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TMI Blog2014 (4) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... f yearly but it is not the case of the revenue that any of the account holders exercised this option - the assessee credited the interest in its own account at the end of financial year and on the event of credit of amount of interest in in account of payee (the assessee) it deducted TDS - the AO has given finding that in the entire deposit scheme the interest was being credited on quarterly basis - there is no observation of the AO that in the balance sheet the entries of interest were made on quarterly basis rather the balance sheet shows the credit of interest on annual basis – thus, the assessee cannot be said to be in default in deduction of TDS – thus, the provisions of Section 271 C which make liable for payment of penalty on the event of failure of any deduction of tax are not attracted – the order of the Tribunal upheld - Decided against Revenue. - Income Tax Appeal No. 50 of 2005, Income Tax Appeal No.51 of 2005, Income Tax Appeal No. 52 of 2005, Income Tax Appeal No. 53 of 2005, Income Tax Appeal No. 54 of 2005, Income Tax Appeal No. 56 of 2005, Income Tax Appeal No.57 of 2005, Income Tax Ap - - - Dated:- 25-4-2014 - Hon'ble Shri Narayan Shukla And Hon'ble Vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce whereas as is apparent the assessee failed to deduct tax at source at the time of crediting the interest to the account of payee in violation of provision of Section 191 A as well as the Board's Circular No.643 dated 22.1.1993? The facts in brief as exposited are that the respondent M/S Sahara India Mutual Befit Co. Ltd. runs several deposits scheme on which depositors are paid interest as per the terms and conditions of the scheme. In order to determine the mode of payment of interest to the depositors the Assessing Officer discussed various schemes and for instance it referred one of the schemes ,i.e, Golden Fixed Deposit Account ( GFDA). Clause nos. 5 and 6 of this scheme deal with the account statement chart and mutual interest withdrawal respectively for which two options were provided. Option No. 1 was that the account holder would receive six monthly interest payment at the rate of 15 % per annum from the concerned branch office. Second option was that in case the account holder does not wish to withdraw half yearly interest payment the cumulative interest amount can be withdrawn as per table given therein. Similarly the other scheme also provided same terms and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest payable in its books of account at the end of financial year. The appellate authority further held that the appellant was required to deduct the tax at source on the basis of making provisions in the books of account at the end of financial year and interest is credited in the interest payable account on accrual basis and not on the maturity basis. With this observation the appellate authority dismissed the appeal and justified levy of penalty imposed by the Assessing Officer. Aggrieved respondent filed Income Tax Appeals before the Income Tax Appellate Tribunal. Income Tax Appellate Tribunal after considering the rival submissions of parties as well as the provisions of Act observed that admittedly in the instant case the tax has been deducted at source at the time of actual payment. Similarly the amount has also not been credited of the account of the payee prior to its maturity. Therefore, main provision of Section 194- A is not attracted. He also considered the explanation to Section 194-A which provides that where any income by way of interest is credited to any account,whether called interest payable account or suspense account or by any other name, such cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of Chapter XVII- B; or (b) pay the whole or any part of the tax as required by or understand(i) sub-section (2) of section 115-O or (ii)the second proviso to section 194 B, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid. (2)any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner. On a bare perusal of the orders, passed by the Assessing Officer as well as the appellate authority we find that they have given much emphasis over the word accrual and has held that as per the provisions of Section 194-A TDS is to be deducted as and when it accrues. The due date of deducting TDS is at the time of accrual or at the time of payment, whichever is earlier. In the instant case the interest has accrued earlier than payment of interest. Therefore, due date of deducting the TDS was at the time of accrual of interest. The provisions of Section 194-A quoted above speak that any person, who is responsible for paying to a resident any income by way of interest shall at the time of credit of such income to the account of payee or at the time of p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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