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TMI Blog2015 (9) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... source. Since the interest income was not liable to be taxed in the hands of the recipient, there is no obligation on the part of the assessees to deduct tax at source. However, since the Hon'ble High Court judgment in the case of CIT Vs. ITC Hotels Ltd. [2015 (8) TMI 987 - KARNATAKA HIGH COURT] is rendered subsequent to the order of the CIT (Appeals), the CIT (Appeals) did not have the benefit to peruse the same Restore the issue for de novo consideration to the file of the Assessing Officer. - Decided in favour of assessee for statistical purposes. - ITA No. 1476/Bang/2014,1477/Bang/2014, 1478/Bang/2014, 1479/Bang/2014, 1480/Bang/2014, 1481/Bang/2014 - - - Dated:- 12-8-2015 - SHRI GEORGE GEORGE K AND SHRI JASON P. BOAZ, JJ. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer for the impugned Assessment Years 2012-13 and 2013-14 also. The assessees vide letters dt.14.3.2014 brought to the notice of KIADB that they had not deducted tax on the interest on its deposits at their branches (supra) as per the request of KIADB, on its assurance that it would submit to them IT Exemption Certificate. KIADB was unable to furnish to the assessees the required IT Exemption Certificates due to the cancellation of its Registration under Section 12A of the Act w.e.f. Assessment Year 2009-10. The assessees furnished Forms 26A duly certified by Chartered Accountants on the basis of which the Assessing Officer accepted that the assessees were not to be treated as assessees in default in terms of Section 201(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that it should be treated as a charitable organization whose income is exempt in terms of the definition of charitable purpose under Section 2(15) of the Act; which view was not accepted by the Department as KIADB s registration under Section 12A of the Act was cancelled by order under Section 12AA(3) of the Act. In that view of the matter, the learned CIT (Appeals) upheld the action of the Assessing Officer, in charging the assessees interest under Section 201(1A) of the Act for failure on their part to deduct tax under Section 196A of the Act in respect of the interest paid to KIADB on deposits kept by it with these 6 branches of Canara Bank, and consequently dismissed the assessees appeals. 3.1 Aggrieved by the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the appellant could not lawfully be asked to pay or make good any tax allegedly not deducted having regard to the principles laid down by the Courts and the Income Tax Appellate Tribunal. Hence, a demand from the assessee cannot be lawfully made unless there is a failure to act honestly and fairly. 6. The learned CIT (Appeals), LTU erred in confirming levy of interest under Section 201(1A) of ₹ 83,862.00 being the interest on TDS. The appellant denies its liability to interest under section 201(1A) and prays that the levy of such interest be quashed. 7. The appellant s craves leave to add, alter, amend, delete, substitute any or all of the grounds urged during the hearing of the appeal. 3.2 The learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Representative strongly relied on the impugned orders of the learned CIT (Appeals). 3.4.1 We have heard the rival submissions and perused and carefully considered the material available on record. In the instant case, the assessee bank had taken term deposit from KIADB. The KIADB was entitled to interest on these term deposits. These interest incomes which have received by KIADB are not liable to be taxed in view of the Registration under Section 12AA enjoyed by KIADB. No doubt the Registration was cancelled by the income tax authorities. However, the assessee took up the matter before the Tribunal and Tribunal vide order in ITA No.1095/Bang/2011 dt.31.1.2013 has set aside the order passed by the income tax authorities cancelling the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer under Section 195 of the Act and not in the hands of the payer / deductor of TDS ? The Hon'ble High Court while considering the above question of law, has rendered the following finding :- .. Even otherwise, as we have already observed herein above, the Revenue itself had given No Objection Certificates consistently for several years and allowed the respondent assessee to make payment to Sheraton without deducting tax at source and it was only after the decision of the Assessing Officer at Delhi in the case of Sheraton holding that payment made to it would be liable for payment of income tax in India, the proceedings in question had been initiated against the respondent assessee herein. However, on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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