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TMI Blog2015 (12) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction was alleged was declared as income by deductee in its return of income filed for the assessment year 2008–09. Thus, it pre–supposes that tax due on such income returned must also have been paid by the deductee. Therefore, the learned Commissioner (Appeals), in our view, was not justified in rejecting assessee's claim on the observation that whether tax paid on such income by the deductee was not mentioned. When the income tax assessment particulars of Tata Motors Ltd. was furnished in the confirmation letter, if the learned Commissioner (Appeals) had any doubt with regard to payment of tax by Tata Motors Ltd., he could have verified from the Departmental Authorities. We have no hesitation in holding that the assessee cannot be tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 201 and levy of interest under section 201(1A) of the Income Tax Act, 1961 (for short the Act ) for short deduction of tax at source. 2. Briefly stated the facts are, the assessee is a banking company. On verifying the TDS return filed by the assessee for the F.Y. 2007 08, the Assessing Officer found that in the second quarter of the relevant F.Y., the assessee has made short deduction of tax to the extent of ₹ 23,69,430. He, therefore, issued show cause notice to the assessee to reconcile the same. However, as observed by the Assessing Officer, as the assessee failed to rectify the defect in terms with the show cause notice, the Assessing Officer passed an order on 8th January 2011, raising a demand of ₹ 23,69,403, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee deducted tax @ 10.30% on the interest paid. It was submitted the Assessing Officer noticing that the final beneficiary is a company i.e., Tata Motors Ltd., a corporate deductee and the rate at which tax should have been deducted is 20.60% raised a demand on the assessee. It was submitted by the assessee that as per Explanation to section 191, a deductor would be treated as an assessee in default under section 201(1) of the Act if the deductee has also failed to pay such tax directly. It was submitted by the assessee that since the deductee Tata Motors Ltd. has declared interest income received from the assessee in its return of income for the relevant assessment year and paid tax the assessee cannot be treated as an assessee in defaul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 201(1A) of the Act is approved. 5. The learned Counsel for the assessee reiterating the stand taken before the first appellate authority, submitted that the interest payments on which short deduction of tax is alleged by the Assessing Officer was made to a trust whose beneficiary is Tata Motors Ltd. It was submitted that though, assessee was required to deduct tax @ 20.60% considering the corporate status of the beneficiary but that fact was not known to assessee at the time of making payment. It was submitted, as the deductee has declared the interest income received from the assessee in the return of income filed the assessee cannot be treated as an assessee in default in view of the decision of the Hon'ble Supreme Court in Hindu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ault under section 201(1). From the confirmation letter of Tata Motors Ltd., submitted before the first appellate authority, it is very much clear that the deductee has admitted that interest payment of ₹ 1,87,33,461, received from the assessee bank was offered to tax in the return of income filed for the assessment year 2008 09. In the said confirmation, Tata Motors Ltd., also furnished their assessment particulars. Thus, from the confirmation letter of the deductee, it is very much clear that the interest payment on which short deduction was alleged was declared as income by deductee in its return of income filed for the assessment year 2008 09. Thus, it pre supposes that tax due on such income returned must also have been paid by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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