Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DEHRADUN BENCH, DEHRADUN
Before: Sh. Amit ShuklaDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeals have been filed by the assessee against the orders of ld. CIT (A), Dehradun dated 11.10.2019, 14.10.2019 and 16.10.2019.
Since, the issues involved in all these appeals are identical, they were heard together.
In following grounds have been rised by the assessee:
“1. For that the learned CIT Appeal failed to appreciate the fact that the appellant was not liable to deduct tax at source u/s 194A on payment of interest of Rs 21,95,687/- (erroneously stated as Rs 27,95,687/- in the appellate to 14/Del/2020 2 Punjab National Bank order) made to Uttarakhand Co-operative Sugar Factories Federation Limited Employees Contributory Provident Fund Trust since the same is recognized by the Commissioner of Income Tax under sub-rule (1) of rule 3 of part A of the fourth schedule of the Income Tax Act 1961. Circular No 004 of 2002 dated 16-7-2002 issued by the CBDT provides for non-deduction of tax at source in respect of entities whose income is unconditionally exempt from tax and specifies recognized provident fund trust in para 2(xi) as eligible to receive income without deduction of tax at source.
2. For that the learned CIT Appeal failed to appreciate the fact that the appellant was not liable to deduct tax at source u/s 194A on payment of interest of Rs 26,13,300/- made to Uttarakhand Co-operative Sugar Factories Federation Limited since the same is set up, financed and is under the control of Government of Uttarakhand. Section 194A(3)(f) provides that the provisions of section 194A will not apply to such institutions or class of institutions that the Central Government may notify in the official gazette. The Central Government vide Notification dated 15-5-1987 notified institutions for the purpose of the aforementioned section. Entry no 41 of the notification specifies any undertaking or body wholly financed by the Government.
3. For that the learned CIT (Appeals) ignored the fact that the recipient of interest, namely Uttarakhand Co- operative Sugar Factories Federation Limited Employees Contributory Provident Fund Trust being an exempt entity u/s 10(25) was not liable to file return of income u/s 139 of the Act. The learned CIT (Appeal) rejected the alternate claim of the appellant to take on record form 26A prescribed under rule 31ACB for the purpose of first proviso to section 201(1) only because the return of income was not filed by the Uttarakhand Co-operative Sugar Factories Federation Limited Employees Contributory Provident Fund Trust.
For that the learned CIT (Appeals) ignored the report submitted by the respondent, namely ACIT (TDS), requisitioned by him during the appellate proceedings. The ACIT (TDS) had herself agreed that the appellant was not liable to deduct tax at source on payments made to the Uttarakhand Co-operative Sugar Factories Federation Limited Employees Contributory Provident Fund Trust and to Uttarakhand Co-operative Sugar Factories Federation Limited.” to 14/Del/2020 3 Punjab National Bank 4. The core issue revolves around the failure of the assessee to deduct TDS u/s 194 of the Income Tax Act, 1961 on the payments made to interest on term deposits to M/s Uttarkhand Co-operative Sugar Factories Federation Ltd. (USFL) and Employees Contributory PF Trust (PF Trust).
The ld. CIT (A) confirmed the action of the Assessing Officer with regard to the interest paid to PF Trust and deleted the liability incurred on account of USFL and confirmed the action pertaining to the PF Trust on the grounds that no return has been filed and no copy has been produced before the revenue authorities.
On perusal of the record before us and the paper book filed, we find that M/s Uttarkhand Co-operative Sugar Factories Federation Ltd. and Employees Contributory PF Trust has been accorded recognition vide order u/s 154 of the Income Tax Act, 1961 dated 22.05.2011 w.e.f. 28.12.2010. Further, the CBDT Circular No. 004/2002 dated 16.07.2002 clarified the non- requirement of tax deduction at source in case of entities whose income is exempt u/s 10 of the IT Act. The provision relevant to the assessee before us is mentioned at para xi which reads as “provident fund to which the Provident Fund Act, 1925 (19 of 1925) referred to in sub-clause (i), recognized provident fund referred to in sub-clause (ii), approved superannuation funds referred to in sub-clause (iii), approved gratuity fund referred to in sub-clause (iv) and funds referred to in sub-clause (v) of clause (25)”. to 14/Del/2020 4 Punjab National Bank 7. In view of the apparent provisions of the Act, circular of the CBDT, the recognition accorded by the ld. CIT, Dehradun, the observation of the revenue authorities that no tax exemption certificate was ever sought by the department is incorrect on the specifics of record, we straightaway hold that the assessee is not liable to any action u/s 201(1) and Section 201(1A) of the Income Tax Act, 1961.
In the result, all the appeals of the assessee are allowed. Order Pronounced in the Open Court on 06/08/2021.