BHAVNAGAR ENERGY COMPANY LTD.,GANDHINAGAR vs. ACIT, TDS CIRCLE, AHMEDABAD

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ITA 1301/AHD/2018Status: DisposedITAT Ahmedabad13 January 2020AY 2014-152 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that interest under Section 201(1A) is leviable for the period the tax was not paid by either the assessee or the payee. Therefore, the AO's levy of interest was considered correct.

What were the facts?

The assessee company initially deducted TDS at a lower rate based on a certificate, but later realized TDS should have been at a higher rate. The AO initiated recovery for short deduction, but scaled it down to interest under Section 201(1A) after the assessee argued the payee had already paid tax.

What were the issues?

Whether interest under Section 201(1A) is leviable for short deduction of TDS when the payee has already accounted for and paid the tax.

Which sections of the Income-tax Act were involved?

Section 201(1A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘C’

Before: SHRI RAJPAL YADAV & SHRI WASEEM AHMED

For Respondent: Shri L.P. Jain, Sr.DR
Hearing: 10/01/2020Pronounced: 13/01/2020

सुनवाई क� तार�ख/Date of Hearing : 10/01/2020 घोषणा क� तार�ख /Date of Pronouncement : 13/01/2020 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : Assessee is in appeal before the Tribunal against order of the ld.CIT(A)-8, Ahmedabad dated 16.3.2018 passed for the Asstt.Year 2014-15.

2.

In response to the notice of hearing, none has come present on behalf of the assessee. Therefore, we proceed to decide the appeal ex parte qua the assessee appellant.

3.

Brief facts of the case are that the assessee had filed an application dated 15.2.2915 under section 154 of the Act and contended that the company has deducted TDS at the rate of 0.5% for the financial year based on the certificate of lower rate being produced by the company. In fact the TDS was required to be deducted at the rate of 2%. When the AO wrote a letter dated 10.9.2015 for recovery of short deduction of tax, then the assessee filed this rectification application. In the rectification application, the assessee further pleaded that the payee company has already accounted for the income, and has paid tax. Therefore, there is no short fall in collection of tax as such. The ld.AO on the other hand found the submissions of the assessee correct, hence, recovery notice sent at Rs.21,88,764/- was scaled down to Rs.3,06,432/-. This amount was calculated by the AO under section 201(1A) of the Act i.e. interest for the period for which tax required to be paid by the assessee were not paid either by the company or by the payee. He rectified recovery letter and calculated interest at Rs.3,06,432/-.

4.

Against this order, assessee went in appeal before the ld.CIT(A). The ld.CIT(A) has rejected the appeal of the assessee.

5.

With the assistance of the ld.DR, we have gone through the record. There is no dispute with regard to the fact that the period calculated by the AO, the taxes required to be deducted by the assessee and paid to the Government treasury were not paid either by the assessee or by the payee, and therefore, for the default period, the interest is leviable upon the assessee. The AO has rightly levied interest, and no interference is called for the in the order of the ld.CIT(A) on this issue. Accordingly, the appeal of the assessee is dismissed.

6.

In the result, appeal of the assessee is dismissed. Pronounced in the Open Court on 13th January, 2020

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