TMS ENTERPRISES PRIVATE LIMITED,CHENNAI vs. ACIT COMPANY CIRCLE 3 (1), CHENNAI

This is an appeal filed by the assessee against the order of the Commissioner of Income-tax (Appeals)-11, Chennai in dated 04.12.2017 for the assessment year 2006-07.

Shri G.Seetharaman represented on behalf of the Assessee and Shri Clement Ramesh Kumar represented on behalf of the Revenue.

It was submitted by ld.A.R that the assessee had filed its return of income for the relevant assessment year, which was processed u/s.143(1) of the Act. When processing the return u/s.143(1) of the Act, as there was a mismatch in the TDS, the same was intimated to the assessee and the assessee had responded and produced the necessary TDS certificates. It was a submission that the credit for the TDS had been granted and interest u/s.244A of the Act had been granted to the assessee. Subsequently, notice u/s.154 dated was issued to the assessee for withdrawing the interest u/s.244A of the Act and the order u/s.154 of the Act was passed for withdrawing the interest granted u/s.244 of the Act on 28.08.2013 to an extent of `1,36,303/-. It was a submission that on appeal before the Ld.CIT(A), the submission of the assessee was not considered and the order passed u/s.154 of the Act was confirmed. It was a submission that the issue of levy of interest u/s.244A was now squarely covered by the decision of the Bombay High Court in the case of CIT Vs. Larsen and Toubro Ltd. reported in [2011] 330 ITR 340 (Bom.) wherein it has been held that where the assessee after deducting and depositing TDS on time, but had filed the TDS certificates during the assessment proceedings, interest u/s.244A cannot be denied. It was a submission that clearly the fact that the issue had reached the Bombay High Court and the Hon’ble Bombay High Court has taken the view in favour of the assessee shows that the issue is highly debatable issue and the same cannot be adjudicated in an order passed u/s.154 of the Act. It was a submission that the order passed u/s.154 of the Act by the ld. Assessing Officer, which was confirmed by the Ld.CIT(A), was liable to be quashed.

In reply, the ld.D.R vehemently supported the order of the ld. Assessing Officer and the order of the Ld.CIT(A). Ld.D.R submitted that the assessee had delayed in producing the TDS certificates before the ld. Assessing Officer, in consequence interest u/s.244A of the Act had rightly been denied by the ld. Assessing Officer.

We have considered the rival submissions. A perusal of the facts in the present case clearly show that the issue as to whether interest u/s.244A of the Act is liable to be paid to assessee, where the TDS has been deducted in time and paid to the Government account, but there is a delay in submissions of the necessary TDS certificates, has been adjudicated by the Hon’ble Bombay High Court in the case of CIT Vs. Larsen and Toubro Ltd., referred to supra. Thus, clearly the issue is a debatable issue and it cannot be a subject matter of rectification u/s.154 of the Act. This being so, we are of the view that the order passed u/s.154 of the Act by the ld. Assessing Officer is unsustainable and consequently, we quash the same. Though on merits, the assessee is entitled to the interest u/s.244A of the Act, in view of the decision of Hon’ble Bombay High Court in the case of CIT Vs. Larsen and Toubro Ltd., referred to supra we are not going into the merits in so far as the order passed u/s.154 of the Act has been quashed on account of the issue being a debatable issue

In the result, the appeal of the assessee is allowed.