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Income Tax Appellate Tribunal, “C” BENCH : KOLKATA
Before: Hon’ble Shri N.V. Vasudevan, JM & Shri M.Balaganesh, AM ]
IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH : KOLKATA [Before Hon’ble Shri N.V. Vasudevan, JM & Shri M.Balaganesh, AM ] I.T.A No. 459/Kol/2015 Assessment Year : 2009-10 Golden Trust Financial Services -vs- ACIT, Circle-54, Kolkata [PAN: AACFG 8395 A] (Appellant) (Respondent)
For the Appellant : Dr. Somnath Ghosh, AR For the Respondent :Shri Arindam Bhattacharjee, Addl CIT,Sr. DR Date of Hearing : 18.09.2017 Date of Pronouncement : 20.09.2017
ORDER Per M.Balaganesh, AM
This appeal by the Assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals) -11, Kolkata [ in short the ld CITA] in Appeal No. 146/CIT(A)- 11/Cir-54/14-15/Kol dated 24.02.2015 against the order passed by the ACIT, Circle- 54, Kolkata [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short “the Act”) dated 09.05.2011 for the Assessment Year 2009-10.
The only issue is to be decided in this appeal is as to whether the Ld. CIT(A) was justified in upholding the addition made towards interest income in the sums of Rs. 43,11,699/- (interest from SBI) and Rs. 83,865/- (interest from Vijaya Bank), in the facts and circumstances of the case.
The brief facts of this issue is that the assessee firm is deriving income from insurance commission and business auxiliary services and has its branches situated
2 ITA No.459/Kol/2015 Golden Trust Financial Services A.Yr.2009-10 mostly in rural and semi urban areas. Because of its network, large number of field workers belong to rural and semi urban areas. The branches are the collection as well as relationship maintenance points with the large network of field workers of the assessee firm. It takes at least 5 to 15 days to transfer the funds from the branches to the Head office at Kolkata depending on the locations of the branches. For that reason, some times the firm faced cash crunches and was forced to avail Bank Overdrafts. Consequently the firm has to pay interest on Bank Overdraft. This is due to the unique business condition and business strategy of the assessee firm. Bank Overdrafts were also obtained against the Fixed Deposits of the firm instead of encashing the Fixed Deposits. This was done to avoid the loss of penal deduction of interest by the Banks on premature encashment of Fixed Deposits. This penal deduction of interest by the Banks would be more than the difference of interest charged by the Banks for availing Bank Overdrafts against the Fixed Deposits. Hence, the firm obtained Bank Overdrafts against Fixed Deposits out of business prudence only. Apart from these, the firm has earned considerable amount of interest on Fixed Deposits. The total inflow of interest during the year on Fixed Deposits was more than the outflow of interest on Bank Overdrafts. So, the firm was a net gainer in this respect and has acted on the basis of ordinary business prudence only.
The assessee has reported interest income on fixed deposit of Rs. 4,31,16,329/- from State Bank of India, Middleton Row Branch and offered the same for taxation. This figure also tallied with the physical TDS certificate issued by the bank in form no. 16A. The Ld. AO observed that the ITS details revealed that the interest income on fixed deposit from State Bank of India, Middleton Row Branch was Rs. 4,74,28,028/-. The Ld. AO placed reliance on the ITS details obtained by the Department as sacrosanct and resorted to make an addition for the remaining portion of Rs. 43,11,699/- (47428028 – 43116329) and ignored the physical TDS certificate in Form 16A which reflected the total interest income from State Bank of India of Rs. 4,31,16,329/-. The said physical 2
3 ITA No.459/Kol/2015 Golden Trust Financial Services A.Yr.2009-10 form 16A also reflected TDS amount of Rs. 48,85,087/- which was duly given credit by the ld. AO and there is absolutely no dispute on the same.
With regard to interest income on fixed deposit from Vijaya Bank, Howrah Branch, the assessee reported interest income of Rs. 78,73,000/- and offered for taxation. In the physical TDS certificate in Form 16A issued by Vijaya Bank, the interest income was reflected at Rs. 78,67,809/-, thereby resulting in assessee considering excess interest income of Rs. 5,198/- in its profit and loss account and in the return of income. However, the ITS details obtained by the Department revealed that the interest income on fixed deposit from Vijaya Bank, Howrah Branch was Rs. 79,56,865/-. The Ld. AO accordingly resorted to bring the difference of Rs. 83,865/-(79,56,865 – 7873000) to tax. The TDS figure reflected in Form No. 16A issued by Vijaya Bank was Rs. 8,97,483/- which was duly given credit by the Ld. AO and on which there is absolutely no dispute.
The ld. CIT(A) upheld the contentions of the Ld. AO that with regard to interest income from State Bank of India, the form no. 26AS after number of corrections contained interest of Rs. 2,81,79,066/- as against the interest of Rs. 4,31,16,329/- reflected in physical TDS certificate in form 16A. However, the TDS amount of Rs. 48,85,087/- remained the same in Form 26AS also. The Ld. CIT(A) based on this discrepancy observed that it indicates there may be certain payment of interest by the bank to the assessee without TDS. Similarly he upheld the addition made with regard to interest income from Vijaya Bank of Rs. 83,865/-. Aggrieved, the assessee is in appeal before us: 1. Under the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals)-11, Kolkata has erred in law as well as in fact in confirming the addition on account of increasing Fixed Deposit interest income from State Bank of India, Middleton Row Branch by Rs. 43,11,699/-.
4 ITA No.459/Kol/2015 Golden Trust Financial Services A.Yr.2009-10 2. Under the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals)-11, Kolkata has erred in law as well as in fact in confirming the addition on account of increasing Fixed Deposit interest income from Vijaya Bank, Howrah Branch by Rs. 83,865/-.
The appellant craves leave to add to or amend the aforesaid grounds before disposal of the appeal.
We have heard the rival submissions. We find that the facts stated hereinabove remain undisputed and hence, the same are not reiterated for the sake of brevity. We find that both authorities below had resorted to make and confirm this addition respectively taking the AIR information/ ITS details as sacrosanct and by completely ignoring the physical TDS certificate issued by the State Bank of India and Vijaya Bank respectively to the assessee. We hold that the assessee cannot be faulted at all just because he is not able to reconcile the figures mentioned in Form 26AS as well as the figures that were reflected in ITS details/ AIR information. The figures in Form 26AS are dependent on the figures uploaded by the deductor i.e. State Bank of India and Vijaya Bank while uploading their respective quarterly TDS returns, on which, the assessee cannot have any control in any manner whatsoever. In the instant case, the assessee has duly offered the interest income based on the physical TDS certificate issued in Form No. 16A by the respective banks i.e. State Bank of India and Vijaya Bank and claimed the TDS reflected thereon. We find that the Ld. AO has not disputed the TDS figure mentioned in physical TDS certificate but had disputed the gross interest income reflected thereon. We find that CBDT had come out with instruction dated 15.02.2016 as under:
SECTION 190 OF THE INCOME-TAX ACT, 1961 - ADMINISTRATION OF TDS - REDRESSAL OF TAXPAYER GRIEVANCES RAISED DUE TO TDS MISMATCHES LETTER, DATED 15-2-2016 This is in reference to the subject mentioned above. The taxpayers are facing problems due to mismatch of TDS/other taxes. These problems may be due to the non-reporting of 4
5 ITA No.459/Kol/2015 Golden Trust Financial Services A.Yr.2009-10 TDS and uploading the TDS details improperly by their deductors. As a result, demand notices are being sent to the taxpayers due to non-availability of the tax credits for claim LTR. 2. The demand created prior to 1-4-2010 was uploaded manually. There may have been mistakes in uploading the demand (e.g. already paid demand was wrongly up loaded without giving credit for taxes paid, same demand was up loaded more than once, demand created u/s 143(1) was again included in demand created u/s 143(3) etc. Since the details of these assessments are not available in CPC(ITR), CPC(ITR) is not in a position to resolve any grievance in such cases. Further, more than 90% of demand entries in CPC FAS involve demand of less than Rs. 1 lakh. In order to handle these cases, the CBDT issued circular no. 8/2015 (copy attached) directing the AOs to give credit for taxes paid on the basis of evidence furnished by the taxpayer. 4. In this regard, Directorate has from time to time issued instructions to the field officers about the procedures to be followed in such cases. Since the number of demand entries is very large, therefore, taxpayers remain dissatisfied. Accordingly, Chairman, CBDT has desired that the standard operating procedure as per Circular No. 8/2015 may be strictly followed by all Assessing Officers under your charge and immediate steps need to be taken to reduce the grievances of the taxpayers.”
We find that from aforesaid letter dated 15.02.2016 issued by CBDT that, credit for TDS should be given based on the evidence furnished by the assessee. It is well settled as per provisions of the Act, that the corresponding income relatable to the TDS claimed by the assessee should be offered to tax in the return of income. In the instant case, the assessee had duly offered the interest income as per the physical Form 16A i.e. physical TDS certificate and hence, we hold that there is no escapement of interest income and there is no case for bringing to tax differential alleged interest income merely based on AIR information/ITS details relied by the Department. We also find that the Hon’ble Delhi High Court vide its judgment in the case of Court on its own motion Vs. CIT and All India Federation of Tax Practitioners vs. UOI & Ors.] (W.P.(C) 2659/2012 and W.F. (C) 5443/2012) dated 14.03.2013 has issued audi mandamus for necessary action by Income Tax Department one of which is regarding the issue of non-credit of TDS to the taxpayer due to TDS mismatch despite the assessee furnishing before the Assessing Officer, TDS certificate issued by the deductor. The CBDT also to be in consonance with this judgment had come out with instruction No. 5 of 2013 dated 08.07.2013 in this 5
6 ITA No.459/Kol/2015 Golden Trust Financial Services A.Yr.2009-10 regard. Hence, we hold that, since the income relatable to the TDS claimed by the assessee is duly offered to tax in the instant case, there is no case for making any addition towards differential interest income based on AIR information. Accordingly, the grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 20.09.2017
Sd/- Sd/- [N.V.Vasudevan] [ M.Balaganesh ] Judicial Member Accountant Member
Dated : 20.09.2017 SB, Sr. PS
Copy of the order forwarded to:
Golden Trust Financial Services, S.B. Mansion, 16, R.N. Mukherjee Road, Kolkata- 700001. 2. ACIT, Circle-54m (Admn), Kolkata, 3, Government Place (West ), Second Floor, Kolkata-700001 3..C.I.T.(A)-11, Kolkata 4. C.I.T.- Kolkata. 5. CIT(DR), Kolkata Benches, Kolkata.