BANK OF INDIA,NAGPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX, TDS, CIRCLE51(1), NAGPUR

PDF · subscribers
ITA 179/NAG/2023Status: DisposedITAT Nagpur29 April 2024AY 2015-16Bench: SHRI V. DURGA RAO, JUDICIAL MEMBER, SHRI KHETTRA MOHAN ROY (Accountant Member)4 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal followed its previous decision in the assessee's own case. It held that the obligation to deduct tax at source under Section 194A needs to be determined in light of Explanation to Section 191, excluding cases where declarations in Form 15G/15H were validly furnished and the interest income did not exceed the basic exemption limit. Interest under Section 201(1A) is payable even if the assessee is not in default under Section 201(1), but only if there was an obligation to deduct tax at source.

What were the facts?

The assessee, Bank of India, was found to have defaulted in deducting tax at source under Section 194A on interest paid to its customers. This was discovered during a spot verification of certain branches. The Assessing Officer (AO) treated the bank as being in default for non-deduction of TDS.

What were the issues?

Whether the bank was in default for non-deduction of TDS on interest paid to customers, and if interest under Section 201(1A) is leviable in such cases, considering valid declarations under Section 197A.

Which sections of the Income-tax Act were involved?

Section 194A,Section 201(1),Section 201(1A),Section 191,Section 197A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR

Before: SHRI V. DURGA RAO, & SHRI KHETTRA MOHAN ROY,

For Appellant: Shri Pratik Sadrani a/w, Shri Milind Bhusari
For Respondent: Shri Abhay Y. Marathe

These twenty appeals arise out of different orders passed by the National Faceless Appeal Centre (NFAC), Delhi, under section 250 of the Income Tax Act, 1961 (hereinafter called “the Act”) in relation to the financial year 2014-15, emanating out of the order passed under section 201(1A) of the Act. Since common issues are involved, therefore, we proceed to dispose off these appeals by way of this consolidated order for the sake of convenience and brevity.

2.

The issues involved in all these appeals are absolutely similar and identical. That, for the fact of the matter, further it was submitted by the learned Authorised Representative that the adjudication for justice in all these appeals shall be served by following the decision of the Nagpur Bench of the Tribunal in assessee's own case in group of appeals vide order dated

Bank of India A.Y. 2015-16 28/08/2023 (ITA no.277/Nag./2022) on absolutely identical facts and issues. The learned Departmental Representative conceded to this submission.

3. We find that in the said referred order, the facts have been illustrated at paras 3 of the said order which are extracted as follows:-

“2. The foremost issue raised in these appeals is against the confirmation of the orders passed by the AOs u/s.201(1)/201(1A) of the Act treating the assessee in default for non-deduction of tax at source u/s 194A on interest paid/credited to its customers and also non-condonation of delay by the Id. CIT(A) in presenting the appeals before him.

3.

Briefly stated, the facts of the case in the captioned appeals are that the assessee is a Nationalised Bank engaged in the banking business. Section 194A mandates that tax has to be deducted at source in respect of interest paid/credited to the account of the customers. A spot verification in some branches of the assessee bank was conducted in March, 2016 and default in compliance was found anent to the TDS provisions under the section. Information was collected from Zonal office as regards the branches paying/crediting interest to customers' accounts, for an amount in excess of the basic exemption limit, without deduction of tax at source on receiving Form Nos. 15G/15H. On perusal of such information, the AO noted certain cases, as tabulated in his order, where interest paid was more than the relevant basic exemption limits but no deduction of tax at source was made on receiving Form Nos.15G/15H. After considering the reply and getting partially satisfied, the AO held the assessee to be in default u/s.201. No succor was provided by the Id. CIT(A) on merits, who also dismissed the appeals filed before him as time barred."

4.

That, so far as merits of the cases are concerned, the relevant observations are at paras 7 & 8 which are reproduced below:–

"7. Next issue which survives on merits is about the liability of the assessee to deduct tax at source. We have discussed the issue lock stock and barrel in drawing the following conclusions: i. The question whether the assessee is in default in terms of section 201(1) needs to be determined in the light of Explanation to section 191. Howbeit, the cases covered u/s 197A(1A) [i.e. the eligible person furnishing declaration in form No. 15G that his tax liability on total income, including the interest, will be Nil] but not hit by section 197A(1B) [i.e. interest income other than interest on securities as referred to in section 194A does not exceed the basic exemption limit], will at the outset be excluded from consideration as not entailing any obligation to deduct tax at source. Similarly, the cases covered u/s 194A(1C) [i.e. persons exceeding the specified age furnishing form No. 15H to the effect that tax on their total income including such interest will be Nil] will also be excluded. ii. Interest u/s 201(1A) is payable by the assessee even w.r.t. the cases where it is not in default in terms of Explanation to section 191 - from the date when the tax was deductible up to the date of filing of return by the payee including the interest income in his total income. However, the cases in which there is no obligation to deduct tax at source will not be considered for interest u/s 201(1A) of the Act. Page | 3

Bank of India A.Y. 2015-16

8.

In the ultimate conclusion, we set aside the impugned orders and send the matter back to the respective AOs for passing fresh orders u/s 201(1)/(1A) in the light of above directions. In case it is found that the recipients included the amount of interest in their total income, then the assessee should not be treated in default in terms of section 201(1). Needless to say, the assessee will be allowed adequate opportunity of hearing in such fresh proceedings."

5.

Respectfully following the aforesaid judicial pronouncement and relying on the same parity of reasoning, these matters are also restored to the file of respective AOs for adjudication as per law following the same direction, as has been given in the above referred Tribunal's order in assessee's own case. The A.O. is directed to conduct necessary enquiry with the payees, if so required.

6.

In the result, all the appeals filed by the assessee are partly allowed for statistical purposes. Order pronounced in the open Court on 29/04/2024

More judgments on Section 194A

All 1,500 judgments and leading authorities on Section 194A →

Recent GST High Court judgments

Search GST case law →