ACIT,BANGALORE vs. M/S. ING VYSYA BANK LTD.,, BANGALORE

This appeal by the revenue is against the order dated 17.8.2002 of the CIT(Appeals)-I, Bangalore relating to assessment year 1991-92.

The assessee is a scheduled bank and carries on banking business. Return of income for the A.Y. 1991-92 was filed by the assessee on 27.12.1991 admitting a taxable Income of Rs.10,01,37,310 and a tax liability thereon of Rs. 4,60,63,163. A sum of Rs. 7,27,42,407/- was claimed as tax deducted at source. The relevant TDS certificates were also attached to the return. An Intimation u/s 143(1) of the Income-tax Act dated 10.01.1992 was issued wherein it was mentioned that “Credit for TDS amounting to Rs. 1,68,25,188 was not been given as the certificates were defective such as not pertaining to the assessment year under consideration, no seal on the certificate by the issuing authority, date of remittance to Government account, exemption certificate, etc. Hence credit for TDS was given to the extent of Rs.5,59,17,219 only based on which a refund of Rs.98,54,056 was worked out. The interest payable on this was shown as Rs.12,81,020. An amount of Rs.60,99,535 was adjusted for some earlier years and a refund order dated 12.03.1992 for the balance amount of Rs.50,35,541 was issued.

The assessee had by letter dated 18.03.1992 requested for the return of TDS certificates for which credit had not been given to enable it to remove the defects and resubmission and obtained their return. The returned TDS certificates included those issued by RBI amounting to Rs.1,20,50,430. RBI was exempted by CBDT from filling up columns 4 & 5 relating to the date of remittance to the’ Government Account, bank branch where the tax is deposited. Another thirty one certificates (Rs. 12,49,500) were issued by APSEB, APSFC & Vysya Bank Leasing Limited who had obtained exemption from using the printed form. These facts were represented to the Assessing Officer vide assessee’s letter dated 17.06.1992 based on which a rectification order u/s 154 of the I.T. Act was issued on 30.07.1992 wherein further TDS credit was given for Rs.1,47,98,234. However the order mentioned that interest u/s 244A is allowed only from the date of receipt of rectified TDS certificates.

Further Credit of Rs.11,00,508 was given on 29.07.1993 by an order u/s 154 and Rs. 8,44,294 by order dated 26. 11.1993 (giving effect to the CIT’s order). The regular assessment u/s 143(3) was completed on 31.03.1994 on a total Income of Rs.18,11,02,430 as against Rs.10,01,37,310 returned by the assessee due to adding back of various items totaling to Rs.8,09,65,119. Consequently the tax payable went up to Rs. 8,33,01,118. After deducting the TDS of Rs.7,26,60,255 so far admitted there was a balance of tax payable by the assessee.

In the appeaI filed by the assessee against the additions, orders were passed in its favour by the CIT(A) deleting Rs. 4,68,08,506. A further sum of Rs. 1,80,88,958 was deleted on giving effect to the orders of the Tribunal vide order dated 10.03.2003. Due to this, again the total taxable income came down to Rs. 11,67,04,962 and the tax payable to Rs. 5,36,84,283 as against TDS of Rs. 7,26,60,255 resulting in a refund. While passing the order for refund, the AO has again taken the stand that interest u/s 244A is not allowable in respect of TDS certificates amounting to Rs. 1,67,43,036 since defective certificates were rectified. The interest amount which is thus denied comes to Rs. 25,11,450.

Aggrieved by the order of AO, the assessee preferred appeal before the CIT(A). The ld. CIT(A) was of the view that refunds to the extent of Rs.1,32,99,336 out of a sum of Rs.1,67,43,036 was not delayed for the reasons attributable to the assessee. Following were the relevant observations of the CIT(A) on this issue:-

Aggrieved by the order of CIT(Appeals), the Revenue has preferred the present appeal before the Tribunal.

The effective grounds of appeal raised by the Revenue read as follows:-

The ld. DR reiterated the stand of Revenue as contained in the grounds of appeal. We have considered the stand taken by the Revenue in the grounds of appeal and are of the view that the same are without any merit. Refusal of the AO to give credit for TDS was itself erroneous. In this regard, it is clearly brought out in the Statement of Facts filed by the assessee before the CIT(A) as well as by the ld. CIT(A) that TDS certificates issued by RBI totaling to Rs.1,20,50,430 were considered defective for the reason that cols. 4 & 5 relating to date of remittances to Govt. account, bank branch where tax is deposited were not required to be filled up by the RBI in view of the exemption granted by CBDT to RBI in the matter of filling up those columns. Similarly, TDS certificates totaling Rs.12,49,500 which were issued by APSCB, APSFC & Vysya Bank Leasing Ltd. were considered defective and TDS not given credit by the AO for the reason that printed forms had not been used by these entities. It has also been brought in the Statement of Facts filed before the CIT(A) that these entities were exempt from using printed forms. It can thus be seen that the Revenue was at fault in not granting credit for TDS. The assessee had duly brought to the notice of AO the fact that credit for TDS was wrongly denied by the AO. The AO accepted the claim of assessee. In such circumstances, it cannot be said that proceedings resulting in refund were delayed by the assessee and consequently the AO could not withdraw interest for any period u/s. 244A of the Act. In our view, the ld. CIT(A) has rightly come to the conclusion that as far as proceedings relating to refund to the extent of Rs.1,32,99,336 was concerned, the assessee was not at fault and therefore interest cannot be denied for any period in respect of the aforesaid sum. We find no grounds to interfere with the order of ld. CIT(Appeals).