THE BRANCH MANAGER, SBI, SECRETARIAT BRANCH,PATNA vs. ACIT, TDS CIRCLE, PATNA

The common issue involved in all these appeals relates to, whether the assessee deserves to be treated in default in terms of Section 201 of the Income Tax Act. For the facility of reference, we take note of this Section, which reads as under:- Consequences of failure to deduct or pay:- (201(1) Where any person, including the principal officer of a company (a) Who is required to deduct any sum in accordance with the provisions of this Act; or (b) referred to in sub-section (1 A) of section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax: Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a payee or on the sum credited to the account of a payee shall not be deemed to be an assessee in default in respect of such tax if such payee— (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed: , 13 & 14/PAT/2019 Assessment Years: 2011-2012, 2012-13 & 2013-2014 The Branch Manager, SBI, Secretariat Branch, Patna 3. Brief facts of the case are that the assessee is a Nationalised Bank with whom Chief Minister Relief Fund has deposited the money where interest income was generated. The Chief Minister Relief Fund wrote a letter to the assessee not to deduct TDS and accordingly while making the payment of interest it did not deduct the TDS. It has been brought to our notice that the Chief Minister Relief Fund is a taxable entity and the interest income earned from the assessee-Bank has been included in the taxable return. The Chief Minister Relief Fund has claimed exemption under section 10(23C) and such exemption has been allowed to it. For buttressing this contention, an order of the ld. CIT(Appeals) dated 15.11.2022 for A.Y. 2011-12 is placed on record. On the strength of above, it was contended that proviso appended to Section 201 read with Clauses (1) & (2) would contemplate that in case the payee has filed the return and included those payments upon which TDS was ought to be deducted in the taxable income and paid the taxes due of such income, then, the payer would not be held in default as per Section 201. The controversy in above aspect would go down to a very brief issue namely if it is verified, whether the payee has included interest income received from the assessee in its taxable income and if it included and paid the taxes thereon then assessee will not be treated as in default. , 13 & 14/PAT/2019 Assessment Years: 2011-2012, 2012-13 & 2013-2014 The Branch Manager, SBI, Secretariat Branch, Patna 4. In the above situation, we deem it appropriate to remit this issue in all these three years to the file of ld. Assessing Officer. Ld. Assessing Officer shall examine the case of the assessee within an ambit of proviso to Section 201 and find out whether Chief Minister Relief Fund has included this interest income in its taxable income or not. As far as levy of taxes is concerned, it is to be appreciated that in case the income of the Chief Minister Relief Fund stands exempted under Section 10(23C), then, it is to be construed that theoretically the payee has paid the taxes. In other words, in a constructive manner, it is to be deemed that payee has filed the taxes on the interest payment from the assessee, otherwise the payee would have claimed refund of this amount. The ld. Assessing Officer is directed to examine the facts and circumstances and then re- adjudicate the issue in accordance with law. The observations made by us will not impair or injure the case of the ld. Assessing Officer and will not cause any prejudice to the defence/explanation of the assessee.

In the result, all the appeals of the assessee are allowed for statistical purposes. Order pronounced in the open Court on 23.08.2023.