2014 (1) TMI 590 - AT - Income Tax

Tribunal upholds CIT(A) decision on interest charge deletion under Income Tax Act

The Tribunal dismissed all five appeals filed by the revenue, upholding the decision of the Ld CIT(A) to delete the interest charged u/s 201(1A) of the ... Demand of Interest u/s 201(1A) of the Act – Belated payment of TDS made – Held that:- The amount was deposited in a separate bank account as directed by the competent jurisdictional High Court - The assessee having acted under the court order, the Ld CIT(A) has rightly deleted the interest – Decided against Revenue Issues:1. Dispute over interest demand u/s 201(1A) of the Income Tax Act.2. Validity of depositing TDS amount in a separate bank account as per High Court order.3. Applicability of High Court order over income tax provisions.Analysis:Issue 1: Dispute over interest demand u/s 201(1A) of the Income Tax ActThe appeals were filed by the revenue against the order of Ld CIT(A) dated 15.6.2012, contesting the contention that no interest could be demanded u/s 201(1A) of the Act. The Assessing Officer charged interest, which the Ld CIT(A) deleted based on the argument that the assessee was restrained by the Hon'ble Calcutta High Court from depositing the TDS amount in the government account. The Ld CIT(A) upheld this reasoning, citing the specific order of the Hon'ble High Court and the fact that the amount was deposited in a separate bank account as directed, not constituting a default under section 201 of the Act.Issue 2: Validity of depositing TDS amount in a separate bank account as per High Court orderThe assessee, a Public Sector Undertaking, deposited the TDS amount in a separate bank account as per the interim order of the Hon'ble Calcutta High Court, following a dispute with the employees association. The Assessing Officer insisted that the TDS should have been deposited with the Income Tax Department, leading to the imposition of interest. However, the Ld CIT(A) and the Tribunal recognized the validity of depositing the amount in the separate account as directed by the High Court, thereby justifying the deletion of interest charges.Issue 3: Applicability of High Court order over income tax provisionsThe contention of the revenue was that the High Court order directing the deposit of TDS amount in a separate bank account did not override the income tax provisions mandating deposit with the Income Tax Department. However, both the Ld CIT(A) and the Tribunal emphasized that the assessee acted under the court order, which was enforceable and binding, thus justifying the deletion of interest charges imposed by the Assessing Officer. The Tribunal also referred to a previous order in a similar case where relief was granted to the assessee under comparable circumstances.In conclusion, the Tribunal dismissed all five appeals filed by the revenue, upholding the decision of the Ld CIT(A) to delete the interest charged u/s 201(1A) of the Income Tax Act based on the valid reasons of compliance with the High Court order. The judgment highlighted the significance of court orders in determining the applicability of income tax provisions and the actions of the assessee in response to legal directives.