Bank appeals on interest levy partially allowed under Sections 201(1A) & 201(1) for assessment years. Remand pending uni registration.

The appeals by the bank against the confirmation of interest levy under Section 201(1A) and Section 201(1) of the Act for various assessment years were partially allowed for statistical purposes. The issues were remanded back to the Assessing Officer pending the decision on the university's registration application under Section 12AA. The Assessing Officer was directed to reevaluate the issues considering the Supreme Court's decision and the impact of Form 26A, with interest under Section 201(1A) to be calculated from the date of tax deductibility to the deductee's return filing date.

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Issues involved:
Appeals against confirmation of interest levy under Section 201(1A) and Section 201(1) of the Act for various assessment years.

Detailed Analysis:

1. The appeals were filed by the assessee, a bank, against the orders of the Learned CIT(A) regarding the confirmation of interest levy under Section 201(1A) and Section 201(1) of the Act for different assessment years. The issue revolved around the non-deduction of TDS under Section 194A(3) concerning deposits held by an university, VTU, which was denied exemption under Section 10(23C) of the Act. The university later applied for registration under Section 12AA of the Act, which was granted retrospectively. The bank argued that it believed TDS was not required and had been provided with Form 26A by VTU, indicating no tax deduction was necessary.

2. The Revenue contended that since VTU had not paid the entire tax for certain assessment years, the bank was liable under Section 201(1) as an assessee in default. Regarding the interest levy under Section 201(1A), it was argued that the interest was compensatory in nature, citing a Supreme Court judgment. The Revenue maintained that the bank's bonafide belief did not absolve it from the liability to pay interest under Section 201(1A). The issue of interest calculation was suggested to be reconsidered by the Assessing Officer.

3. The Authorized Representative of the assessee had no objection to the issues being sent back to the Assessing Officer for reevaluation. It was emphasized that the interest calculation under Section 201(1A) needed to be reviewed as it was allegedly incorrect. The proviso of Section 201(1A) was highlighted to suggest that interest should only be levied from the date of tax deductibility to the date of the deductee's income tax return filing.

4. The Judicial Member directed that the issues be returned to the Assessing Officer pending the CBDT's decision on VTU's registration application under Section 12AA. If the application was accepted, the bank's liabilities under Section 201(1) and Section 201(1A) would be nullified. The Assessing Officer was instructed to reevaluate the issues based on the Supreme Court's decision and the impact of Form 26A. The interest under Section 201(1A) was to be calculated from the date of tax deductibility to the deductee's return filing date to ensure fairness and compliance with tax laws.

5. Ultimately, the appeals of the assessee were partially allowed for statistical purposes, with the decision pronounced at the hearing on a specified date in 2017 in Goa.

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