TaxTMI 
TaxTMI 
2014 (5) TMI 1041
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....paid to the depositors. 4. The facts relating to the said issue are stated in brief. Both these assessees are branches of Ernakulam District Co-op Bank Ltd. The first one is "Mattancherry" branch and the other one is "Kalamasery" branch. The Department carried out a survey operation under section 133A of the Act in the main branch of the bank. During the course of survey operations, it was noticed that the bank has failed to deduct tax at source under section 194A of the Act on the interest paid/credited to various depositors. Accordingly, the Income-tax Officer (TDS) issued a show-cause notice to these two branches of the bank requesting these assessees to explain as to why the bank manager of the branch should not be treated as assessees-in-default under section 201(1) of the Act. In response thereto, it was submitted by the assessees that they did not deduct tax at source from the interest paid to the depositors, since the depositors have furnished declarations in Form 15G/ 15H in terms of section 197A(1A) of the Act. The Income-tax Officer (I.T.O) noticed that the assessee is required to furnish a copy of the abovesaid declaration to the Chief Commissioner or Commissioner in....
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....income is to be included in computing the total income would be nil. He submitted that the Form 15H and Form 15G are the two forms for furnishing the declaration that are prescribed under section 197A(1A) of the Act and accordingly the depositors have furnished those forms to the assessee. The learned authorised representative further submitted that the assessee, under the provisions of section 197A(1A), is prohibited from deducting tax at source, if the recipient of interest furnishes the above said forms. Accordingly, he submitted that the assessee did not deduct tax at source as per the mandate of the provisions of section 197A(1A) of the Act in the case of persons who furnished the prescribed forms. In this regard, the learned authorised representative placed reliance on the decision of the hon'ble Gujarat High Court in the case of CIT v. Valibhai Khanbhai Mankad (Tax Appeal No. 1182 of 2011 dated October 1, 2012) [2013] 1 ITR-OL 405 (Guj) wherein the hon'ble Gujarat High Court had observed as under (page 409) : "7. The exclusion provided in sub-section (3) of section 194C from the liability to ....
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....lso submitted that the Finance (No. 2) Act, 2009 has inserted a new section, namely 206AA in the Income-tax Act. According to sub-section (2) of the abovesaid section, the declaration filed in Form 15G/15H filed in terms of section 197A shall not be valid, unless the person furnishes his permanent account number in such declaration. The learned Departmental representative further submitted that the defect noticed by the Income-tax Officer may also relate to the defect of non-furnishing of permanent account number. Accordingly he submitted that the validity of Form 15H and Form 15G received by these assessees also require verification. 9. We have heard the rival contentions and carefully perused the record. As submitted by the learned Departmental representative, the Income-tax Officer has observed in the case of Mattancherry branch that most of the forms furnished by the depositors were found to be defective. We notice that the assessees are required to file copies of declarations furnished by the depositors with the Chief Commissioner or Commissioner in terms of rule 29C(3) of the Income tax Rules. If the copies of declarations are furnished to the Chief Commissioner or Commiss....
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....ng a company or a firm), if such person furnishes to the person responsible for paying any income of the nature referred to in section 193 or sec tion 194A or section 194K, as the case may be, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil." A plain reading of section 197A(1A) shows that the said provision overrides the provisions of section 194A if the modalities prescribed in section 197A(1A) are complied with. The section further states that the person responsible for paying any income of the nature referred to in section 194 or section 194A or section 194K shall not deduct tax under any of the abovesaid sections in the case of a person, if such person furnishes a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner. Hence, it was contended by the learned authorised representative that the assessee cannot deduct tax at source, if the recipient of the interest amount furnishes declaration in the prescribed form. 13. It was ....