2015 (12) TMI 184

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.... of tax at source. 2. Briefly stated the facts are, the assessee is a banking company. On verifying the TDS return filed by the assessee for the F.Y. 2007-08, the Assessing Officer found that in the second quarter of the relevant F.Y., the assessee has made short deduction of tax to the extent of Rs. 23,69,430. He, therefore, issued show cause notice to the assessee to reconcile the same. However, as observed by the Assessing Officer, as the assessee failed to rectify the defect in terms with the show cause notice, the Assessing Officer passed an order on 8th January 2011, raising a demand of Rs. 23,69,403, on account of short deduction of tax and levied interest thereon under section 201(1A) of an amount of Rs. 9,64,420. He further levi....

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....Motors Ltd., a corporate deductee and the rate at which tax should have been deducted is 20.60% raised a demand on the assessee. It was submitted by the assessee that as per Explanation to section 191, a deductor would be treated as an assessee in default under section 201(1) of the Act if the deductee has also failed to pay such tax directly. It was submitted by the assessee that since the deductee Tata Motors Ltd. has declared interest income received from the assessee in its return of income for the relevant assessment year and paid tax the assessee cannot be treated as an assessee in default under section 201(1) of the Act. In support of such contention, the assessee relied upon the decision of the Hon'ble Supreme Court in Hindustan....

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....ted that the interest payments on which short deduction of tax is alleged by the Assessing Officer was made to a trust whose beneficiary is Tata Motors Ltd. It was submitted that though, assessee was required to deduct tax @ 20.60% considering the corporate status of the beneficiary but that fact was not known to assessee at the time of making payment. It was submitted, as the deductee has declared the interest income received from the assessee in the return of income filed the assessee cannot be treated as an assessee in default in view of the decision of the Hon'ble Supreme Court in Hindustan Cocacola Beverages Pvt. Ltd. (supra). It was further submitted, to prove such fact, assessee has also furnished the confirmation from Tata Motor....

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....at the deductee has admitted that interest payment of Rs. 1,87,33,461, received from the assessee bank was offered to tax in the return of income filed for the assessment year 2008-09. In the said confirmation, Tata Motors Ltd., also furnished their assessment particulars. Thus, from the confirmation letter of the deductee, it is very much clear that the interest payment on which short deduction was alleged was declared as income by deductee in its return of income filed for the assessment year 2008-09. Thus, it pre-supposes that tax due on such income returned must also have been paid by the deductee. Therefore, the learned Commissioner (Appeals), in our view, was not justified in rejecting assessee's claim on the observation that whet....