TaxTMI 
TaxTMI 
2016 (8) TMI 697
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....acts as obtaining in ITA no. 4216/Del/2015 in the case of Principal Officer, Employees Provident Fund Organization, A-2C, Sector-24, Noida. 4. Brief facts, as obtaining from the order passed u/s 201(1)/201(1A), passed by the DCIT, TDS, Noida dated 31.3.2014 are that: 4.1. It came to the notice of the department that various officers of the Employees Provident Fund (hereinafter referred to as EPF), had been allowing settlement as also withdrawal of accumulated balances due to various employees/ subscribers without making deduction of tax thereon as per provisions of the Income-tax Act, 1961. He observed that taxable income accruing to an employee on account of settlement or withdrawal of accumulated balance was governed by various variables laid down in Rule 8 & 9 of Part A of the ivTH Schedule to the Income Tax Act. 4.2. After referring to rules 8,9 & 10 of Part A of Schedule IV, the AO pointed out that the trustees of a recognized provident fund (hereinafter referred to as "RPF"), or any person authorized by the regulation of the fund to make payment of accumulated balances due to employees, should have, in cases where sub-rule(1) of Rule 8 applied at the time of accumula....
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....ayable by the assessee u/s 201(1)/201(1A) of the Income- tax Act, as under: Financial year Assessment year Short/ non deduction of TDS u/s 201(Rs.) Interest u/s 201(1A)(Rs.) Total tax liability 2010-11 2011-12 33,70,09,802 14,52,25,049 48,22,34,851 2011-12 2012-13 20,87,17,439 6,60,62,332 27,47,79,771 2012-13 2013-14 7,81,35,967 1,56,36,475 9,37,72,442 4.5. Before ld. CIT(A) the assessee raised following contentions: (1) The assessee was not provided adequate opportunity and the order passed by DCIT was in gross violation of principles of natural justice. (2) On correct interpretation of Section 2(38) it is clear that every statutorily recognized provided fund is recognized provided fund, but every recognized provided fund is not statutorily recognized. (3) The assessee's EPF was governed by the provisions of section 10(11) of the I.T. Act and thus, such payments to the employee were exempt from income-tax, having no liability for TDS. To bring home this point it was submitted that section 10(11) of the I.T. Act provides for income, which do not form part of the total income and were exempt un....
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...., 1952. The assessee had not deducted tax at any point of time right from the enactment of the statute. (b) The assessee's objections filed before AO were not disposed of. 4.7. Ld. CIT(A) after considewring the assessee's detailed submissions recorded following findings: (i) Assessee organization (EPFO) is a recognized provident Fund (RPF), as defined in section 2(38) of the I.T. Act. (ii) As per the provisions contained in section 10(12) of the Income- tax act, the taxability of accumulated balance due and becoming payable to an employee participating in a recognized provident fund to be governed by Rule 8 of Part A of Schedule IV. (iii) The assessee's contention that it is a statutory provident fund covered by exemption allowed u/s 10(11), factually and legally not tenable. He pointed out that the statutory provident funds are those which are set up under the provisions of the Provident Fund Act, 1925 and the fund is maintained by the government and Semi- government organization, local authorities, Railway, Universities and recognized educational institutions. Therefore, the assessee EPFO is not a statutory provident fund as the same had not....
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.... of sums by the persons. He submitted that no TDS could be made from withdrawals as Principal Officer was obliged to make full payment. 5.2. Ld. counsel further referred to section 10(11) of the Income-tax Act, 1961, which was not in force when Employees Provident Fund Act, 1952 was enacted. He submitted that after enactment of Income-tax Act, 1961, section 10(11) applied even upon Employees Provident Fund Act, 1952, because provisions of section 10(11) specifically mentioned the Provident Fund Act, 1925 or any other provident fund, notified by the Central Government. He submitted that since the Employees Provident Fund Act, 1952 is a fund, which was set up by the Central Government in 1952, therefore, it was notified in 1952 itself and its further notification under the Income-tax Act, 1961 was not warranted. He further pointed out that the Public Provident Fund was set up by the Central Government through Public Provident Fund, which was notified by the Central Government on 2.7.1968. The Public Provident Fund was set up by the Central Government in 1968. Therefore, it was notified separately. Further, Employees Provident Fund Act, 1952 was notified prior to the enactment of I....
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....has been made before 5 years of rendering of continuous service. He further submitted that if the payees had paid the tax then assessee cannot be treated as assessee in default. 6. Per contra ld. CIT(DR) submitted that scheme of the Income-tax Act, 1961 deals with two types of provident funds, namely - (1) Provident fund to which provisions of PF Act 1925 are applicable or any other provident fund set up by the Central Government and notified for the purpose of section 10(11) of the Income-tax Act; and (2) recognized provident fund which includes provident fund established under a scheme framed under the Employees Provident Fund Act, 1952. 6.1. Ld. CIT(DR) submitted that there is no provision under the scheme of GPF or PPF, which is under 1925 Act, for premature withdrawal. Therefore, any payment from GPF or PPF is exempt from applicability of Income-tax as per provisions of section 10(11). However, premature withdrawals are allowed from recognized provident fund. Certain categories of such withdrawals, from recognized provident funds, are exempt by virtue of provisions of section 10(12) but certain premature withdrawals are not covered therein, accordingly taxable. 6.2. L....
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....eclared by him in such return of income; and (iv) The deductor furnishes a certificate from CA in form 26A to the effect of fulfillment of preceding three conditions. 6.7. As regards the assessee's plea that it was impossible for them to comply with the provisions, ld. CIT(DR) submitted that law contemplates that whenever there is doubt, the deductor can deduct tax at maximum marginal rate and issue TDS certificate. The deductee has option to get a certificate from the AO to the effect of deducting TDS at lower rate or claiming the return by filing return of income. In this regard ld. DR placed reliance on the decision of ITAT Guwahati Bench in the case of Arihant Invest Vs. ITO 61 Taxmnn.com 16. 7. We have considered rival submissions and have perused the record of the case. Admittedly the AO determined the liability u/s 201(1) and 201(1A) on the basis of information furnished by assessee in regard to the payments made out of accumulated balances in the EPF a/c. In the absence of complete information the AO estimated that 50% of the withdrawals were made before rendering five years of continuous service and, therefore, in view of Rule 8(1) the said withdrawals were ....
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.... age of 55 years at the time of termination of his service, shall also be entitled to withdraw the full amount standing to his credit in the Fund if he attains the age of 55 years before the payment is authorised;] [(b) on retirement on account of permanent and total incapacity for work due to bodily or mental infirmity duly certified by the medical officer of the establishment or where an establishment has no regular medical officer, by a registered medical practitioner designated by the establishment;] (c) immediately before migration from India for permanent settlement abroad [or for taking employment abroad]; [(d) on termination of service in the case of mass or individual retrenchment: [(dd) on termination of service under a voluntary scheme of retirement framed by the employer and the employees under a mutual agreement specifying, inter alia, that notwithstanding the provisions contained in sub-clause (a) of clause (00) of section 2 of the Industrial Disputes Act, 1947, excluding voluntary retirement from the scope of definition of "retrenchment" such voluntary retirements shall for the purpose be treated as retrenchments by mutual....
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....ing half shall be debited to the member's account; (iv) A member suffering from tuberculosis or leprosy 3[ or cancer ,even if contracted after leaving the service of an establishment on grounds of illness but before payment has been authorised, shall be deemed to have been permanently and totally incapacitated for work.] [(2) In cases other than those specified in sub-paragraph (I), the Central Board, or where so authorised by the Central Board, the Commissioner or where so authorised by the Commissioner, any officer subordinate to him, may permit a member to withdraw the full amount standing to his credit in the fund on ceasing to be an employee in any establishment to which the Act applies provided that he has not been employed in any factory or other establishment to which the Act applies for a continuous period of not less than two months immediately preceding the date on which he makes an application for withdrawal. The requirement of two months waiting period shall not, however, apply in cases of female members resigning from the service of the establishment for the purpose of getting married.] (5) Any member who withdraws the amount due to him ....
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....able force in the submission of ld. CIT(DR) on this count. 7.6. In course of his submissions ld. counsel, inter alia, submitted that when section 2(38) came into force Employees Provident Fund and Miscellaneous Provisions Act, 1952 was recognized as recognized Provident Fund. Inadvertently amendment in section 9 of Employees Provident Fund and Miscellaneous Provisions Act, 1952 could not be made replacing '1922' by '1961'. From this plea it is evident that ld. counsel wants the Tribunal to read something in the Act which is not there. Be that as it may, when Fourth Schedule has been incorporated in the Income-tax Act, 1961, dealing with cases of recognized provident fund, the Tribunal cannot go beyond that. The submission of ld. counsel primarily revolves around a case of casus omisus but the court cannot fill the gap and read '1961' instead of '1922' in the Employees Provident Fund and Miscellaneous Provisions Act, 1952, particularly when the said provision is not under consideration before us. Be that as it may, Tribunal is not empowered with such powers. Therefore, we hold that the provisions of section 10(11) are not applicable to the present proceedings but Schedule IV to t....