2018 (3) TMI 1566

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....d are being disposed of by this consolidated order. 3. Identical grounds are raised in these appeals which read as follows: i) The order of the Income Tax Officer (TDS), Kannur is against the facts and circumstances of the appellant's case and hence opposed to the provisions of the Income Tax Act, 1961. ii) The Learned Income Tax Officer (TDS) ought to have considered the fact that the appellant is contributing to a provident fund recognized by the Government of Kerala and as per the guidelines issued by the State Co-operative Department. iii) Without prejudice to the above, the appellant is not liable to deduct tax on the interest accrued on PF deposits of the employees' u/s. 192 of the Income Tax act as secti....

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....ssed the appeals. 6. Aggrieved by the order of the CIT(A), the assessee has preferred the present appeals before the Tribunal. 7. The Ld. Counsel for the assessee fairly admitted as regards the issue of contributions to unrecognized PF, the Tribunal in the case of Kodakkad Service Co-operative Bank Ltd. vs. Income Tax Officer(TDS) in ITA Nos. 335 & 336/coch/2016 dated 03/03/2017 had decided the issue against the assessee. 7.1 As regards the issue of deduction of interest on PF deposits for the purpose of TDS u/s. 192 of the Act, it was submitted that as per the provisions of sec. 192 sub-sec. (2B) of the Act, it is for the assessee's employee to report to the assessee-employer for any income that he is in receipt of for inclusion i....

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....The Assessing Officer held that the contributions to Provident Fund are not recognized u/s. 2(38) of the Act and were not eligible for deduction u/s. 80C of the Act, hence, there were short deductions u/s. 192 of the Act. Further, it was held by the Assessing Officer that interest on the Provident Fund was liable to be taxed under the head 'Income from other sources'. To understand the issue in a correct perspective, the relevant provisions namely, sections 80C (2) (vi), 2(38) and 192 of the I.T. Act need to be analysed. "80C(1) In computing the total income of an assessee, being an Individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of this section, the whole of the amo....

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....oyees Provident Fund Act, 1952 (19 of 1952). That being the case, admittedly, the assessees' contributions to the Provident Fund are not recognized Provident Fund u/s. 2(38) of the Act and the contributions are not entitled to deduction u/s. 80C (2)(vi) of the I.T. Act. If the contributions are not eligible for deduction u/s. 80C of the Act, there are resultant short deductions of tax u/s. 192 of the Act. Consequently, the interest accrued on the Provident Fund is also liable to be taxed as 'Income from other sources'. 9.4 Section 192(1) of the Income Tax Act states that "Any person responsible for paying any income chargeable under the head "Salaries" shall, at the time of payment, deduct income tax on the amount payable at the av....