TaxTMI 
TaxTMI 
2021 (9) TMI 1219
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....,72,42,976/- u/sec. 201(1) and Rs. 17,83,45,620/- u/sec. 201(1A) of the Act, while observing that section 201(1) & 201(1A) provides consequences of failure to deduct tax at source to the effect that any person who fails to deduct tax at source shall be deemed to be an Assessee in default in respect of such tax, hence, the Assessee is deemed to be an Assessee in default in respect of tax of Rs. 29,72,42,976/-. Further that as per sub-section (1A) of section 201, where a person fails to remit the tax deducted into government account within the due dates, the person responsible for deducting tax shall be liable to pay simple interest at the prescribed rate on the amount of such tax from the date on such tax is deductible to the date on which such tax is actually paid. Since the Assessee has failed to deduct the tax of Rs. 29,72,42,976/- it is also liable to pay interest u/sec. 201(1A) amounting to Rs. 17,83,45,620/- for the period from 01/04/2006 to 31/03/2011. 3. The Assessee in first round of litigation, challenged the said addition before the Ld. Commissioner and in response to the remand proceedings submitted specifically by way of written submissions dated 31/08/2012 that it i....
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....e about the type of financial corporation, we remit this issue back to the file of the AO to determine the status. In case it is found that it is a financial corporation, the exemption may be granted." 5. The Ld. AR and Ld. DR submitted that the Assessee also filed appeal against the order dated 24/08/2016 passed in ITA No. 1707/Hyd/2013 by the ITAT, before the Hon'ble high Court of Andhra Pradesh, which is pending for adjudication, however no stay is granted by the Hon'ble Court qua further proceedings in pursuance to the ITAT order. 6. As no stay was granted by the Hon'ble High Court qua further proceedings in pursuance to the ITAT Order, the AO while following the directions of the Hon'ble Tribunal, vide its order dated 14/12/2017 u/sec. 254 of the Act concluded that on verification it is found that the said APIIC does not cover u/sec. 194A(3)(iii)(b) of the Act, since it is a company incorporated for the purpose of the development of the infrastructure for industries in the state of Andhra Pradesh. Consequently, the AO made the addition of Rs. 25,93,12,825/- and Rs. 35,06,31,083/-. 7. The Assessee in 2nd round of litigation challenged the said order dated 14/12/201....
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.... Therefore, the appeal made by the appellant on this ground is allowed." 8. The Revenue Department, being aggrieved against the impugned order under challenge, preferred the instant appeal on the following grounds of appeal:- "1. The order of the ld. CIT(A) is erroneous both on facts and in law. 2. On the facts and circumstances of the case and in law, the ld. CIT(A) has failed to note that the ITAT vide it order dated 24/08/2016 adjudicated the matter and remitted the limited issue to the file of the Assessing Officer to find out whether M/s.APIIC (Andhra Pradesh Industrial Infrastructure Corporation Limited) is a 'financial corporation' or not within the meaning of section 194(3)(iii)(b) of the Act. 3. The ld. CIT(A) has erred in granting relief holding that M/s. APIIC is an exempted entity u/sec. 194A(3)(iii)(f) of the Act ignoring the fact that as per the said provisions, in order to avail the exemption from TDS, such institution should be notified by the Central Government in the Official Gazette after recording reasons whereas the Assessee company itself has admitted that there is no such notification for APIIC. 4. On the facts and circu....
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....such income to the account of the payee and the provisions of this section shall apply accordingly. (2) [Omitted by the Finance Act, 1992, w.e.f. 1-6-1992.] (3) The provisions of sub-section (1) shall not apply- (i).................................................................................................. ..................................................................................................... ................................................................... (ii) [***] (iii) to such income credited or paid to- (a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or (b) any financial corporation established by or under a Central, State or Provincial Act, or (c) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or (d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or (e) any company or co-operative society ....
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....hra Pradesh and, therefore, the provisions of section 194(A)(1) of the Act are not applicable qua interest paid/payable by the Assessee to the said organization APIIC as per section 194(3)(iii)(f) of the Act. 9.3 Considering the peculiar facts and circumstances in totality, we are in concurrence with the conclusion of the ld. Commissioner for covering the APIIC u/sec. 194A(3)(iii)(f) of the Act and to the effect as well that APIIC is an organization exempted u/sec. 11 of the Act having filed 'NIL' taxable income, is not liable to tax and, therefore, deduction of tax at source qua APIIC is not attracted. Consequently, the conclusion drawn by the ld. Commissioner, whereby deleted the addition made by the AO u/sec. 201(1) & 201(1A) of the Act is liable to be affirmed. In the result, ground No.3 filed by the Revenue Department stand dismissed. 10. Now coming to the ground No.2 wherein the Revenue Department has raised the issue that the ld. Commissioner has failed to note that the ITAT vide its order dated 24/08/2016 adjudicated the matter and remitted the limited issue to the file of the AO to find out whether APIIC is a 'financial corporation' or not within the meaning of secti....
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....he Hon'ble Allahabad high Court in the case of Pt. Sheo Nath Prasad Sharma Vs. C.I.T., 66 ITR, p.647 (All.) reminded that the law empowers the Income-tax Officer to assess the income of an Assessee and determine the tax payable thereon in accordance with law. The Hon'ble Court further observed that just because the Assessee has shown the receipt as income in his return, it does not make him liable to tax thereon. If the Income-tax Officer assess an Assessee upon a receipt, which is not taxable in law, it is always open to the Assessee to take the case in appeal or in revision thereafter. Further the Assessee is within his rights in requiring the appellate or the revisional authority to examine the validity of the assessment to tax a receipt which, though admitted by him, is not taxable in law. 10.8 From the verdicts of the Apex Court and High Court, it is clear that the very purpose of income tax proceedings is to correctly assess the tax liability of an Assessee in accordance with law, may be the Assessee has claimed mistakenly and/or inadvertently and/or not claimed under proper provisions of law as happened in this case. Further the legal as well as factual additional/new gro....