2022 (9) TMI 404

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....ncome-tax Act, 1961 [the Act] and levy of interest u/s. 201(1A) of the Act on the following grounds :- (a) Ground No 1 - The order passed by the Ld. AO is without jurisdiction on the facts and circumstances of the case and bad in law. (b) Ground No. 2: The order passed by the Ld. AO is beyond reasonable time period and hence is barred by time on the facts and circumstances of the case. (c) Ground No. 3: The order passed by the Ld. AO under Section 201 of the Act is bad in law in as much as the provisions of Section 201 of the Act does not levy any charge on the Assessee to pay the tax at source not deducted but merely treats him as an "assessee in default" and the order is passed not in consonance and read with the provisions of Sec 1....

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....012 declaring a total loss of Rs.2,76,83,545. The return was assessed u/s. 143(3) on a total loss of Rs.2,29,34,850, u/s. 153A on 6.9.2016 on a total loss of Rs.2,34,07,107 and u/s. 153C of the Act determining a total loss of Rs.2,34,07,107. In all the returns and assessments an amount of Rs.36,16,438 was added as disallowance u/s. 40(a)(ia) for non-deduction of tax at source u/s. 194A. 4. The AO noticed that the assessee had debited an amount of Rs.36,16,438 towards finance cost as interest accrued against Compulsory Convertible Debentures [CCDs] on which tax was not deducted. A notice u/s. 201(1) & 201(1A) of the Act dated 5.6.2017 was issued to the assessee asking to show cause why it should not be held as an assessee in default u/s 201....

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....stor. He further submitted that though the interest was provided, the assessee and the lender came to an understanding that there will be an interest moratorium until the Tech Park for which the funds were borrowed becomes fully operational, based on which the interest was subsequently reversed at the beginning of the next financial year. 7. The ld. AR drew our attention to the interest waiver letter given by the lender in this regard (pg. 32 of PB). It was also submitted that there was no subsequent payment of interest by the assessee and the payee did not receive any interest from the assessee in order to attract TDS provisions. In this regard the ld AR relied on the decision of the coordinate Bench of the Tribunal in the case of Biocon ....

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.... In the case under consideration, as discussed supra, the appellant has accepted the order of the AO as passed under Section 143(3) of the Act and as such the ratio of the above decision of ITAT applies to its case. In the case of Solar Automobiles India (P.) Ltd. v. Deputy Commissioner of Income-tax (TDS), Circle 18(2) [2012] 17 taxmann.com (Karnataka), the jurisdictional High Court held that once the interest was credited to the relevant account in the books, the deductor was liable to deduct tax at source even if the interest was not actually paid to the creditors due to losses. " 9. We have considered the rival submissions and perused the material on record. As per the terms of the debenture agreement, the assessee is liable to pay int....