Clipped from: https://www.taxscan.in/no-tds-default-on-interest-payments-if-form-15g-15h-submitted-by-assessee-before-year-end-itat/272400/
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has recently, in an appeal filed before it, held that no TDS default can me imposed on interest payments, if Income Tax Form 15G/ 15H is submitted by the assessee before yearтАУend.
The aforesaid observation was made by the Chennai ITAT, when an appeal was preferred before it by the assessee, as directed against the order of the Commissioner of Income Tax (Appeals), Madurai, dated 30.01.2020, pertaining to the assessment year 2013-14.
The ground of the assesseeтАЩs appeal being that the Commissioner of Income-tax (Appeals), Madurai, has erred in partly allowing the Appeal for the Assessment Year 2013-14, the brief facts of the case were that a TDS inspection was conducted in the premise of M/s.Tamilnadu Mercantile Bank Ltd., Virudhunagar, on 07.06.2013.
During the course of inspection, it was noticed that, in respect of 22 payees, the interest payment was more than Rs.2 lakhs, on which, the deductor bank had not deducted TDS. And based on the same, the AO worked out the total TDS deductible amounting to Rs.7,00,072/-. The assessee explained that in respect of senior citizens, the bank will deduct TDS as and when the payment is made, however that, when parties submit Form Nos.15G/15H, the same is reversed.
The AO did not accept the plea of the deductor having received Form Nos.15G/15H in those cases, and was of the view that once TDS has been deducted, it cannot be reversed or retained, but it can only be remitted to the account of the Central government. And therefore, he computed the short deduction of TDS in respect of interest payment to depositors amounting to Rs.11,43,976/-.
Being aggrieved, the assessee carried the matter in appeal before the First Appellate Authority, and the CIT(A)-1, Madurai, upheld the view of the AO on the issue of filing of Form Nos.15G/15H. Thereafter, the assessee carried the matter in further appeal before the Tribunal and the ITAT тАШDтАЩ Bench, Chennai, in its order in ITA No.3093/Chny/2014, dated 19.02.2016, directed the AO to examine whether the recipients have any taxable income or not in light of Form Nos.15G/15H.
The AO in compliance with the order of the Tribunal verified Form Nos.15G/15H filed by the assessee and allowed relief in respect of short deduction of TDS to the tune of Rs.3,23,816/- wherever the assessee had submitted relevant Forms. However, in respect of balance amount of Rs.4,43,904/-, the assessee could not submit necessary details, and therefore, he computed short deduction of TDS.
The assessee carried the matter in appeal before the CIT(A), who in turn confirmed the additions made by the AO on the ground that the assessee could not justify non-deduction of TDS and reversal of TDS on interest payments. And, it is being aggrieved by this order of the CIT(A), that the assessee is presently in appeal before the Chennai ITAT.
With Mr. G.Sekar, FCA , the AR for the assessee having submitted that the bank had deducted TDS wherever interest payment exceeded prescribed limit, but as and when parties submitted Form Nos.15G/15H, then, TDS deduction has been reversed, he added that this fact has been explained to the AO.
The AR further submitted that; however, the AO had ignored the details filed by the assessee and computed short deduction of TDS only on the ground that there is no provision to reverse TDS deducted on submission of relevant Forms.
On the other hand, Mr. AR.V. Sreenivasan, Addl. CIT, the DR on behalf of the Revenue, submitted that the assessee could not explain with necessary details why TDS deduction has been reversed, and therefore that the matter may be set aside to the file of the AO for further verification.
Hearing the opposing contentions of both sides, as well as perusing the materials available on record, the Chennai ITAT observed:
тАЬWe have heard both the parties, perused the materials available on record and gone through orders of the authorities below. It is a common practice in banking sector that wherever senior citizens submit declaration in Form Nos.15G/15H, TDS is not deducted on interest payments even if such payment is in excess of threshold limit. In this case, there is no dispute with regard to the fact that the assessee has deducted TDS wherever interest payments exceed threshold limit, but reversed such TDS deduction on interest payment as and when the parties submit Form Nos.15G/15H within the same financial year.тАЭ
тАЬIn our considered view, when the assessee has submitted necessary declaration in Form Nos.15G/15H for non-deduction of TDS and also for reversal of TDS deduction on interest payment, then, in our considered view, the AO ought to have accepted the claim of the assessee, because, as per law, if relevant declaration in Form Nos.15G/15H is submitted before the end of the relevant financial year, then, the question of deduction of TDS on interest payments does not arise. Therefore, we are of the considered view that the AO is required to reexamine the claim of the assessee in light of relevant Forms submitted by the assesseeтАЭ, the Coram of Mahavir Singh, the Vice тАУ President and Manjunatha G, the Accountant Member added.
Finally, the ITAT held:
тАЬThus, we set aside the order of the Ld.CIT(A) and restore the issue back to the file of the AO and direct the AO to re-verify the claim of the assessee and decide the issue in accordance with law.тАЭTo Read the full text of the Order CLICK HERE
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M/s.Tamilnadu Mercantile Bank Ltd vs Income Tax Officer
CITATION: 2023 TAXSCAN (ITAT) 826
Counsel for Appellant: Mr. G.Sekar
Counsel for Respondent: Mr. AR.V.Sreenivasan
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