The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has ruled in response to an appeal that if Income Tax Form 15G/ 15H is submitted by the assessee before year-end, no TDS default can be levied on interest payments.
The ITAT Chennai bench has made this observation where the assessee filed an appeal with the Chennai ITAT against the judgement of the Commissioner of Income Tax (Appeals), Madurai, dated 30.01.2020, about the assessment year 2013–14.
According to the summary of the presented case, a TDS inspection was carried out on the premises of M/s. Tamilnadu Mercantile Bank Ltd. Virudhunagar, on July 7, 2013, which is the issue of the assessee, in which he claims that the Commissioner of Income-tax (Appeals), Madurai, made a mistake in partially allowing the appeal for the Assessment Year 2013–14.
During the inspection, it was observed that the deductor bank had not deducted TDS from 22 payees whose interest payments were more than Rs. 2 lakhs. Concerning that, the AO detected the total TDS deductible, which came to Rs. 7,00,072/-. The assessee said that concerning the senior citizens, banks will deduct TDS from payments made, but this will be reversed if parties submit Form Nos. 15G/15H.
When TDS has been deducted, it cannot be reversed or kept; it may only be remitted to the account of the Central government, according to the AO, who rejected the deductor’s plea saying that they had received Form Nos. 15G/15H in this case. Therefore, he calculated the short TDS deduction regarding interest payment depositors amount of Rs. 11,43,976/-.
The discontented assessee brought the issue to the First Appellate Authority with an appeal. The CIT (A)-1 in Madurai upheld the perspective of the AO on the matter of filing form No. 15G/15H. The assessee then brought the case before the Tribunal in a subsequent appeal, and the ITAT ‘D’ Bench in Chennai instructed the AO to determine whether the receivers have any taxable income or not in light of Form Nos.15G/15H in its order in ITA No. 3093/Chny/2014, dated February 19, 2016.
Under the Tribunal’s ruling, the AO verified Form Nos. 15G/15H filed by the assessee and provided relief regarding short deduction of TDS totalling Rs. 3,23,816/- in all cases where the assessee had presented applicable Forms. The assessee, however, was unable to provide the required information for the balance of Rs. 4,43,904/-, thus he calculated a short TDS deduction.
The assessee appealed the case to the CIT(A), who upheld the AO’s additions on the basis that the assessee did not have enough justification for the non-deduction of TDS and the reversal of TDS on interest payments. The assessee, at present, in an appeal before the Chennai ITAT said they are aggrieved by this CIT(A) order.
The AR representing the assessee, Mr. G. Sekar, FCA, stated that the bank had deducted TDS in case of interest payments exceeding the prescribed limit, but in case of Form Nos. 15G/15H submitted by the parties, the TDS deduction has been reversed. This was also added in front of the AO.
In the submission of the AR, the AO ignored the information presented by the assessee and computed a short TDS deduction on the basis that there is no regulation to reverse TDS deducted upon submission of the relevant Forms.
On the other hand, Mr. AR.V. Sreenivasan, Addl. CIT, the DR on behalf of the Revenue, questioned that because the assessee was unable to provide the essential details regarding the TDS deduction has been reversed. So the issue should be put on hold and added to the AO’s file for further verification.
Hearing the opposing contentions of both sides, as well as perusing the materials available on record, the Chennai ITAT observed: “We 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 the banking sector that wherever senior citizens submit declarations in Form Nos.15G/15H, TDS is not deducted on interest payments even if such payment is more than the threshold limit. In this case, there is no dispute with regard to the fact that the assessee has deducted TDS wherever interest payments exceed the 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.”
“In our considered view, when the assessee has submitted the 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 the 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 assessee”, the Coram of Mahavir Singh, the Vice – President and Manjunatha G, the Accountant Member added. Finally, the ITAT held: “Thus, we set aside the order of the Ld.CIT(A) and restore the issue to the file of the AO and direct the AO to re-verify the claim of the assessee and decide the issue under the law.”
|Case Title||M/s.Tamilnadu Mercantile Bank Ltd. Vs. The Income Tax Officer|
|Appellant by||Mr. G.Sekar, FCA|
|Respondent by||Mr. AR.V.Sreenivasan|
|Chennai ITAT||Read Order|