SBI wins over Rs. 1,000 cr income tax case
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The Income Tax Appellate Tribunal has held that State Bank of India was not required to deduct any tax at source (TDS) on over Rs. 11,000 crore in the Site Restoration Fund (SRF) account maintained by Oil and Natural Gas Corporation (ONGC) from 2002.
Total stakes involved in his case including tax, interest and penalty in all the assessment years from 2003 could well exceed Rs.1, 000 crores. As a sequel to this verdict, SBI would be entitled to receive refund of whatever amount had been coercively recovered by the Income Tax Department.
SRF account was opened by ONGC with SBI Dehradun branch in 2002. SBI did not deduct any tax at source on interest credited on these deposits from 2002 and the corpus of the SRF account swelled into thousands of crores including interest.
In February 2013 Income Tax Department initiated proceedings against SBI on account of TDS default for several assessment years. While some assessments were completed, assessments for several years were still pending. The assessing officer observed that the assessee/ deductor had not deducted TDS on the above payments under Section 194A of the I.T. Act. The dispute whether TDS should be deducted or not for the deposits maintained in the SRF account was taken to the ITAT by way of appeals by both the SBI and the department.
The ITAT comprising C.M. Garg, Judicial Member and S.V. Mehrotra, Accountant Member, in its order said “it is evident that there is no fixed period prescribed in regard to these deposits in SRF account and that an assessee has to give notice to the bank for making withdrawal from this deposit account. The withdrawal is to be made as per requirement of subsection (3) to section 33ABA. Therefore, it cannot be said to be for a fixed period.”
Agreeing with the submissions of senior counsel Bishwajit Bhattacharya, appearing for the SBI, the ITAT pointed out that there was no maturity period and, therefore, it was not ‘time deposit’. Therefore, if a deposit was not in the nature of time deposit, then it was not amenable to the provisions of section 194A of the IT Act. Further not even a single paisa had been withdrawn for the last 12 years from the corpus of the fund that had now swelled approximately to Rs. 11,000 crores. This was assessable as income from other sources and not as business income and hence not liable for TDS, the Tribunal held. It dismissed the department’s appeal and allowed the one filed by SBI. (The Hindu)
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