No TDS require to be deduct on Interest payable on FDRs made in the name of the court

No Requirement to deduct TDS on Interest payable on FDRs made in the name of the Registrar General of court.

In the Honorable Delhi High Court, UCO Bank Versus DCIT


Bank accepted a Fixed Deposit (FD) in the name of Register General of this Court and issued a Fixed Deposit Receipt (FDR).

ACIT issued a show cause notice  to the petitioner bank for not deducting TDS on the interest accrued and to show cause why the petitioner bank be not treated as an assessee in default under Section 201(1)/201(1A) of the Act. The petitioner, by its reply, submitted that the said FD was in the name of Register General of this Court as a custodian and no TDS was deducted on the accrued interest because the actual beneficiary was not known as the matter was sub judice. It was also submitted that the TDS would be deducted on when payment is made to the beneficiary as may be decided by the Court. Continue reading

No TDS on award & interest thereon w.r.t. motor accident claims cases

No TDS shall be deducted on claim amount and interest on the deposits, made under the orders of the court in motor accident claims cases.

Circular 8/2011 issued on 14-10-2011 stated that when litigant is directed by the court that a specified amount be deposited in the bank directly or through the court w.r.t motor accident claims. The bank shall in accordance with the provisions of the Act, deduct TDS on the interest accruing on the above mentioned deposit(s) as per existing procedure and at the rates in force. The certificate of deduction of tax shall be issued by the bank in the name of ‘the depositor’.

In nutshell, above circular directed banks to deduct TDS on deposits made in banks w.r.t motor accident claims. Continue reading

TDS credit cannot be claim unless income not shown in ITR

No TDS credit can be claimed in returns if the corresponding income, on which TDS was deducted, not shown in returns. Further such TDS amount shall be treated as deemed to be income received by invoking section 198.

In ANDHRA PRADESH HIGH COURT, Sri Y. Rathiesh Versus The Commissioner of Income Tax-I

Assessee gave loan to the two companies. The 1st company was just showing the accumulated interest, in its account books without making actual payment to assessee. further, the 1st company deducted tax at source (TDS) on the amount of interest payable and issued TDS credit certificates, in relation thereto. whereas the second one was paying interest regularly.

In the returns filed by him, the appellant was adopting a hybrid system. While in respect of his transaction with the 1st company, he adopted cash system and with regards to the transaction with the 2nd company, he adopted the mercantile system. The result was that he did not pay the tax on the interest payable to him by the 1st company, even while he enjoyed the entire benefit of TDS credit made in that behalf. Continue reading