ITO vs. Zion IFMR Capital 2016

Parties Involved

Facts Summary

The assessee is a Securitization Trust controlled by IDBI Trusteeship Ltd. and engaged in raising funds through issuance of pass through certificates. The assessee paid Rs.8,73,92,849/- to the originator under the head Excess Interest Spread (EIS) without deducting TDS as per section 194LBC of the Act. The Assessing Officer held the assessee to be 'assessee in default' for non-deduction of TDS on the EIS paid to the Originator. The assessee appealed to the Commissioner of Income Tax (Appeals) who allowed the appeal, holding that the assessee was not liable to deduct TDS and was not 'an assessee in default'. The Revenue appealed to the Income Tax Appellate Tribunal, challenging the order of the Commissioner of Income Tax (Appeals).…

Legal Issues

• 1. Whether the ld. CIT(A) is justified in holding that Excess Interest Spread (EIS) amount paid during F.Y. 2016-17 cannot be held to be at part with income paid by the assessee trust to its investors.
• 2. Whether the ld. CIT(A) is justified in holding that the assessee is not liable to deduct TDS u/s. 194LBC of the I. T. Act, 1961, on the payment made to the originator by way of excess interest spread (EIS).
• 3. Whether the ld. CIT(A) is justified in holding that the assessee cannot be deemed to be an assessee in default for non-deduction of tax at source on sum of Rs.8,73,92,849/- being Excess Interest Spread (EIS) paid to the originator.
• 4. Whether the ld. CIT(A) is justified in not appreciating the findings made by the ld. A.O. in the order u/s. 201/201(1A) of the I. T. Act, 1961 regarding assessee’s TDS liability u/s. 194LBC of the I. T. Act, 1961.

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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