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February 2009

Liability of Trust : Assessee, a provident fund trust of employees : Assessable in the status of individual : Not liable to TDS u/s.194A

By K. B. Bhujle, Advocate
Reading Time 2 mins

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55 TDS : Liability of Trust : S. 194A of
Income-tax Act, 1961 : A.Ys. 2002-03 to 2005-06 : Assessee Corporation, a
provident fund trust of employees : Assessable in the status of individual : Not
liable to deduct tax at source u/s.194A.



[CIT v. Food Corporation of India Contributory Provident
Fund Trust, 218 CTR 625 (Del.)]

The assessee is a provident fund trust of the employees.
The Assessing Officer found that the amounts being credited to the account of
the ex-employees after cessation of employment, had the character of interest.
The AO held the assessee was required to deduct tax at source u/s.194A of the
Income-tax Act, 1961 on the interest so credited. The assessee having failed
to do so was treated as being in default and demands were raised u/s.201(1) &
201(1A) of the Act. The Tribunal held that the assessee being assessed to tax
in the status of an individual, was not liable to deduct tax at source
u/s.194A and accordingly deleted the demands.

 

On appeal by the Revenue, the Delhi Court upheld the
decision of the Tribunal and held as under :

“Assessee corporation, a provident fund trust of employees
created after seeking exemption u/s. 16 of the Employees Provident Fund Act,
1952, being assessable in the status of individual, was not liable to deduct
tax at source u/s.194A while crediting amounts to the account of
ex-employees.”

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