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Tds deducted but not deposited due to order of high court

kiran (service) (51 Points)

06 December 2012

Facts of case:- TDS has been deducted by employer(nationalized bank) from salary of it's employees. However the same has not been deposited beacuse there was an Order of Madras High Court' which granted a stay on deposit of such TDS. (i guess Order of high court is passed in year 2010/2011). Now IT assessment has started for such bank employees; & Income Tax dept has started sending Notice of Demand, as the TDS is not reflecting in 26AS. when checked with respective employer (i.e. bank), they are of the opinion that such TDS cannot be deposited due to order of madras high court. Plz advice what to do in such case? any further updates on the order of 'Madras High Court case'? (since it had just granted a temporary stay on deposit of TDS)

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Akanksha Jain (Article) (690 Points)
Replied 06 December 2012

File an appeal with the CIT-Appeal on the ground that Madras High Court has granted a stay on the deposit of TDS from salary and the assessee cannot deposit the TDS in the Government A/c till the final verdict of the court.

Reliance is also placed on the following judicial pronouncements:-

1. In the case of Rakshak Chemicals (P) Ltd., Vapivs Income Tax Officer (TDS), Valsaddt. 08.09.2005 (205-TMI-55341-ITAT Ahmedabad-A) in which it is held that there is no default of the appellant company within the meaning of Sec. 201 read with proviso thereto in view of the specific order of the Special Court not to deposit the tax to the credit of Central Govt. but to deposit the same with the special court.

2. In the case of Chief Manager, LIC of India, BBSR vs ACIT (TDS) dt. 23.09.2011 (2011 TIOL-760-ITAT-CUTTACK) in which it is held that in view of stay order of the Orissa High Court the levy of interest u/s 201(1A) is not justified and directed to the department to refund the amount of interest that was levied u/s 201(1A) and collected from the appellant after verification of the records.

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kiran (service) (51 Points)
Replied 06 December 2012

Thanks Akanksha. But any updates on that order of the court ? how to find out that ? I tried to search a lot on net but could not find anything. It may be possile that the stay has already been removed & the bank (employer) is not aware of it at all.