Income Tax Officer (Tds), Haridwar v. M/S Bharat Heavy Electricals Limited, Epf Trust

IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Income Tax Appeal No. 10 of 2013 1. Commissioner of Income Tax, (TDS), Kanpur. 2. Income Tax Officer (TDS), Haridwar. ….….. Appellants. Versus M/s Bharat Heavy Electricals Limited, EPF Trust, Ranipur, Haridwar. …….. Respondent Mr. Hari Mohan Bhatia, Advocate, present for the appellants. Alongwith Income Tax Appeal No. 11 of 2013 1. Commissioner of Income Tax, (TDS), Kanpur. 2. Income Tax Officer (TDS), Haridwar. ….….. Appellants. Versus M/s Bharat Heavy Electricals Limited, EPF Trust, Ranipur, Haridwar. …….. Respondent Mr. Hari Mohan Bhatia, Advocate, present for the appellants. Income Tax Appeal No. 12 of 2013 1. Commissioner of Income Tax, (TDS), Kanpur. 2. Income Tax Officer (TDS), Haridwar. ….….. Appellants. Versus M/s Bharat Heavy Electricals Limited, EPF Trust, Ranipur, Haridwar. …….. Respondent Mr. Hari Mohan Bhatia, Advocate, present for the appellants. And Income Tax Appeal No. 13 of 2013 1. Commissioner of Income Tax, (TDS), Kanpur. 2. Income Tax Officer (TDS), Haridwar. ….….. Appellants. Versus M/s Bharat Heavy Electricals Limited, EPF Trust, Ranipur, Haridwar. …….. Respondent Mr. Hari Mohan Bhatia, Advocate, present for the appellants. Hon’ble Prafulla C. Pant, J.Hon’ble V.K. Bist, J. Oral : Prafulla C. Pant, J. In all these four appeals the Revenue has raised following substantial question of law:- i) Whether M/s Bharat Heavy Electricals Limited Employees Provident Fund Trust, Haridwar, is not “individual” as such, was it liable to deduct the tax at source under Section 194A of Income Tax Act, 1961, in respect of the interest accrued/paid to the retired employees on the contributions made by them to the Provident Fund during their service period? 2) Word “individual” is not defined in the Income Tax Act, 1961. Section 2 (31) of the Act, defines word ‘person’ which includes “individual” apart from a Hindu undivided family, a company, a firm, an association of persons or a body of individuals, whether incorporated or not, a local authority, and every artificial juridical person. The explanation to Section 2 (31) of the Act, provides that an association of persons or a body of individuals or a local authority or an artificial juridical person shall be deemed to be a person, whether or not such person or body or authority or juridical person was formed or established or incorporated with the object of deriving income, profits or gains. 2) 3) In Commissioner of Income Tax Vs. Shri Krishna Bandar Trust (1993) 201 ITR page 989, the Calcutta High Court has held that it is now settled that the word “individual” does not necessarily and invariably always refer to a single natural person. A group of individuals may as well come in for treatment as an individual under the tax laws if the context so requires. The mere fact that the beneficiaries of the trustees, being representative assessees, are more than one, cannot lead to the conclusion that they constitute “an association of persons”. The trustees of discretionary trust in the circumstances can be assessed under status of an individual. 4) In M.L. Family Trust and others Vs. State of Gujarat and another (1995) 213 ITR 152, the Gujarat High Court has held where the beneficiaries are individuals, the status of the trustees would be that of individuals, and Section 194A of the Income Tax Act, 1961, would have no applicability to them. 5) The Madras High Court in Income Tax Officer Vs. Arihant Trust and others, 1995 (214) ITR page 306 also held that where the trustees are representative assessees they are to be assessed as individuals and are exempted from Section 194A of Income Tax Act, 1961. 4) In M.L. Family Trust and others Vs. State of Gujarat and another (1995) 213 ITR 152, the Gujarat High Court has held where the beneficiaries are individuals, the status of the trustees would be that of individuals, and Section 194A of the Income Tax Act, 1961, would have no applicability to them. 5) The Madras High Court in Income Tax Officer Vs. Arihant Trust and others, 1995 (214) ITR page 306 also held that where the trustees are representative assessees they are to be assessed as individuals and are exempted from Section 194A of Income Tax Act, 1961. 6) Lastly, on the similar case to the present case before us, the Delhi High Court in Commissioner of Income Tax Vs. Food Corporation of India, Contributory Provident Fund Trust (2009) 318 ITR 318 (Delhi) held that since the assessee trust is an “individual” therefore the same is outside the purview of Section 194A of the Act, and it also found that such a provident fund trust has no liability to deduct tax at source on the interest accrued after their retirement on the contribution made by the employees. 7) In view of the above, we do not find any force in these appeals filed by the Revenue, as such, the same are liable to be dismissed. 8) Accordingly, the substantial question of law stands answered against the Revenue, and all the four appeals ITA No. 10 of 2013, ITA No. 11 of 2013, ITA No. 12 of 2013 and ITA No. 13 of 2013, are hereby dismissed (Misc. Application (CLMA) No. 5972 of 2013, Misc. Application (CLMA) No. 5973 of 2013 and Exemption Application (CLMA) No. 5974 of 2013, also stand disposed of). (V.K. Bist, J.) (V.K. Bist, J.) (Prafulla C. Pant, J.) 18.06.2013 JM