UCO Bank moves HC against IT order levying fine on it

NEW DELHI: The United Commercial Bank has moved the Delhi High Court challenging an Income Tax notice that slapped a penalty of over Rs 54 lakh on its branch for not making tax deduction at source on a fixed deposit account worth Rs 7.7 crore opened by the HC.

A bench of Chief Justice Dipak Misra and Justice Sanjiv Khanna, before whom the bank's plea came up for hearing recently, has referred the matter to a larger bench and fixed July 15 for further hearing.

The bank approached the court following the I-T department's March 29 order that the high court branch of UCO Bank was liable to pay more than Rs 54 lakh for violation of Income Tax act for not deducting TDS amount on the interests generated on a Fixed Deposit Receipt of more than Rs 7.7 crore.

The department has issued notice to the bank for its failure to deduct tax on the interest received by the court's Registrar General (RG).

Filing a petition through its standing Counsel Sarfaraz Khan, the bank submitted that the RG is only the custodian of the deposited amount but not the beneficiary and the act would not apply on it.

While hearing various litigations, the court had directed the litigants to deposit the disputed amount with the RG till the final disposal of the case and the RG had deposited them in the bank in the form of FDRs.

In the petition, UCO's counsel sought the court's intervention as the bank has got thousands of FDRs from the court and the department could issue large number of similar notices.

In September 2004, the court had passed an interim order in the case of Union of India versus Oriental Building Furnishing Company Ltd. and directed the government to deposit Rs 7,07,45,550 by way of an FDR in the name of Registrar General, the Delhi High Court.

Urging the court to quash the March 29 order of the I-T department to pay the penalty, the bank said, "Declare that the non-deduction of tax at source from the deposits made by the bank in the name of RG, Delhi High Court under the interim directions is not violative of Income Tax act".

Source: EconomicTimes