Present :  Sri A.K. Das,  President

                 Sri L.K. Banerjee,  Member

Order no.   7    dated  20.9.2007

          The petitioner purchased Maharastra Krishna Valley Development Corpn. (o.p. no.3) Deep Discount Bond Scheme-A for ten years valued Rs.5000/- each under Regd. Folio No.MKA 522129 Certificate no.00248762 Distinction No.0001771233 to 0001771240 No. of Bond 8 (eight), annexure A-1.

            The o.p.no.1 is the authorized agent of o.p. no.3 and o.p. no.2 is the authorized transfer agent of o.p. no.1.

            As per instruction, annex-2, of o.p. nos.1 and 2 petitioner/complainant had submitted on 15.5.06 original bonds certificate, application for redemption and two copies of 15-G forms (I. Tax Act) duly filled in to o.p. no.1.

            On receiving the redemption cheque no.611981  dt.30.6.06 the petitioner came to know that there was a deduction of tax Rs.16,320/-, annex A-4,  although petitioner submitted filled in 15-G form whereby no fee  would be deducted at source.

            The petitioner demanded refund of Rs.16320/- from o.p. no.2 on 17.7.06,  annex-6,  following reminder 11.9.06,  28.10.06,  annex-7,8,9.

            The petitioner also put his claim to o.p. no.1 on 3.10.06, annex-10,  and to o.p. no.3 on 4.10.06,  6.11.06, annex-1,2.

            The o.ps. did not respond to such correspondence. Hence the petitioner has moved this forum for relief.

            All the o.ps. have been served with notices. Excepting o.p. no. none appears to contest the claim of the petitioner.

            One w/v was received by post on behalf  of o.p. nos.1 and 2. It has been contended therein that o.p. no.1 is the Investor Service Centre in the region of Kolkata and o.p. no.2 are recently appointed registrars and transfer agent who had processed and dispatched the bond certificates to the complainant. There was no deficiency in service on their part.

            The contention of complainant is liable to be dismissed as provisions of sub section (IB) of the Income Tax Act makes it clear that provision of sub-section (IA) will not apply where the amount of credit or paid the previous year exceeds the maximum not chargeable to tax (in the instant case Rs.1,00,000/-).

            The proceeds in the case exceeds the exemption limit of Rs.100000/-. It is fact that sub-section (I A) of S. 197 A of the Income Tax Act,1961 provides, no tax is required to be deducted u/s 193 or 194 A or 194 K, if in person furnish a declaration in prescribed form (Form No,156) to the effect that there is no tax liability on this estimated total income of the previous year in which the said income is included.

            However, sub-section (I A) is further subject to provisions of sub-section (I B) of the Income Tax Act which provides that the provisions of sub-section (I A) will not apply where the amount of credit or paid the previous year exceeds the maximum not chargeable to tax. Since in the complainant’s case  the amount of interest paid during the financial year 2006-07 is Rs.1,63,200/- which exceeding Rs.1,00,000/-, so the case squarely falls under the provisions of section 197 A (IB) and hence does not become eligible for payment without deduction of Income Tax.

            The complainant in reply to w/v of o.ps. has submitted that the bonds were ten years tenure and rate of interest of each bond was @ 17.50%. The bond started from 1.7.96 and the date of redemption was 30.6.06. Face value of each bond was Rs.5000/- and maturity value of each bond was Rs.25,000/-. There was 8 bonds purchased by the petitioner.

            The o.p.  did not clearly mentioned the details about the bonds.

            Each bond earned total 10 years interest amounting Rs.20000/-. So each bond carried one financial year interest amounted to Rs.2000/-. In each financial year petitioner  had earned interest (Rs.2000 x 8) = Rs.16,000/-.

            Each financial year the petitioner had deposited Rs.40,000/- and had earned interest Rs.16,000/-.

            The petitioner had deposited money for earning consecutive 10 years, interest but petitioner had earned only 9 years interest.

            Actual earning of last financial year is Rs.16,000/- but o.ps. had deducted Rs.16,320/-.

            The petitioner had issued series of letters to o.ps. but no reply was received from their end.

            No TDS certificate was received from o.ps. The counterfoil of a cheque was not at all considered as TDS certificate.

            The petitioner is in absolute doubt about deduction of money.

            Now it is evident from the contentions of the parties that the petitioner had received Rs.1,83,680/- after deduction of TDS of Rs.16320/- towards redemption of the bonds purchased by the petitioner. The accumulated interest on matured amount exceeds Rs.100,000/-.

            The sub-section (I A) of sec 197A of the Income Tax Act 1961 provides that no tax is required to be deducted u/s 193 or 194A or 194K, if a person furnish  a declaration in the in the prescribed form No.156 to the effect that then is no tax liability on this estimated total income of the previous year in which the said income is included.

            Said sub-section (I A) is further subject to provisions of sub-section (IB) of the Income Tax Act which provides that the provisions of sub-section (IA) will not apply where the amount of creditor paid in the previous year exceeds the maximum amount not chargeable to tax (Rs.1,00,000/-).

            In the financial year 2006-07 the amount of interest paid Rs.1,63,200/- which exceeds Rs.1,00,000/-. Therefore provision of section 197A(IB) comes to play. In that case payment without deduction TDS cannot be made.

            No materials / evidences  are forth coming to by pass the aforesaid provision of the Income Tax Act. Tax has been deducted at source on the accumulated interest which exceeds Rs.1,00,000/-.       

            Therefore the contention of the petitioner has no leg to stand and he is not entitled to get refund of the amount Rs.16,320/- in terms of the prayer as deduction have been made following the prov8isions of the provisions of the Income Tax Act. No deficiency in service on the part of the o.p. are established. Accordingly, present consumer complaint fails and it is liable to be dismissed.

            Hence,

                        Ordered,

            That the present consumer complaint is dismissed on contest. There is no order to the litigation cost.

            Let copy of this order be supplied to the parties free of cost.

          _______________                                                        _______________

                  Member                                                                        President