Chandigarh

StateCommission

CC/121/2019

Krishan Kumar - Complainant(s)

Versus

State Bank of India - Opp.Party(s)

In Person

14 Oct 2019

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

 

Complaint case No.	:	121 of 2019
Date of Institution	:	14.05.2019
Date of Decision	:	14.10.2019

 

Krishan Kumar S/o Sh. Data Ram

Corresponding Address:-

House No.3266, Sector 23-D, Chandigarh.

…… Complainant

V e r s u s

State Bank of India, Chandigarh Main Branch, SCO 43-48, Banking Square, Sector 17-B, Chandigarh – 160017.

 

…..Opposite Party.

 

Complaint under Section 17 of the Consumer Protection Act, 1986

 

BEFORE: JUSTICE RAJ SHEKHAR ATTRI, PRESIDENT.

                MRS. PADMA PANDEY, MEMBER.

                MR. RAJESH K. ARYA, MEMBER

 

Argued by:-

 

Sh. Krishan Kumar, complainant in person.

Sh. Harish Chander Gupta, Advocate for the opposite party alongwith Sh. Ravinder Kumar, Miglani, Manager of opposite party – Bank.

 

PER  RAJESH  K.  ARYA, MEMBER

                Briefly stated the facts are that the complainant after his retirement from Food Corporation of India on 30.09.2009, deposited an amount of Rs.21,42,847/- with the opposite party – Bank in a Term Deposit vide Certificate date 02.11.2011 (Annexure C-1), which was to mature on 13.01.2019. The complainant visited the opposite party – Bank on 14.01.2019 i.e. after maturity of term deposit and noticed that amount towards TDR shown was Rs.40,12,318/- after deducting tax at source against the assured amount of Rs.42,86,608/-. It was found that an amount of Rs.60,000/- plus Rs.6,000/- were not paid towards income tax. The complainant wrote letter dated 23.01.2019 (Annexure C-2), which was replied by the Bank vide letter dated 12.02.2019 (Annexure C-3) with assurance to revert back shortly. The complainant wrote letter dated 08.02.2019 (Annexure C-4), which was replied by the Bank vide letter dated 14.02.2019 (Annexure C-5) whereby, the Bank informed that deduction was made from the maturity amount. It was also informed that the difference of amount was due to non-application of interest on the amount of TDS paid on various dates, which came to Rs.66,000/- approximately. Further vide the opposite party – Bank issued letter dated 28.02.2019 (Annexure C-6) giving calculation, however, reply and statement issued failed to justify as to how there was less amount to the tune of Rs.66,000/- in the account of the complainant. The complainant wrote letter dated 01.03.2019 (Annexure C-7), which was not replied by the opposite party. Again a detailed letter dated 08.03.2019 (Annexure C-9) was written by the complainant to the Bank requesting to pay an amount of Rs.60,728/- and TDS of Rs.6,651/- be paid to income tax according to rule but the said letter was not replied by the opposite party. Feeling aggrieved, the instant complaint has been filed by the complainant, seeking directions to the opposite party –Bank to pay an amount of Rs.60,728/- alongwith interest @18% p.a. from the date of maturity of STR i.e. 13.01.2019 till realization and to deposit Rs.6,651/- as income tax in accordance with rules besides paying compensation of Rs.1 Lakh and Rs.50,000/- towards cost of litigation.

2.                  Upon notice, the opposite party – Bank filed reply to the complaint, by way of affidavit of Sh. Alok Kumar Sinha, its Asstt. Gen. Manager, wherein, by referring to Sections 194-A and 271C of Income Tax Act, it has been stated that it is mandatory for the bank to deduct TDS on the interest accrued/paid on the FDR or on any other amount and if the same is not deducted, it can incur penalty as provided under Section 271-C of Income Tax Act. It has been stated that the deposit of money by way of FDR is personal decision of the complainant and he does not fall under the definition of consumer. It has further been submitted that the difference of amount is only due to deduction of TDS, which has accrued every year on the interest on the FDR. It has also been submitted that after deducting TDS, the balance amount of interest is credited in the principal amount of FDR and so on. It has further been submitted that the complainant has not incurred any loss due to deduction of TDS as the complainant has availed the benefits of TDS from the Income Tax Department. It has further been submitted that the Bank had sent detailed calculations of interest paid and TDS deducted vide letters dated 14.02.2019 and 28.02.2019 (Annexurs OP/1 and OP/2 respectively. The remaining averments were denied, being wrong. It is prayed that the complaint having no substance, be dismissed.

3.                  The parties led evidence, in support of their cases.

4.                  We have heard the contesting parties and have gone through the evidence and record of the cases, very carefully.

5.                  So far as objection raised by the opposite party – Bank with regard to the complainant not a consumer is concerned, it may be stated here that Consumer Protection Act 1986 is one of the beneficial legislations enacted by the Parliament with a view to provide better protection to the consumers. Section 2 (1)(g) of the Act defines deficiency in the service and the concept of service is defined under Section    2(1 )(o) of the Act. Banking Service is one of the services covered under the Consumer Protection Act 1986. It may include receiving deposits in various accounts and schemes, lending money, providing agency services e.g. payment of premium against insurance policy, locker services, debit and credit cards, bank guarantees, bank drafts etc. As such, the objection raised by the opposite party – Bank is rejected being not sustainable.

6.                  On merits of the case, the only question, which falls for consideration, is, as to whether the opposite party – Bank was right in deducting TDS from the maturity amount of term deposit or not? It may be stated here that the TDS rate on fixed deposits (FDs) is 10% if the interest amount for the entire financial year exceeds Rs.10,000/- for the Assessment Year. If the bank has deducted TDS but the consumer is liable for a lower rate of tax, he can   claim the amount back as a refund in his income tax return from the Income Tax Department. If he falls under the higher income tax slab rates of 20% and 30%, then he will need to pay the tax over the TDS charged as self-assessment tax. The banks calculate TDS at the time the interest is due for the deposit and not when they actually pay it. Thus, the tax on the interest income should be paid annually and not at the time of the FD maturity.

7.                  Further, tax at source is deducted as per the provisions of Section 194-A of Income Tax Act, which is extracted hereunder:-

            “194A: Interest Other Than Interest on Securities"

            (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force.

           [Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section.]

          Explanation: For the purposes of this section, where any income by way of interest as aforesaid is credited to any account, whether called Interest payable account or Suspense account or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.”

8.                    Further, it is mandatory for the Bank to deduct TDS on the interest accrued/paid on the FDR or on any other amount and if the same is not deducted, it can incur penalty as provided under Section 271-C of the Income Tax Act, which reads thus:-

          “271C – Penalty for failure to deduct tax at source:

          (1) If any person fails to

(a) deduct the whole or any part of the tax as required by or under the provisions of Chapter XVIIB ; or

(b) pay the whole or any part of the tax as required by or under,

(i) sub-section (2) of section 115-O ; or

(ii) second proviso to section 194B, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid.

(2) Any penalty imposable under sub-section (1) shall be imposed by the 1[Joint Commissioner].”

9.             In the instant case, the opposite party – Bank has rightly deducted tax at source as per governing norms. Perusal of letters dated 14.02.2019 and 28.02.2019 (Annexures OP-1 & OP-2 respectively) clearly transpire that the opposite party – Bank deducted tax at source to the extent of 10% at the end of every year on the accrued interest on the amount deposited in Special Term Deposit (STD). In aforesaid letters, the opposite party – Bank duly mentioned that difference of amount was due to non-application of interest on the amount of TDS paid on various dates, which comes to approximately Rs.66,000/-. It was also mentioned that the complainant has already claimed benefit of TDS deduction in 26AS for the period mentioned in the letters i.e. from 31.03.2012 to 12.01.2019.

10.           Not only above, at as per Instruction No.5 at the back side of the Term Deposit Advice (Annexure C-1), it was specifically made clear to the knowledge of the complainant that interest paid on this deposit is subject to Tax deduction at source (TDS) as per CBDT rules/income tax act unless from 15G/15H is submitted. Calculation qua interest calculated on term deposit receipt by the opposite party – Bank (Annexure OP-3) appears to be correct and in conformity with rules and regulations governing the subject. We do not find any imperfection on the part of the opposite party – Bank in performance of their duty. No case of any deficiency in rendering service or unfair trade practice is made out on the part of the opposite party – Bank and as such, the complaint is liable to be dismissed.

11.           No other point, was urged, by the contesting parties.

12.           For the reasons recorded above, the complaint is dismissed with no order as to costs.

13.           Certified Copies of this order be sent to the parties, free of charge.

14.           The files be consigned to Record Room, after completion.

Pronounced.

14.10.2019

[RAJ SHEKHAR ATTRI]

PRESIDENT

 

 

 

(PADMA PANDEY)

        MEMBER

 

 

 

(RAJESH  K. ARYA)

MEMBER

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