M/s. Bright Professionals Pvt. Ltd., Delhi V. ITO, New Delhi

CO 209/DEL/2015

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3209 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-07-2017
• Assessment Year: misc
• Appeal Filed On: 24-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K THAKUR
• Assessee Lawyers: S K JAIN
• Keywords: Search and seizure; Non-deduction of tax
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI B.P.JAIN, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 5794/DEL /2013 ASSTT. YEAR: 2009-10 ITA NO. 5795/DEL /2013 ASSTT. YEAR: 2009-10 INCOME TAX OFFICER, WARD 49(2), NEW DELHI. VS BRIGHT PROFESSIONAL PVT. LTD., 1/53, 1 ST FLOOR, LALITA PARK, LAXMI NAGAR, DELHI-110092 (PAN: AABCB1766A) (APPELLANT) (RESPONDENT) C.O. NO. 208/DEL/2015 & C.O. NO. 209/DEL/201 5 (IN ITA NO. 5794/DEL /2013) (IN ITA NO. 5795/ DEL /2013) ASSTT. YEAR: 2009-10 ASSTT. YEAR: 2010-11 BRIGHT PROFESSIONAL PVT. LTD., 1/53, 1 ST FLOOR, LALITA PARK, LAXMI NAGAR, DELHI-110092 (PAN: AABCB1766A) VS INCOME TAX OFFICER, WARD 49(2), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. JAIN, SR. DR RESPONDENT BY : SHRI M.K. THAKUR, CA DATE OF HEARING : 07.11.2017 DATE OF PRONOUNCEMENT: 20.1 1.2017 ORDER PER SUDHANSHU SRIVASTAVA, J.M. ITA NO. 5794 AND 5795/DEL/2013 HAVE BEEN PREFERRED BY THE DEPARTMENT. ITA 5794/DEL/2013 CHALLENGES THE O RDER OF THE ITA 5794, 5795/D/13 & CO 208, 209/D/15 ASSESSMENT YEAR 2009-10 & 2010-11 2 LD. COMMISSIONER OF INCOME TAX(A)-XXX, NEW DELHI FO R ASSESSMENT YEAR 2009-10 WHEREIN VIDE ORDER DATED 18 .7.2013, THE LD. COMMISSIONER OF INCOME TAX(A) HAS PARTLY AL LOWED THE APPEAL OF THE ASSESSEE AGAINST THE ORDER PASSED U/S 201(1)/201(1A) OF THE INCOME TAX ACT, 1961 (HEREINA FTER CALLED 'THE ACT'). C.O. 208/D/2015 HAS BEEN FILED BY THE ASSESSEE AGAINST THE SAME ORDER. 2. ITA NO. 5795/DEL/2013 CHALLENGES THE PARTIAL DIS ALLOWANCE OF ASSESSEES APPEAL AGAINST THE ORDER PASSED U/S 2 01(1)/201(1A) OF THE ACT FOR ASSESSMENT YEAR 2010-11, THE DATE OF THE IMPUGNED ORDER IS 18.7.2013. C.O. 209/2015 HAS BEEN FILED A GAINST ITA NO. 5795 BY THE ASSESSEE. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY IS IN THE BUSINESS OF PROVIDING ACADEMIC COACHING TO ITS STUDENTS PURSUING CHARTERED ACCOUNTANCY COURSE. DURING THE A SSESSMENT YEARS UNDER CONSIDERATION, THE ASSESSEE ALLEGEDLY H AD GROSS PROFIT SHARING ARRANGEMENTS WITH THE DIFFERENT FACULTIES I N THE FIELD OF ACCOUNTANCY AND LAW FOR THE PURPOSE OF IMPARTING CO ACHING TO THE STUDENTS. AS PER THE ASSESSEE, IT HAD PAID 70% OF THE TOTAL FEES AFTER DEDUCTING RENT OF AUDITORIUM AND COST OF COURSE MATERIAL TO THE FACULTIES. THE ASSESSING OFFICER W AS OF THE ITA 5794, 5795/D/13 & CO 208, 209/D/15 ASSESSMENT YEAR 2009-10 & 2010-11 3 OPINION THAT TAX WAS DEDUCTIBLE AT SOURCE ON THE PAYMENTS/SHARING OF FEES TO THE FACULTIES U/S 194J OF THE ACT. THEREAFTER, THE ASSESSING OFFICER PASSED ORDERS U/S 201(1)/201(1A) OF THE INCOME TAX ACT, 1961 RAISING A TAX DEMAND OF RS. 19,91,446 AND RS.17,08,022 FOR ASSESSMENT YE ARS 2009-10 AND 2010-11 RESPECTIVELY. THE ASSESSING OFFICER AL SO RAISED A DEMAND OF RS. 2,72,337/- AND RS. 1,07,187/- FOR FAI LURE TO DEDUCT TDS U/S 194I OF THE ACT. ON APPEAL BEFORE T HE FIRST APPELLATE AUTHORITY, THE LD. COMMISSIONER OF INCOME TAX(A) ACCEPTED THE ASSESSEES CLAIM FOR NON-DEDUCTION OF TAX AT SOURCE U/S 194J OF THE ACT BUT CONFIRMED THE TAX PAYMENT F OR NON- DEDUCTION OF TAX ON RENT PAID U/S 194I OF THE INCOM E TAX ACT, 1961. 2.2 NOW, THE DEPARTMENT HAS CHALLENGED THE ADJUDICA TION OF THE LD. COMMISSIONER OF INCOME TAX(A) IN DELETING THE T AX DEMAND U/S 194J BY FILING THESE APPEALS AND THE ASSESSEE H AS CHALLENGED THE CONFIRMATION OF TAX DEMAND U/S 194I THROUGH TWO CROSS OBJECTIONS. 3. LD. SR. DR SUBMITTED THAT THERE WAS A SEARCH OPE RATION U/S 133A OF THE ACT ON 25.11.2010 AT THE BUSINESS PREMI SES OF THE ASSESSEE SITUATED AT 1/53, FIRST FLOOR, LALITA PARK , LAXMI NAGAR, ITA 5794, 5795/D/13 & CO 208, 209/D/15 ASSESSMENT YEAR 2009-10 & 2010-11 4 DELHI TO VERIFY THE COMPLIANCE OF THE TAX PROVISION S OF CHAPTER XVII OF THE ACT. IT WAS SUBMITTED THAT DUE TO NON-C OOPERATION OF THE ASSESSEE SUBSEQUENT TO THE SEARCH OPERATIONS, T HE ASSESSING OFFICER WROTE TO THE ADIT(INV) UNIT III REQUESTING HIM TO SHARE HIS FINDINGS ON THE VIOLATION OF TDS PROVISIONS ALONG W ITH XEROX OF SEIZED MATERIAL IN THIS CASE AND ON THE BASIS OF IN FORMATION GATHERED FROM THE INVESTIGATION WING, LETTER OF DEM AND WAS SENT TO THE DIRECTORS OF THE ASSESSEE COMPANY. THE LD. SR. DR ALSO SUBMITTED THAT DURING THE COURSE OF SURVEY, THE DIR ECTOR OF THE COMPANY SHRI S. RASHID MASOOD HAD ACCEPTED THAT RS. 51.50 LAKH WERE PAID TO THE FACULTY MEMBERS WITHOUT DEDUC TING TAX AT SOURCE DURING THE CURRENT FINANCIAL YEAR 2010-11. THE LD. SR. DR ALSO SUBMITTED THAT TAKING INTO ACCOUNT THE FACT OF NON-DEDUCTION OF TAX AT SOURCE ON THE PAYMENTS MADE TO FACULTY ME MBERS AS WELL AS PAYMENT OF RENT WITHOUT DEDUCTION OF TAX AT SOURCE, DEMANDS RAISED FOR BOTH THE ASSESSMENT YEARS IN QUE STION WERE LEGALLY CORRECT AND THAT THE ORDER OF THE A.O.(TDS) SHOULD BE UPHELD. 4. IN RESPONSE, THE LD. AR SUBMITTED THAT AS FAR AS THE ISSUE OF DEDUCTION OF TAX AT SOURCE ON PAYMENTS MADE TO FACU LTIES WAS CONCERNED, THE SAME WAS COVERED BY THE JUDGMENT OF THE HON'BLE ITA 5794, 5795/D/13 & CO 208, 209/D/15 ASSESSMENT YEAR 2009-10 & 2010-11 5 DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INC OME TAX VS NIIT REPORTED IN 318 ITR 289 (DEL) AND CIT VS CAREE R LAUNCHER INDIA LTD. REPORTED IN 207 TAXMAN 28 (DEL), AND THE REFORE, THE LD. COMMISSIONER OF INCOME TAX(A) HAD RIGHTLY ALLOWED R ELIEF TO THE ASSESSEE. IT WAS SUBMITTED THAT THERE WAS A SHARIN G OF PROFIT AT THE GROSS LEVEL WITH THE FACULTIES AND THE LD. COMM ISSIONER OF INCOME TAX(A) HAD DULY NOTED THAT THE FACULTIES WER E ASSOCIATED WITH THE ASSESSEE ON REVENUE SHARING BASIS. IT WAS SUBMITTED THAT THE DEPARTMENT HAD PROCEEDED ON A MERE SUSPICI ON THAT THERE WAS NO REVENUE SHARING AS NO SUCH AGREEMENT W AS ON RECORD. ON THE ISSUE OF LIABILITY TO DEDUCT TAX AT SOURCE ON RENT U/S 194I OF THE ACT, IT WAS SUBMITTED THAT THE PRES CRIBED THRESHOLD LIMIT WAS RS. 1,20,000 PER ANNUM IN RESPE CT OF EACH PAYEE AND IT WAS A FACT ON RECORD THAT NO PAYEE HAD BEEN PAID AN AMOUNT EXCEEDING THE THRESHOLD LIMIT DURING THE YEA RS UNDER CONSIDERATION AND AS SUCH, BOTH THE LOWER AUTHORITI ES HAD ERRED IN HOLDING THAT THE ASSESSEE WAS LIABLE TO DEDUCT T AX AT SOURCE ON THESE AMOUNTS. OUR ATTENTION WAS ALSO DRAWN TO THE DETAILS FILED BEFORE THE LOWER AUTHORITIES IN THIS REGARD AND NOW AVAILABLE IN THE PAPER BOOK. IT WAS SUBMITTED THAT THE ADJUDICA TION OF THE LD. ITA 5794, 5795/D/13 & CO 208, 209/D/15 ASSESSMENT YEAR 2009-10 & 2010-11 6 COMMISSIONER OF INCOME TAX(A) IN RESPECT OF TDS U/S 194I WAS ERRONEOUS AND THE SAME SHOULD BE RESERVED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. AS FAR AS THE ISSUE O F DEDUCTION OF TAX AT SOURCE U/S 194J ON PAYMENTS MADE TO FACULTY MEMBERS IS CONCERNED, THE LD. COMMISSIONER OF INCOME TAX(A) HA S HELD THAT IN VIEW OF THE JUDGMENTS OF HON'BLE DELHI HIGH COUR T IN THE CASE OF COMMISSIONER OF INCOME TAX VS NIIT (SUPRA) AND C IT VS CAREER LAUNCHER INDIA LTD. (SUPRA), TAX U/S 194J WAS NOT D EDUCTIBLE AT SOURCE. HOWEVER, THE FACT REMAINS THAT THE ASSESS EES PLEA OF PROFIT SHARING WITH THE FACULTY MEMBERS IS NOT EVID ENT FROM THE FACTS ON RECORD. THE LD. COMMISSIONER OF INCOME TA X(A), WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE, HAS N OT MADE REFERENCE TO ANY DOCUMENT OR EVIDENCE WHICH ENABLED HIM TO REACH THE CONCLUSION THAT THE FACULTY MEMBERS WERE FRANCHISEES OF THE ASSESSEE COMPANY AND NOT ITS EMPLOYEES. AL THOUGH THE LD. COMMISSIONER OF INCOME TAX(A) HAS HELD THAT THE FAC ULTIES WERE ASSOCIATED WITH THE ASSESSEE ON A REVENUE SHARING B ASIS, NO EVIDENCE HAS BEEN FORTHCOMING FROM THE ASSESSEE TO JUSTIFY THIS CLAIM. ALTHOUGH THERE ARE NUMEROUS JUDGMENTS WHEREI N IT HAS BEEN HELD THAT ABSENCE OF A WRITTEN AGREEMENT DOES NOT IPSO FACTO ITA 5794, 5795/D/13 & CO 208, 209/D/15 ASSESSMENT YEAR 2009-10 & 2010-11 7 GIVE A CONTRARY PRESUMPTION, ALL THE SAME, THERE HA S TO BE SOME SUBSTANTIATION OF THE CLAIM AND A MERE BALD STATEME NT WITHOUT ANY CORROBORATIVE EVIDENCE CANNOT SERVE THE PURPOSE OF THE ASSESSEE IN THIS REGARD. WE ARE OF THE VIEW THAT T HE LD. COMMISSIONER OF INCOME TAX(A) HAS NOT EXAMINED THE ISSUE IN PROPER PERSPECTIVE AND THE RELIEF HAS BEEN GRANTED TO THE ASSESSEE ONLY ON THE BASIS OF WRITTEN SUBMISSIONS M ADE BEFORE HIM. WE ARE OF THE CONSIDERED OPINION THAT THE ISS UE NEEDS RE- EXAMINATION. AS NO EVIDENCE HAS BEEN FILED BEFORE US, IT WOULD BE IN THE FITNESS OF THINGS IF THE ISSUE IS RESTORED T O THE FILE OF THE LD. COMMISSIONER OF INCOME TAX(A) TO EXAMINE THIS ISSUE DE NOVO AND ADJUDICATE ON THE SAME AFTER CONSIDERING EVIDEN CES WHICH THE ASSESSEE MAY LIKE TO PRODUCE BEFORE HIM IN THIS REGARD. WE ARE AFRAID THAT GIVEN THE FACTUAL CIRCUMSTANCES OF THE CASE, WE ARE UNABLE TO APPLY THE RATIO OF THE JUDGMENTS OF THE H ON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS NIIT LTD. (SUPRA) AND CIT VS CAREER LAUNCHER INDIA LTD. (SUPRA) IN FAVOUR OF THE ASSESSEE AS THE ASSESSEE HAS NOT DISCHARGED THE INITIAL ONUS CA ST UPON IT. WE, ACCORDINGLY, RESTORE THE ISSUE OF NON-DEDUCTIBI LITY OF TAX AT SOURCE ON THE PAYMENTS MADE TO FACULTY MEMBERS TO T HE FILE OF ITA 5794, 5795/D/13 & CO 208, 209/D/15 ASSESSMENT YEAR 2009-10 & 2010-11 8 THE LD. COMMISSIONER OF INCOME TAX(A) FOR FRESH EXA MINATION IN TERMS OF OUR OBSERVATIONS AS ABOVE. 5.1 IN THE RESULT, THE APPEALS FILED BY THE DEPARTM ENT ARE ALLOWED FOR STATISTICAL PURPOSES. 5.2 AS FAR AS THE C.O.S OF THE ASSESSEE ARE CONCERN ED WHICH CHALLENGE THE CONFIRMATION OF THE TAX DEMAND BY THE LD. COMMISSIONER OF INCOME TAX(A) ON PAYMENT OF RENT, W E ARE OF THE CONSIDERED OPINION THAT THE INTEREST OF JUSTICE WOU LD BE SERVED IF THIS ISSUE IS ALSO RESTORED TO THE FILE OF THE LD. COMMISSIONER OF INCOME TAX(A) TO RE-EXAMINE THE CLAIM OF THE ASSESS EE THAT NO PAYMENTS EXCEEDING THE THRESHOLD LIMIT WERE MADE BY THE ASSESSEE IN BOTH THE YEARS UNDER CONSIDERATION. A CCORDINGLY, BOTH THE CROSS OBJECTIONS OF THE ASSESSEE ARE ALSO ALLOWED FOR STATISTICAL PURPOSES. 5.3 WE ALSO ADD THAT IT WILL BE IN THE FITNESS OF T HINGS THAT THE LD. COMMISSIONER OF INCOME TAX(A) OBTAINS A REMAND REPORT FROM THE ASSESSING OFFICER BEFORE PROCEEDING TO ADJUDICA TE BOTH THE ISSUES. 6. IN THE RESULT, BOTH THE APPEALS OF THE DEPARTMEN T AND COS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ITA 5794, 5795/D/13 & CO 208, 209/D/15 ASSESSMENT YEAR 2009-10 & 2010-11 9 ORDER IS PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER, 2017. SD/- SD/- (B.P. JAIN ) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20 TH NOVEMBER, 2017 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR