Gujarat Gas Company Ltd., Surat V. The ACIT.,TDS Circle, Surat

CO 236/AHD/2011

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1106 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 03-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Recovery proceedings
• Section: 194C; 201(1); 2

Judgement Text

ITA NO S . 2349, 2350 & 2351 /AHD/ 20 1 1 C.O. NOS.234, 235 & 236/AHD/2011 ASSESSMEN T YEAR S : 2 0 0 8 - 09, 2009 - 10 & 2010 - 11 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S.S. GODARA JM] ITA NO S . 2349, 2350 & 2351/AHD/2011 ASSESSMENT YEAR S : 200 8 - 09, 2009 - 10 & 2010 - 11 ASSISTANT COMMISSIONER OF INCOME TAX, ....... .. . .. ... APPELLANT TDS CIRCLE, SURAT. VS. GUJARAT GAS COMPANY LIMITED, .......... ..................RESPONDENT ADAJAN, SURAT. [PAN A AACG 5600 M ] C.O. NOS.234, 235 & 236/AHD/2011 (IN ITA NO S . 2349, 2350 & 2351/AHD/2011) ASSESSMENT YEAR S : 200 8 - 09, 2009 - 10 & 2010 - 11 GUJARAT GAS COMPANY LIMITED ....... .. . .....APPELLANT ADAJAN, SURAT. [PAN A AACG 5600 M ] VS. ASSISTANT COMMISSIONER OF INCOME TAX, ............................RESPONDENT TDS CIRCLE, SURAT. APPEARANCES BY: DILEEP KUMAR FOR THE REVE NUE SANJAY R. SHAH FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : SEPTEMBER 8 TH , 201 5 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 15 TH , 2015 O R D E R PER PRAMOD KUMAR AM: 1. THESE THREE APP E ALS, AS ALSO THREE CROSS O BJECTIONS, CALL INTO QUESTION THR EE SEPARATE, BUT MATERIALITY SIMILAR, ORDERS PASSED BY THE LD . CIT (A) IN THE MATTER OF TAX ITA NO S . 2349, 2350 & 2351 /AHD/ 20 1 1 C.O. NOS.234, 235 & 236/AHD/2011 ASSESSMEN T YEAR S : 2 0 0 8 - 09, 2009 - 10 & 2010 - 11 PAGE 2 OF 4 WITHHOLDING DEMANDS RAISED UNDER SECTION 201(1) AND 201(1) OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) FOR THE ASSESSMENT YEARS 2008 - 09, 2009 - 10 & 2010 - 11. 2. WHEN THESE APPEALS AND CROSS OBJECTIONS WERE TAKEN UP FOR HEARING IT WAS NOTICED THAT ONE OF THE GROUNDS TAKEN UP BY THE ASSESSEE , IN THE CROSS OBJECTIONS, WAS THAT SINCE ALL THE RECIPIENTS HAVE DULY DISCHARGE D THEIR INCOME TAX OBLIGATIONS IN RESPECT OF INCOME EMBEDDED IN THE PAYMENTS , DEMANDS UNDER SECTION 201(1) CANNOT BE RAISED. THIS GRIEVANCE IS AS FOLLOWS : - 3. THE CROSS OBJECTOR FURTHER SUBMITS THAT EVEN IF IT IS FOUND THAT TAX IS DEDUCTIBLE U/S 194J RATHER THAN 194C, THEN ALSO THE CROSS OBJECTOR CANNOT BE CONSIDERED A S ASSESS EE IN DEFAULT U / S. 201(1) AS THE AMOUNT PAID BY THE CROSS OBJECTOR HAS BEEN CONSIDERED AS INCOME BY ALL PAYEES IN THEIR RESPECTIVE RETURN OF INCOME. 3. AS THIS ISSUE GOES TO THE ROOT OF THE MATTER, AND IN THE EVENT OF THIS ISSUE BEING DECIDED IN FAVOUR OF THE ASSESSEE, ALL OTHER ISSUES IN THE APPEALS AND THE CROSS OBJECTIONS WILL BE RENDERED INFRUCTUOUS, WE WILL TAKE UP THIS ISSUE FIRST. 4. THE ISSUE SO RAISED LIES IN A VERY NARROW COMPASS OF FACTS . DURING THE COURSE OF TH E TDS SURVEY CONDUCTED ON ASSESSEE S PREMISES, IT WAS FOUND THAT THE ASSESSEE WAS DEDUCTING TAX AT SOURCE UNDER SECTION 194C OF THE ACT FROM PAYMENTS MADE TO M/S HONEYWELL AUTOMATION INDIA LIMITED, M/S CHICAGO PNEUMATIC SALES AND M/S SOPAN O & M CO. PVT. L TD, EVEN THOUGH THE NATURE OF SERVICES RENDERED BY THESE PERSONS ATTRACTED TAX DEDUCTION AT SOURCE UNDER SECTION 194J . IT WAS IN THIS BACKDROP THAT THE DEMAND ITA NO S . 2349, 2350 & 2351 /AHD/ 20 1 1 C.O. NOS.234, 235 & 236/AHD/2011 ASSESSMEN T YEAR S : 2 0 0 8 - 09, 2009 - 10 & 2010 - 11 PAGE 3 OF 4 WAS RAISED, IN RESPECT OF DIFFERENTIAL AMOUNTS, UNDER SECTION 201 R.W.S. 194J . IN APPEAL, IT WA S CONTENDED THAT THE RECIPIENTS HAVE PAID ALL THE TAXES DUE AND AS SUCH DEMAND UNDER SECTION 201(1) CANNOT BE RAISED ON MERITS ALSO, IT WAS CONTENDED TH AT THE TAX D EDUCTION A T SOURCE WAS RIGHTLY DONE UNDER SECTION 194C . LEARNED CIT (A) ACCEPTED THE CONTEN TION ON MERITS. THE ASSESSING OFFICER IS NOT SATISFIED AND IS IN APPEAL BEFORE US. THE ASSESSEE IS ALSO AGGRIEVED THAT SINCE THE RECIPIENTS HAD NO OUTSTANDING TAX LIABILITY ANYWAY, DEMAND UNDER SECTION 201(1) CANNOT BE RAISED AT ALL. 5. W E HAVE HEARD TH E RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 6. AS IS THE WELL SETTLED LEGAL POSITION, THE TDS LIABILITY UNDER SECTION 201(1) IS ONLY A MODE OF RECOVERY, AND, AS S UCH, VICARIOUS LIABILITY ON THE PERSON WHO OUGHT TO HAVE DEDUCTED TAX AT SOURCE. A VICARIOUS LIABILITY CAN SURVIVE AS LONG AS PRINCIPAL LIABILITY IS AN EXISTENCE. THUS, WHEN RECIPIENT OF INCOME EMBEDDED IN THE PAYMENT DOES NOT HAVE ANY OUTSTANDING TAX LI ABILITY, THE LIABILITY OF TAX DEDUCTOR ALSO COMES TO AN END. HON BLE SUPREME COURT, IN THE CA S E OF HINDUS T AN COCA COLA BE V ERAGES PVT. LTD. V S. CIT [(2007) 293 ITR 226 (SC)], HAS HELD THAT WHEN THE PAYEE HAS ALREADY PAID TAX ON THE INCOME ON WHICH THERE WA S A SHORT DEDUCTION OF TAX AT SOURCE, RECOVERY OF TAX CANNOT BE MADE ONCE AGAIN FROM THE TAX DEDUCTOR. THE LIABILITY OF INTEREST UNDER SECTION 201(1A), HOWEVER, WILL REMAIN, IF ANY, FROM THE DATE OF SHORT DEDUCTION OF TAX AT SOURCE TILL THE POINT OF TIME WHEN T A X LIABILITY OF THE RECIPIENT IS DISCHARGED. ITA NO S . 2349, 2350 & 2351 /AHD/ 20 1 1 C.O. NOS.234, 235 & 236/AHD/2011 ASSESSMEN T YEAR S : 2 0 0 8 - 09, 2009 - 10 & 2010 - 11 PAGE 4 OF 4 7. LEARNED R EPRESENTATIVE HAVE FAIRLY AGREED THAT THE MATTER SHOULD BE RESTORED TO THE FILE OF THE ASSESSING OFFICER (TDS) FOR THE LIMITED PURPOSES OF DISPOSING OF THE MATTER IN THE LIGHT OF THE LEGAL POSI TION SET OUT ABOVE AND AFTER VERIFYING RELATED DETAILS . ACCORDINGLY, WE DEEM IT FI T AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION , AS ABOVE. 8. IN VIEW OF THE ABOVE DIRECTIONS, ALL OTHER ISSUES RAISED IN T H E APPEALS AND THE CROSS OBJECTIONS ARE INFRUCTUOUS AT THIS STAGE AND NEED NO ADJUDICATION. 9. IN THE RESULT, WHILE C RO SS OBJECTIONS FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE, APPEALS FILED BY THE ASSESSING OFF ICER ARE DISMISSED A S INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF SEPTEMBER, 2015. SD/ - SD / - S.S. GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD , T HE 15 TH DAY OF SEPTEMBER , 201 5 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD