M.P. Power Trading Company Ltd., Jabalpur V. Deputy Commissioner of Income Tax, TDS, Jabalpur

CO 3/JAB/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1088 (ITAT-JABALPUR)
• Duration Of Justice: 5 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-05-2019
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 07-02-2014
• Court: TRIBUNAL
• Department Lawyers: V B SARGOR
• Keywords: TDS
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JABALPUR BENCH, JABALPUR BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO.280/JAB/2013 A.Y. : 2009-10 (26Q-4 TH ) DY. CIT,(TDS) JABALPUR VS M.P.POWER TRADING CO.LTD., JABALPUR. APPELLANT RESPONDENT TAN NO. : JBPM060272A C.O.NO.03/JAB/2014 (ARISING OUT OF I.T.A.NO.280/JAB/2013) A.Y. : 2009-10 (26Q-4 TH ) M.P.POWER TRADING CO.LTD., JABALPUR. VS DY. CIT,(TDS) JABALPUR CROSS OBJECTOR RESPONDENT DEPARTMENT BY : SHRI V.B.SARGOR, DR ASSESSEE BY : SHRI MANOJ JAIN, ADV. -: 2: - 2 DATE OF HEARING : 2 9 . 0 5 .201 5 DATE OF PRONOUNCEMENT : 29 . 0 5 .201 5 O R D E R PER GARASIA, J.M. THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF C IT(A), JABALPUR, DATED 10.10.2013 FOR THE ASSESSMENT YEAR 2009-10 (26Q QRTR 4 TH ). 2. THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL : - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS JUSTIFIED I N DELETING DEMAND OF RS. 78,42,152/- RAISED U/S 201(1) OF THE INCOME-TAX ACT, 1961. FOR THE SHORT DEDUCTION OF TAX. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) IS JUSTIFIED IN HOL DING THAT THE ASSESSEE WAS NOT LIABLE TO MAKE ANY TDS -: 3: - 3 FROM TRANSMISSION CHARGES PAID TO M/S. PGCIL BY THE ASSESSEE. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) IS JUSTIFIED IN HOLD ING THAT THE PROVISION OF SECTION 201(1) AND 201(1A) OF THE ACT, ARE NOT APPLICABLE TO THE ASSESSEE FOR FAI LURE TO DEDUCT TAX AT THE TIME OF PAYMENT MADE TO M/S. PGCIL ON THE TIME AND INTEREST THEREON. 3. THE ASSESSING OFFICER HAS PASSED THE ORDER U/S 201(1)/201(1A) OF THE INCOME-TAX ACT, 1961, HOLDING THAT THE ASSESSEE IS IN DEFAULT FOR SHORT PAYMENT/NON-PAYMEN T OF TDS PERTAINING TO FORM NO. 26Q (4 TH QUARTER) AND INTEREST THEREON ON NON PAYMENT OF TAX WAS CALCULATED AT RS.78,42,15 2/-. 4. THE MATTER CARRIED TO THE LD. CIT(A), WHO HAS ALLOW ED THE APPEAL BY OBSERVING AS UNDER :- 5. I HAVE CAREFULLY GONE THROUGH THE ORDER APPEALED AGAINST AND SUBMISSIONS OF THE APPELLANT. DURING TH E COURSE OF APPELLATE PROCEEDINGS, IT WAS NOTICED THA T THE APPELLANT HAD FILED ADDITIONAL GROUNDS OF APPEAL TO THE -: 4: - 4 GROUNDS ALREADY RAISED IN THE APPEAL, A COPY OF THE SAME WAS FORWARDED TO THE AO FOR HIS VERIFICATION/EXAMIN ATION AND SPECIFIC COMMENTS. THE MATTER WHICH SPEAKS THAT LIABILITY FOR TDS U/S 201 DOES NOT EXIST AT ALL. TH EREFORE, THE CONSEQUENTIAL INTEREST U/S 201(1A) IS ALSO NOT LEVIABLE. IN THE REMAND REPORT DATED 30.09.2013, THE DCIT(TDS ) HAS MENTIONED THAT THE ORDER U/S 201(1)/201(1A) WAS PA SSED BY THE THEN ACIT(TDS) ON THE BASIS OF THE RECORDS A VAILABLE AT THAT TIME. HOWEVER, NOW IT IS UPON THE HON'BLE C IT(A) TO TAKE THE DECISION. 6. IN ACIT VS. M.P.POORVA KSHETRA VIDYUT VITARAN CO. L IMITED I.T.A.NO. 99/JAB/09 FOR ASSESSMENT YEAR 2006-07 DAT ED 27.08.2009, THE HON'BLE JURISDICTIONAL I.T.A.T., JA BALPUR BENCH HAS HELD AS UNDER :- WE ARE OF THE CONSIDERED OPINION THAT IT WOULD BE UNREASONABLE TO ADOPT THE CONSTRUCTION OF THE PROVISIONS OF SECTION 194J OF THE ACT SO AS TO REND ER THE ENTIRE EXPENDITURE ON TRANSMISSION CHARGES INADMISSIBLE FOR FAILURE OF THE ASSESSEE TO DEDUCT TAX AT SOURCE ON THE PAYMENTS MADE FOR POWER -: 5: - 5 TRANSMISSION. THE ACTION OF THE LD. CIT(A) IN DELET ING THE ADDITION IS, THEREFORE, UPHELD. 7. I FIND THAT IN THE CASE OF THE APPELLANT ITSELF FOR A.Y 2006- 07 AND 2007-08, MY LD. PREDECESSOR HAS, IN APPEAL NOJ/CIT[A]-L/D.CIT T DS.I(I)/JBP/263&257/09-10 VIDE ORDER DATED 29 TH MARCH, 2010, HELD AS UNDER: 'NOW THE CONTENTION OF THE APPELLANT IS FOUND TO BE CORRECT. THE RENT IS PAID IN RESPECT OF USE OF A PARTICULAR ASSET OR ARTICLE AS PER THE AGREEMENT BETWEEN THE OWNER OF THE ASSET AND THE USER. NOW IN THE INSTANT CASE THE TRANSMISSION CHARGES CANNOT BE EQUATED WITH THE 'RENT' BECAUSE THE WHEELING CHARGE S ARE NOT BASED ON THE USE OF ANY OF THE ASSET OF THE PAYEE COMPANY NOR THE APPELLANT USES THE PLANT AND MACHINERIES OR EQUIPMENTS OF THE PAYEE COMPANY. THE APPELLANT HAS NO RIGHT NOR MACHINE IS TAKEN ON HIRE OR RENT. ANY WORK OF THE TRANSMISSION COMPANIE S WHICH FOR THE PURPOSE OF RENT IF CONSTRUED AS AN ASSET, IS NOT TOTALLY MEANT FOR THE APPELLANT COMPA NY -: 6: - 6 AND CAN BE USED BY ALL WHO DESIRE TO USE THE SAME BECAUSE IT IS SIMPLY USED FOR THE ALLOCATED POWER T O THE APPELLANT WHICH ARE BASED ON THE QUANTUM OF POWER ALLOCATED AND NOT USE OF THE ASSET. FURTHER T HE HON'BLE ITAT JABALPUR BENCH, JABALPUR IN THEIR ORDE R IN ITA NO. I 73 AND I74/JAB/2009, A. Y. 2007-08 AND 2008-09 DATED 28TH OCTOBER 2009 IN THE CASE OF A CIT CIR. TDS JABALPUR VS. M/S MADHYA PRADESH POORVA KSHETRA VIDYUT VITRAN CO. LTD., JABALPUR AND IN ITA NO. 99/JAB/2009 DATED 27.08.2009 HAVE HELD THAT THE TAX WAS NOT LIABLE TO BE DEDUCTED BY THE APPELLANT EITHER U/S 1941 OF THE I. T ACT OR 194J O F THE I. T ACT. SINCE THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT ARE IDENTICAL TO THAT OF THE CASE DECIDED BY THE HON'BLE ITAT: IT IS HEREBY HELD THAT THE APPELLANT CANNOT BE TREATED IN DEFAULT U/S 201 OF THE I. T ACT. ACCORDINGLY, THE DEMAND CREATED, AS MENTIONED ABOVE, IS HEREBY CANCELLED. ' A. 8. I DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW TH AN THAT TAKEN BY MY LD. PREDECESSOR IN THE CASE OF THE APPE LLANT -: 7: - 7 ITSELF AND WHICH IN TURN IS BASED ON THE REASONED O RDER OF THE JURISDICTIONAL ITAT. HENCE, THE FACT REMAINS TH AT THE APPELLANT WAS NOT LIABLE TO MAKE ANY TDS FROM THE TRANSMISSION CHARGES PAID BY THE APPELLANT, THEREFO RE, THERE IS NO QUESTION OF TREATING THE APPELLANT AS A SSESSEE IN DEFAULT U/S 201(1) MUCH LESS ANY INTEREST LIABIL ITY CAN BE SADDLED U/S 201(1A). THE FACT THAT THE APPELLANT ITSELF HAD MADE AND DEPOSITED TDS OUT OF ABUNDANT PRECAUTI ON MAKES NO DIFFERENCE BECAUSE THE FACT REMAINS THAT T HE APPELLANT WAS NOT LIABLE TO MAKE TDS. LOOKING TO TH E FACTS AND CIRCUMSTANCES OF THE CASE AS ALSO DECISIO NS CITED ABOVE, THE DEMAND RAISED AGAINST THE APPELLAN T U/S 201(1A) CANNOT BE SUSTAINED. IN THE RESULT, THE APPEAL IS ALLOWED. 9. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PER USED THE MATERIAL AVAILABLE ON RECORD. AFTER HEARING TH E RIVAL SUBMISSIONS AND GOING THROUGH THE ORDERS OF THE TAX AUTHORITIES, WE NOTED THAT THE CASE OF THE ASSESSEE IS DULY COVERED BY THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE -: 8: - 8 OF CIT VS. ELI LILLY & CO. (INDIA) (P) LTD. (2009) 312 ITR 225 (SC), WHEREIN, IT HAS BEEN HELD THAT THE PERIOD OF DEFAULT STARTS FROM DATE OF DEDUCTIBILITY OF TAX TILL DATE OF ITS ACTUAL PAYMENT BY THE CONCERNED EMPLOYEE AND ALSO IN THE CASE OF M /S. HINDUSTAN COCA COLA BEVERAGE PVT. LTD. VS. CIT (200 7) 293 ITR 226 (SC), WHEREIN, IT HAS BEEN HELD THAT WHEN THE T AX HAS BEEN PAID BY THE DEDUCTEE-ASSESSEE, THE TAX COULD N OT BE RECOVERED ONCE AGAIN FROM THE ASSESSEE. ALL FACTS A RE NOT BORNE OUT FROM THE ASSESSMENT ORDERS AND THE LD. CIT(A) H AS ALSO NOT VERIFIED THE SAME. THEREFORE, IN THE INTEREST OF JU STICE AND FAIR PLAY, WE RESTORE THIS MATTER BACK TO THE FILE OF AO WITH THE DIRECTION THAT THE AO SHALL VERIFY WHETHER THE PAYM ENT SHOWN IN THE ASSESSMENT ORDER IS LIABLE FOR TDS OR NOT. S ECONDLY, IF THERE IS ANY SHORT DEDUCTION OF TAX OR NOT AND IF T HERE IS ANY SHORT DEDUCTION OF TAX THAN THE RECEIPT AND THE PAY EE HAS PAID THE TAX OR NOT AND THEY HAVE SHOWN IN THE RETURN OF INCOME HAS TO BE VERIFIED FROM THE CONCERNED ASSESSES. THE REFORE, THIS ALL REQUIRES VERIFICATION AT THE END OF AO. THE AO AND LD. CIT(A) SHOULD HAVE VERIFIED THESE FACTS BEFORE MAKING THE ASSESSMENT AND LD. CIT(A) SHOULD HAVE ALSO DONE THIS EXERCISE. WE FOUND -: 9: - 9 BOTH THE AUTHORITIES HAVE FAILED TO DO SO. THEREFOR E, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE BACK THIS ISSUE TO THE FILE OF AO AND THE AO IS DIRECTED TO VERIFY WHE THER ANY SHORT DEDUCTION OF TAX OR NOT AND WHETHER THE ASSES SEE IS LIABLE FOR INTEREST OR NOT AND WHETHER THE DEDUCTEE HAS PAID TAX OR NOT. THE ASSESSEE IS DIRECTED TO COOPERATE W ITH THE AO AND HE MUST PRODUCE ALL THE RELEVANT EVIDENCE BEFOR E THE AO AND THE AO IS FURTHER DIRECTED TO VERIFY THE SAME A ND DECIDE THE MATTER AFRESH KEEPING IN MIND THE DECISIONS OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ELI LILLY & CO . (INDIA) (P) LTD AND HINDUSTAN COCA COLA BEVERAGE P. LTD. V. CIT (SUPRA). 10. THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 11. SINCE THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSE S, THE CROSS OBJECTION HAS BECOME INFRUCTUOUS AND THE SAME IS ALSO DISMISSED. -: 10: - 10 12. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICA L PURPOSES AND THE CROSS OBJECTION IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 29 TH MAY, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 29 TH MAY , 2015. CPU* 156