ACIT (TDS), Chandigarh V. M/s Punjab Infrastructure Development Board, Chandigarh

ITA 1021/CHANDI/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1634 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-12-2015
• Assessment Year: 2012-2013
• Appeal Filed On: 06-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Recovery proceedings; Retrospective amendment
• Section: 194C; 201(1); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.1021/CHD/2013 (ASSESSMENT YEAR : 2012-13) THE A.C.I.T.(TDS), VS. M/S PUNJAB INFRASTRUCTURE CHANDIGARH. DEVELOPMENT BOARD, SCO 33-35, SECTOR 34-A, CHANDIGARH. PAN: PTLP10093G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. MITTAL, DR RESPONDENT BY : SHRI DEEPAK AGGARWAL DATE OF HEARING : 15.10.2015 DATE OF PRONOUNCEMENT : 27.10.2015 O R D E R PER RANO JAIN, A.M . : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH DATED 21.8.2013 RELATING TO ASSESSMENT YEAR 2012-13. 2. THE ONLY ISSUE IS AGAINST THE QUASHING OF ORDE R UNDER SECTIONS 201(1) AND 201(1A) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) MADE BY THE ASSESSING OFF ICER BY CALCULATING TDS LIABILITY OF PAYMENTS MADE TOWARDS GRANT FOR FINANCIAL SUPPORT TO PUBLIC PRIVATE PARTNERSHIP PROJECTS INFRASTRUCTURE DEVELOPMENT, WHICH WAS NOT AS PER 2 THE PROVISIONS OF SECTION 194C OF THE ACT. SINCE THE ISSUE WAS SAME AS IN ASSESSMENT YEAR 2007-08, IN WH ICH THE TDS LIABILITY WAS CREATED ON SIMILAR ISSUE BY P ASSING ORDER UNDER SECTIONS 201(1) AND 201(1A) OF THE ACT. THE LEARNED CIT (APPEALS) RELYING ON HIS ORDER FOR ASSE SSMENT YEAR 2007-08 HELD THAT THE ASSESSEE WAS NOT REQUIRE D TO DEDUCT TAX UNDER SECTION 194C OF THE ACT ON THE IMP UGNED PAYMENTS AND THE ASSESSING OFFICER WAS NOT RIGHT IN TREATING THE PERSON RESPONSIBLE AS ASSESSEE IN D EFAULT UNDER SECTIONS 201(1) AND 201(1A) OF THE ACT. IN THIS WAY, DEMANDS CREATED UNDER SECTION 201(1) AND 201(1 A) OF THE ACT WERE DELETED BY THE LEARNED CIT (APPEALS). 3. DURING THE COURSE OF HEARING, OUR ATTENTION WAS INVITED TO AN ORDER OF I.T.A.T., CHANDIGARH BENCH I N ASSESSEES OWN CASE FOR VARIOUS ASSESSMENT YEARS STARTING FROM ASSESSMENT YEAR 2007-08 TO 2011-12. WHILE ADJUDIC ATING THE SIMILAR ISSUE THE HON'BLE I.T.A.T., CHANDIGARH BENC H UPHELD THE ORDER OF THE LEARNED CIT (APPEALS) OBSERVING AS UNDER : 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. SHRI DEE PAK AGGARWAL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED TH AT IN THE INSTANT CASE THE CONCESSIONAIRE / PAYEE INCLUDE D THE AMOUNT OF GRANT MADE BY THE ASSESSEE IN HIS RETURN OF INCOME AND HAD ALREADY PAID TAXES ON THE RETURNED INCOME AS PER THE REGULARLY FOLLOWED ACCOUNTING POL ICY AND, THEREFORE, PRESENT CASE IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F HINDUSTAN COCA COLA BEVERAGE (P) LTD VS. CIT IN [2 007] 293 ITR 226 (SC), WHEREIN THE HON'BLE SUPREME COURT HELD THAT WHERE THE PAYEE HAS ALREADY PAID TAX ON T HE 3 INCOME ON WHICH THERE WAS A SHORT DEDUCTION OF TAX AT SOURCE, RECOVERY OF TAX CANNOT BE MADE ONCE AGAIN F ROM THE TAX DEDUCTOR. SHRI DEEPAK AGGARWAL, LD. COUNSE L FOR THE ASSESSEE STATED AT THE BAR THAT THE PAYEE (M/S ROHAN RAJDEEP TOLLWAYS LTD.) - I) HAS FURNISHED H IS RETURN OF INCOME UNDER SECTION 139; (II) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOME IN SUCH RETUR N OF INCOME; AND (III) HAS PAID THE TAX DUE ON THE INCO ME DECLARED BY HIM IN SUCH RETURN OF INCOME; AND HE HA S FURNISHED A CERTIFICATE TO THIS EFFECT FROM AN ACC OUNTANT AS PER THE FIRST PROVISO TO SECTION 201(1) OF THE A CT. IT IS TRUE THAT IN THE CASE OF HINDUSTAN COCA COLA BEVERA GE (P) LTD V CIT (SUPRA), THE HON'BLE SUPREME COURT HELD T HAT WHERE THE ASSESSEE HAS ALREADY PAID TAX ON THE INCO ME ON WHICH THERE WAS A SHORT DEDUCTION OF AT SOURCE, RECOVERY OF TAX CANNOT BE MADE ONCE AGAIN FROM THE TAX DEDUCTOR. THE RELEVANT OBSERVATIONS OF THE HON'BLE SUPREME COURT ARE AS UNDER:- I) THAT SINCE THE DEPARTMENT DID NOT CHALLENGE THE ORDER OF THE TRIBUNAL RECALLING ITS EARLIER ORDER, THAT O RDER ATTAINED FINALITY AND THE HIGH COURT COULD NOT INTE RFERE WITH THE FINAL ORDER ; (II) WITHOUT DECIDING THE QUESTION WHETHER THE APPE LLATE TRIBUNAL COULD HAVE REOPENED THE APPEAL FOR RECTIFY ING AN ERROR APPARENT ON THE RECORD, THAT, IN VIEW OF CIRC ULAR NO. 275/201/95-IT(B) DATED JANUARY 29, 1997, AND SINCE THE ASSESSEE HAD PAID THE INTEREST UNDER SECTION 201(1A ) AND THERE WAS NO DISPUTE THAT THE TAX DUE HAD BEEN PAID BY THE DEDUCTEE (PRADEEP OIL), THE APPELLATE TRIBUNAL CAME TO THE RIGHT CONCLUSION THAT THE TAX COULD NOT BE R ECOVERED ONCE AGAIN FROM THE ASSESSEE. 7. WE ALSO OBSERVE HERE THAT THE ISSUE INVOLVED IS SQUARELY COVERED BY THE DECISION OF HON'BLE DELHI HIGH COURT DATED 26.8.2015 IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD IN ITA NO. 162 OF 2015. THE ISSUE 4 RAISED BY THE REVENUE BEFORE THE HON'BLE DELHI HIG H COURT PERTAIN TO THE RETROSPECTIVITY OF THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT WHICH READS AS UNDE R:- PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII-B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB-SECTION ( 1) OF SECTION 201, THEN, FOR THE PURPOSE OF THIS SUB- CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO THE HON'BLE DELHI HIGH COURT HAS HELD THAT WHAT IS COMMON TO BOTH THE PROVISOS TO SECTION 40(A)(IA) AN D SECTION 201 (1) OF THE ACT IS THAT AS LONG AS THE P AYEE / RESIDENT HAS FILED ITS RETURN OF INCOME DISCLOSING THE PAYMENT RECEIVED BY AND IN WHICH THE INCOME EARNED BY IT IS EMBEDDED AND HAS ALSO PAID TAX ON SUCH INCOME , THE ASSESSEE WOULD NOT BE TREATED AS A PERSON IN DEFAUL T. THE RELEVANT OBSERVATIONS OF THE HON'BLE DELHI HIG H COURT ARE AS UNDER:- 8. IT IS SEEN THAT THE ISSUE IN THESE AYS ARISE S IN THE CONTEXT OF THE DISALLOWANCE BY THE ASSESSING OFFICER OF THE PAYMENT MADE BY THE RESPONDENT ASSESSEE TO ANSAL PROPERTIES AND INFRASTRUCTURE LTD . (APIL ) WHICH PAYMENT, ACCORDING TO THE REVENUE, OUGHT TO HAVE BEEN MADE ONLY AFTER DEDUCTING TAX AT SOURCE UNDER SECTION 194J OF THE ACT. BEFORE THE ITAT, IT WAS URGED BY THE ASSESSEE THAT IN VIEW OF THE INSERTION OF THE SECOND PROVISO TO SECTION 40(A ) (IA) OF THE ACT, THE PAYMENT MADE COULD NOT HAVE BEEN DISALLOWED. RELIANCE WAS PLACED ON THE DECISION OF THE AGRA BENCH OF ITAT IN ITA NO. 337/AGRA/2013 (RAJIV KUMAR AGARWAL V. ACIT) IN WHICH IT WAS HELD THAT THE SECOND PROVISO TO SECTIO N 5 40 (A) (IA) OF THE ACT IS DECLARATORY AND CURATIVE IN NATURE AND SHOULD BE GIVEN RETROSPECTIVE EFFECT FRO M 1ST APRIL 2005. 9. IT IS SEEN THAT THE SECOND PROVISO TO SECTION 40(A) (IA) WAS INSERTED BY THE FINANCE ACT 2012 WITH EFFECT FROM 1ST APRIL 2013. THE EFFECT OF THE SAID PROVISO IS TO INTRODUCE A LEGAL FICTION WHERE AN ASSESSEE FAILS TO DEDUCT TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII B. WHERE SUCH ASSESSEE IS DEEMED NOT TO BE AN ASSESSEE IN DEFAULT IN TERMS OF THE FIRST PROVISO TO SUB-SECTION (1) OF SECTION 201 OF THE ACT, ITA NO. 160 & 161/2015 PAGE 5 OF 10 THEN, IN SUCH EVENT, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME B Y THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO . 10. IT IS POINTED OUT BY LEARNED COUNSEL FOR THE REVENUE THAT THE FIRST PROVISO TO SECTION 201 (1) O F THE ACT WAS INSERTED WITH EFFECT FROM 1 ST JULY 2012. THE SAID PROVISO READS AS UNDER: PROVIDED THAT ANY PERSON, INCLUDING THE PRINCIPAL OFFICER OF A COMPANY, WHO FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER ON THE SUM PAID TO A RESIDENT OR ON THE SUM CREDITED TO THE ACCOUNT OF A RESIDENT SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT- (I) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 139; (II) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOME IN SUCH RETURN OF INCOME; AND (III) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME; 6 AND THE PERSON FURNISHES A CERTIFICATE TO THIS EFFECT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED. 11. THE FIRST PROVISO TO SECTION 201 (1) OF THE A CT HAS BEEN INSERTED TO BENEFIT THE ASSESSEE. IT ALSO STATES THAT WHERE A PERSON FAILS TO DEDUCT TAX AT SOURCE ON THE SUM PAID TO A RESIDENT OR ON THE SUM CREDITED TO THE ACCOUNT OF A RESIDENT SUCH PERSON SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 139 OF THE ACT. NO DOUBT, THERE IS A MANDATORY REQUIREMENT UNDER SECTION 201 TO DEDUCT TAX AT SOURCE UNDER CERTAIN CONTINGENCIES, BUT THE INTENTION OF THE LEGISLATURE IS NOT TO TREAT THE ASSESSEE AS A PERSON IN DEFAULT SUBJECT TO THE FULFILLMENT OF THE CONDITIONS AS STIPULATED IN THE FIRST PROVISO TO SECTION 201(1). THE INSERTION OF THE SECOND PROVISO TO SECTION 40(A) (I A) ALSO REQUIRES TO BE VIEWED IN THE SAME MANNER. THIS AGAIN IS A PROVISO INTENDED TO BENEFIT THE ASSESSEE . THE EFFECT OF THE LEGAL FICTION CREATED THEREBY IS TO TREAT THE ASSESSEE AS A PERSON NOT IN DEFAULT OF DEDUCTING TAX AT SOURCE UNDER CERTAIN CONTINGENCIES . 12. RELEVANT TO THE CASE IN HAND, WHAT IS COMMON TO BOTH THE PROVISOS TO SECTION 40 (A) (IA) AND SECTION 201 (1) OF THE ACT IS THAT THE AS LONG AS T HE PAYEE/RESIDENT (WHICH IN THIS CASE IS ALIP) HAS FIL ED ITS RETURN OF INCOME DISCLOSING THE PAYMENT RECEIVE D BY AND IN WHICH THE INCOME ITA NO. 160 & 161/2015 PAGE 7 OF 10 EARNED BY IT IS EMBEDDED AND HAS ALSO PAID TAX ON SUCH INCOME, THE ASSESSEE WOULD NOT BE TREATED AS A PERSON IN DEFAULT. AS FAR AS THE PRESENT CASE IS CONCERNED, IT IS NOT DISPUTE D BY THE REVENUE THAT THE PAYEE HAS FILED RETURNS AND OFFERED THE SUM RECEIVED TO TAX. 7 8. THE HON'BLE DELHI HIGH COURT HAS HELD INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1ST APRIL, 2005, BEING THE DATE FROM WHICH SUB CLAUSE ( IA) OF SECTION 40(A) WAS INSERTED BY THE FINANCE (NO. 2) A CT, 2004. IN THE ABOVE DECISION, THE HON'BLE HIGH COUR T HAS CATEGORICALLY HELD THAT NO DOUBT THERE IS A MANDATO RY REQUIREMENT U/S 201 TO DEDUCT TAX AT SOURCE UNDER CERTAIN CONTINGENCIES, BUT THE INTENTION OF THE LEG ISLATURE IS NOT TO TREAT THE ASSESSEE AS A PERSON IN DEFAULT SUBJECT TO THE FULFILLMENT OF THE CONDITIONS AS STIPULATED IN THE FIRST PROVISO TO SECTION 201(1). THE FIRST PROVISO TO SECTION 201(1) OF THE ACT WAS INSERTED W.E.F. 1.7.2 012. THE HON'BLE DELHI HIGH COURT HAS CATEGORICALLY HELD THAT INSERTION OF THE SECOND PROVISO TO SECTION 40(A) (I A) ALSO REQUIRES TO BE VIEWED IN THE SAME MANNER. ACCORDIN G TO HONBLE HIGH COURT THIS AGAIN IS A PROVISO INTENDED TO BENEFIT THE ASSESSEE. THE HON'BLE HIGH COURT RULED THAT THE SECOND PROVISO TO SECTION 40 (A) (IA) OF THE AC T IS DECLARATORY AND CURATIVE IN NATURE AND SHOULD BE GI VEN RETROSPECTIVE EFFECT FROM IST APRIL 2005. RESPECTF ULLY FOLLOWING THE JUDGEMENT OF THE HON'BLE SUPREME COUR T IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE P. LTD VS. CIT (SC) AND ALSO THE RECENT DECISION OF THE HON'BLE DE LHI HIGH COURT IN THE CASE CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD (SUPRA), WE DO NOT FIND ANY MERITS IN THE APPEAL OF THE REVENUE AND HENCE THE SAME IS DISMISSED. 9. AS REGARDS THE INTEREST U/S 201(1) (1A) OF THE ACT, SHRI DEEPAK AGGARWAL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT RECIPIENT / PAYEE (M/S ROHAN RAJDEE P TOLLWAYS LTD HAS SUFFERED LOSS IN THE IMPUGNED ASSESSMENT YEAR. IT WAS CLAIMED BEFORE US THAT THE RECIPIENT / PAYEE HAD FILED THE RETURN FOR THE YEAR UNDER CONSIDERATION DECLARING LOSS, THEREFORE, NO INTERES T U/S 8 201(1A) IS REQUIRED TO BE CHARGED FROM THE ASSESSEE (PAYER) FOR NOT DEDUCING TAX AT SOURCES. EVEN IF TH E ASSESSEE HEREIN DEDUCTS / REMIT THE TDS AMOUNT ON T HE INCOME PAID TO RECIPIENT / PAYEE, THE SAME IS LIABL E TO BE REFUNDED TO THE SAID RECIPIENT / PAYEE AND THERE IS NO TAX LIABILITY IN THEIR HANDS. IN OUR VIEW, THERE IS NO LOSS TO THE REVENUE. WHILE TAKING SUCH A VIEW WE ARE SUPPOR TED BY THE DECISION OF ITAT, LUCKNOW BENCH IN THE CASE OF DCIT V SAHARA INDIA COMMERCIAL CORPORATION LTD (201 5) 117 DTR (LUCKNOW)(TRIB) 59. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE APPEAL PREFERRED BY TH E REVENUE. 4. THOUGH NO DISTINGUISHING FACTS WERE BROUGHT TO OUR NOTICE DURING THE YEAR, WE ALSO SEE THAT THE BASIS OF CONFIRMING THE ORDER OF THE LEARNED CIT (APPEALS) I N THE PRECEDING YEARS IS THE FACT THAT THE PAYEE HAS DULY DEPOSITED THE TAX ON ITS INCOME EARNED FROM THE ASSESSEE TO T HE GOVERNMENT EXCHEQUER. HOWEVER, IN THE YEAR UNDER CONSIDERATION, NO SUCH FACT AND NO MATERIAL RELATIN G TO THE SAME WERE BROUGHT TO OUR NOTICE AND NOT DISCUSSED B Y THE LEARNED CIT (APPEALS). IN VIEW OF THIS, WE RESTOR E THE ISSUE TO THE FILE OF THE LEARNED CIT (APPEALS) FOR THE LIMIT ED PURPOSE OF VERIFYING THE FACT THAT THE PAYEE HAS DULY ADDED TH E SAID AMOUNT IN ITS INCOME AND HAS PAID DUE TAXES THEREON OR NOT. IN CASE THE LEARNED CIT (APPEALS) FOUND THE SAME AS TRUE, HE IS DIRECTED TO DELETE THE DEMAND SO RAISED. NO NEE D TO ADD THAT THE ASSESSEE MAY BE GIVEN PROPER OPP ORTUNITY TO 9 ADDUCE THE EVIDENCES IN THIS REGARD. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF OCTOBER, 2015. SD/- SD/- (BHAVNESH SAINI) (RANO JAIN) JUDICIAL MEMBER ACOUNTANT MEMBER DATED : 27 TH OCTOBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH