M/s Punjab Cricket Association, Mohali V. ITO (TDS)-II, Chandigarh

ITA 1070/CHANDI/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77082 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 12-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Section: 201(1); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1068 TO 1070/CHD/2010 ASSESSMENT YEAR: 2006-07 TO 2008-09 M/S. PUNJAB CRICKET ASSOCIATION, VS. THE I.T.O (T DS)-II MOHALI CHANDIGARH PAN NO. AAATP3502C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. TEJ MOHAN SINGH RESPONDENT BY : SMT JYOTI KUMARI DATE OF HEARING : 28/04/2014 DATE OF PRONOUNCEMENT: 20/05/2014 ORDER PER T.R.SOOD, A.M. THE ABOVE THREE APPEALS FILED BY THE ASSESSEE ARE A GAINST THE SEPARATE ORDERS DATED 17/5/2010 OF CIT(APPEALS), CH ANDIGARH. 2. IN ALL THESE APPEALS FOLLOWING COMMON GROUNDS HA VE BEEN RAISED : 1. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ORDER OF THE ASSESSING AUTHORITY. 2. APPELLANT ORGANIZES MATCHES ALIKE RANJI ALLOTTED TO IT BY BCCI. THE LOCAL ORGANIZATIONS MAKE ARRANGEMENTS FOR THE TEAMS. ALL THE BILLS FOR BOARDING AND LODGING A RE 2 ISSUED BY THE HOTELS IN THE NAMES OF THE PLAYERS. P CA IS ONLY RESPONSIBLE TO REIMBURSE THE PLAYERS FOR IT. P AYMENT TO THE HOTELS ARE MADE AS PER THEIR INSTRUCTIONS AN D ON THEIR BEHALF. NO LINK OF ANY TYPE EXISTS BETWEEN PC A AND HOTELS. 3. THAT THE LEARNED CIT(A) HAS ERRED IN UPHOLDING T HE LEVY OF INTEREST AND RECOVERY OF TDS AMOUNT WITHOUT APPRECIATING THE FACTS. PCA HAS NO CONNECTION WITH HOTELS NOR HAS IT ENTERED INTO ANY AGREEMENT OR CONTRACTS. 4. NO MATERIAL HAS BEEN BROUGHT ON RECORD WHICH ESTABLISHES ANY DEALING BETWEEN APPELLANT & HOTELS. FULFILLMENT OF ITS OBLIGATION AND REMITTANCE ON BEH ALF OF PLAYERS WILL NOT MAKE THEM DEDUCTOR IN LAW. FACTS ARE CLEAR AND NEED NO DISCUSSION. 3. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT HE DOES NOT WISH TO PRESS THE ISSUE REGARDING DEDUCTIO N OF TAX ON PAYMENT TO THE PRIZE WINNERS. 4. AFTER HEARING BOTH THE PARTIES, WE FIND THAT AN INSPECTION WAS DONE FOR TDS PURPOSES BY THE DEPARTMENT AND IT WAS NOTICED THAT PERSON RESPONSIBLE (P R) HAS NOT DEDUCTED TAX ON PA YMENT OF RENT TO HOTELS FOR LODGING & BOARDING OF THE PLAYERS. S IMILARLY NO TAX WAS DEDUCTED ON PRIZE GIVEN TO THE WINNERS. DURING THE ASSESSMENT PROCEEDINGS U/S 201 PR/ AUTHORIZED REPRESENTATIVE A PPEARED AND STATED THAT THEY HAVE NO OBJECTION IF TAX IS RECOVE RED. ACCORDINGLY AO DETERMINED THE TDS AMOUNT ALONGWITH INTEREST AND ISSUE DEMAND NOTICE ACCORDINGLY. 5. LATER ON AN APPLICATION U/S 154 WAS MOVED BY THE ASSESSEE WHICH WAS REJECTED. 6. ON APPEAL IT WAS MAINLY STATED THAT AO HAS WRONG LY REJECTED THE APPLICATION BECAUSE COPY OF THE VARIOUS LEDGER ACCOUNTS OF THE 3 HOTEL WAS NOT PROVIDED. IT WAS FURTHER PLEADED THAT IF THE DEDUCTEE HAS PAID THE TAXES THEN TAX WAS NOT REQUIRED TO BE DEDUCTED. IN THIS REGARD RELIANCE WAS PLACED ON THE VARIOUS DECISIONS INCLUDING THE DECISION OF HONBLE SUPREME COURT IN CASE OF HINDUS TAN COCA COLA BEVERAGE P. LTD. VS. CIT, 293 ITR 226. 7. LD. CIT(A) EXAMINED THE SUBMISSIONS AND OBSERVED THAT NO DOUBT IF THE TAXES HAS BEEN PAID BY THE DEDUCTEE TH EN TAX WAS NOT REQUIRED TO BE DEDUCTED. HOWEVER, DEDUCTOR ASSESSEE WAS LIABLE FOR INTEREST. 8. SHE FURTHER OBSERVED THAT VARIOUS CONFIRMATIONS FROM HOTEL WERE ALSO NOT FILED AND THEREFORE APPEAL OF THE ASS ESSEE WAS DISMISSED. 9. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT TAX WAS NOT REQUIRED TO BE DEDUCTED FROM THE HOTEL. IN VIEW OF THE CLARIFICATION ISSUED BY THE CBDT IN THE FORM OF QUE STION AND ANSWER (COPY WAS FILED ON RECORD). REPLY TO THE QUESTION NO. 20 WHICH CLEARLY PROVIDES THAT TAX WAS NOT REQUIRED TO BE DEDUCTED UNLESS THE HOTEL WAS TAKEN ON REGULAR BASIS. HE FURTHER REFER TO THE CIRCULAR NO. 715 DT. 08/08/1995 WHERE THESE ISSUES HAVE BEEN FURTHER CLARIFIED THEREFORE TAX WAS NOT REQUIRED TO BE DEDUCTED ON THE PAYMENT TO THE HOTEL BECAUSE ASSESSEE HAS NOT ENTERED INTO ANY CONTRACT FOR TAKI NG THE HOTEL ROOM ON REGULAR BASIS. 10. ON THE OTHER HAND LD. DR POINTED OUT THAT THE A DMISSION WAS MADE BY THE AO ON THE BASIS OF AGREEMENT IS RECORDE D IN THE ORDER 4 U/S 201(1) ITSELF. FURTHER ASSESSEE HAD NOT FILED T HE PROPER DETAILS BEFORE AO OR CIT(A) AND THEREFORE ADMISSION WAS JUS TIFIED. 11. IN THE REJOINDER THE LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT NO DOUBT BEFORE AO, AUTHORIZED REPRESENTATIVE AGREED FOR THE ADDITION BUT THIS ADDITION IS AGAINST THE LAW AS EX PLAINED BY THE CBDT AND THEREFORE THERE CANNOT BE ANY ESTOPPEL AGA INST THE LAW. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND AGREE WITH THE SUBMISSION THAT THERE CANNOT BE ANY ADMISS ION AGAINST THE PROVISION OF THE LAW. REPLY TO THE QUESTION NO. 20 READS AS UNDER: QUESTION 20: WHETHER PAYMENTS MADE TO A HOTEL FOR ROOMS HIRED DURING THE YEAR WOULD BE OF THE NATURE OF RENT ? ANSWER: PAYMENTS MADE BY PERSONS, OTHER INDIVIDUAL AND HUFS FOR HOTEL ACCOMMODATION TAKEN ON REGULAR BASIS WILL BE IN THE NATURE OF RENT SUBJECT TO TDS UNDER SECTION 194-I. THE ABOVE REPLY HAS BEEN FURTHER CLARIFIED AS UNDER : CIRCULAR NO. 715, DATED 8-8-1995 HAS BEEN ISSUED B Y THE CENTRAL BOARD OF DIRECT TAXES TO CLARIFY VARIOU S PROVISIONS RELATING TO TAX DEDUCTION AT SOURCE UNDE R VARIOUS PROVISIONS OF THE INCOME-TAX ACT. QUESTION NO. 20 OF THE AFORESAID CIRCULAR RELATED TO APPLICABILI TY OF THE PROVISIONS OF SECTION 194-I OF THE INCOME-TAX ACT I N RESPECT OF PAYMENTS MADE TO A HOTEL FOR ROOMS. THE RELEVANT QUESTION AND ANSWER IS REPRODUCED BELOW:- Q.NO. 20 : WHETHER PAYMENTS MADE TO A HOTEL FOR ROOMS HIRED DURING THE YEAR WOULD BE OF THE NATURE OF RENT? 5 ANS: PAYMENTS MADE BY PERSONS OTHER THAN INDIVIDUAL S AND HUF FOR HOTEL ACCOMMODATION TAKEN ON REGULAR BA SIS WILL BE IN THE NATURE OF RENT SUBJECT TO TDS UNDER SECTION 194-I. [EMPHASIS SUPPLIED] IN THIS CONTEXT, DOUBTS HAVE BEEN RAISED AS TO WHAT CONSTITUTES HOTEL ACCOMMODATION TAKEN ON REGULAR BASIS FOR THE PURPOSE. 2. THE BOARD HAVE CONSIDERED THE MATTER. FIRST, IT NEEDS TO BE EMPHASISED THAT THE PROVISIONS OF SECTION 194 -I DO NOT NORMALLY COVER ANY PAYMENT FOR RENT MADE BY AN INDIVIDUAL OR HUF EXCEPT IN CASES WHERE THE TOTAL S ALES, GROSS RECEIPTS OR TURNOVER FROM BUSINESS AND PROFES SION CARRIED ON BY THE INDIVIDUAL OR HUF EXCEED THE MONE TARY LIMITS SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB. WHERE AN EMPLOYEE OR AN INDIVIDUAL REPRESENTI NG A COMPANY (LIKE A CONSULTANT, AUDITOR, ETC.) MAKES A PAYMENT FOR HOTEL ACCOMMODATION DIRECTLY TO THE HOT EL AS AND WHEN HE STAYS THERE, THE QUESTION OF TAX DEDUCT ION AT SOURCE WOULD NOT NORMALLY ARISE (EXCEPT WHERE HE IS COVERED UNDER SECTION 44AB AS MENTIONED ABOVE) SINC E IT IS THE EMPLOYEE OR SUCH INDIVIDUAL WHO MAKES THE PAYMENT AND THE COMPANY MERELY REIMBURSES THE EXPENDITURE. FURTHERMORE, FOR PURPOSES OF SECTION 194-I, THE MEA NING OF RENT HAS ALSO BEEN CONSIDERED. RENT MEANS AN Y PAYMENT, BY WHATEVER NAME CALLED, UNDER ANY LEASE OR ANY OTHER AGREEMENT OR ARRANGEMENT FOR THE USE OF A NY LAND [ EMPHASIS SUPPLIED ]. THE MEANING OF RENT IN SECTION 194-I IS WIDE IN ITS AMBIT AND SCOPE. FOR T HIS REASON, PAYMENT MADE TO HOTELS FOR HOTEL ACCOMMODATION, WHETHER IN THE NATURE OF LEASE OR LICENSE AGREEMENTS ARE COVERED, SO LONG AS SUCH ACCOMMODATION HAS BEEN TAKEN ON REGULAR BASIS. WHERE EARMARKED ROOMS ARE LET OUT FOR A SPECIFIED R ATE AND SPECIFIED PERIOD, THEY WOULD BE CONSTRUED TO BE ACCOMMODATION MADE AVAILABLE ON REGULAR BASIS. SIMILAR WOULD BE THE CASE, WHERE A ROOM OR SET OF R OOMS ARE NOT EARMARKED, BUT THE HOTEL HAS A LEGAL OBLIGA TION TO PROVIDE SUCH TYPES OF ROOMS DURING THE CURRENCY OF THE AGREEMENT. 3. HOWEVER, OFTEN, THERE ARE INSTANCES, WHERE CORPO RATE EMPLOYERS, TOUR OPERATORS AND TRAVEL AGENTS ENTER I NTO 6 AGREEMENTS WITH HOTELS WITH A VIEW TO MERELY FIX TH E ROOM TARIFFS OF HOTEL ROOMS FOR THEIR EXECUTIVE/GUESTS/CUSTOMERS. SUCH AGREEMENTS, USUALL Y ENTERED INTO FOR LOWER TARIFF RATES, ARE IN THE NAT URE OF RATE-CONTRACT AGREEMENTS. A RATE-CONTRACT, THEREFOR E, MAY SAID TO BE A CONTRACT FOR PROVIDING SPECIFIED T YPES OF HOTEL ROOMS AT PRE-DETERMINED RATES DURING AN AGREE D PERIOD. WHERE AN AGREEMENT IS MERELY IN THE NATURE OF A RATE CONTRACT, IT CANNOT BE SAID TO BE ACCOMMODATIO N TAKEN ON REGULAR BASIS, AS THERE IS NO OBLIGATION ON THE PART OF THE HOTEL TO PROVIDE A ROOM OR SPECIFIED SE T OF ROOMS. THE OCCUPANCY IN SUCH CASES WOULD BE OCCASIONAL OR CASUAL. IN OTHER WORDS , A RATE-CONTR ACT IS DIFFERENT FOR THIS REASON FROM OTHER AGREEMENTS, WH ERE ROOMS ARE TAKEN ON REGULAR BASIS. CONSEQUENTLY, THE PROVISIONS OF SECTION 194-I WHILE APPLYING TO HOTEL ACCOMMODATION TAKEN ON REGULAR BASIS WOULD NOT APPL Y TO RATE-CONTRACT AGREEMENTS. THE COMBINED READING OF ABOVE CLARIFICATION CLEARLY SHOWS THAT UNLESS ASSESSEE HAS TAKEN THE HOTEL ACCOMMODATION O N REGULAR BASIS NO TDS IS REQUIRED TO BE DEDUCTED. 13. THE REVENUE HAS NOT BROUGHT ANY MATERIAL ON RE CORD TO SHOW THAT ASSESSE HAS TAKEN THE HOTEL ON REGULAR BASIS. THE HOTEL ACCOMMODATION WAS ARRANGED ONLY FOR LODGING AND BOA RDING OF THE PLAYERS AS AND WHEN THEY WERE PARTICIPATING IN THE CITY. SO EVEN IF ASSUMING THAT ASSESSEE HAS ENTERED INTO AN AGREEMEN T WITH HOTEL TO FIX LOWER TARIFF THE SAME CANNOT BE CONSTRUED AS TH E AGREEMENT FOR TAKING THE ACCOMMODATION ON REGULAR BASIS. THEREFOR E, IN OUR OPINION THE TAX WAS NOT DEDUCTIBLE FROM THE HOTEL. 14. THE ISSUE REGARDING DEDUCTION OF TAX FROM PRIZE MONEY WAS NOT PRESSED BEFORE US AND THEREFORE SAME IS DISMISSED. 15. IN THE RESULT THE APPEALS ARE PARTLY ALLOWED. 7 ORDER PRONOUNCED IN THE OPEN COURT ON 20/05/2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 20 TH MAY, 2014 AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR ITAT, CHANDIGARH