UCO Bank, Shimla V. Addl. CIT (TDS), Shimla

ITA 1148/CHANDI/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7498 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 26-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief; Question of law; Initiation of penalty proceedings; Non-deduction of tax; Reason to believe
• Section: 201(1); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE MS.DIVA SINGH, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.1148/CHD/2014 (ASSESSMENT YEAR : 2011-12) UCO BANK, VS. THE ADDL. CIT(TDS), NIGAM VIHAR BRANCH, SHIMLA RANGE, SHIMLA. SHIMLA. PAN: PTLU10254G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VISHAL MOHAN, ADV. RESPONDENT BY : SHRI AKHILESH GUPTA, SR. DR DATE OF HEARING : 28.06.2018 DATE OF PRONOUNCEMENT : 11.07.2018 ORDER PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)[HEREINAFTER REFERRED TO AS LD.CIT(APPEAL S)], SHIMLA DATED 29.10.2014 RELATING TO ASSESSMENT YEAR 2011- 12. 2. THE SOLE ISSUE IN THE PRESENT APPEAL PERTAINS TO LEVY OF PENALTY U/S 271C OF THE INCOME TAX ACT, 1961 (IN SH ORT THE ACT) FOR NON DEDUCTION OF TAX AT SOURCE. AT THE OUTSET IT MAY BE STATED THAT THIS IS A RECA LLED MATTER. EARLIER THE APPEAL OF THE ASSESSEE WAS DISM ISSED IN LIMINE FOR NON PROSECUTION. THE ASSESSEE FILED MISCELLANEOUS APPLICATION BEFORE THE TRIBUNAL FOR R ECALLING ITA NO.1148/CHD/2014 A.Y. 2011-12 2 OF HIS APPEAL. THE TRIBUNAL VIDE ORDER DATED 27.11. 2015 PASSED IN MA NO.67/CHD/2015 ALLOWED THE MISCELLANEO US APPLICATION OF THE ASSESSEE. HENCE THE ORIGINAL APP EAL WAS FIXED FOR HEARING BEFORE US. 3. BRIEF FACTS RELATING TO THE CASE ARE THAT THE AS SESSEE WAS ENGAGED IN THE BUSINESS OF BANKING . THE ITO(T DS), SHIMLA, NOTICED THAT THE ASSESSEE AS A DEDUCTOR HAD NOT DEDUCTED TAX, U/S 194A(3) OF THE ACT, ON THE INTERE ST PAID TO M/S H.P. BUILDING & OTHER CONSTRUCTION WORKER WELFA RE BOARD, KHALINI, SHIMLA (HEREINAFTER REFERRED TO AS BOARD). THEREFORE, ORDER DATED 12.2.2013 U/S 201(1)/201(1A) OF THE ACT WAS PASSED BY THE ITO(TDS), SHIMLA, TREATING TH E ASSESSEE DEDUCTOR TO BE IN DEFAULT WITHIN THE MEANI NG OF SECTION 201 OF THE ACT IN RESPECT OF SUCH TAX WHICH HAD NOT BEEN DEDUCTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 194A(3) OF THE ACT, AND FURTHER REFERRED THE CASE F OR INITIATION OF PENALTY PROCEEDINGS U/S 271C OF THE A CT. THE ASSESSEE SUBMITTED DURING PENALTY PROCEEDINGS THAT SINCE THE DEDUCTEE IS A BODY CONSTITUTED BY CENTRAL GOVER NMENT AND AS PER PROVISION OF SECTION 196 OF THE ACT THE TAX IS NOT TO BE DEDUCTED IF IT IS PAYABLE TO GOVERNMENT, RBI, A CORPORATION ESTABLISHED UNDER THE CENTRAL ACT AND I S EXEMPT FROM INCOME TAX ON ITS INCOME, THE ASSESSEE DEDUCTOR DID NOT DEDUCT TAX TREATING THE DEDUCTEE T O BE COVERED BY SECTION 196 OF THE ACT. THE ASSESSING OF FICER REJECTED THE ASSESSEES SUBMISSION AND THEREAFTER IMPOSED ITA NO.1148/CHD/2014 A.Y. 2011-12 3 PENALTY TO THE EXTENT OF TAX DEDUCTED AT SOURCE OF RS.13,61,776/- U/S 271C OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(APPE ALS) WHERE THE ASSESSEE RAISED SEVERAL CONTENTIONS CHALL ENGING THE LEVY OF PENALTY, INCLUDING THAT IT WAS NOT LIAB LE TO DEDUCT TDS ON THE INTEREST PAID TO BOARD UNDER THE PROVISIONS OF ACT, THAT THE BOARD IN ANY CASE, HAD NOT PAID ANY TAXES ON ITS INCOME FILING NIL RETURN OF INCOM E AND, THEREFORE, WHEN THERE WAS NO LIABILITY TO PAY THE T AX ON THE BOARD ITSELF, NO LIABILITY TO DEDUCT TAX COULD BE F IXED ON THE ASSESSEE, THAT THE ACTION OF NOT DEDUCTING TAX AT S OURCE WAS NOT DELIBERATE AND HAD BEEN DONE UNDER A REASONABLE BELIEF THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT S OURCE, THAT THE ISSUE OF TAX DEDUCTION AT SOURCE ON THE PA YMENT MADE TO THE BOARD WAS A DEBATABLE ISSUE. THE LD.CIT(APPEALS) DISMISSED ALL THE CONTENTIONS OF TH E ASSESSEE STATING THAT THE PRIMARY CONTENTION OF THE ASSESSEE THAT IT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE ON T HE SAID PAYMENT, WAS UNTENABLE SINCE IT WAS NEITHER SAVED B Y THE PROVISIONS OF SECTION 194A(3)(III)(F) OF THE ACT, N OR BY THE NOTIFICATION NO.SO3489 RELIED UPON BY THE ASSESSEE IN ITS SUPPORT. THE LD.CIT(APPEALS) DISMISSED REST OF THE CONTENTIONS OF THE ASSESSEE ALSO HOLDING AT PARAS 5 .1 TO 5.3 AS UNDER: ITA NO.1148/CHD/2014 A.Y. 2011-12 4 5.1 THE MAIN ISSUE IN THIS CASE IS WHETHER PENALTY U/S 271C IS IMPOSABLE IN THE FACT AND CIRCUMSTANCES OF THE ASSESSEE'S CASE. THE MAIN ARGUMENTS GIVEN BY ASSESSEE ARE THAT DEDUCTEE IS COVERED BY PROVISIONS BY 196 AS WE LL AS 194A(3)(III)(F) AND SO3489. ASSESSEE ALSO SUBMITTED T HAT THE LIABILITY DETERMINE U/S 201(1) AND 201(1 A) HAS ALREADY BEEN PAID BY THE ASSESSEE. ASSESSEE ALSO RELIED UPON VARIOU S/ CASE LAWS. THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN CON SIDERED. THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE. ASS ESSEE IS NOT COVERED BY 196 AS THE DEDUCTEE IS NEITHER A COR PORATION WHICH ENJOYS EXEMPTION FROM INCOME TAX SPECIFICALLY , NOR GOVERNMENT/RBI/ MUTUAL FUND. THUS PROVISIONS OF SECTION 196 DO NOT APPLY TO DEDUCTEE IN THIS CASE. SIMILARLY THE DEDUCTEE HAS NOT BEEN EXEMPTED U/S 194A READ WITH SO 3489 SPECIFICALLY. THE ASSESSEE HAS ALSO SUBMITTED THA T SINCE ASSESSEE HAS ALREADY MADE PAYMENT AFTER THIS FACT W AS POINTED OUT BY THE ITO (IDS), SO NO PENALTY IS IMPOS ABLE ON TO ASSESSEE. 5.2 THE ASSESSEE ALSO REFERRED TO THE CASE OF HINDUS TAN COCA COLA VS. CIT 293 ITR 226 HOLDING THAT THE ASSES SEE MAY NOT BE LIABLE U/S 201(1) & 201(1A), BUT HON'BLE APEX COUR T IN THIS CASE HAS ENDORSED THE PROVISIONS OF SECTION 27 1C WITH A VIEW THAT SECTION 201 DEALS WITH THE TAX DEMAND ON BE HALF OF DEDUCTEE WHEREAS THE FAILURE TO DEDUCT TAX IS LIABL E TO BE PENALIZED U/S 271 C. 5.3 THE CASE LAWS GIVEN BY THE ASSESSEE THAT IS IN THE CASE OF 19 TAXMAN 221 INCOME TAX OFFICER, WARD TDS-2 VS. BRA NCH MANAGER, STATE BANK OF BIKANER & JAIPUR AND ITO (TDS), SHIMLA VS. STATE BANK OF PATIALA 35 TAXMAN 466 EXONERATE ASSESSEE FROM BEING ASSESSEE IN DEFAULT FO R THE PURPOSE OF SECTION 201&201(1A) BUT THE VERY FACT THAT A SSESSEE FAILED TO DEDUCT THE TAX WITHIN THE PROVISION OF SE CTION 194A MAKES ASSESSEE LIABLE FOR PENALTY U/S 271 C. CAREFUL READING OF SECTION 271C SAYS THAT IF A PERSON FAILS TO DEDUCT IN ACCORDANCE WITH PROVISIONS OF SECTION CHAPTER XVII B, PENALTY I S IMPOSABLE. SECTION 194A CLEARLY SPECIFIES THAT THE AMOUNT HAS TO BE DEDUCTED BY THE DEDUCTOR AT THE TIME WHEN SUCH INTER EST IS CREDITED TO THE ACCOUNT OF PAYEE. THAT MEANS PROVIS IONS OF SECTION 194A MANDATED ON ASSESSEE TO DEDUCT THE TAX AT THE TIME OF CREDITING THE ACCOUNT OF DEDUCTEE. SO THE W ORD 'TIME' USED IN SECTION 194A MANDATES ASSESSEE TO DEDUCT AT A PARTICULAR TIME ONLY. THUS SUBSEQUENT PAYMENT BY THE DEDUCTOR CANNOT BE PLEADED AN ARGUMENT FOR THE PURP OSE OF SECTION 271 C. ASSESSEE ALSO RELIED UPON THE CASE LA W ITO(TDS) VS. STATE BANK OF PATIALA 221/CHD/2014. HOWEVER THE FACTS OF THE CASE ARE NOT SAME AS FACTS OF THE ASSESSEE'S CASE AS THE DEDUCTEE IN THE CASE LAWS CI TED ABOVE WAS WHOLLY FUNDED BY THE GOVERNMENT WHEREAS T HE DEDUCTEE IN THE CASE OF ASSESSEE IS COLLECTING A FEE SEPARATELY @ 1% OF COST OF CONSTRUCTION. KEEPING IN VIEW, AB OVE FACTS, THE CONTENTION OF ASSESSEE IS NOT ACCEPTED AN D APPEAL IS DISMISSED . ITA NO.1148/CHD/2014 A.Y. 2011-12 5 5. AGGRIEVED BY THE SAME, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US, RAISING FOLLOWING EFFECTIVE GROUN DS: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN UPHOLDING THE LEVY OF PENALTY OF RS.13,61,776/- UNDER SECTION 271C OF THE INCOME TAX ACT, 1961. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN UPHOLDING THE LEVY OF PENALTY THOUGH THE SAID IMPOSITION OF THE PENALTY WAS HOPELESSLY BARRED BY LIMITATION 6. DURING THE COURSE OF HEARING BEFORE US, THE LD. COUNSEL FOR ASSESSEE, REITERATING THE CONTENTION MADE BEFOR E THE LD.CIT(APPEALS), STATED THAT THE ASSESSEE WAS NOT L IABLE TO DEDUCT ANY TDS ON THE PAYMENT MADE TO THE BOARD. DRAWING OUR ATTENTION TO THE FACTS OF CASE THE LD. COUNSEL FOR ASSESSEE STATED THAT THE PENALTY HAD BEEN LEVIE D IN THE PRESENT CASE U/S 271C OF THE ACT FOR NON DEDUCTION OF TAX AT SOURCE ON THE INTEREST PAID BY THE ASSESSEE TO H.P. BUILDING & OTHER CONSTRUCTION WORKER WELFARE BOARD, KHALINI, SHIMLA. THE LD. COUNSEL FOR ASSESSEE STATED THAT TH E TDS ON THE SAME WAS DEDUCTIBLE AS PER THE PROVISIONS OF SE CTION 194A OF THE ACT, WHICH REQUIRED TAX TO BE DEDUCTED AT SOURCE ON THE INTEREST OTHER THAN INTEREST ON SECUR ITY. THE LD. COUNSEL FOR ASSESSEE STATED THAT THERE IS NO DI SPUTE VIS- -VIS THIS POSITION SINCE EVEN AS PER THE ORDER PAS SED ON THE ASSESSEE U/S 201(1)/201(1A) OF THE ACT DATED 1.2.20 13 THE ASSESSEE WAS HELD LIABLE FOR TAX DEDUCTION AT SOURC E ON THE INTEREST PAID TO THE BOARD UNDER THE PROVISIONS OF SECTION ITA NO.1148/CHD/2014 A.Y. 2011-12 6 194A OF THE ACT. THE LD. COUNSEL FOR ASSESSEE THERE AFTER STATED THAT SUB-SECTION (3) OF SECTION 194A WAS AN EXCLUSIONARY CLAUSE LISTING SITUATION IN WHICH NO T AX WAS REQUIRED TO BE DEDUCTED AT SOURCE ON THE INTEREST P AID. DRAWING OUT ATTENTION TO THE SAID SUB-SECTION AND M ORE SPECIFICALLY CLAUSE (F) OF THE SAME WHICH READS AS UNDER: S.194A. (1) ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY INCOME BY WAY OF INTEREST OTHER THAN INCOME [BY WAY OF INTEREST ON SECURITIES], SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT INCOME-TAX THEREON AT THE RATES IN FORCE. . .. .. (3) THE PROVISIONS OF SUB-SECTION (1) SHALL NOT APPLY . .. .. (F) SUCH OTHER INSTITUTION, ASSOCIATION OR BODY [OR CLASS OF INSTITUTIONS, ASSOCIATIONS OR BODIES] WHICH THE CENTRAL GOVERNMENT MAY, FOR REASONS TO BE RECORDED IN WRITING, NOTIFY IN THIS BEHALF IN THE OFFICIAL GAZETTE. THE LD. COUNSEL FOR ASSESSEE STATED THAT AS PER TH E ABOVE EXCLUSIONARY CLAUSE, NO TAX WAS REQUIRED TO B E DEDUCTED AT SOURCE ON INTEREST INCOME CREDITED OR P AID TO INSTITUTIONS, ASSOCIATIONS OR BODIES NOTIFIED BY TH E CENTRAL GOVERNMENT. THE LD. COUNSEL FOR ASSESSEE STATED THA T THE BOARD WAS NOTIFIED BY THE VIRTUE OF THIS SUB-CLAUSE VIDE NOTIFICATION NO.SO3489. DRAWING OUR AT TO THE SAME, PLACED ITA NO.1148/CHD/2014 A.Y. 2011-12 7 AT PAPER BOOK PAGE NO.32, THE LD. COUNSEL FOR ASSES SEE POINTED OUT THAT IT INCLUDED THE FOLLOWING ENTITIES WHICH WERE INCLUDED FOR THE PURPOSE OF TAX DEDUCTION AT S OURCE ON INTEREST PAYMENT MADE TO THEM: ANY CORPORATION ESTABLISHED BY A CENTRAL, STATE OR PROVINCIAL ACT. ANY COMPANY IN WHICH ALL THE SHARES ARE HELD (WHETHER SINGLE OR TAKEN TOGETHER) BY THE GOVERNMENT OF THE RESERVE BANK OF INDIA OR A CORPORATION OWNED BY THAT BANK. ANY UNDERTAKING OR BODY INCLUDING A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 (XXI OF 1860) FINANCED WHOLLY BY THE GOVERNMENT. 7. THE LD. COUNSEL FOR ASSESSEE STATED THAT THE BOA RD QUALIFIED UNDER THE SAID NOTIFICATION BOTH UNDER FI RST CATEGORY, AS A CORPORATION ESTABLISHED UNDER THE CE NTRAL, STATE OR PROVINCIAL ACT AND AS AN UNDERTAKING REGIS TERED UNDER THE SOCIETIES REGISTRATION ACT WHOLLY FINANC ED BY THE GOVERNMENT. IN SUPPORT OF ITS CONTENTION THAT THE B OARD QUALIFY AS A CORPORATION ESTABLISHED BY THE CENTRAL , STATE OR PROVINCIAL ACT, THE LD. COUNSEL FOR ASSESSEE DREW O UR ATTENTION TO THE ACT UNDER WHICH THE BOARD WAS CONS TITUTED, PLACED AT PAPER BOOK PAGE NO.1 BEING THE BUILDING & OTHER CONSTRUCTION WORKER WELFARE (REGULATION OF EMPLOYME NT AND CONDITIONS OF SERVICE) ACT, 1996 AND DREW OUR A TTENTION TO SECTION 18 OF THE SAME IN CHAPTER-V WHICH DEALT WITH THE CONSTITUTION OF THE STATE WELFARE BOARD AND READ AS UNDER: (1) EVERY STATE GOVERNMENT SHALL, WITH EFFECT FROM SUCH DATE AS IT MAY, BY NOTIFICATION APPOINT, CONSTITUTE A BOARD TO BE KNOWN AS THE (NAME OF THE STATE) BUILDING AND OTHER CONSTRUCTION WORKERS WELFARE BOARD TO ITA NO.1148/CHD/2014 A.Y. 2011-12 8 EXERCISE THE POWERS CONFERRED ON AND PERFORM THE FUNCTIONS ASSIGNED TO IT UNDER THIS ACT.. 8. THE LD. COUNSEL FOR ASSESSEE STATED THAT IT IS C LEARLY EVIDENT FROM THE ABOVE THAT THE BOARD WAS CONSTITUT ED UNDER THE CENTRAL ACT AND HENCE, ANY PAYMENT OF INT EREST MADE TO IT WAS NOT LIABLE FOR TAX DEDUCTION AT SOUR CE BEING INCLUDED IN THE LIST OF ENTITIES NOTIFIED UNDER THE PROVISIONS OF SECTION 194A(3)(III)(F) OF THE ACT. THE LD. COUN SEL FOR ASSESSEE FURTHER STATED THAT THE BOARD WAS FINANCED WHOLLY BY THE GOVERNMENT WHICH WAS EVIDENT FROM SECTIONS 2 3 AND 24 OF THE SAID ACT AND IT WAS POINTED OUT TO US AS UNDER: 23.GRANTS AND LOANS BY THE CENTRAL GOVERNMENT. -- THE CENTRAL GOVERNMENT MAY, AFTER DUE APPROPRIATION MADE BY PARLIAMENT BY LAW IN THIS BEHALF, MAKE TO A B OARD GRANTS AND LOANS OF SUCH SUMS OF MONEY AS THE GOVER NMENT MAY CONSIDER NECESSARY. 24.BUILDING AND OTHER CONSTRUCTION WORKERS' WELFARE FUND AND ITS APPLICATION. THERE SHALL BE CONSTITUTED BY A BOARD A FUND TO BE CALLED THE BUILDING AND OTHER CONSTRUCTION WORKERS' WELFARE FUND AND THERE SHALL BE CREDITED THERETO (A) ANY GRANTS AND LOANS MADE TO THE BOARD BY THE CENTRAL GOVERNMENT UNDER SECTION 23; (B) ALL CONTRIBUTIONS MADE BY THE BENEFICIARIES; (C) ALL SUMS RECEIVED BY THE BOARD FROM SUCH OTHER SOURCES AS MAY BE DECIDED BY THE CENTRAL GOVERNMENT. (2) THE FUND SHALL BE APPLIED FOR MEETING (A) EXPENSES OF THE BOARD IN THE DISCHARGE OF ITS F UNCTIONS UNDER SECTION 22; AND (B) SALARIES, ALLOWANCES AND OTHER REMUNERATION OF THE MEMBERS, OFFICERS AND OTHER EMPLOYEES FOR THE BOARD ; (C) EXPENSES ON OBJECTS AND FOR PURPOSES AUTHORIS ED BY THIS ACT. (3) NO BOARD SHALL IN ANY FINANCIAL YEAR, INCUR EXPE NSES TOWARDS SALARIES, ALLOWANCES AND OTHER REMUNERATION TO ITA NO.1148/CHD/2014 A.Y. 2011-12 9 ITS MEMBERS, OFFICERS AND OTHER EMPLOYEES AND FOR MEETING THE OTHER ADMINISTRATIVE EXPENSES EXCEEDING FIVE PER CENT, OF ITS TOTAL EXPENSES DURING THAT FI NANCIAL YEAR. 9. THE LD. COUNSEL FOR ASSESSEE THEREAFTER DREW OUR ATTENTION TO THE FINDINGS OF THE LD.CIT(APPEALS) PO INTING OUT THAT THE LD.CIT(APPEALS) HAD HELD THAT THE BOARD WA S NOT COVERED U/S 194A(3)(III)(F) READ WITH NOTIFICATION NO.SO3489 SINCE IT HAD NOT BEEN SPECIFICALLY EXEMPTED UNDER T HE NOTIFICATION. THE LD. COUNSEL FOR ASSESSEE STATED T HAT THIS BASIS OF THE LD.CIT(APPEALS) FOR HOLDING THE ASSESS EE AS NOT COVERED UNDER THE NOTIFICATION NO.SO3489 WAS INCORR ECT. LD.COUNSEL FOR THE ASSESSEE STATED THAT THIS SPECIF IC ISSUE OF WHETHER AN ENTITY NEEDED TO BE SPECIFICALLY NOTI FIED FOR BEING ENTITLED TO THE BENEFIT OF SECTION 194A OF TH E ACT, HAD BEEN DEALT WITH BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT (TDS), CHANDIGARH VS. STATE BANK OF PATIALA SECTT. SHIMLA IN ITA NO.17 OF 2014 DATED 31.12.2014 . THE LD. COUNSEL FOR ASSESSEE DREW OUR ATTENTION TO THE QUESTION OF LAW FRAMED BEFORE THE HON'BLE HIGH COURT AS UNDE R: WHETHER FOR THE PURPOSE OF OBTAINING EXEMPTION UNDER SECTION 194A(3)(F) OF THE INCOME TAX ACT, THE ASSESSEE WAS REQUIRED TO APPLY FOR EXEMPTION AND THE SAME COULD ONLY BE GRANTED TO THE ASSESSEE AFTER THE CENTRAL GOVERNMENT ISSUED A NOTIFICATION IN THIS BEHALF IN THE OFFICIAL GAZETTE? 10. THE LD. COUNSEL FOR ASSESSEE THEREAFTER DREW OU R ATTENTION TO THE FINDINGS OF THE HON'BLE HIGH COURT AT PARAS 8 AND 9 OF THE ORDER AS UNDER: 8. NOW THE LANGUAGE OF SECTION 194A OF THE ACT IS SIMPLE, UNAMBIGUOUS AND EVIDENTLY CLEAR. THE CENTRAL GOVERNMENT HAS ISSUED NOTIFICATION, SPECIFICALLY EXEMPTING, INTER ALIA, SOCIETIES WHICH ARE WHOLLY ITA NO.1148/CHD/2014 A.Y. 2011-12 10 FINANCED BY THE GOVERNMENT, THUS MAKING THE PROVISI ONS OF SECTION 1 OF SECTION 194A INAPPLICABLE. IN VIEW OF SUB- SECTION 3(III) (F) OF THE $AID SECTION, IN THE INST ANT CASE, ASSESSEE MADE PAYMENTS, WITHOUT DEDUCTING INCOME-TA X, TO SUCH SOCIETIES WHICH STAND EXEMPTED UNDER THE NOTIFICATION. 9. IN OUR CONSIDERED VIEW, ONCE THE NOTIFICATION STANDS ISSUED, IT IS NOT THE REQUIREMENT OF THE ACT FOR THE ASSESSEE TO EITHER APPLY OR SEEK EXEMPTION FROM THE AUTHORITIES UNDER THE ACT OR THE CENTRAL GOVERNMENT . EXPRESSION 'REASONS TO BE RECORDED IN WRITING' ARE IN REFERENCE TO THE STAGE PRECEDING ISSUANCE OF NOTIFICAT ION BY THE CENTRAL GOVERNMENT. REASONS HAVE TO BE THA T OF THE CENTRAL GOVERNMENT AND NOT THE ASSESSEE. WITH THE ISSUANCE OF NOTIFICATION BY THE CENTRAL GOVERNMENT, WHICH IS NOT THE SUBJECT MATTER OF CHALLENGE HEREIN , PROVISIONS OF SECTION 194(A) (1) OF THE ACT, AUTOMATIC ALLY BECOMES INAPPLICABLE. 11. REFERRING TO THE ABOVE, THE LD. COUNSEL FOR ASS ESSEE STATED THAT THE HON'BLE HIGH COURT IN VERY CLEAR TE RMS HAD STATED THAT ONCE THE NOTIFICATION WAS ISSUED AND TH E ASSESSEE WAS COVERED UNDER THE SAID NOTIFICATION TH ERE WAS NO REASON OR REQUIREMENT FOR THE ASSESSEE TO SEPARA TELY APPLY FOR EXEMPTION AND SEEK SPECIFIC EXEMPTION. TH US, THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT THE CONTENT ION OF THE REVENUE/CIT(APPEALS) THAT THE BOARD WAS NOT EX EMPT FROM TAX DEDUCTION ON THE PAYMENT OF INTEREST MADE TO IT SINCE IT WAS NOT SPECIFICALLY NOTIFIED FOR THE PURP OSE, HAS NO LEGS TO STAND ON. THEREAFTER THE LD. COUNSEL FOR A SSESSEE STATED THAT THE ISSUE IN ANY CASE WAS DIRECTLY COVE RED BY THE DECISION OF THE BANGALORE BENCH OF THE I.T.A.T. IN THE CASE OF CANARA BANK VS. ITO(TDS) IN ITA NOS.889 TO 892/BANG/2014, DATED 23.9.2015 WHEREIN IDENTICAL IS SUE OF PENALTY FOR NON DEDUCTION OF TAX AT SOURCE ON INTER EST PAID TO KARNATAKA BUILDING & CONSTRUCTION WORKERS WELFAR E BOARD A BOARD CONSTITUTED U/S 18 OF BUILDING & OTHE R ITA NO.1148/CHD/2014 A.Y. 2011-12 11 CONSTRUCTION WORKERS (REGULATION AND EMPLOYMENT AND CONDITIONS OF SERVICE) ACT, 1996 HAD BEEN DECIDED I N FAVOUR OF THE ASSESSEE. OUR ATTENTION WAS DRAWN TO THE FIN DINGS OF THE I.T.A.T. AT PARAS 10 TO 15 OF THE ORDER AS UNDE R: 10. AS PER THE ASSESSEE IT IS A CORPORATION ESTABLISHED BY A CENTRAL, STATE OR PROVINCIAL ACT. AT THIS JUNCTURE IT IS REQUIRED TO HAVE A LOOK AS T O HOW THE ASSESSEE HAS BEEN CONSTITUTED. ADMITTEDLY ASSESSEE IS A BOARD WHICH CAME INTO EXISTENCE THROUGH NOTIFICATION NO. KAE 241 LET 2006, DT.18.01.2007, WHICH NOTIFICATION WAS ISSUED IN ADHERENCE TO SECTION 18 OF BUILDING AND OTHER CONSTRUCTION WORKERS (REGULATION AND EMPLOYMENT AND CONDITIONS OF SERVICE) ACT, 1996. THE SAID SECTION IS REPRODUCED HERE UNDER : 18.CONSTITUTION OF STATE WELFARE BOARDS:- (1) EVERY STATE GOVERNMENT SHALL, WITH EFFECT FROM SUCH DATE AS IT MAY, BY NOTIFICATION, APPOINT, CONSTITUTE A BOARD TO BE KNOWN AS THE. . .(NAME OF THE STATE) BUILDING AND OTHER CONSTRUCTION WORKER'S WELFARE BOARD TO EXERCISE THE POWERS CONFERRED ON, AND PERFORM THE FUNCTION ASSIGNED TO, IT UNDER THIS ACT. (2) THE BOARD SHALL BE A BODY CORPORATE BY THE NAME AFORESAID, HAVING PERPETUAL SUCCESSION AND A COMMON SEAL AND SHALL, BY THE SAID NAME, SUE AND BE SUED. (3) THE BOARD SHALL CONSIST OF A CHAIRPERSON, A PERSON TO BE NOMINATED BY THE CENTRAL GOVERNMENT AND SUCH NUMBER OF OTHER MEMBERS, NOT EXCEEDING FIFTEEN, AS MAY BE APPOINTED TO IT BY THE STATE GOVERNMENT: PROVIDED THAT THE BOARD SHALL INCLUDE AN EQUAL NUMBER OF MEMBERS REPRESENTING THE STATE GOVERNMENT, THE EMPLOYERS AND THE BUILDING WORKERS AND THAT LEAST ONE MEMBER OF THE BOARD SHALL BE A WOMAN. (4) THE TERM AND CONDITIONS OF APPOINTMENT AND THE SALARIES AND OTHER ALLOWANCES PAYABLE TO THE CHAIRPERSON AND THE OTHER MEMBERS OF THE BOARD, AND THE MANNER OF FILLING OF CAUSAL VACANCIES OF THE MEMBERS OF THE BOARD, SHALL BE SUCH AS MAY BE PRESCRIBED. 11. THE QUESTION THAT IS REQUIRED TO BE ANSWERED IS WHETHER THE STATE WELFARE BOARD CONSTITUTED ITA NO.1148/CHD/2014 A.Y. 2011-12 12 THROUGH THE NOTIFICATION ISSUED UNDER / IN CONSONANCE WITH SECTION 18(1) OF THE BUILDING AND OTHER CONSTRUCTION WORKERS (REGULATION AND EMPLOYMENT AND CONDITIONS OF SERVICE) ACT, 1996 COULD BE CONSIDERING AS A CORPORATION ESTABLISHED BY A CENTRAL / STATE OR PROVINCIAL ACT, FALLING WITHIN THE MEANING OF NOTIFICATION GO NO.SO 3469, DT.22.10.1970 (SUPRA) REPRODUCED BY US AT PARA NINE ABOVE. A CLOSE LOOK OF THIS NOTIFICATION SHOW THAT APART FROM CORPORATION ESTABLISHED BY CENTRAL OR STATE OR PROVINCIAL ACT, THERE ARE TWO OTHER GROUPS MENTIONED THEREIN. ONE IS A COMPANY IN WHICH ALL THE SHARES ARE HELD BY THE GOVERNMENT OR RBI OR A CORPORATION OWNED BY RBI; AND THE SECOND IS AN UNDERTAKING OR BODY FINANCED WHOLLY BY THE GOVERNMENT. THEREFORE, IN OUR OPINION, THE TERMINOLOGY USED IN CLAUSE (I) OF THE NOTIFICATION SHOULD BE INTERPRETED KEEPING IN MIND THE TENOR AND TEXTURE OF THE OTHER CLAUSES. FOR INTERPRETING WHAT COULD COME WITHIN THE AMBIT OF CLAUSE (I) OF THE RULE NOSCITUR A SOCIIS CAN BE APPLIED IN SUC H A SITUATION. THE COMMON GENUS THAT RUNS THROUGH ALL THE THREE CLAUSES IS THAT OWNERSHIP IS VESTED WITH THE GOVERNMENT EITHER BY WAY OF HOLDING THE SHARES OR BY WAY OF FINANCING. IF A COMPANY WHOSE SHARES ARE HELD BY THE GOVERNMENT IS CONSIDERED AS ONE FALLING WITHIN SUB-CLAUSE (F) OF CLAUSE (III) OF SECTION 194A OF THE ACT, THERE IS N O REASON WHY A WELFARE BOARD CONSTITUTED IN ACCORDANCE WITH THE CENTRAL ENACTMENT SHOULD BE EXCLUDED FROM ITS AMBIT. ESPECIALLY SO SINCE FUNDS OF THE BOARD WAS NOTHING BUT ONLY CESS COLLECTED BY CONTRACTORS UNDER A STATUTORY EDICT. 12. APART FROM THE ABOVE, WHAT WE FIND IS THAT THE BOARD HAS BEEN ESTABLISHED THROUGH A NOTIFICATION ISSUED, UNDER SECTION 18 OF BUILDING AND OTHER CONSTRUCTION WORKERS (REGULATION AND EMPLOYMENT AND CONDITIONS OF SERVICE) ACT, 1996. THIS SECTION HAS BEEN REPRODUCED BY US ABOVE AT PARA TEN ABOVE. CLAUSE (2) THEREOF STATES THAT THE BOARD SHALL BE A BODY CORPORATE. TO UNDERSTAND WHAT IS A BODY CORPORATE, WHEN A READY DEFINITION IS NOT AVAILABLE IN THE RELEVANT STATUTES, THE BEST PLACE TO LOOK IS THE COMPANIES ACT, 1956. DEFINITION OF A BODY CORPORATE AS GIVEN IN SECTION 2(11) OF THE ACT , IS REPRODUCED HEREUNDER : (11)BODY CORPORATE OR CORPORATION INCLUDES A COMPANY INCORPORATED OUTSIDE INDIA, BUT DOES NOT INCLUDE__ (I) A CO-OPERATIVE SOCIETY REGISTERED UNDER ANY LAW RELATING TO CO-OPERATIVE SOCIETIES, AND ITA NO.1148/CHD/2014 A.Y. 2011-12 13 (II) ANY OTHER BODY CORPORATE (NOT BEING A COMPANY AS DEFINED IN THIS ACT), WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION, SPECIFY IN THIS BEHALF. 13. ABOVE DEFINITION HAS BEEN EXTRACTED BY US ONLY TO SHOW THAT A BODY CORPORATE IS CONSIDERED EQUIVALENT TO A CORPORATION. THE BOARD CAN THUS VERY WELL BE CONSTRUED AS A CORPORATION. IT HAS BEEN CONSTITUTED TO EXERCISE THE POWERS CONFERRED ON A STATE UNDER THE BUILDING AND OTHER CONSTRUCTION WORKERS (REGULATION AND EMPLOYMENT AND CONDITIONS OF SERVICE) ACT, 1996. THUS IN OUR OPINION THE METHODOLOGY IN WHICH AND THE PURPOSE FOR WHICH THE BOARD HAS BEEN CREATED, WHEN SEEN ALONG WITH THE WORDING OF SO NO.3469, DT.22.10.1970, WOULD SHOW THAT IT COULD CLAIM ITSELF TO BE FALLING WITHIN SUB CLAUSE (F) OF CLAUS E (III) TO SUB-SECTION (3) OF SECTION 194A OF THE ACT . ASSESSEE HAD A BONAFIDE REASON TO BELIEVE THAT INTEREST PAYMENT ON DEPOSITS PLACED BY THE BOARD DID NOT WARRANT DEDUCTION OF TAX AT SOURCE. 14. WE ARE ALIVE TO THE FACT THAT CIT (A) HAD RELIE D ON THE JUDGMENT OF HONBLE SUPREME COURT IN DALCO ENGINEERING P. LTD (SUPRA) AND HONBLE KERALA HIGH COURT IN KERALA TODDY WORKERS WELFARE FUND (SUPRA) FOR CONSIDERING THE ASSESSEE TO BE A BOARD NOT ESTABLISHED BY A CENTRAL ACT, BUT ESTABLISHED UNDER A CENTRAL ACT. IN OUR OPINION BOTH THESE DECISIONS ARE DISTINGUISHABLE ON FACTS. IN THE CASE OF DALCO ENGINEERING P. LTD (SUPRA), THE QUESTION BEFORE THE HONBLE APEX COURT WAS THAT WHETHER THE DISABILITY COMMISSIONER, PUNE SHOULD HAVE ISSUED DIRECTION TO AN EMPLOYER, TO REINSTATE THE RESPONDENT WHO WAS A TELEPHONE OPERATOR, BACK IN SERVICE, EXERCISING THE JURISDICTION VESTE D IN THE COMMISSIONER U/S.47 OF THE PERSONS WITH DISABILITY (EQUAL OPPORTUNITIES AND PROTECTION) ACT , 1995 (IN SHORT THE DISABILITY ACT). RESPONDENT EMPLOYEE HAD RELIED ON SECTION 47 OF THE SAID ACT WHICH MANDATED NON-DISCRIMINATION IN GOVERNMENT EMPLOYMENT FOR AN EMPLOYEE WHO BECAME DISABLED DURING HIS SERVICE. IT ALSO GAVE POWER TO THE APPROPRIATE GOVERNMENT TO EXEMPT ANY ESTABLISHMENT FROM THE RIGORS OF THE SAID SECTION. THE TERM ESTABLISHMENT EMPLOYED IN SECTION 47 OF THE SAID ACT WAS DEFINED IN SECTION 2(K) OF THAT ACT. AS PER THIS DEFINITION, ESTABLISHMENT MEANT A CORPORATION ESTABLISHED BY OR UNDER A CENTRAL, STATE OR PROVINCIAL ACT OR AN AUTHORITY OR A BODY OWNED OR CONTROLLED OR AIDED BY THE GOVERNMENT OF A LOCAL AUTHORITY OR A GOVERNMENT COMPANY, AS DEFINED IN SECTION 617 OF THE COMPANIES ACT, 1956 AND INCLUDED DEPARTMENTS OF A GOVERNMENT. CONTENTION OF THE RESPONDENT WAS THAT HIS ITA NO.1148/CHD/2014 A.Y. 2011-12 14 EMPLOYER WAS INCORPORATED UNDER COMPANIES ACT, 1956 AND THEREFORE, WAS A CORPORATION FALLING WITH THE DEFINITION OF SECTION 2(K). QUESTION BEFORE TH E HONBLE APEX COURT WAS THEREFORE WHETHER A COMPANY INCORPORATED UNDER THE COMPANIES ACT COULD BE CONSTRUED AS A CORPORATION FALLING WITHIN SECTION 47 OF THE DISABILITY ACT. IT WAS IN SUCH CIRCUMSTANCES THE HONBLE APEX COURT DISTINGUISHED BETWEEN A CORPORATION ESTABLISHED BY A CENTRAL ACT AND A CORPORATION ESTABLISHED UNDER A CENTRAL ACT. A COMPANY INCORPORATED UNDER THE COMPANIES ACT CAN NEVER BE EQUATED WITH A BOARD CONSTITUTED BY A NOTIFICATION MANDATED BY A CENTRAL ENACTMENT. IN THE CASE OF KERALA TODDY WORKERS WELFARE FUND (SUPRA), BEFORE HONBLE KERALA HIGH COURT, THE BOARD OF TRUSTEES CONSTITUTED WAS ONLY TO ADMINISTRATE THE FUNDS IN TERMS OF THE STATUTE UNDER WHICH THE BOARD WAS CREATED. IN OUR OPINION THIS CASE ALSO WAS COMPLETELY DIFFERENT ON FACTS. AS HELD BY HONBLE APEX COURT IN THE CASE OF CIT V. SUN ENGINEERING WORKS (198 ITR 297), OBSERVATIONS OF THE COURT HAS TO BE UNDERSTOOD IN THE LIGHT OF THE QUESTIONS RAISED BEFORE IT. IT IS NEITHER DESIRABL E NOR PERMISSIBLE TO PICK OUT A WORD OR SENTENCE DIVORCED FROM THE CONTEXT OF THE QUESTION RAISED AND TREAT IT AS A COMPLETE LAW. 15. THUS IN OUR OPINION, ASSESSEE WAS JUSTIFIED IN CONSIDERING THE BOARD TO BE AN INSTITUTION, ASSOCIATION OR BODY FALLING WITHIN SUB-CLAUSE (F) O F CLAUSE (III) OF SUB-SECTION (3) OF SECTION 194A OF THE ACT. IT HAD EVERY REASON TOOLD A BONAFIDE BELIEF THAT IT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE ON THE INTEREST PAYMENTS EFFECTED BY IT TO THE BOARD. ESPECIALLY SO SINCE BOARD GAVE ALL DETAILS TO THE ASSESSEE AS TO HOW IT WAS CONSTITUTED AND ALSO EXPLAINED WHY THE INTEREST PAID TO IT WAS EXEMPT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE THEREFORE OF THE OPINION THAT ASSESSEE COULD NOT BE DEEMED TO BE ONE IN DEFAULT FOR NOT DEDUCTING TAX AT SOURCE ON INTEREST PAID TO THE BOARD. ACCORDINGLY WE SET ASIDE THE ORDERS OF THE LD. CIT (A) AND THAT OF ITO (TDS) TREATING THE ASSESSEE AS ONE IN DEFAULT U/S.201(1) AND LEVYING INTEREST U/S.201(1A) OF THE ACT. 12. THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT IT WAS EVIDENT FROM THE ABOVE THAT THE ASSESSEE WAS NOT RE QUIRED TO DEDUCT ANY TAX AT SOURCE ON THE INTEREST PAID TO THE BOARD SINCE IT WAS EXEMPT FROM THE SAID LIABILITY B Y VIRTUE OF BEING INCLUDED IN THE NOTIFICATION ISSUED FOR TH IS PURPOSE ITA NO.1148/CHD/2014 A.Y. 2011-12 15 IN SO3489 ISSUED UNDER THE PROVISIONS OF SECTION 194A(3)(III)(F) OF THE ACT AND, THEREFORE, THERE WA S NOT CASE FOR LEVY OF ANY PENALTY U/S 271C OF THE ACT AT ALL. 13. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(APPEALS). 14. WE HAVE HEARD CONTENTIONS OF BOTH THE PARTIES, PERUSED THE ORDERS OF AUTHORITIES BELOW AND ALSO GONE THROU GH THE DOCUMENTS PLACED BEFORE US. WE ARE IN COMPLETE AGR EEMENT WITH THE LD.COUNSEL FOR THE ASSESSEE THAT THE ASSES SEE WAS NOT REQUIRED TO DEDUCT ANY TAX AT SOURCE ON THE PAY MENT MADE TO THE BOARD. THE FACT THAT THE LIABILITY TO DEDUCT TAX ON THE SAID INTEREST PAYMENT AROSE U/S 194A OF THE ACT ON ACCOUNT OF BEING INTEREST OTHER THAN INTEREST ON SE CURITIES IS NOT IN DISPUTE BEFORE US. CLEARLY, AS DEMONSTRAT ED BY THE LD. COUNSEL FOR ASSESSEE BEFORE US ,BY VIRTUE OF SU B CLAUSE (3)(III)(F), OF THE SAID SECTION, INTEREST PAID TO NOTIFIED INSTITUTIONS ARE EXEMPT FROM TAX DEDUCTION AT SOURC E AND NOTIFICATION PRODUCED BEFORE US, ISSUED UNDER THE S AID CLAUSE, BEING SO3489, CLEARLY LISTS ENTITIES WHICH HAVE BEEN FORMED UNDER THE STATE OR CENTRAL ACT. THE ASSESSEE HAS DEMONSTRATED BEFORE US THAT THE BOARD WAS CONSTITUT ED UNDER CENTRAL ACT I.E. BUILDING & OTHER CONSTRUCTIO N WORKERS(REGULATION OF EMPLOYMENT AND CONDITIONS OF SERVICE)ACT, 1996. ALL THE ABOVE FACTS HAVE NOT BEE N DISPUTED BY THE REVENUE. THEREFORE, SO FAR AS THE EXCLUSION OF THE INCOME PAID TO THE BOARD FROM THE PROVISIONS OF TDS IS CONCERNED, IT IS NOT DISPUTED THAT THE BOARD IS COV ERED UNDER ITA NO.1148/CHD/2014 A.Y. 2011-12 16 THE GENERAL NOTIFICATION ISSUED IN THIS REGARD. THE ONLY CONTENTION OF THE REVENUE FOR HOLDING THAT THE BOA RD WAS NOT EXCLUDED FOR THE PURPOSES OF TAX DEDUCTION AT S OURCE IS THAT THE BOARD IS NOT SPECIFICALLY NOTIFIED FOR THE PURPOSE. THIS CONTENTION OF THE REVENUE HAS ALSO BEEN DEMONS TRATED BEFORE US TO BE INCORRECT SINCE THE HON'BLE JURISDI CTIONAL HIGH COURT IN THE CASE OF STATE BANK OF PATIALA(SUP RA) HAS CATEGORICALLY HELD THAT THERE IS NO NEED FOR A SPEC IFIC NOTIFICATION IN THIS REGARD. MOREOVER THE DECISION OF THE COORDINATE BENCH IN THE CASE OF CANARA BANK(SUPRA), RELIED ON BY THE LD.COUNSEL FOR THE ASSESSEE ,IS WE FIND O N IDENTICAL ISSUE WHEREIN THE ASSESSEE BANK HAD BEEN HELD TO BE ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOURCE ON INTEREST PAID TO KARNATAKA BUILDING AND CONSTRUCTIO N WORKERS WELFARE BOARD WHICH WAS FORMED UNDER THE BU ILDING AND CONSTRUCTION WORKERS(REGULATION AND EMPLOYMENT AND CONDITIONS OF SERVICE )ACT,1996.IN THE SAID CASE IT WAS HELD BY THE ITAT THAT THE BOARD WOULD QUALIFY AS BEING FORMED UNDER A CENTRAL ACT AND THUS BE TREATED AS NOTIFIED FOR PURPOSES OF NO DEDUCTION OF TAX AT SOURCE ON THE IN TEREST PAID TO IT IN TERMS OF SECTION 194A(3)(III)(F) OF T HE ACT. IN THE PRESENT CASE THE BOARD HAS BEEN FORMED UNDER THE SA ME CENTRAL ACT AND THE SAID DECISION IS THEREFORE SQU ARELY APPLICABLE TO THE PRESENT CASE . 15. IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT ANY TAX AT SOURCE ON THE PAYMENT O F INTEREST MADE TO THE BOARD BY VIRTUE OF THE PROVISIONS OF SE CTION ITA NO.1148/CHD/2014 A.Y. 2011-12 17 194A(3)(III)(F) OF THE ACT READ WITH NOTIFICATION N O.SO3489 AND AS A CONSEQUENCE, THEREFORE, NO PENALTY U/S 271 C OF THE ACT COULD BE LEVIED ON IT FOR NON DEDUCTION TO TAX AT SOURCE. PENALTY LEVIED, THEREFORE, IS DIRECTED TO BE DELETE D. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11 TH JULY, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH