Appeal Details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 2439 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 1 month(s) 29 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-10-2017
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
21-06-2017
Assessment Year
2015-2016
Appeal Filed On
01-09-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. ASST. YEAR APPELLANT RESPONDENT 1148/HYD/16 2012-13 ASST. COMMISSIONER OF INCOME TAX (TDS), TDS CIRCLE-2(1), HYDERABAD M/S. NEXGEN EDUCATIONAL TRUST, HYDERABAD [TAN: HYDN04161D] [PAN: AABTN3182H] 1149/HYD/16 2013-14 1150/HYD/16 2014-15 1151/HYD/16 2015-16 FOR REVENUE : DR. SIBENDU MOHARANA, CIT-DR & SHRI M. SITARAM, DR FOR ASSESSEE : SHRI K. GOPAL, AR DATE OF HEARING : 10-10-2017 DATE OF PRONOUNCEMENT : 31-10-2017 O R D E R PER BENCH : THESE FOUR APPEALS ARE BY REVENUE AGAINST SIMILAR BU T SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX (A PPEALS)-8, HYDERABAD, DATED 14-06-2016 ON THE ISSUE OF DELETION OF PENALTY LEVIED U/S. 271C OF THE INCOME TAX ACT [ACT]. THE RE VENUE HAS RAISED SIMILAR GROUNDS IN ALL THE YEARS EXCEPT THE AM OUNT OF PENALTY INVOLVED. THE GROUNDS RAISED IN AY. 2012-1 3 ARE EXTRACTED HEREUNDER FOR THE SAKE OF RECORD: I.T.A. NOS. 1148 TO 1151/HYD/2016 :- 2 - : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD.CIT(A) DID NOT ERR IN DELETING THE PENALTY AMOUNT OF RS. 4,83,61,419/ - LEVIED UNDER SECTION 271C OF THE INCOME TAX ACT, 19 61? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) DID NOT ERR IN DELETING THE PENALTY LEVIED UNDER SECTION 271C O F THE INCOME TAX ACT, 1961 BY HOLDING THAT THE ASSESS EE WAS NOT REQUIRED TO DEDUCT THE TAX AS PER THE PROVISIONS OF SECTION 194 J OF THE ACT EVEN THOUGH THE SERVICE AGREEMENT BETWEEN THE ASSESSEE AND THE DEDUCTEE COMPANY CLEARLY INDICATES THAT THE SERVICES RENDERED WERE I N THE NATURE OF 'TECHNICAL SERVICES'? 3. THE APPELLANT PRAYS TO AMEND OR ALTER ANY GROUND S OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. 2. BRIEFLY STATED, ASSESSEE IS A TRUST RUNNING EDUCATION AL INSTITUTIONS. A SURVEY U/S. 133A(2A) OF THE ACT WAS CO NDUCTED ON 12-03-2015. DURING THE SURVEY OPERATIONS, ASSESSING OFFICER (AO) NOTICED THAT THE SERVICES PROVIDED BY THE SERVICE PROVI DERS ARE IN THE NATURE OF TECHNICAL SERVICES AS CONTEMPLATED U/S. 194J AND HENCE, ASSESSEE WAS REQUIRED TO DEDUCT TAX AT 10% INSTE AD OF 2% DEDUCTED U/S. 194C OF THE ACT. AO PASSED AN ORDER RA ISING DEMAND U/S. 201(1A) FOR AYS. 2012-13 AND 2014-15 AN D DEMAND U/S. 201(1) AND 201(1A) FOR AYS. 2013-14 AND 2015-1 6. HE ALSO INITIATED PENALTY PROCEEDINGS U/S. 271C AND LEVIED PE NALTY FOR THE IMPUGNED YEARS AS UNDER: AY. PENALTY RS. 2012-13 4,83,61,419 2013-14 5,20,18,920 2014-15 8,12,18,325 2015-16 12,55,78,932 I.T.A. NOS. 1148 TO 1151/HYD/2016 :- 3 - : 3. ASSESSEE CONTESTED THE ABOVE AND RAISED VARIOUS GR OUNDS ON THE PRINCIPLES OF LAW AND ALSO ON FACTS. THE LD.CIT( A) AFTER CONSIDERING THE DETAILED SUBMISSIONS OF ASSESSEE AND VARIOUS PRINCIPLES LAID DOWN BY THE HIGHER JUDICIAL AUTHORI TIES AND ALSO ON THE FACT THAT HE HAS PASSED SOME ORDERS PARTLY ALLOWING, AS FAR AS THE DEMANDS LEVIED U/S. 201(1) AND 201(1A) ARE CONCE RNED, DELETED THE PENALTY BY STATING AS UNDER: 6.9 IN THE LIGHT OF THE SUBMISSIONS AND DISCUSSIONS SUPRA, IT IS PERTINENT TO MENTION HERE THAT APPELLANT'S APPEAL A GAINST DEMANDS LEVIED U/S.201(1) AND 201(LA) HAS BEEN PARTLY ALLOWED VIDE ORDER NO. ITA NO. 0039/CIT(A)-8/HYD/2015-16, DATED 6TH JUNE, 2016. KE EPING IN VIEW THE FACTS, ISSUES AND CIRCUMSTANCES OF THE INSTANT CASE , PENALTY LEVIED U/S.271C IS DELETED AND GROUNDS NOS. 2 TO 10 ARE AL LOWED. REVENUE IS AGGRIEVED. 4. LD. CIT-DR SUBMITTED THAT CIT(A) HAS ERRED IN DELETIN G THE PENALTY AS THERE IS A FAILURE ON THE PART OF ASSESSEE TO DEDUCT TAX AND REMIT TO THE GOVERNMENT AS QUANTIFIED IN VARIOUS OR DERS IN THE IMPUGNED ASSESSMENT YEARS. 5. IN RESPONSE, LD.AR WAS TO SUBMIT THAT THERE WAS NO DE MAND U/S. 201(1) FOR AYS. 2012-13 TO 2014-15 AND HENCE TH E PROVISIONS OF SECTION 271C ARE NOT APPLICABLE. FOR AY. 2015-16 A S THE RETURN FOR THAT YEAR WAS NOT FILED, THE AO RAISED THE DEMAND U /S. 201(1) ALSO, BUT LD.CIT(A) GAVE RELIEF ON THAT ISSUE ON VERI FICATION OF FACTS. IT WAS ALSO SUBMITTED THAT ASSESSEE HAD BONAFIDE BELIEF THAT THE TAX WAS TO BE DEDUCTED U/S. 194C WHEREAS THE AO WAS OF THE OPINION THAT THE TAX WAS TO BE DEDUCTED U/S. 194J. REFERRING TO THE AGREEMENTS IN THIS REGARD AND VARIOUS JUDICIAL PRIN CIPLES, IT WAS I.T.A. NOS. 1148 TO 1151/HYD/2016 :- 4 - : SUBMITTED THAT ASSESSEE HAS REASONABLE CAUSE AND ACCORD INGLY, THE LD.CIT(A) DELETED THE PENALTY INVOKING THE PROVISIONS OF SECTION 273B. HE SUPPORTED THE ORDERS OF THE LD.CIT(A). 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS ON RECORD AND VARIOUS CASE LAW RELIED UPON B Y THE PARTIES. IT IS A FACT THAT NO DEMAND U/S. 201(1) WAS RAISED F OR TWO ASSESSMENT YEARS AND EVEN OTHER TWO YEARS WHERE IT WAS RAISED, LD.CIT(A) HAS GIVEN RELIEF AND DELETED THE DEMANDS R AISED U/S. 201(1). THE ONLY ISSUE FOR SURVIVAL IN THE QUANTUM O F APPEALS IS WHETHER INTEREST IS LIVIABLE U/S. 201(1A) AND IF SO, W HAT WAS THE PERIOD FOR WHICH THE INTEREST WAS LEVIABLE. AS SEEN FROM THE PROVISIONS OF SECTION 271C, THERE SHOULD BE A FAILURE ON THE PART OF ASSESSEE TO DEDUCT TAX OR REMIT TAX WITHIN THE PROVISION S SO AS TO ATTRACT PENALTY. IN THIS CASE, AS SEEN FROM THE FACTS, A SSESSEE IN FACT DEDUCTED TAX AT 2% UNDER THE PROVISIONS OF SECTION 1 94C ON THE REASON THAT THE AGREEMENTS ENTERED WERE CONTRACTUAL I N NATURE AND NOT FOR PROVIDING TECHNICAL SERVICES. BY V IRTUE OF THE AMENDMENT BROUGHT TO SECTION 201(1) BY INSERTION OF PR OVISO W.E.F. 01-07-2012, DEMANDS U/S. 201(1) CANNOT BE RAISED, IF THE DEDUCTEE HAS SATISFIED THAT IT HAS INCLUDED THE INCOME AND REMIT TED THE TAXES. THEREFORE, WHETHER IT IS DEDUCTION U/S. 194C O R 194-J SINCE THE DEDUCTEE HAS ADMITTED THE INCOMES AND PAID TAXES THER EON, THE QUESTION OF SHORT DEDUCTION OR NON-REMITTANCE OF TAX DOES NOT ARISE IN THIS CASE. IN FACT THERE WERE NO DEMANDS U/S. 201 (1) SO AS TO LEVY PENALTY U/S. 271C. 6.1. THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF C IT VS. CADBURY INDIA LTD., [11 TAXMANN.COM 66 (DELHI)] HAS CONSIDERED I.T.A. NOS. 1148 TO 1151/HYD/2016 :- 5 - : THE ISSUE ON SIMILAR FACTS OF THE CASE, WHEREIN ALSO THE TDS WAS DEDUCTED U/S. 194C, WHEREAS THE AO DEMANDED THE DEDUC TION U/S. 194-I AND 194-J, AT A HIGHER RATE. THE HONBLE H IGH COURT HAS HELD AS UNDER: IT IS A SETTLED LAW THAT WHAT WOULD CONSTITUTE RE ASONABLE CAUSE CANNOT BE LAID DOWN WITH PRECISION AND THAT THE QUE STION AS TO WHETHER THERE WAS REASONABLE CAUSE OR NOT FOR THE ASSESSEE NOT TO DEDUCT TAX AT SOURCE AT ALL OR UNDER SOME PARTICULAR PROVISION TH AN PRESCRIBED WAS A QUESTION OF FACT WHICH HAD TO BE SEEN IN THE FACTS AND CIRCUMSTANCES OF EACH CASE [PARA 7]. IN THE INSTANT CASE, THE ASSESSEE HAD BEEN DEDUCTIN G TAX FROM THE PAYMENTS PAYABLE TO CFAS UNDER SECTION 194C ON A CO NSOLIDATED BASIS TOWARDS DIFFERENT HEADS. THERE WAS NO REASON TO DIS BELIEVE THE ASSESSEE THAT THE SAME WAS BEING DONE BY ITS EMPLOYEES ON MI SCONCEIVED PROFESSIONAL ADVICE GIVEN BY THE CHARTERED ACCOUNTA NT. SINCE THE PAYMENTS WERE TO BE DEDUCTED FROM CFAS, NO BENEFIT WAS TO BE DERIVED BY THE ASSESSEE FOR MAKING LESSER OR INACCURATE DEDUCT IONS. NO MALA FIDE INTENTION OF ANY KIND COULD HE ATTRIBUTED TO THE AS SESSEE FOR DEDUCTING TAX UNDER ONE PROVISION OF LAW THAN THE OTHER. IT WAS N EITHER THE CASE OF MALA FIDE INTENTION NOR THAT OF NEGLIGENT INTENTION OR W ANT OF BONA FIDE, BUT A CASE OF MISCONCEIVED BELIEF OF APPLICABILITY OF ONE PROVISION OF LAW. IT COULD NOT BE SAID JUDICIOUSLY THAT THE ASSESSEE HAD FAILE D TO COMPLY WITH THE PROVISION OF SECTIONS 194-1 AND 194J WITHOUT REASON ABLE CAUSE [PARA 8]. THEREFORE, THE FINDINGS AS RECORDED BY THE TRIBUNAL WERE JUSTIFIED AND THE INSTANT APPEALS WERE TO BE DISMISSED. 7. LD.CIT(A)S FINDINGS ON THE ISSUE IS IN CONSONANC E WITH THE PRINCIPLES LAID DOWN AND CONSISTENT WITH THE PROVISION S OF THE ACT. THE PROVISIONS OF SECTION 273B ARE APPLICABLE AS ASS ESSEE HAS A REASONABLE CAUSE FOR NON-DEDUCTION OF TAX AT 10% AS AG AINST 2% IT HAS DEDUCTED. IN FACT, THE OPINION OF THE AO HAS NOT Y ET BECOME FINAL AS THE ISSUE OF LEVY OF INTEREST U/S. 201(1A) ITS ELF IS BEING RESTORED TO THE FILE OF AO FOR FRESH EXAMINATION IN AP PEALS IN ITA NOS. 1152/HYD/2016 TO 1155/HYD/2016, (SEPARATELY CO NSIDERED). I.T.A. NOS. 1148 TO 1151/HYD/2016 :- 6 - : CONSIDERING THIS, WE ARE OF THE OPINION THAT THERE IS N O NEED TO INTERFERE WITH THE ORDER OF THE LD.CIT(A). ACCORDINGLY , THE GROUNDS OF REVENUE ARE REJECTED. IN FACT THE GROUNDS ARE PE CULIARLY WORDED AS CAN BE SEEN FROM THE GROUNDS ITSELF. THE REVENU E IS ASKING WHETHER THE CIT(A) DID NOT ERR (SIC). IN RESPONSE, WE CAN ONLY SAY THAT THE CIT(A) DID NOT ERR IN DELETING THE PENALTIES. 8. IN THE RESULT, ALL THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2017 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 31 ST OCTOBER, 2017 TNMM I.T.A. NOS. 1148 TO 1151/HYD/2016 :- 7 - : COPY TO : 1. THE ASST. COMMISSIONER OF INCOME TAX(TDS), TDS C IRCLE- 2(1), HYDERABAD. 2. M/S. NEXGEN EDUCATIONAL TRUST, PLOT NO. 80, SHRI SAI PLAZA, III FLOOR, AYYAPPA SOCIETY, MADHAPUR, HYDERA BAD. 3. CIT (APPEALS)-8, HYDERABAD. 4. CIT-TDS, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.
