ACIT (E), New Delhi V. Jamnalal Bajaj Foundation, New Delhi

ITA 118/DEL/2015

• Counselvise Citation: 11820114 RSA 2015
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 2
• Next Hearing Date: 15-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 07-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KR CHOPRA
• Assessee Lawyers: M A GOHEL
• Keywords: Business income; Charitable institution

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC-2, NEW DELHI) BEFORE SHRI J. S. REDDY, ACCOUNTANT MEMBER I.T.A. NO.118 /DEL/2015 ASSESSMENT YEAR : 2010-11 ACIT, (E), CIRCLE 2(1), VS. JAMNALAL BAJAJ FOOUND ATION, NEW DELHI C/O BAJAJ AUTO LTD., B-60-61, NARAINA INDL. AREA, PHASE II, NEW DELHI-110 028 GIR / PAN:AAATJ0402B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANOJ KR. CHOPRA, SR. DR RESPONDENT BY : SHRI M.A. GOHEL, CA DATE OF HEARING : 15.07.2015 DATE OF PRONOUNCEMENT : 20.07.2015 ORDER THIS IS AN APPEAL FILED BY ASSESSEE DIRECTED AGAIN ST THE ORDER OF LD. CIT(A) XXI, NEW DELHI, DATED 16.10.2014 FOR THE AS SESSMENT YEAR 2008- 09 ON THE FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THAT AS PER THE PROVI SION OF SECTION 199 OF THE ACT, TDS IS A TAX PAID BY THE RECIPIENT OF I NCOME ON WHICH TAX HAS BEEN DEDUCTED AS SOURCE, THEREFORE, ALLOWANCE T DS AS APPLICATION OF INCOME WILL TANTAMOUNT TO ALLOWANCE OF TAX AS AP PLICATION OF INCOME, WHICH IS NOT A ALLOWABLE AS APPLICATION OF INCOME.. 2. THE FACTS OF THE CASE IN BRIEF ARE THAT IN THE C OURSE OF ASSESSMENT PROCEEDINGS, IS HAS BEEN NOTICED THAT ASSESSEE HAS NOT DECLARED TAXES DEDUCTED AT SOURCE (TDS) OF RS. 22,50,895/- AS INCO ME. ONLY THE AMOUNT RECEIVED NET OF TDS IS REFLECTED AS INCOME. AS THE ASSESSEE DOES NOT HAVE TAXABLE INCOME, THE INCOME TAX REFUND DUE TO TDS IS SHOWN AS INCOME IN THE YEAR OF RECEIPT. THE TAXES DEDUCTED AT SOURCE (TDS ) CONSTITUTE PART OF ITA NO.118/DEL/2015 2 INCOME RECEIVED AND THIS HAS BEEN DEDUCTED FROM INC OME AND ALTERNATIVELY THE TAX DEDUCTED AT SOURCE WAS CLAIMED AS APPLICATI ON OF INCOME. THE ASSESSEE OFFERED INCOME IN 'INCOME & EXPENDITURE AC COUNT' NET OF TDS. THE A.O. WAS OF THE VIEW THAT THIS IS NOT IN ACCORD ANCE TO PROVISIONS OF INCOME TAX ACT AS THE PROVISIONS OF SECTION 199 STI PULATE THAT ANY DEDUCTION MADE IN ACCORDANCE TO PROVISIONS OF CHAPTER XVII AN D PAID TO THE CENTRAL GOVERNMENT SHALL BE TREATED AS A PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOSE INCOME, THE TAX DEDUCTION HAS BEE N MADE. THE LD. A.O. HELD THAT ALLOWANCE OF TDS AS APPLICATION OF INCOME WILL TANTAMOUNT TO ALLOWANCE OF 'TAX' AS APPLICATION OF INCOME, WHICH IS NOT ALLOWABLE AS APPLICATION OF INCOME. THEREFORE APPLICATION OF INC OME IN FORM OF TDS OF RS. 22,50,895/- WAS DISALLOWED AND ADDED BACK TO TH E INCOME OF THE ASSESSEE IN THE ASSESSMENT ORDER. 3. THE FIRST APPELLATE AUTHORITY GRANTED RELIEF ON TWO COUNTS:- I) THE A.O. IS NOT JUSTIFIED IN ACCEPTING THE REFUN D OF INCOME TAX OF EARLIER YEARS TDS AS INCOME AND AT THE SAME TIME, REJECTING THE CLAIM OF ASSESSEE THAT TDS MADE IN THAT YEAR, SHOULD NOT BE TAKEN AS INCOME OF THIS YEAR AND THAT IT SHOULD BE CONSIDERED AS INCOME ONL Y IN THE YEAR WHEN REFUND OF TAXES IS MADE BY THE INCOME TAX DEPARTMENT, ON P RINCIPLES OF CONSISTENCY. II) THAT TAX DEDUCTED AT SOURCE IS APPLICATION OF I NCOME U/S 11(1) OF THE ACT AND THAT SIMILAR DECISIONS WARE TAKEN EARLIER F OR A PERIOD OF TWO ASSESSMENT YEARS I.E. 2008-09 AND 2009-10. 4. AFTER HEARING RIVAL CONTENTIONS, I UPHOLD THE OR DER OF FIRST APPELLATE AUTHORITY BY APPLYING THE DECISION OF HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF DIT(EXEMPTION) VS. NATIONAL ASSOCIATION OF SOFTWARE AND ITA NO.118/DEL/2015 3 SERVICES COMPANY 345 ITR 262 WHEREIN AT PAGE 371, P ARA 12 IT IS HELD AS UNDER: THUS; IT APPEARS THAT THERE IS A CONSENSUS OF JUDI CIAL VIEW ON THE QUESTION WHETHER PAYMENT OF TAXES CAN BE CONSIDERED AS A PROPER DEDUCTION WHILE DETERMINING THE INCOME AVAILABLE TO A TRUST FOR 'APPLICATION TO CHARITABLE PURPOSES AS REQUIRED BY SECTION 11(1)(A) OF THE ACT: THE QUESTION IS NOT WHETHER TAXES ARE ALLO WABLE WHILE .COMPUTING THE BUSINESS INCOME OF AN ASSESSEE UNDE R THE PROVISIONS OF THE ACT. THE QUESTION IS WHETHER THE WORD 'INC OME' USED IN SECTION 11(1) (A) OF .THE ACT MUST BE 'ASSIGNED THE SAME MEANING AS THE WORDS 'TOTAL INCOME' AS DEFINED IN SECTION 2(45 ) OF THE ACT, THE CENTRAL BOARD OF DIRECT TAXES ITSELF HAS OPINED IN THE CIRCULAR CITED ABOVE THAT IT WOULD BE INCORRECT TO: ASSIGN TO THE WORD INCOME USED IN SECTION 1L(L)(A)THE SAME MEANING AS HAS BEEN STA TUTORILY ASSIGNED TO THE EXPRESSION TOTAL INCOME' UNDER SECTION. 2(45) , OF THE ACT. HAVING REGARD TO THE AUTHORITIES NOTICED ABOVE AND KEEPING IN VIEW THE' FACT THAT THE LONG-SETTLED POSITION, WHICH HAS ALSO BEEN ACCEPTED BY THE, CENTRAL BOARD .OF DIRECT TAXES, .SHOULD NOT BE UPSET, PARTICULARLY WHERE THE STATUTE WHICH WE ARE DEALING WITH IS AN ALL- INDIA STATUTE, WE EXPRESS L AGREEMENT WITH THE JUDI CIAL TREND AND HOLD THAT THE PAYMENT OF TAXES UNDER THE VDIS IS TO BE D EDUCTED BEFORE ARRIVING AT THE COMMERCIAL INCOME OF THE ASSESSEE-R UST THAT IS AVAILABLE FOR APPLICATION TO CHARITABLE PURPOSES. W E ARE THUS IN AGREEMENT WITH THE VIEW TAKEN BY THE TRIBUNAL ON TH IS POINT. 5. IN VIEW OF THE FINDINGS IN THE JUDGEMENT OF HON BLE JURISDICTIONAL HIGH COURT, I UPHOLD THE ORDER OF FIRST APPELLATE A UTHORITY THAT THE TAX DEDUCTED AT SOURCE IS TO BE TAKEN AS APPLICATION OF INCOME. THE APPEAL OF REVENUE IS DISMISSED. 6. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2015 SD./- (J. S. REDDY) ACCOUNTANT MEMBER DATE: 20 TH JULY, 2015 SP ITA NO.118/DEL/2015 4 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 16/7 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 17,20, SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 21/7/15 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 21/7 SR. PS/PS 7 FILE SENT TO BENCH CLERK 21/7 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER