ITO, Jaipur V. JSEL SECURITIES LTD, Jaipur

ITA 123/JPR/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5103 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 31-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: MANISH AGARWAL CA DHK
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL ; DS LE{K BEFORE:SHRI BHAGCHAND,AM & SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 123/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 THE ITO WARD- 6 (1) JAIPUR CUKE VS. M/S. JSEL SECURITIES LTD. JLN MARG, MALIVYA NAGAR JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAACJ 9169 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA, ADDL. CIT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL, CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28/07/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 29 /07/2016 VKNS'K@ ORDER PER BHAGHCHAND, AM THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER O F THE LD. CIT(A)-II, JAIPUR DATED 30-11-2012 FOR THE ASSESSM ENT YEAR 2006-07 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN:- (I) DELETING THE PENALTY IMPOSED U/S 271(1) OF RS. 30,72,658/- IMPOSED ON ACCOUNT OF ASSESSEE'S DELIB ERATE FAILURE TO MAKE TDS ON THE PAYMENTS MADE TO CDSL. ITA NO. 123/JP/2013 THE ITO, WARD- 6(1),JAIPUR VS. M/S. JSEL SECURITIES LTD., JAIPUR . 2 (II) OBSERVING THAT IT IS A DEBATABLE ISSUE WHETHER TDS WAS DETECTABLE ON THE PAYMENT MADE TO CDSL DES PITE THE FACT THAT THE ASSESSEE'S LIABILITY FOR MAKING T DS ON THE PAYMENTS MADE TO CDSL WAS WELL WITHIN THE PROVISION OF SECTION 194J OF THE I.T. ACT, 1961. 2.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET OF HEARING, IT I S OBSERVED THAT THE DEPARTMENT HAS CHALLENGED THE ACTION OF THE LD. CIT (A) IN DELETING THE PENALTY OF RS. 10,35,266/ IMPOSED BY THE AO U/S 271 (1)(C) OF THE ACT ON THE DISALLOWANCE MADE AT RS. 30,72,658/- U/S 40(A)( IA) OF THE ACT. THE OBSERVATION OF THE LD. CIT(A) ALLOWING THE APPEAL O F THE ASSESSEE TO THIS EFFECT IS AS UNDER:- 3. FACTS IN BRIEF OF THIS CASE ARE THAT IN ORDER PASSED U/S 143(3) DATED 15-12-208 AT TOTAL INCOME O F RS. 54,18,765/- AGAINST RETURNED INCOME OF RS. 23,46,10 7/-, ADDITION AMOUNTING TO RS. 30,72,658/- WAS MADE U/S 40(A)(IA) FOR NON-DEDUCTION OF TDS AT 5% U/S 194J W AS TO BE DEDUCTED BY THE ASSESSEE ON PAYMENT OF TRANSACTION OF CDSL. CIT (A)-II, JAIPUR THROUGH ORDER DATED 26-10- 2009 CONFIRMED THE DISALLOWANCE U/S 40(A)(IA), HOWEVER, HON'BLE ITAT BENCH B JAIPUR THROUGH ORDER DATED 12-03-201 0 RESTORED THE MATTER BACK TO THE FILE OF THE LD. CI T(A) TO ASCERTAIN THE NATURE OF SERVICE BEING RENDERED BY C DSL TO THE ASSESSEE. AO IN THE PENALTY ORDER DATED 29-03-2 011 HAS IMPOSED PENALTY ON RS. 30,75,658/- STATING THAT THE DISALLOWANCE WAS CONFIRMED BY CIT(A). DURING APPEL LATE PROCEEDINGS THROUGH WRITTEN SUBMISSION DATED 30-11- 2012 IT HAS BEEN STATED THAT WHETHER TDS WAS AT ALL DEDUCTI BLE IS HIGHLY DEBATABLE. THAT IT IS ALSO DEBATABLE THAT WH ETHER SERVICE PROVIDED IS TECHNICAL SERVICE. THAT THE AMOUNT OF DISALLOWANCE IF AT ALL IS TO BE RESTRICTED ONLY TO THE AMOUNT PAYABLE AT THE YEAR END AND NOT THE TOTAL AMOUNT AL READY ITA NO. 123/JP/2013 THE ITO, WARD- 6(1),JAIPUR VS. M/S. JSEL SECURITIES LTD., JAIPUR . 3 PAID. THAT IT WAS NOT POINTED OUT BY THE TAX AUDIT ORS OTHERWISE THE ASSESSEE WOULD HAVE DEDUCTED TDS EVEN THOUGH IT WAS A DEBATABLE ISSUE. IT WAS FINALLY STA TED THAT AS THE ADDITION ITSELF HAD BEEN SET ASIDE BY HON'BLE ITAT, PENALTY CANNOT BE SUSTAINED. AFTER GOING THROUGH R IVAL SUBMISSIONS, THE AO IS DIRECTED TO DELETE THE PENAL TY BECAUSE ALL PARTICULARS WERE DISCLOSED TO THE DEPARTMENT, A ND FOR TECHNICAL LAPSE OF NON-DEDUCTION OF TDS, PENALTY U/ S 271(1)(C) IS NOT WARRANTED SPECIALLY WHEN THE QUANT UM ADDITION ON THE DEBATABLE ISSUE HAS BEEN SET BY HON 'BLE ITAT ORDER DATED 12-03-2010. IN THE RESULT, THE APP EAL IS ALLOWED. 2.2 IT IS ALSO NOTED THAT THE ASSESSEE HAD FILED AN APPEAL IN ITA NO. 959/JP/2009 FOR THE ASSESSMENT YEAR 2006-07 RAISIN G THEREIN FOLLOWING GROUNDS OF APPEAL. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.30,72,658/- U/S 40(A)(IA) BEING PAYM ENT TO CDSL WITHOUT DEDUCTION OF TAX AT SOURCE. THE LD. CI T(A) ERRED IN HOLDING THAT THE ASSESSEE WAS LIABLE TO DEDUCT T AX U/S 194J ON PAYMENT OF RS.30,72,658/- MADE TO CDSL AGAINST TRAN SACTION CHARGES. THE ADDITION (DISALLOWANCE) MADE IS BAD IN LAW AND LIABLE TO BE DELETED. THE ISSUE HAD BEEN DISPOSED OFF BY THE COORDINATE B ENCH VIDE ITS ORDER DATED 12-03-2010 BY OBSERVING AS UNDER:- 4. WE HAVE HEARD BOTH THE PARTIES. BEFORE US, THE LD.AR HAS FILED THE COPY OF THE BI-PARTITE AGREEMENT BETWEEN CDSIL AND THE ASSESSEE . AS PER CLAUSE 2 OF THE AGREEMENT, IT IS MENTIONED THAT THE ASSESSEE WILL PAY TO CDSL SUCH FEES, CHARGES AND DEPOSITS AS SPECIFIED FROM T IME TO TIME IN ITS OPERATION INSTRUCTIONS. IT IS TRUE THAT CDSL IS ALSO REQUIRED THE ASSESSEE TO HAVE HARDWARE AND SOFTWARE AS MAY BE SPECIFIED BY THE CD SL. WE ARE NOT AWARE AS TO WHAT FEES IS CHARGED AND DEPOSITS ARE CHARGED BY CDSL. BEFORE US, THE LD.AR SUBMITTED THAT CDSL IS NOT CHARGING FEES FOR RECEIPT OF THE SHARES IN D- MAT ACCOUNT BUT CHARGES THE FEES AS AND WHEN THE TR ANSACTIONS IN RESPECT OF SALE OF SHARES. HOWEVER, NO SUCH DETAILS HAVE BEEN FILED BEFORE US. AS PER EXPLANATION OF SECTION 194J OF THE ACT, IT IS MADE CLEAR THAT FEES FOR TECHNICAL ITA NO. 123/JP/2013 THE ITO, WARD- 6(1),JAIPUR VS. M/S. JSEL SECURITIES LTD., JAIPUR . 4 SERVICES SHALL HAVE THE SAME MEANING AS IN EXPLANAT ION 2 TO CLAUSE (VII) OF SUB-SECTION (1) SECTION 9. AS PER EXPLANATION 2 SEC TION 9 (VII), IT HAS BEEN MADE CLEAR THAT FEES FOR TECHNICAL SERVICES MEANS A NY CONSIDERATION FOR RENDERING ANY MANAGERIAL , TECHNICAL OR CONSULTANCY SERVICES. THE CUSTOMERS OF THE ASSESSEE ARE HAVING THEIR D-MAT ACCOUNT THRO UGH CDSL. HENCE THE CDSL IS MANAGING THE SHARES OF THE CUSTOMERS IN THE D-MAT FORM. WE ARE NOT HAVING THE DETAILS OF CHARGING OF FEES RAISED BY TH E CDSL BECAUSE THE ASSESSEE HAS NOT FILED ANY COPY OF THE BILL. THE AO HAS ALSO NOT MENTIONED THE DETAILS OF FEES CHARGED BY CDSL. IN THESE CIRCUMSTANCES, IT IS NOT POSSIBLE FOR US TO GIVE THE FINDING AS TO WHETHER THE PAYMENTS MADE BY THE ASSESSEE ARE COVERED U/S 194J OF THE I.T. ACT. THE ASSESSEE IS AN AGENT OF C DSL. WE ARE NOT AWARE AS TO WHETHER CDSL IS HAVING ANY CONTROL AS TO CHARGING O F FEES FROM THE CUSTOMERS BY THE ASSESSEE . WE ARE ALSO MADE AWARE OF THE FAC T THAT THE AO TDS HAS ALSO PASSED THE ORDER U/S 201 AND 201(1A) AGAINST T HE ASSESSEE AND APPEAL IS PENDING BEFORE THE LD. CIT(A) . WE THEREFORE, RESTO RE THIS MATTER ON THE FILE OF THE LD. CIT(A) TO ASCERTAIN THE NATURE OF SERVICES BEING RENDERED BY CDSL TO THE ASSESSEE . THE LD. CIT(A) WILL HAVE TO GO THROU GH THE BILLS RAISED BY THE CDSL AND ALSO TO PROCEEDS AS PER OPERATING INSTRUCT IONS OF CDSL FOR THE PURPOSE OF CHARGING OF FEES AND OTHER CHARGES ETC. ACCORDINGLY THE MATTER IS RESTORED BACK TO THE FILE OF THE LD. CIT(A) AND TH IS MATTER MAY BE HEARD TOGETHER ALONGWITH ORDER OF THE AO TDS U/S 201 / 201(1A) OF THE ACT. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. 2.3 WE HAVE ALSO TAKEN INTO THE CONSIDERATION THE S UBMISSIONS INCLUDING THE CASE LAWS RELIED ON BY BOTH THE PART IES. HOWEVER, WE FIND THAT THE QUANTUM ADDITION OF THE ASSESSEE (SUPRA) H AS BEEN RESTORED BY THE COORDINATE BENCH VIDE ITS ORDER DATED 12-03-2010 TO THE FILE OF THE LD. CIT(A) AND ITS OUTCOME IS AWAITED AS CONFIRMED BY T HE LD. AR OF THE ASSESSEE IN HIS WRITTEN SUBMISSION. HENCE, IT IS NO T DESIRABLE ON OUR PART TO CONFIRM THE ACTION OF THE LD. CIT(A) ON THE ISSUE O F DELETING THE PENALTY U/S 271(1)(C) IMPOSED BY THE AO, FOR WANT OF APPR OPRIATE DECISION ON MOOT ISSUE AS RAISED BY THE ASSESSEE IN ITS MAIN AP PEAL IN ITA NO. ITA NO. 123/JP/2013 THE ITO, WARD- 6(1),JAIPUR VS. M/S. JSEL SECURITIES LTD., JAIPUR . 5 959/JP/2009. IN THIS VIEW OF THE MATTER, WE RESTORE THE ISSUE OF DELETING THE PENALTY U/S 271(1)(C) OF THE ACT TO THE FILE O F THE LD. CIT(A) TO DECIDE ITS AFRESH BY CONSIDERING THE ISSUE OF QUANTUM APPE AL AS THE SAME HAD BEEN RESTORED BY THE COORDINATE BENCH VIDE ITS ORDE R DATED 12-03-2010. THUS THE APPEAL OF THE REVENUE IS ALLOWED FOR STATI STICAL PURPOSES AS INDICATED ABOVE. 0 IN THE RESULT, APPEAL OF REVENUE IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29 /07/201 6 SD/- SD/- DQY HKKJR HKKXPUN (KUL BHARAT) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 29 /7/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ITO, WARD- 6 (1) , JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S.JSEL SECURITIES LTD., JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.123/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR