Het Graphics, Ahmedabad V. The Addl.CIT,TDS Range, Ahmedabad

ITA 1268/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0529 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 04-03-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 22-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T SANKAR
• Assessee Lawyers: N B SHAH
• Keywords: Recovery proceedings
• Section: 273B; 194C; 201(1); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI A. MOHAN ALANKAMONY, AM AND SHRI KUL B HARAT, JM) ITA NO. 1268/AHD/2010 A. Y.: 2006-07 HET GRAPHICS, 4, NARAYAN CHAMBERS, NEHRU BRIDE CORNER, ASHRAM ROAD, AHMEDABAD P. A. NO. AADFH 8184 K VS THE ADDL. CIT, TDS RANGE, AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY SHRI N. B. SHAH, AR RESPONDENT BY SHRI T. SANKAR, SR. DR DATE OF HEARING: 04-03-2013 DATE OF PRONOUNCEMENT: 15-03-2013 O R D E R PER A. MOHAN ALANKAMONY: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A)-VI, AHMEDABAD DATED 29-12-2009 IN APPEAL NO.CIT(A)-X/12 3/ADDL. CIT. TDS/09-10, PASSED U/S 250 READ WITH SECTION 271C OF THE IT ACT, FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS RAISED TWO GROUNDS OF APPEAL, W HEREIN GROUND NO.2 WAS NOT ARGUED AND, THEREFORE, DISMISSE D AS NOT PRESSED. THE LONE SURVIVING GROUND NO.1 IS REPRODUC ED HEREIN UNDER FOR REFERENCE: ITA NO.1268/AHD/2010 (AY- 2006-07) HET GRAPHICS VS ADDL. CIT, TDS RANGE, AHMEDABAD 2 (1). THAT THE LEARNED ADDITIONAL COMMISSIONER TDS RANGE HAS ERRED IN LEVYING PENALTY U/S. 271C OF THE INCOM E TAX ACT, 1961, WHICH IS NOT IN ACCORDANCE WITH LAW AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VI HAS ERRED IN CONFIRMING THE PENALTY OF RS.19,09,894/-. THAT THE SAME BE DELETED. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE ADVERTISEMENT BUSINESS. ON VERI FICATION OF THE RECORDS BY THE LEARNED AO IT WAS NOTICED THAT DURIN G THE RELEVANT YEAR UNDER CONSIDERATION THE ASSESSEE HAD FAILED TO DEDU CT TAX FOR THE ASSESSMENT YEAR 2006-07 U/S 194-I OF THE ACT. THERE AFTER, THE LEARNED AO PASSED ORDER U/S 201 (1) READ WITH SECTI ON 201(1A) AND 221 OF THE ACT AND PENALTY PROCEEDINGS U/S 271C OF THE ACT WAS INITIATED ON 02-07-2007. SUBSEQUENTLY, ORDER U/S 27 1C OF THE ACT WAS PASSED ON 20-03-2009 WHEREIN PENALTY OF RS.19,0 9,894/- WAS LEVIED BY HOLDING THAT THERE WAS NO REASONABLE CAUS E FOR DROPPING THE SAME U/S 273B OF THE ACT, SINCE TDS WAS DEDUCTIBLE BY THE ASSESSEE FOR ITS PAYMENTS MADE TO AUDA FOR DISPLAYING KIOSKS BY UTILIZING THE ELECTRICITY POLES ERECTED BY AUDA . 4. THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A) AND ELABORATE SUBMISSIONS WERE MADE. HOWEVER, THE LEARN ED CIT(A) CONFIRMED THE ORDER OF LEARNED AO WITH THE FOLLOWIN G OBSERVATIONS: (I) IT IS ABUNDANTLY CLEAR THAT DURING THE COURSE O F TDS SURVEY PROCEEDINGS IT WAS ESTABLISHED THAT THE ASSE SSEE HAD FAILED TO DEDUCT TDS OF R.19,09,894/- U/S 194- I OF THE ACT ON THE PAYMENT OF RENT OF RS.85,11,116/- TO AUD A. ITA NO.1268/AHD/2010 (AY- 2006-07) HET GRAPHICS VS ADDL. CIT, TDS RANGE, AHMEDABAD 3 (II) FINANCE ACT, 2002 HAD OMITTED SECTION 10(20A) DUE TO WHICH AUDA BECOMES A TAXABLE ENTITY FROM ASSESSMENT YEAR 2003-04 WHICH MANDATES THE ASSESSEE TO DEDUCT TAX FOR THE PAYMENTS MADE BY IT TO AUDA FOR USING THE ELECTRICITY POSTS FOR DISPLAYING ADVERTISEMENTS. (III) BOARD CIRCULAR NO.715 DATED 08-08-1995 ALSO C LARIFIES THE ISSUE. (IV) THE ASSESSEE HAD ALSO NOT OBTAINED CERTIFICATE FROM AUDA REGARDING ITS STATUS FOR TAX LIABILITY, INSTEA D SUO MOTO TAKEN A DECISION NOT TO DEDUCT TAX AT SOURCE F OR THE PAYMENTS MADE TO AUDA. (V) THE ASSESSEE DID NOT HAVE GOOD AND SUFFICIENT R EASONS FOR NOT DEDUCTING TAX AT SOURCE TO GAIN BENEFIT U/S 273B OF THE ACT. 5. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LEARNED AR SUBMITTED BEFORE US THAT THE ASSE SSEE FIRM HAD ENTERED INTO A LICENSE AGREEMENT WITH AUDA TO UTILI ZE THE ELECTRICITY POSTS ERECTED BY THEM TO LIGHT UP THE ROADS FOR THE PURPOSE OF DISPLAYING ADVERTISEMENTS/HOARDINGS. THE ASSESSEE W AS UNDER THE BONA FIDE BELIEF THAT AUDA IS AN ENTITY WHICH IS EX EMPT FROM INCOME TAX. THEREFORE, THE ASSESSEE FAILED TO DEDUCT TAX. THE REVENUE AUTHORITIES HAD CONSIDERED THAT THE PAYMENTS MADE B Y THE ASSESSEE TO AUDA ARE TO BE TREATED AS RENT AND ACCORDINGLY T AX HAS TO BE DEDUCTED U/S 194- I OF THE ACT. HOWEVER, ITAT VIDE ORDER IN ITA NO.4451/AHD/2007 DATED 08-10-2010 HAD HELD THAT THE NATURE OF PAYMENTS FALLS UNDER THE CATEGORY OF PAYMENTS IN LI EU OF CONTRACT, AND, THEREFORE, SECTION 194C OF THE ACT WILL BE APP LICABLE AND NOT 194- ITA NO.1268/AHD/2010 (AY- 2006-07) HET GRAPHICS VS ADDL. CIT, TDS RANGE, AHMEDABAD 4 I OF THE ACT. CONSEQUENTLY, THE AMOUNT OF TDS DEDUC TIBLE WILL BE RS.1,90,649/- DUE TO WHICH THE QUANTUM OF PENALTY W OULD BE SUBSTANTIALLY REDUCED. FURTHER, THE LEARNED AR RELI ED ON THE FOLLOWING DECISIONS: I) ELI LILLY & COMPANY (INDIA) (P) LTD. & ORS., 312 ITR 225 (SC) II) GUJARAT NARMADA VALLEY FERTILIZERS CO. LTD., 66 TTJ (AHD) 121 III) INDIAN PETROCHEMICALS CORPN. LTD., 129 TTJ (AH D) 715 IV) MUTHOOT BANKERS (2012) 50 SOT 146 (COCHIN) (URO ) V) HINDUSTAN LEVER LTD. (2005) 4 SOT 785 (DEL) VI) SENIOR ACCOUNTS OFFICER, THERMAL POWER PROJECT, ANPARA (2000) 66 TTJ (ALL) 529 VII) PUNJAB STATE ELECTRICITY BOARD (2004) 88 TTJ ( CHD) 450 7. THE LEARNED DR SUPPORTED THE ORDERS OF THE REVEN UE AUTHORITIES AND PRAYED THAT THE PENALTY MAY BE SUSTAINED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE REVENUE. AS POINTED OUT BY THE LEARNED AR THE A SSESSEES QUANTUM APPEAL HAD BEEN REMITTED BACK TO THE LEARNE D AO TO EXAMINE THE DATES OF PAYMENTS OF TAXES BY AUDA AND RE-WORK THE INTEREST U/S 201 AND 201(A) OF THE ACT IN THE LIGHT OF DECISION RENDERED BY THE HONBLE SUPREME COURT IN THE CASE OF HINDUST AN COCA COLA BEVERAGES (P) LTD. VS CIT REPORTED IN 293 ITR 226. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HEREIN UNDER FOR REFERENCE: ITA NO.1268/AHD/2010 (AY- 2006-07) HET GRAPHICS VS ADDL. CIT, TDS RANGE, AHMEDABAD 5 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE DOCUMENTS ON RECORD. THE UNDISPUTED FACTS IS THAT T HE ORDER OF THE ITAT PASSED ON 8-10-2010 IN ITA NO.4451/AHD/200 7 OF THE ITAT WAS RECALLED FOR THE LIMITED PURPOSE OF ADJUDI CATING GROUND WITH RESPECT TO CHARGING OF INTEREST U/S 201 AND 201(1A). CIT(A) IN PARA 10 OF THE ORDER HAS GIVEN A FINDING THAT AUDA IS FILING ITS RETURN OF INCOME AND IS ASSESSED TO TAX. CBDT VIDE CIRCULAR NO.275/201/95-IT(B) DATED 29-1-1997 STATES NO DEMAND VISUALIZED U/S. 201(1) OF THE I. T. ACT SHOU LD BE ENFORCED AFTER THE TAX DEDUCTOR HAS SATISFIED THE O FFICER IN CHARGE OF TDS THAT TAXES DUE HAVE BEEN PAID BY THE DEDUCTEE ASSESSEE. HOWEVER, THIS WILL NOT ALTER THE LIABILIT Y TO CHARGE INTEREST U/S. 201 (1A) OF THE ACT TILL THE DATE OF PAYMENT OF TAXES BY THE DEDUCTEE OR THE LIABILITY FOR PENALTY U/S. 2 71C OF THE I. T. ACT. HONBLE APEX COURT IN THE CASE OF HINDUSTAN C OCA COLA (SUPRA) HAS HELD THAT WHERE THE PAYEE HAS ALREADY P AID TAX ON THE INCOME ON WHICH THERE WAS A SHORT DEDUCTION OF TAX AT SOURCE, RECOVERY OF TAX CANNOT BE MADE ONCE AGAIN F ROM THE TAX DEDUCTOR. 8. IN THE PRESENT APPEAL, THE FACTUAL POSITION AS C ONFIRMED BY CIT(A) IS THAT AUDA IS SUBJECT TO TAX AND IS FILING ITS RETURN OF INCOME. HOWEVER, THE DETAILS OF TAXES PAID AND THE DATE OF ITS PAYMENTS BY AUDA ARE NOT ON RECORD. SINCE THE DETAI LS OF TAXES AND DATES OF PAYMENT OF TAXES BY AUDA HAVE NO T BEEN EXAMINED BY THE ASSESSING OFFICER WHILE PASSING THE ORDER U/S. 201 (1) R. W. S. 201(1A) & 221, IN THE INTEREST OF JUSTICE, WE DEEM IT FIT TO REFER THE MATTER BACK TO THE FILE OF A.O. WE DIRECT THAT THE A. O. WILL CALL FOR THE NECESSARY RECORDS AND EXAMINE THE DATES OF PAYMENT OF TAXES BY AUDA AND REWORK TH E INTEREST U/S. 201 AND 201(1A) AS PER LAW IN THE LIGHT OF DEC ISION OF HONBLE APEX COURT AND CBDT CIRCULAR. THIS GROUND O F THE ASSESSEE IS THUS ALLOWED BUT FOR STATISTICAL PURPOS E ONLY. 9. SINCE, THE QUANTUM APPEAL IS PENDING BEFORE THE LEARNED AO FOR DISPOSAL TO DETERMINE THE AMOUNT OF TAX DEDUCTI BLE AT SOURCE, WHICH WILL HAVE A DIRECT BEARING ON LEVY OF PENALTY , WE ARE OF THE OPINION THAT IT WILL PREMATURE TO ADJUDICATE THE PE NALTY APPEAL AT THIS ITA NO.1268/AHD/2010 (AY- 2006-07) HET GRAPHICS VS ADDL. CIT, TDS RANGE, AHMEDABAD 6 STAGE. THEREFORE, WE HEREBY REMITTED THE MATTER BAC K TO THE FILE OF THE LEARNED AO TO PASS APPROPRIATE ORDER AS PER LAW AND MERITS AFTER THE DISPOSAL OF THE QUANTUM APPEAL AND IN CONSIDERA TION OF THE SAME. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 15-03-2013 SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANTA DEKA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER AS ST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION- DIRECT ON COMPUTER 05-03-2013 2 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 3 DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./ P.S.: 4 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 5 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR . P.S./P.S.: 6 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 8 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER 9 DATE OF DESPATCH OF THE ORDER: