M/s Q C Residential Pvt. Ltd., Mohali V. ACIT (TDS), Chandigarh

ITA 1289/CHANDI/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7061 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 07-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VINEET THAKRAL
• Keywords: Non passing of speaking order
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1286 TO 1289/CHD/2012 ASSESSMENT YEARS : 2006-07 TO 2 009-10 M/S Q C RESIDENTIAL PVT LTD V A.C.I.T. (TDS) CHAND IGARH (FORMERLY KNOWN AS QUARK MEDIA HOUSE (INDIA) PVT LTD A-45, INDUSTRIAL AREA PHASE VII-B, MOHALI AAACQ 0535F (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VINEET THAKRAL RESPONDENT BY: SHRI MAHAVIR SINGH DATE OF HEARING 10.9.2014 DATE OF PRONOUNCEMENT 15.9.201 4 O R D E R PER T.R. SOOD, A.M THESE APPEALS ARE DIRECTED AGAINST THE ORDER DATED 21.9.2012 OF THE LD CIT(A), CHANDIGARH. 2. IN ALL THESE APPEALS THE ASSESSEE HAS RAISED COM MON GROUNDS WHICH ARE AS UNDER: 1 THAT THE ORDER OF THE A.C.I.T. (TDS) IS BAD IN L AW AND ON FACTS. 2 THAT THE ASSESSING OFFICER AND LD. CIT(A) HAS FAI LED TO APPRECIATING THE MATERIALS ON THE RECORD AND FACTS OF THE CASE. 3 THAT THE ORDER OF ASSESSING OFFICER AND LD. CIT(A ) IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW AND FACTS OF T HE CASE AND IS, THUS UNTENABLE. 4 THAT THE FACTS AND CIRCUMSTANCES OF THE CASE AN D LAW, THE ASSESSING OFFICER AND LD. CIT(A) HAS FURTHER ERRED IN PASSING A NON SPEAKING ORDER IN VIOLATION OF THE PRINCIPALS OF NA TURAL JUSTICE. 5 THE ASSESSING OFFICER ERRONEOUS, ARBITRARY AND WI THOUT ANY JUSTIFICATION IMPOSED INTEREST DEMAND U/S 201(1A) O F THE ACT ON THE SHORT DEDUCTION OF TAX FROM THE DUE DATE OF THE DED UCTION OF TAX AT 2 SOURCE TO DATE OF FILING OF INCOME TAX RETURN BY TH E DEDUCTEE AMOUNTING TO RS. 6,35,960. 6 THAT THE ASSESSING OFFICER AND LD. CIT(A) HAD ILL EGALLY, WRONGLY, ARBITRARILY AND WITHOUT ANY BASIS TREATED THE MAINTENANCE CHARGES AS RENT. 3 AFTER HEARING BOTH THE PARTIES WE FIND THAT A SUR VEY OPERATION/INSPECTION U/S 133A(1) OF THE ACT WAS CAR RIED OUT IN THE BUSINESS PREMISES OF THE ASSESSEE ON 29.9.2009 WHIC H CONCLUDED ON 1.10.2009. DURING THIS SURVEY IT WAS NOTICED TH AT THE ASSESSEE HAS TAKEN ON LEASE BUILDING, MAINTENANCE OF BUILDIN G FACILITIES FROM QUARK CITY INDIA (P) LTD AS PER LEASE DEED DAT ED 13.4.2005. THE ASSESSEE HAD PAID RENT FROM FINANCIAL YEAR 2005 -06 TO FINANCIAL YEAR 2008-09 AND ACCORDING TO THE ASSESS ING OFFICER TDS WAS REQUIRED TO BE DEDUCTED AT 22.66% U/S 194-I OF THE ACT BY CONSIDERING THE RENT AS WELL AS MAINTENANCE SERV ICES OBTAINED BY THE ASSESSEE. IT WAS FURTHER NOTICED THAT THE A SSESSEE HAS DEDUCTED TDS @ 2.06% ON MAINTENANCE SERVICES INSTEA D OF 22.66% U/S 194-I. THEREFORE A SHOW CAUSE NOTICE WA S ISSUED THAT WHY ACTION SHOULD NOT BE TAKEN U/S 201(1) AND 201(1 A). IN RESPONSE IT WAS MAINLY STATED THAT PROPER TDS HAS B EEN DEDUCTED ON RENT PORTION. LESSOR WAS ALSO REQUESTED TO PROV IDE MAINTENANCE SERVICES SUCH AS LIFT, DG SETS, HVAC & ALL SPLIT A.C, WATER TREATMENT EQUIPMENT, FIRE SAFETY SYSTEM, UPS, ELECTRICAL LIGHTING AND PANNLES, GLASS DOOR AND WINDOWS, HEALT H CLUB EQUIPMENT MAINTENANCE, CONTROL SYSTEM, MISCELLANEOU S EQUIPMENTS, SECURITY, HOUSEKEEPING AND GARDENING. FURTHER THE ASSESSEE HAD RENEGOTIATED TERMS OF THE EARLIER AGRE EMENT AND 3 SEPARATE AGREEMENT ON ACCOUNT OF MAINTENANCE AND SE RVICE CHARGES WAS ENTERED. MAINTENANCE CHARGES WERE NEGO TIATED AT RS. 11.4 PER SQFT AND SUCH MAINTENANCE CANNOT BE CO VERED U/S 194-I. REFERENCE WAS ALSO MADE TO CBDT CIRCULAR NO. 275/201/95- IT(B) DATED 29.1.1997 ACCORDING TO WHICH NO DEMAND CAN BE IMPOSED U/S 201(1) IF THE ASSESSEE IS ABLE TO SATI SFY THE AUTHORITIES THAT TAXES HAVE BEEN PAID BY THE DEDUCT EES. THE ASSESSING OFFICER DID NOT FIND FORCE IN THESE SUBMI SSIONS AND REFERRED TO VARIOUS CLAUSES IN THE LEASE DEED AND H ELD THAT IT WAS A COMPOSITE AGREEMENT THROUGH WHICH ASSESSEE OBTAIN ED THE PREMISES AND RENT ALONG WITH CERTAIN SERVICES AND T HEREFORE THE ASSESSEE WAS SUPPOSED TO DEDUCT TAXES U/S 194-I. H OWEVER, HE FURTHER REFERRED TO THE DECISION OF HON'BLE SUPREM E COURT IN CASE OF HINDUSTAN COCA COLA BEVERAGE P. LTD V CIT, 293 I TR 226 AND HELD THAT THE ASSESSEE WAS ONLY LIABLE TO INTEREST U/S 201(1A) FROM DUE DATE OF DEDUCTION TO THE DATE OF FILING OF INCO ME TAX RETURN. THIS LIABILITY WAS AT RS. 6,35,960. 4 ON APPEAL BEFORE THE LD. CIT(A) WRITTEN SUBMISSIO NS WERE FILED AND THE RELEVANT PORTION HAS BEEN EXTRACTED A S UNDER: SINCE THE ASSESSEE DEDUCTEE HAS NOT ONLY PAID ITS TAX LIABILITY BUT ON THE OTHER HAND PAID IN EXCESS ON ACCOUNT OF TAX DE DUCTION MADE BY THE ASSESSEE-COMPANY THEREFORE IN VIEW OF THIS SITU ATION, THE ASSESSEE DEDUCTEE HAS NOT ONLY DEPOSITED THE TAXED BUT ON THE OTHER HAND THE TAX PAID WAS IN EXCESS DUE TO SOLE REASON OF TAX DEDUCTION BY THE ASSESSEE-COMPANY. IN VIEW OF THIS FACT, THE ASSESSEE-COMPANY THEREFORE IS NOT ONLY LIABLE FOR THE INTEREST U/S 2 01(1A) OF THE ACT., THIS VIEW OF NOT CHARGING INTEREST U/S 201(1A) ON A CCOUNT OF EXCESS DEPOSIT OF TAX BY THE ASSESSEE DEDUCTEE WAS HELD IN THE FOLLOWING CASES: CIT V. ADIDAS INDIA MARKETING (P) LTD, 288 ITR 379 (DELHI) CIT V. RISHIKESH APARTMENTS CO-OP HOUSING LTD. 253 ITR 310 (GUJ) 4 BELOW IS THE TAX INFORMATION IN RELATION TO DEDUCTE E GATHERED BY THE ASSESSEE-COMPANY: FINANCIAL YEAR RETURNED INCOME/LOSS (IN RS) TAX DUE TAX DEPOSITED/TDS DEDUCTED (IN RS) REFUND (IN RS.) 2005-06 61,68,344 -- 18,895,455 18,895,455 2006-07 183,400,082 -- 12,236,824 12,236,824 2007-08 83,203,759 -- 11,656,340 11,656,340 2008-09 57,332,055 -- 10,660,483 10,660,483 THE LD. CIT(A) DID NOT FIND ANY FORCE IN THE SAME A ND DISMISSED THE APPEAL VIDE PARA 5 WHICH IS AS UNDER: I HAVE CONSIDERED THE SUBMISSION OF THE LD. COUNSE L. THE APPELLANT AGREES THAT THE MAINTENANCE OF BUILDING AND OTHER F ACILITIES ARE PART OF RENT AND SO TAX WAS REQUIRED TO BE DEDUCTED @ 22.66 % U/S 194-I OF THE ACT. THUS THERE IS NO DISPUTE ABOUT THE RATE A T WHICH TAX SHOULD HAVE BEEN DEDUCTED. THE ONLY PLEA OF THE LD. COUNS EL IS THAT THE DEDUCTEE HAD PAID THE TAX AND SO INTEREST U/S 201(1 A) SHOULD NOT BE CHARGED. THE LD. COUNSEL FOR THE ASSESSEE HAS RELI ED UPON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN CASE OF R ISHIKESH APARTMENTS CO-OP HOUSING SOCIETY LTD (SUPRA). FACT S IN THAT CASE WERE THAT THE DEDUCTEE HAD ALREADY PAID SUFFICIENT ADVANCE TAX THAN WHAT WAS PAYABLE AND THAT IS WHY THE HON'BLE HIGH C OURT HAD HELD THAT THE INTEREST WAS NOT LEVIABLE. THE APPELLANT HAS GIVEN CERTAIN DETAILS OF TAXES PAID BY THE DEDUCTEE VIZ. M/S QUAR KCITY INDIA (P) LTD BUT HAS NOT GIVEN THE DETAILS OF ADVANCE TAX PAID. MOREOVER NO EVIDENCE REGARDING PAYMENT OF ADVANCE TAX AND FILIN G OF RETURN HAS BEEN FILED. HENCE THE CONTENTION OF THE APPELLANT CANNOT BE ACCEPTED. THE DEMAND CREATED AT RS. 6,35,960 U/S 201(1A) IS A CCORDINGLY UPHELD AND ALL THE GROUNDS TAKEN BY THE APPELLANT A RE DISMISSED. 5 BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE MADE DETAILED SUBMISSIONS THAT IT WAS NOT A CASE OF COMPOSITE AGR EEMENT AND THE ASSESSEE HAS CORRECTLY DEDUCTED TDS. IN ANY CAS E AS PER THE DECISION OF HON'BLE SUPREME COURT IN CASE OF HINDU STAN COCA COLA BEVERAGE P. LTD V CIT (SUPRA) AS WELL AS BOARD CIRCULAR NO. 275/201/95-IT(B) DATED 29.1.1997 IF THE DEDUCTEE HA S ALREADY MADE PAYMENT THEN THE ASSESSEE CANNOT BE HELD IN DE FAULT. HE REFERED TO THE SUBMISSIONS MADE BEFORE THE LD. CIT( A) THAT IN FACT DEDUCTEE WAS NOT SUPPOSED TO MAKE ANY PAYMENT IN VI EW OF THE 5 LOSSES AND LOT OF REFUND WAS DUE, THEREFORE INTERES T WAS ALSO NOT PAYABLE IN VIEW OF THE FOLLOWING DECISION: THOMAS MUTHOOT V. DCIT, 28 TAXMANN.COM 25 (COCHIN BENCH) ALLAHABAD BANK V ITO, 46 TAXMANN.COM 200 (AGRA BENC H) CHHATTISGARH STATE ELECTRICITY BOARD V ITO (TDS), 1 8 TAXMANN.COM 150 (MUMBAI BENCH) 6 ON THE OTHER HAND, THE LD. D.R FOR THE REVENUE ST RONGLY SUPPORTED THE ORDER OF ASSESSING OFFICER. HE FURTHE R SUBMITTED THAT THE DETAILS REGARDING LOSSES AND REFUND OF THE DEDUCTEE, IF DUE, WERE NOT FURNISHED BEFORE THE ASSESSING OFFICE R. 7 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULL Y AND FIND THAT HON'BLE SUPREME COURT IN CASE OF HINDUSTAN CO CA COLA BEVERAGE P. LTD V CIT (SUPRA) HAS HELD AS UNDER: WITHOUT DECIDING THE QUESTION WHETHER THE APPELLAT E TRIBUNAL COULD HAVE REOPENED THE APPEAL FOR RECTIFYING AN ERROR AP PARENT ON THE RECORD, THAT IN VIEW OF CIRCULAR NO. 275/201/95-IT (B) DATED JAN29, 1997, AND SINCE THE ASSESSEE HAD PAID THE INTEREST U/S 201(1A) AND THERE WAS NO DISPUTE THAT THE TAX DUE HAD BEEN PAID BY THE DEDUCTEE (PRADEEP OIL) THE APPELLATE TRIBUNAL CAME TO THE RI GHT CONCLUSION THAT THE TAX COULD NOT BE RECOVERED ONCE AGAIN FROM THE ASSESSEE. AFTER THIS DECISION THE ISSUE AROSE AGAIN WHETHER I N CASES WHERE DEDUCTEE WAS NOT LIABLE TO TAX, INTEREST CAN BE LEV IED OR NOT. IN CASE OF ALLAHABAD BANK V ITO (SUPRA), HEAD NOTE REA DS AS UNDER: SECTION 201, R.W.S 194A OF THE ACT DEDUCTION OF TAX AT SOURCE CONSEQUENCE OF FAILURE TO DEDUCT OR PAY (CONDITION PRECEDENT) ASSESSMENT YEARS 2001-02 TO 2007-08 WHETHER RECOVE RY PROVISIONS U/S 201(1) CAN BE INVOKED ONLY WHEN LOSS TO REVENUE IS ESTABLISHED AND THAT CAN ONLY BE ESTABLISHED WHEN IT IS DEMONST RATED THAT RECIPIENT OF INCOME HAS NOT PAID DUE TAXES THEREOF AND HE HAS LIABILITY TO PAY TAX HELD YES WHETHER INTEREST U/S 201(1A) IS ADMITTEDLY A COMPENSATORY INTEREST IN NATURE WHICH SEEKS TO CO MPENSATE REVENUE FOR DELAY IN REALIZATION OF TAXES AND, THER EFORE WHERE RECIPIENT OF INCOME HAD NO TAX LIABILITY EMBEDDED I N SUCH PAYMENTS, THERE WOULD BE NO QUESTION OF DELAY IN RE ALIZATION OF TAXES AND THUS PROVISIONS OF SECTION 201(1A) WOULD NOT BE INVOKED HELD YES. 6 THE HIGHLIGHTED PORTION CLEARLY SHOWS THAT INTEREST IS OF COMPENSATORY NATURE AND IF RECIPIENT OF THE INCOME HAS NO TAX LIABILITY THEN THERE CANNOT BE ANY LIABILITY ON ACC OUNT OF INTEREST U/S 201(1A). SIMILAR VIEW HAS BEEN TAKEN IN CASE O F CHHATTISGARH STATE ELECTRICITY BOARD V ITO (TDS) (SUPRA) AND IN CASE OF THOMAS MUTHOOT V. DCIT (SUPRA). THEREFORE FOLLOWIN G THESE ORDERS WE HOLD THAT IF THE RECIPIENT WAS NOT HAVING ANY TAX LIABILITY THEN INTEREST CANNOT BE CHARGED U/S 201(1A). HOWEVE R, SINCE THIS INFORMATION WAS NOT AVAILABLE WITH THE ASSESSING OF FICER, WE SET ASIDE THE ORDER OF THE CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF ASSESSING OFFICER TO VERIFY WHETHER THE RECIPIEN T HAS ANY CHARGEABLE INCOME OR NOT AND THEN DECIDE THE ISSUE IN THE LIGHT OF OUR OBSERVATIONS MADE ON THE BASIS OF THE DECISION OF ALLAHABAD BANK V ITO, 46 TAXMANN.COM 200 (SUPRA). 8. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 1286/CHD/2012 IS ALLOWED FOR STATISTICAL PURPOSES. ITAS NO. 1287, 1288 & 1289/CHD/2012 9 THE ISSUES AND FACTS IN ALL THESE APPEALS ARE IDE NTICAL AS IN ITA NO. 1286/CHD/2012 AND FOLLOWING OUR ABOVE ORDER , THESE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 10 IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE A RE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15.9.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 15.9.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 7