Deer Farms (P) Ltd., New Delhi V. ITO, New Delhi

ITA 1307/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3806 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 14-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: TDS
• Section: 201(1); 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A. NO.1307/D/2011 FINANCIAL YEAR :2006-07 (ASSESSMENT YEAR : 2007-08) DEER FARMS (P) LIMITED, VS. INCOME TAX OFFICER, 21/48, COMMERCIAL COMPLEX TDS WARD-1, INTERNATIONAL MALCHA MARG, NEW DELHI TAXATION, NEW DELHI PAN NO.AAACD0227F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.V.S.R. KRISHNA, CA RESPONDENT BY : MS. Y. KAKKAR, SR. DR ORDER PER K.G. BANSAL: AM: IN THIS CASE, THE ASSESSING OFFICER ISSUED A SHOW CAUSE N OTICE ON 16.01.2007, REQUESTING THE ASSESSEE TO STATE AS TO WHY IT SHOULD NOT BE TREATED AS AN ASSESSEE IN DEFAULT U/S 201(1) AND WHY THE INTEREST SHO ULD NOT BE CHARGED U/S 201(1A), IN RESPECT OF THE TRANSACTION RECORDED IN THE DEED OF SETTLEMENT DATED 25.11.2006, EXECUTED AMONG SHRI S.M. WAHI, SHRI SANJIT SIN GH BAKSHI, THE ASSESSEE AND VAISHALI INTERNATIONAL MANAGEMENT & RESOURCES LTD. THE ASSESSEE WAS INFORMED THAT IT PAID A SUM OF `4 CRORES TO SHRI S.M. W AHI FOR PURCHASE OF PROPERTY SITUATED AT 13, KAUTILYA MARG, NEW DELHI. IT WAS REQUES TED TO FURNISH THE DETAILS OF TAX DEDUCTED AT SOURCE U/S 195 OF THE ACT AND PAYMENT T HEREOF TO THE CREDIT OF THE CENTRAL GOVERNMENT. IT WAS INTER ALIA SUBMITTED THAT T HE PAYMENT OF `1 CRORE MADE IN NOVEMBER, 2006, HAS TO BE TAKEN AS PAYMENT MADE TO MS. RITA WAHI AND NOT TO SHRI S.M. WAHI. SHRI WAHI WAS PAID A SUM OF `3 CRORES ON 03.01.2007. AS PER 1307-2011-DF 2 LEGAL OPINION OBTAINED AND SUBMITTED, HE IS NOT LIABLE T O PAY TAX, AS HIS STATUS IS THAT OF A NON RESIDENT INDIAN. IT WAS ALSO SUBMITTED THAT THE BANK ACCOUNT OF SHRI WAHI HAS BEEN ATTACHED IN RESPECT OF LIABILITY ARISING FROM THE AFORESAID TRANSACTION. 1.1 THE ASSESSING OFFICER MADE FURTHER INQUIRIES AND FOUN D THAT THE WHOLE OF THE AMOUNT OF `4 CRORES WAS PAID TO SHRI S.M. WAHI. THE AS SESSING OFFICER CONSIDERED THE FACTS OF THE CASE, SUBMISSIONS MADE BEFORE HIM AND TH E PROVISIONS CONTAINED IN SECTION 195 OF THE ACT. HE ALSO CONSIDERED THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF TRANSMISSION CORPORATION OF ANDHRA PRA DESH LIMITED VS. CIT (1992) 239 ITR 587. IT IS MENTIONED THAT THE ASSESSEE HAD NOT FILED ANY APPLICATION U/S 195(2) OF THE ACT. THUS, IT WAS HELD THAT THE ASSESSEE F AILED TO DEDUCT TAX FOR SOURCE AS REQUIRED U/S 195 OF THE ACT. ACCORDINGLY, THE LIABI LITY OF TAX WAS COMPUTED AT `1.20 CRORES AND THE LIABILITY OF INTEREST AT `3.90 LAC S. THEREFORE, THE ASSESSEE WAS DIRECTED TO PAY A SUM OF `1,23,90,000/- TO THE CREDIT O F CENTRAL GOVERNMENT. THE DETAILS OF TAX AND INTEREST, AS COMPUTED BY THE ASSESSIN G OFFICER, ARE AS UNDER:- AMOUNT (`) TAX DATE OF DEDUCTION PERIOD OF DEFAULT INTEREST 1,00,00,000 30,00,000 27.11.2006 4 MONTHS 1,20,000 3,00,00,000 9 0,00,000 03.01.2007 3 MONTHS 2,70,000 4,00,00,000 1,20,00,000 3,90,000 2. THE MATTER WAS AGITATED BEFORE THE CIT(A)-II, NEW DELH I. IT WAS SUBMITTED THAT SHRI WAHI HAD FILED HIS RETURN OF INCOME DISCLOSIN G CAPITAL GAINS ARISING OUT OF THE AFORESAID TRANSACTION. THE MATTER TRAVELED UPTO THE H IGH COURT IN REGARD TO DETERMINATION OF HIS TAX LIABILITY. THE HONBLE COURT DIRECTED THE ASSESSING OFFICER TO GRANT BENEFIT TO HIM IN RESPECT OF INDEXED COST OF ACQUI SITION OF `2.25 CRORES, THUS, DETERMINING LONG-TERM CAPITAL GAINS AT `1.75 CRORES. T HE TAX ON THIS GAIN AMOUNTED TO `37.5 LACS AS PER THE ORDER GIVING EFFECT TO THE DECISI ON OF THE HONBLE HIGH 1307-2011-DF 3 COURT. THE REVENUE HAD ALSO ATTACHED THE BANK ACCOUNT OF SHRI WAHI ON 12.01.2007. THEREFORE, IT SHOULD BE DEEMED THAT SHRI WAHI DISCHARGED HIS TAX LIABILITY ON 12.01.2007. ACCORDINGLY, IT WAS URGED THAT THE AMOUNT RECOVERED FROM THE BANK ACCOUNT OF SHRI WAHI SHOULD BE CONSTRUED AS AD VANCE TAX PAID BY HIM. IN SUCH A SITUATION, THE ASSESSEE CANNOT BE EXPECTED TO PAY T HE AMOUNT OF TDS, OR INTEREST THEREON. THE LEARNED CIT(A) CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE HIM. IT HAS BEEN HELD THAT THE Q UESTION BEFORE HIM IS NOT REGARDING THE COMPUTATION OF CAPITAL GAIN BUT AS TO W HETHER THE ASSESSEE HAS COMMITTED DEFAULT U/S 195 OF THE ACT OR NOT. THE RECORD S CLEARLY REVEAL THAT THE ASSESSEE COMMITTED SUCH DEFAULT. THEREFORE, THE ASSESSING OF FICER HAS RIGHTLY INVOKED THE PROVISIONS CONTAINED IN SECTIONS 201 AND 20 1(1A). THUS, THE APPEAL OF THE ASSESSEE HAS BEEN DISMISSED. 3. BEFORE US, IT IS THE COMMON CASE OF BOTH THE PARTIES T HAT THE ISSUE IS NO LONGER RES INTEGRA AS THE SAME STANDS COVERED BY THE DECISION OF H ONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES (P) LIMITED VS. CIT, (2007) 293 ITR 226. IN VIEW OF THIS DECISION IT IS CLEAR THAT THE A SSESSEE CANNOT BE ASKED TO PAY THE TAX, WHICH HAS ALREADY BEEN PAID BY SHRI WAHI. HOWEVER, IT IS ARGUED BY THE LEARNED DR THAT THE LIABILITY TO PAY INTEREST STILL SURV IVES FOR WHICH SUITABLE DIRECTIONS MAY BE GIVEN. THE RELEVANT PORTION OF THE AFORESAID JUD GMENT READS AS UNDER:- BE THAT AS IT MAY, CIRCULAR NO.275/201/95-IT(B) DAT ED JANUARY 29, 1997, ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, IN O UR CONSIDERED OPINION, SHOULD PUT AN END TO THE CONTROVERSY. THE CIR CULAR DECLARES NO DEMAND VISUALIZED U/S 201(1) OF THE INCOME-TAX AC T SHOULD BE ENFORCED AFTER THE TAX DEDUCTOR HAS SATISFIED THE OFFICER- IN-CHARGE OF TDS, THAT TAXES DUE HAVE BEEN PAID BY THE DEDUCTEE-ASSESSEE. HOWEVER, THIS WILL NOT ALTER THE LIABILITY TO CHARGE INT EREST U/S 201(1A) OF THE ACT TILL THE DATE OF PAYMENT OF TAXES BY THE DEDUC TEE-ASSESSEE OR THE LIABILITY FOR PENALTY U/S 271C OF THE INCOME-TA X ACT. IN THE INSTANT CASE, THE APPELLANT HAD PAID THE INTEREST U /S 201(1A) OF THE ACT AND THERE IS NO DISPUTE THAT THE TAX DUE HAD BEEN PAID BY THE 1307-2011-DF 4 DEDUCTEE-ASSESSEE (M/S PRADEEP OIL CORPORATION). IT IS NO T DISPUTED BEFORE US THAT THE CIRCULAR IS APPLICABLE TO THE FACTS SITUATION ON HAND. IN THE CIRCUMSTANCES, IT IS NOT NECESSARY TO GO IN DETAI L AS TO WHETHER THE TRIBUNAL COULD HAVE AT ALL REOPENED THE APPEAL TO RECTI FY THE ERROR APPARENT ON THE FACE OF THE RECORD. WE DO NOT WISH TO EXP RESS ANY FIRM VIEW ON THIS ASPECT. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIO NS MADE BEFORE US. FROM THE FACTS IT APPEARS THAT SHRI WAHI HAD FILED HIS RETURN OF INCOME AND HIS LIABILITY TO CAPITAL GAINS HAS BEEN DETERMINED AT `37.50 LACS AS PER THE JUDGMENT OF HONBLE HIGH COURT. HOWEVER, THE DATE OF RECOVERY OF THIS AMOUNT IS NOT DISCERNIBLE FROM THE FACTS PLACED BEFORE US. IN THIS CO NNECTION, THE CLAIM OF THE ASSESSEE IS THAT THE DATE OF ATTACHMENT OF THE ACCOUNT OF SHRI WAHI SHOULD BE TAKEN AS THE DATE OF PAYMENT OF ADVANCE TAX BY HIM. WE ARE NO T INCLINE TO ACCEPT THIS ARGUMENT. THE DATE OF PAYMENT OF TAX BY SHRI WAHI WILL BE THE DATE ON WHICH THE TAX HAS ACTUALLY BEEN COLLECTED BY THE REVENUE FROM HIS BA NK ACCOUNT. IN VIEW OF THIS, WE THINK IT FIT TO RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO PROCEED AS DIRECTED HEREUNDER:- I) HE WILL ASCERTAIN THE FACT REGARDING DETERMINATION OF TAX LIABILITY IN THE CASE OF SHRI WAHI, FOR WHICH THE ASSESSEE SHALL PLACE REQUI SITE EVIDENCE BEFORE HIM; II) HE WILL ASCERTAIN THE DATE ON WHICH THE TAX WAS RECOVERED F ROM SHRI WAHI; III) IF TAX HAS BEEN RECOVERED FROM SHRI WAHI IN RESPECT OF CAP ITAL GAINS, THE ASSESSEE WILL NOT BE LIABLE TO PAY THE AMOUNT OF TAX TO BE DEDUCTED BY HIM AT SOURCE, OTHERWISE THE TAX DETERMINED IN HIS CASE AS LONG-TERM CAPITAL GAINS WILL BE RECOVERED FROM IT; AND 1307-2011-DF 5 IV) INTEREST WILL BE PAYABLE BY THE ASSESSEE FROM THE DATE OR DAT ES OF DEFAULT COMMITTED IN RESPECT OF DEDUCTION OF TAX AT SOURCE TILL THE DATE ON WHICH LONG-TERM CAPITAL GAIN TAX HAS BEEN RECOVERED FROM HIS B ANK ACCOUNT. 5. IN RESULT, THE APPEAL IS PARTLY ALLOWED AS DISC USSED ABOVE. THIS ORDER WAS PRONOUNCED IN OPEN COURT ON 17.06.2011. SD/- SD/- ( C.L. SETHI ) ( K.G. BANSAL ) JUDICIAL MEMBER ACCOUNTANT ME MBER DT.17.06.2011. NS COPY FORWARDED TO:- 1. DEER FARMS (P) LTD., 21/48, COMMERCIAL COMPLEX MALCHA M ARG, NEW DELHI-21. 2. INCOME TAX OFFICER WARD-1, INTERNATIONAL TAXATION, NEW DELHI. 3. THE CIT 4. THE CIT (A), NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY BY ORDER (ITAT, NEW DELHI).