ACIT (TDS), Circle-2(1), Hyd, Hyderabad V. Power Grid Corporation of India Limited, Secunderabad, Secunderabad

ITA 1666/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2428 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 08-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: CHANDRAMOULESWARA RAO
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B SMC : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA.NO.1666/HYD/2016 ASSESSMENT YEAR 2008-2009 DCIT (TDS), CIRCLE - 2(1), HYDERABAD. VS. M/S. POWER GRID CORP OF INDIA LTD., KAVADIGUDA, MAIN ROAD, SECUNDERABAD 80. PAN: HYDN00317C (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI CHANDRAMOULESWARA RAO FOR REVENUE : SMT N. SWAPNA, DR DATE OF HEARING : 20.06.2017 DATE OF PRONOUNCEMENT : 20.06.2017 ORDER PER D. MANMOHAN, VP. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)- 8, HYDERABAD, WITH REFERENCE TO THE CHARGEABILITY O F THE INTEREST U/S 201(1) AND 201(1A) OF THE INCOME TAX ACT, 1961. 2. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE S TATED IN BRIEF. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRANSMISSION OF POWER AL L OVER THE COUNTRY. IT FILED ALL ITS QUARTERLY TDS RETURNS IN FORM NO.24Q FOR THE FY 200 7-2008. THOUGH THE COMPANY DEDUCTED THE TDS, IT HAD NOT MADE THE PAYMENT BY FO LLOWING THE ORDER OF THE HONBLE CALCUTTA HIGH COURT DATED 27.03.2002. WITH REGARD TO THE TDS ON PERKS OF ALL THE EMPLOYEES, THE ASSESSEE WAS OF THE OPINION THAT NO TAX NEED TO BE DEDUCTED AND THEREFORE, APPROACHED THE HONBLE HIGH COURT. THE HONBLE HIGH COURT PASSED AN INTERIM ORDER ON 27.03.2002 WHEREBY IT WAS DIRECTED THAT THE DEDUCTION MADE BY THE ASSSESSEE SHOULD BE KEPT IN A SEPARATE BANK ACCOUNT UNTIL FURTHER ORDERS OF THE COURT. IT DESERVES TO BE NOTICED THAT THE ORIGINAL ORDER W AS PASSED TILL 08.04.2002, WHICH WAS EXTENDED TILL THE FINAL ORDER WAS PASSED. ACCORDIN G TO THE LD COUNSEL FOR THE ASSESSEE THE INTERIM ORDER PERMITS THE ASSESSEE TO DEDUCT TH E TAX, IT CAN BE PAID FROM THE NEXT 2 MONTH WHEN THE MATTER IS FINALLY DECIDED, IF THE AS SESSEE HAS TO DEPOSIT THE TDS AMOUNT. 3. AS PER THE DIRECTIONS OF THE HONBLE CALCUTTA HI GH COURT, ASSESSEE DEDUCTED THE TAX BUT DID NOT PAY THE AMOUNT TO THE TUNE OF RS. 2 7,09,738/-, WHICH IS REFERABLE TO THE TDS ON PERKS OF ALL THE EMPLOYEES. THE ASSESSEE DEPOSITED THE AMOUNT IN A SEPARATE BANK ACCOUNT INSTEAD OF DEPOSITING IT IN T HE GOVERNMENT ACCOUNT TILL ITS FINAL VERDICT AS PER THE HONBLE CALCUTTA HIGH COURT ORDE R. THEREAFTER, THE HONBLE CALCUTTA HIGH COURT, VIDE ITS ORDER DATED 14.02.2012, DIRECT ED THE ASSESSEE-COMPANY TO DEPOSIT THE TDS ON PERQUISITES, WITHOUT ANY INTEREST AND PE NALTY, WITH THE RESPECTIVE INCOME TAX AUTHORITIES. ACCORDINGLY, THE ASSESSEE-COMPANY DEPOSITED THE SAID AMOUNT, WITHOUT INTEREST, ON 06.03.2012. AS PER THE ORDER O F THE HONBLE CALCUTTA HIGH COURT IN CAN 7522 OF 2011, THE ASSESSEE WAS PERMITTED TO REFUND THE BALANCE EXCESS AMOUNT OF TAX ON HOUSING PERQUISITES. HOWEVER, VIDE ORDER DATED 13.06.2016, THE AO CHARGED INTEREST U/S 201(1A) OF THE ACT AMOUNTING TO RS.10, 19,790/- ON THE GROUND OF DELAY IN REMITTANCE. 4. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE LD CIT (A) THAT ON AN IDENTICAL MATTER, THE HONBLE SUPREME COURT, IN THE CASE REPO RTED IN 354 ITR 156, OBSERVED THAT THE ASSESSEE CANNOT BE SAID TO HAVE DEFAULTED WHEN IT HAS MERELY FOLLOWED THE DIRECTIONS OF THE HONBLE HIGH COURT. IN THE AFORE MENTIONED CASE, ONGC WAS THE ASSESSEE WHICH IN TURN DEDUCTED THE TDS BUT DID NOT MAKE THE PAYMENT FOR THE PERIOD WHEN THE INTERIM ORDER OF THE HONBLE HIGH COURT WA S IN FORCE. LD COUNSEL FOR THE ASSESSEE ALSO RELIED UPON THE DECISION OF THE ITAT, AHMEDABAD BENCH IN THE CASE OF RAKSHAK CHEMICALS PVT LTD VS. ITO (98 TTJ 357), WHE REIN THE BENCH OBSERVED THAT THE PROVISIONS OF CHAPTER XVIIB OF THE ACT COULD NO T BE COMPLIED WITH DURING THE COURT ORDER AND HENCE, THE DEDUCTOR CANNOT BE HELD TO BE IN DEFAULT U/S 201 AND CONSEQUENTLY, INTEREST THEREUNDER CANNOT BE LEVIED. HE HAS ALSO RELIED UPON SEVERAL DECISIONS TO SUBMIT THAT THERE IS A REASONABLE CAUS E IN NOT DEPOSITING THE TAX DEDUCTED IN WHICH EVENT INTEREST CANNOT BE CHARGED. 5. THE LD CIT (A), AGREED WITH THE CONTENTION OF TH E ASSESSEE AND OBSERVED THAT IN THE ASSESSEES OWN CASE, THE HONBLE ITAT, DELHI BENCHES EXONERATED THE ASSESSEE FROM THE RIGOUR OF PROVISIONS OF SECTION 201(1A) OF THE ACT SINCE, THE ASSESSEE HAS 3 DEPOSITED THE AMOUNT IN A SEPARATE BANK ACCOUNT AS DIRECTED BY THE COMPETENT JURISDICTIONAL HIGH COURT. LD CIT (A) ALSO FOLLOWE D THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ONGC AND OTHERS (SC) 354 ITR 1 56, WHEREIN THE COURT OBSERVED THAT THE ASSESSEE, WHO HAS SCRUPULOUSLY FOLLOWED TH E DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, CANNOT BE SAID TO BE IN DEFAULT IN MAKING DEPOSIT OF THE TAX DEDUCTED AT SOURCE IN WHICH EVENT INTEREST CANNOT B E CHARGED U/S 201 OF THE ACT. HE ACCORDINGLY DELETED THE INTEREST CHARGED BY THE AO. 6. AGGRIEVED BY THE ORDER OF THE LD CIT(A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7. THE MAIN PLEA OF THE LD DR IS THAT THE PROVISION S OF SECTION 201(1A) OF THE ACT ARE MANDATORY IN NATURE AND THEREFORE, INTEREST HAS TO BE CHARGED IN THE EVENT OF DEFAULT IN PAYMENT OF TDS WITHIN THE SPECIFIED TIME LIMIT. IT IS ALSO CONTENDED THAT THERE IS NO EVIDENCE TO SHOW THAT THE ORDER, PASSED BY THE HONBLE CALCUTTA HIGH COURT IN THE YEAR 2002, WAS APPLICABLE TO AY 2008-2009. IT WAS ALSO CONTENDED THAT THE INTEREST CHARGED U/S 201(1A) OF THE ACT IS JUSTIFIE D BECAUSE THE DEPOSITS MADE BY THE ASSESSEE IN THE SEPARATE BANK ACCOUNT COULD HAVE EA RNED INTEREST TO THE DEDUCTOR AND IN FACT, THE HONBEL CALCUTTA HIGH COURT DID NOT PE RMIT THE REVENUE TO COLLECT THE INTEREST U/S 201(1A) OF THE ACT. IT WAS ALSO SUBMI TTED THAT THE TDS AMOUNT DEDUCTED / DEDUCTIBLE IS REQUIRED TO BE REMITTED TO THE GOVE RNMENT ACCOUNT WITHIN ONE WEEK FROM THE END OF THE MONTH IN WHICH THE DEDUCTION IS MADE WHEREAS THE ASSESSEE HAS DEPOSITED THE TDS AMOUNT IN A SEPARATE BANK ACCOUNT ONLY ON 06.03.2012. IN THE ALTERNATIVE, IT WAS CONTENDED THAT THE INTEREST CHA RGED U/S 201(1A) OF THE ACT WOULD HAVE BEEN CONFIRMED ATLEAST FROM THE DATE ON WHICH THE TDS AMOUNT WAS DEDUCTIBLE TO THE DATE ON WHICH IT WAS DEPOSITED IN A SEPARATE ACCOUNT. 8. ON THE OTHER HAND, LD COUNSEL APPEARING FOR THE ASSSESSEE RELIED UPON THE ORDERS OF THE HONBLE ITAT, DELHI BENCHES VIZ., (I) ACIT VS. POWER GRID CORPORATION OF INDIA LIMITED (ITA NOS. 4477 TO 4481/DEL/2012, ORDE R DATED 10.05.2013) AND (II) ACIT VS. POWER GRID CROPN. OF INDIA LTD (ITA NOS. 5001 T O 5005/DEL/2012, ORDER DATED 22.11.2012), WHEREIN THE BENCH OBSERVED THAT THE AM OUNT HAVING BEEN DEPOSITED IN A SEPARATE BANK ACCOUNT, AS DIRECTED BY THE HONBLE CALCUTTA HIGH COURT, INTEREST IS NOT CHARGEABLE ON THE PRESUMPTION OF DELAY IN MAKIN G THE PAYMENT. HE ALSO SUBMITTED 4 THAT AS PER THE INTERIM ORDER, THE EFFECTIVE DEMAND SHOULD BE ADJUSTED FROM THE NEXT MONTH AND IN THIS CASE, THE AMOUNT WAS DEPOSITED IM MEDIATELY IE., WITHIN 20 DAYS AND HENCE, THERE IS NO DEFAULT IN EITHER DEDUCTION OR MAKING PAYMENT. LD COUNSEL FOR THE ASSESSEE, THUS, STRONGLY RELIED UPON THE ORDER PASSED BY THE ITAT, DELHI BENCHES IN THE ASSESSEES OWN CASE FOR THE SAME PERIOD. 9. JOINING THE ISSUE, LD DR SUBMITTED THAT THE ASS ESSEE HAS EARNED INTEREST ON THE AMOUNT DEPOSITED IN THE BANK AND EVEN AFTER THE DIRECTION OF THE HONBLE CALCUTTA HIGH COURT, THERE WAS A FURTHER DELAY AND THESE TWO ASPECTS WERE NOT CATEGORICALLY REFERRED / CONSIDERED BY THE ITAT, DELHI BENCHES. 10. I HAVE HEARD BOTH THE PARTIES, CAREFULLY CONSID ERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE CASE OF THE LD COUNSEL FOR THE ASSESSEE IS THAT THE ASSESSEE FOLLOWED AN UNIFORM POLICY, AS PER THE DIRECTION OF THE HONBLE CALCUTTA HIGH COURT, IN DEPOSITING THE AMOUNT IN THE BANK AC COUNT AND IMMEDIATELY AFTER THE FINAL OUTCOME IN THIS MATTER, THE AMOUNT WAS DEPOSI TED WITH THE DEPARTMENT WITHIN THE REASONABLE TIME FRAME AND SINCE THIS IS THE UNI VERSAL PRACTICE FOLLOWED ALL OVER INDIA, THE VIEW TAKEN BY THE ITAT, DELHI BENCHES NE EDS TO BE FOLLOWED, THE FACTS BEING IDENTICAL IN THE OTHER CASES ALSO. 11. IN THE LIGHT OF THE DECISIONS OF THE ITAT, DELH I BENCHES, I AM OF THE VIEW THAT IT IS NOT A FIT CASE FOR CHARGING OF INTEREST U/S 2 01(1A) THE ACT. THE ASSESSING OFFICER MAY EXAMINE AS TO WHETHER THE FACTS ARE IDENTICAL I N THE CASE OF THE REMITTANCES MADE WITHIN THE JURISDICTION OF DELHI / NAGPUR BENCHES A ND IF THE FACTS ARE IDENTICAL, HE IS DIRECTED TO FOLLOW THE DECISION OF THE ITAT, DELHI BENCHES (SUPRA). IN SHORT, LD CIT (A) IS JUSTIFIED IN FOLLOWING THE DECISION OF THE I TAT, DELHI BENCHES AS WELL AS THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF O NGC AND OTHERS (SUPRA). THE MATTER IS DISPOSED OF ACCORDINGLY. 12. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JUNE, 2017. SD/- (D. MANMOHAN) VICE PRESIDENT HYDERABAD, DATED: 20 TH JUNE, 2017 5 OKK, SR.PS COPY TO 1. M/S. POWER GRID CORP OF INDIA LTD., KAVADIGUDA, MAIN ROAD, SECUNDERABAD 80. 2. DCIT (TDS), CIRCLE-2(1), HYDERABAD. 3. CIT(A)-8, HYDERABAD. 4. PR. CIT-8, HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE