The Executive Engineer P W D (N.H) Division, V. The Tax Recovery Officer TDS 2,

ITA 168/IND/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2877 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 03-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR MITRA
• Keywords: TDS
• Section: 201(1); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C.SHARMA, ACCOUNTANT MEMBER PAN NO. : BPLEO0296C I.T.A.NO. 167 & 168/IND/2009 A.YS. : 2005-06 & 2006-07 THE EXECUTIVE ENGINEER, THE RECOVERY OFFICER, PWD(NH)DIVISION, TDS 2, INDORE. INDORE APPELLANT RESPONDENT APPELLANT BY : SHRI MANOJ GUPTA, C. A. RESPONDENT BY : SHRI PRADEEP KUMAR MITRA, SR. DR O R D E R PER R. C. SHARMA, A.M. THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2005-06 AND 2006-07 IN THE MATTER OF ORDER PASSED U/S 201(1A)/206-C(1C) (6) OF THE INCOME-TAX ACT, 1961. 2. COMMON GROUNDS HAVE BEEN TAKEN IN BOTH THE APPEALS WITH REGARD TO CIT(A)S ACTION, WHEREIN HE HAS CONF IRMED THE ORDER OF AO FOR LEVY OF INTEREST ON THE TCS DEPOSIT ED BELATEDLY. -: 2: - 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. 4. THE FACTS, IN BRIEF, ARE THAT ASSESSEE HAD AWARDED CONTRACT FOR COLLECTING TOLL FROM KSHIPRA TOLL PLAZ A AT DEWAS TO M/S. KALIKA ENTERPRISES, SHIVPURI AND M/S. LAXMAN ELECTRONICS, GWALIOR, FOR THE YEAR 2004-05 AND 2005 -06 RESPECTIVELY. BUT THE TCS WAS NOT MADE WHILE COLLEC TING LICENCE FEE FROM THESE CONCERNS. THE AO ISSUED SHOW CAUSE NOTICE AND CREATED DEMAND EQUAL TO THE AMOUNT WHICH ASSESSEE OUGHT TO HAVE COLLECTED AT THE TIME OF REC EIVING CONTRACT AMOUNTS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 206C(1C) AS INSERTED BY THE FINANCE ACT 2004 W.E.F. 01.10.2004 TOGETHER WITH INTEREST THEREON U/S 201(1 A) AS PER THE FOLLOWING DETAILS :- PERIOD LICENCE FEE COLLECTED (RS.) TAX COLLECTABLE INTEREST U/S 201(1A) (RS. ) TOTAL ( RS. ) FY (FROM 1 ST OCT.04, TO 31 ST MARCH, 2005) 53,772,000 1,204,492 278,478 1,482,970 FY 2005- 06 53,149,185 1,190,926 1,51,620 1,342,546 -: 3: - 3 5. BY THE IMPUGNED ORDER, THE LD. CIT(A) ABSOLVED THE ASSESSEE FROM PAYMENT OF TCS ON THE PLEA THAT M/S. KALIKA ENTERPRISES AND M/S. LAXMAN ENTERPRISES FROM WHOM I T HAS TO COLLECT THE TAX WHILE RECEIVING THE LICENCE FEE IN ACCORDANCE WITH CONTRACT FOR TOLL PLAZA, THEY HAVE PAID THE DU E TAXES ON THEIR RETURNED INCOME. ACCORDINGLY, DEMAND RAISED T O THE EXTENT OF RS. 12,04,492/- WAS DELETED BY THE LD. CI T(A). HOWEVER, THE ORDER OF ITO-TDS WITH REGARD TO INTERE ST PAYABLE U/S 206-C(7) WAS UPHELD AMOUNTING TO RS. 2,78,478/- . HOWEVER, AGAINST THE ORDER OF CIT(A) FOR DELETING T HE DEMAND IN RESPECT OF NON-COLLECTION OF TCS, THE DEPARTMENT HA S NOT FILED ANY APPEAL, THE BENCH HAD SPECIFICALLY ASKED BOTH T HE LD. AUTHORIZED REPRESENTATIVE AND LD. SENIOR D.R. TO TH IS EFFECT AND THE LD. AUTHORIZED REPRESENTATIVE STATED THAT N O SUCH APPEAL WAS FILED BY THE DEPARTMENT AGAINST THE ORDE R OF CIT(A). WE ARE, THEREFORE, NOT GOING ON THE MERIT OF THE OR DER OF CIT(A) DELETING THE LIABILITY OF ASSESSEE ON ACCOUNT OF TA X WHICH ASSESSEE OUGHT TO HAVE COLLECTED FROM THE LICENSEE U/S 206C OF INCOME-TAX ACT, 1961. NOW ONLY GRIEVANCE REMAINS TO BE -: 4: - 4 ADJUDGED BY US IS WITH REGARD TO CIT(A)S ACTION FO R CONFIRMING CHARGING OF INTEREST U/S 206C(7) OF THE INCOME-TAX ACT, 1961. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT THE ASSESSEE, A STATE GOVERNMENT AUTHORI TY HAD AWARDED CONTRACT FOR COLLECTING TOLL TO M/S. KALIKA ENTERPRISES AND M/S. LAXMAN ELECTRONICS, FROM TOLL PLAZA AT DEW AS FOR THE ASSESSMENT YEAR 2004-05 AND 2005-06. HOWEVER, TCS U /S 206C WAS NOT COLLECTED WHILE COLLECTING LICENCE FEE FROM THESE CONCERNS. ACCORDINGLY, THE AO CREDITED DEMAND U/S 2 06C (1C) AND ALSO LEVIED INTEREST THEREON U/S 201(1A)/206C(7 ). AS PER THE PROVISIONS OF SUB SECTION (7) OF SECTION 206C, IF THE PERSON RESPONSIBLE FOR COLLECTING TAX DOES NOT COLLECT THE TAX OR AFTER COLLECTING THE TAX FAILS TO PAY AND REQUIRED UNDER THIS SECTION, HE SHALL BE LIABLE TO PAY SIMPLE INTEREST @ 1 % PER MONTH OR PART THEREOF ON THE AMOUNT OF SUCH TAX FROM THE DAT E ON WHICH SUCH TAX WAS COLLECTABLE TO THE DATE ON WHICH TAX W AS ACTUALLY PAID. HOWEVER, IN THE INSTANT CASE, THE LD. CIT(A) HAS DELETED THE DEMAND CREDITED U/S 206C(1C) BY RELYING ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN C OCA COLA BEVERAGES LIMITED, 293 ITR 226, WHEREIN IT WAS HELD THAT -: 5: - 5 RECOVERY OF SHORT DEDUCTION OF TAX U/S 201 OF THE I NCOME-TAX ACT, 1961, CANNOT BE MADE FROM THE TAX DEDUCTOR WHE RE THE PAYEE INCLUDED THE INCOME ON WHICH TAX WAS ALLEGED TO HAVE BEEN SHORT DEDUCTED IN ITS TAXABLE INCOME AND PAID TAXES THEREON. THE HON'BLE SUPREME COURT FURTHER OBSERVED THAT THERE IS NO DISPUTE WHATSOEVER THAT THE DEDUCTEE M/ S. PRADEEP OIL CORPORATION FROM WHOM THE ASSESSEE WAS TO COLLE CT TAX HAD ALREADY PAID TAXES DUE ON ITS INCOME RECEIVED FROM THE ASSESSEE AND HAD RECEIVED REFUND FROM THE INCOME TA X DEPARTMENT. THE HON'BLE SUPREME COURT HAS ALSO REFE RRED TO CBDT CIRCULAR NO. 275/201/95/I.T./B DATED 29 TH JANUARY, 1997, WHEREIN IT HAS BEEN CLARIFIED THAT NO DEMAND VISUALIZED UNDER SECTION 201(1) OF THE INCOME-TAX ACT SHOULD B E 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 CHARG E INTEREST U/S 201(1A) OF THE ACT TILL THE DATE OF PAYMENT OF TAXE S BY THE DEDUCTEE-ASSESSEE OR THE LIABILITY FOR PENALTY UNDE R SECTION 271C OF THE INCOME-TAX ACT. -: 6: - 6 7. IN VIEW OF THE ABOVE DISCUSSION, THE HON'BLE SUPREM E COURT HAD HELD THAT SINCE THE ASSESSEE HAD PAID INT EREST U/S 201(1A) OF THE ACT AND THERE IS NO DISPUTE THAT THE TAX DUE HAD BEEN PAID BY THE DEDUCTEE- ASSESSEE (PRADEEP OIL CO RPORATION), THE ASSESSEE CANNOT BE ONCE AGAIN FORCED TO PAY THE TAX WHICH HAVE ALREADY BEEN PAID BY DEDUCTEE ASSESSEE M/S. PR ADEEP OIL CORPORATION. 8. THUS, IT IS VERY MUCH CLEAR FROM THE ABOVE ORDER OF HON'BLE SUPREME COURT THAT LIABILITY OF TDS WAS WAI VED AS THE INCOME IN RESPECT OF WHICH TAX WAS PAYABLE WAS ALRE ADY INCLUDED BY DEDUCTEE-ASSESSEE IN ITS TOTAL INCOME A ND DUE TAXES WAS PAID THEREON AND THE DEDUCTEE HAD ALSO RE CEIVED REFUND FROM THE INCOME TAX DEPARTMENT. HOWEVER, SIN CE THE ASSESSEE HAD ALREADY PAID INTEREST U/S 201(1A) OF T HE ACT, IT WAS HELD THAT THE ASSESSEE CANNOT BE MADE ONCE AGAI N LIABLE FOR PAYMENT OF SHORT DEDUCTION OF TAX. 9. IT IS ALSO CLEAR FROM THE CIRCULAR DATED 29TH JANUA RY, 1997, AS DISCUSSED HEREINABOVE THAT EVEN IF THE DED UCTEE PAYS TAX, THE LIABILITY OF DEDUCTOR WITH REGARD TO CHARG ING OF INTEREST U/S 201(1A) WILL CONTINUE TILL THE DATE OF PAYMENT OF TAXES BY -: 7: - 7 THE DEDUCTEE. RESPECTFULLY FOLLOWING THE VERDICT OF THE CBDT CIRCULAR, WE MODIFY THE ORDER OF THE CIT(A) WITH RE GARD TO PAYMENT OF INTEREST U/S 206-C(7) AND DIRECT THE ITO , TDS TO CHARGE INTEREST FROM THE DATE THE ASSESSEE WAS LIAB LE TO DEDUCT TCS TILL THE ACTUAL PAYMENT OF TAXES BY THE DEDUCTE E I.E. M/S. KALIKA ENTERPRISES AND M/S. LAXMAN ELECTRONICS. WE DIRECT ACCORDINGLY. 10. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED IN PART. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH, 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH MARCH, 2011. CPU* 2930