Terra Infra Development Limited, Hyderabad V. Income Tax Officer (TDS), Ward-2(3), Hyderabad

ITA 1875/Hyd/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 8309 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-08-2018
• Assessment Year: 2014-2015
• Appeal Filed On: 16-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Section: 154

Judgement Text

ITA NOS 1875 AND 1876 OF 2017 TERRA INFRA DEVELOPME NT LTD HYDERABAD. PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS.1876 & 1875/HYD/2017 (ASSESSMENT YEARS: 2013-14 & 2014-15) M/S. TERRA INFRA DEVELOPMENT LIMITED HYDERABAD PAN:AAACN7166R VS INCOME TAX OFFICER (TDS) WARD 2(3) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.C. DEVDAS FOR REVENUE : SHRI K.J. RAO, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. BOTH ARE ASSESSEES APPEALS FOR THE A.YS 2013-14 & 2014-15 RESPECTIVELY AGAINST THE ORDER OF THE CIT ( A)-8, HYDERABAD DATED 28.08.2017. IN BOTH THE APPEALS, THE GROUNDS RAISED BY THE ASSESSEE ARE COMMON EXCEPT FOR THE QUANTUM. THEREFO RE, FOR THE SAKE OF CLARITY AND READY REFERENCE, THE GROUNDS OF APPEAL FOR THE A.Y 2014-15 ARE REPRODUCED HEREUNDER: 1. THE ORDER OF THE HON'BLE CIT (A) IS ERRONEOUS IN LAW AS WELL AS FACTS OF THE CASE. 2. THE HON'BLE CIT (A) OUGHT TO HAVE OBSERVED THAT THE ORDER DATED 4.5.2017 PASSED BY THE AO REJECTING TO RECTIF Y AND DELETE THE FEE U/S 234C OF THE I.T. ACT WAS WITHOUT APPRECIATING THE PROVISIONS IN PROPER PROSPECTIVE A ND THEREFORE, IT WAS ERRONEOUS IN LAW AND THE FEE OUGH T TO HAVE BEEN DELETED. DATE OF HEARING: 0 8.08 . 201 8 DATE OF PRONOUNCEMENT: 03.10.2018 ITA NOS 1875 AND 1876 OF 2017 TERRA INFRA DEVELOPME NT LTD HYDERABAD. PAGE 2 OF 4 3. THE HON'BLE CIT (A) OUGHT TO HAVE HELD THAT THE AO FAILED TO OBSERVE THAT LATE FEE U/S 234E OF THE I.T. ACT W AS BROUGHT INTO THE FOLD OF SECTION 200A OF THE I.T. ACT W.E.F . 1.06.2015 AND THEREFORE, THE RELEVANT PROVISION I.E. 234E OF THE IT ACT CANNOT BE APPLIED FOR THE FINANCIAL YEAR 2013-14. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON'BLE CIT (A) OUGHT TO HAVE HELD THAT THE FEE OF RS.92,40 0 CHARGED U/S 234E OF THE I.T. ACT FOR THE FINANCIAL YEAR 201 3-14 WAS LIABLE FOR DELETION. 5. ANY OTHER GROUND WILL BE RAISED AT THE TIME OF H EARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, ENGAGED IN THE BUSINESS OF EXECUTION OF CONSTRUCTIO N WORK, FILED ITS TDS RETURN AS REQUIRED UNDER THE PROVISIONS OF THE ACT FOR THE FINANCIAL YEAR 2012-13 & 2013-14 RESPECTIVELY. WHIL E PROCESSING THE SAME, THE AO CHARGED FEE U/S 234E OF THE I.T. A CT. THE ASSESSEE FILED PETITION U/S 154 OF THE ACT STATING THAT SECTION 234E WAS BROUGHT INTO FOLD U/S 200A OF THE ACT ONLY W.E.F. 1.6.2015 AND THEREFORE, THEY CANNOT BE MADE APPLICA BLE RETROSPECTIVELY AND NO FEE CHARGED FOR THE A.YS 201 2-13 AND 2013- 14. THE AO HOWEVER, REJECTED THE APPLICATION OBSERV ING THAT THERE IS NO TDS PROVISION UNDER THE IT ACT TO RAISE SUCH OBJECTIONS. AGGRIEVED BY THE SAME, THE ASSESSEE FILED AN APPLIC ATION BEFORE THE AO WHO CONFIRMED THE ORDER OF THE AO BY FOLLOWING T HE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF RA JESH KOURANI VS. UNION OF INDIA WHEREIN THE LEVY OF LATE FEE EVE N BEFORE THE AMENDMENT IN SECTION 200A WAS UPHELD. THE LEARNED C OUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, RELIED UPON THE DE CISION OF THE B BENCH OF THE TRIBUNAL AT CHANDIGARH IN THE CASE OF M/S. SONALAC PAINTS & COATINGS LTD VS. DY.CIT IN ITA NO.1158/CHD /2017 (REPORTED IN 2018) 167 DTR (CHD.)TRIB.183 WHEREIN T HE TRIBUNAL HAS FOLLOWED THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN ITA NOS 1875 AND 1876 OF 2017 TERRA INFRA DEVELOPME NT LTD HYDERABAD. PAGE 3 OF 4 THE CASE OF FATHERAJ SINGHVI & ORS. VS. UNION OF IN DIA & QRS. 289 CTR 602 (KAR.) WHEREIN IT WAS HELD THAT PRIOR TO 1. 6.2015, NO ADJUSTMENT ON ACCOUNT OF FEE U/S 234E COULD BE MADE BY THE AO WHILE PROCESSING THE RETURNS U/S 200A OF THE I.T. A CT. THE TRIBUNAL HAS OBSERVED THAT AS PER THE ESTABLISHED P RINCIPLES OF INTERPRETATION OF STATUTE, WHERE TWO VIEW WERE POSS IBLE ON AN ISSUE, THE VIEW FAVOURABLE TO THE ASSESSEE WAS TO B E TAKEN AND PLACED RELIANCE UPON THE DECISION OF THE HON'BLE SU PREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD, REPO RTED IN (1973) 88 ITR 192 TO HOLD IT IN FAVOUR OF THE ASSESSEE. 3. THE LEARNED DR WAS ALSO HEARD. 4. WE FIND THAT THOUGH THE PROVISIONS FOR LEVY OF F EE IN CERTAIN CASES HAS BEEN BROUGHT INTO THE STATUTE BOO K W.E.F. 1.7.2012, IT HAS BEEN BROUGHT UNDER THE PURVIEW OF SECTION 200A ONLY W.E.F. 1.6.2015. THEREFORE, AS RIGHTLY HELD BY THE COORDINATE BENCH IN THE CASE OF M/S. SONALAC PAINTINGS & COATI NGS LTD (CITED SUPRA) WE HOLD THAT THE INTEREST U/S 234E CANNOT BE LEVIED IN RESPECT OF TDS RETURNS FILED PRIOR TO 1.6.2015. FOR THE SAKE OF READY REFERENCE, THE RELEVANT PARA IS REPRODUCED HE REUNDER: 10. NOW COMING TO THE MERITS OF THE CASE, WE FIND FORCE IN THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSE E THAT PRIOR TO 01.06.2015, THERE WAS NO MANDATE, AS PER T HE STATUTE, TO MAKE ANY ADJUSTMENT ON ACCOUNT OF LEVY OF FEES U/S 234E WHILE PROCESSING TDS RETURNS U/S 200A. WE HAVE TAKEN NOTE OF THE ORDER OF THE HON'BLE GUJARAT HIGH COURT HOLDING THE AMENDMENT MADE TO SECTION 200A W. E.F. 01.06.2015, GIVING POWER TO MAKE ADJUSTMENT ON ACCO UNT OF FEES U/S 234E WHILE PROCESSING RETURNS U/S 200A TO BE RETROSPECTIVE IN NATURE, STATING THAT THIS POWER GI VEN TO THE AO IS A MACHINERY PROVISION WHILE THE SUBSTANTIVE PROVISION OF THE POWER TO LEVY FEES U/S 234E WAS AL WAYS THERE ON THE STATUTE FROM 01.06.2012. BUT AT THE SA ME TIME, WE NOTE THAT THE HON'BLE KARNATAKA HIGH COURT HELD THAT LEVY OF FEES U/S 234E WHILE PROCESSING RETURNS , TDS ITA NOS 1875 AND 1876 OF 2017 TERRA INFRA DEVELOPME NT LTD HYDERABAD. PAGE 4 OF 4 U/S 200A PRIOR TO 01.06.2015 WAS WITHOUT ANY AUTHOR ITY OF LAW. WITH TWO DIVERGENT VIEW OF THE HON'BLE HIGH COURTS ON THE ISSUE AND IN THE ABSENCE OF ANY DECISION BY THE JURISDICTIONAL HIGH COURT, WE CONCUR WITH THE LEARN ED COUNSEL FOR THE ASSESSEE THAT AS PER THE WELL ACCEP TED RULE OF CONSTRUCTION, IF TWO REASONABLE CONSTRUCTIONS OF A STATUTE ARE POSSIBLE THE CONSTRUCTION WHICH FAVOURS THE ASS ESSEE MUST BE ADOPTED. IN VIEW OF THE SAME, RESPECTFULLY FOLLOWING THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF FATHERAJ SINGHVI (SUPRA), WE HOLD THAT THE FEES LEVIED IN ALL THE PRESENT CASES U/S 234E PRIOR TO 01.06.2015 IN THE INTIMATIONS MADE U/S 200A WAS WITHOUT AUTHORITY OF LAW AND THE SAME IS THEREFORE, DIRECTED TO BE DELETED. IN VIEW OF THE ABOVE, ALL T HE APPEALS OF THE ASSESSEE STAND ALLOWED. 5. RESPECTFULLY FOLLOWING THE SAME, ASSESSEES APPE ALS FOR BOTH THE A.YS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD OCTOBER, 2018. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 3 RD OCTOBER, 2018. VINODAN/SPS COPY TO: 1 B.NARSINGH RAO & CO. CA, PLOT NO.554, ROAD NO.92, JUBILEE HILLS, HYDERABAD 500096 2 ITO (TDS) WARD 2(3) HYDERABAD 3 CIT (A) - 8 HYDERABAD 4 CIT TDS, HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER