M/s.VRL Logistics Ltd., Hubli V. Deputy Commissioner of Income-Tax, Bellary

ITA 1911/BANG/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2372 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 15-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Assessee Lawyers: V K GURUNATHAN
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO S . 1911 & 1912 /BANG/201 6 ASSESSMENT YEAR S : 2007 - 08 & 2008 - 09 M/S. VRL LOGISTICS LTD., 351/1, 16 KM, NH-4, BENGALURU ROAD, VARUR, HUBLI. PAN: AABCV3609C VS. THE DEPUTY COMMISSIONER OF INCOME TAX, TDS CIRCLE, BALLARI. APPELLANT RESPONDENT APPELLANT BY : SHRI V.K. GURUNATHAN, ADVOCATE RESPONDENT BY : DR. P.V. PRADEEP KUMAR, ADDL. CIT (DR) DATE OF HEARING : 1 6 . 0 7 .2018 DATE OF PRONOUNCEMENT : 31 . 0 8 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER BOTH THESE APPEALS ARE FILED BY THE ASSESSEE WHICH ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. CIT(A), HUBLI BOTH DATED 16. 06.2016 FOR ASSESSMENT YEARS 2007-08 AND 2008-09. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAK E OF CONVENIENCE. 2. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMEN T YEAR 2007-08 IN ITA NO. 1911/BANG/2016 ARE AS UNDER. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED COMMISSIONER OF INCOME-TAX (A) OUGHT TO HAVE ACCEPT ED THE SUBMISSIONS OF THE APPELLANT AND REFRAINED FROM UPH OLDING THE LEVY OF INTEREST U/S.201(1A) OF THE ACT. 2. ON THE FACTS THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THERE WAS ACTUAL PURCHASE OF THE B ODY OF THE BUS FROM THE VENDOR NAMELY DAMODAR BODY BUILDERS AND CONSEQU ENTLY THERE WAS NO OBLIGATION ON THE PART OF THE APPELLANT TO D EDUCT TAX AT SOURCE BY APPLYING THE PROVISIONS OF SEC.194C OF THE ACT A ND CONSEQUENTLY ITA NOS. 1911 & 1912/BANG/2016 PAGE 2 OF 5 THE LEARNED COMMISSIONER (A) OUGHT TO HAVE REFRAINE D FROM UPHOLDING THE LEVY OF INTEREST U/S.201(1A) OF THE ACT. 3. THERE BEING NO OBLIGATION TO DEDUCT TAX AT SOURC E U/S.194C OF THE ACT, THE PROVISIONS OF SEC.201(1) HAS NO APPLICATIO N AND CONSEQUENTLY THE INTEREST U/S.201(1A) OF THE ACT AS LEVIED IS WI THOUT JURISDICTION AND ACCORDINGLY LIABLE TO BE DELETED. 4. WITHOUT PREJUDICE, THE LEARNED COMMISSIONER (A) OUGHT TO HAVE DIRECTED THE ASSESSING AUTHORITY TO CONFINE TO THE LEVY OF INTEREST U/S.201 (1A) ONLY TILL THE DATE OF PAYMENT OF TAX B Y THE PAYEE. 5. WITHOUT PREJUDICE, THE LEVY OF INTEREST U/S.201 (1A) AS CONFIRMED BY THE LEARNED COMMISSIONER (A) IS EXCESSIVE, ARBITRAR Y AND UNREASONABLE AND LIABLE TO BE DELETED IN TOTO. 6. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 3. THE ASSESSEE HAS ALSO RAISED THREE ADDITIONAL GR OUNDS IN THIS YEAR WHICH ARE AS UNDER. 1) THE CIT (APPEALS) ERRED IN UPHOLDING THE LEVY OF INTEREST UNDER SEC.201(1A) OF THE ACT IN RESPECT OF PAYMENTS MADE BY THE APPELLANT TO M/S.SUZLON INFRASTRUCTURE PVT.LTD TOWARDS POWER EVACUATION FACILITY FOR 34 NOS. OF WIND TURBINE GENERATORS (WT GS) VIDE AGREEMENT DATED 23.06.2006 HOLDING THAT THE PAYMENT S WERE LIABLE FOR TDS UNDER SEC.194J OF THE ACT. 2) THE CIT (APPEALS) ERRED IN UPHOLDING THE LEVY OF INTEREST UNDER SEC.201(1A) OF THE ACT IN RESPECT OF LEASE CONSIDER ATION FOR LAND TAKEN ON LEASE FOR 30 YEARS FROM M/S.SUZLON ENERGY LTD ON WHICH WIND POWER PLANT OF THE APPELLANT CONSISTING OF 34 NOS. OF WTGS WAS LOCATED EVEN THOUGH THE CONSIDERATION PAID WAS A FU LL AND ONE TIME CONSIDERATION INVOLVING NO ADDITIONAL OUTGOINGS IN THE FUTURE YEARS VIDE TRANSFER LEASE DEED NO.21/2010-11 DATED 05.04. 2010, HOLDING THAT THE SAID PAYMENT WAS LIABLE FOR TDS UNDER SECT ION 194-I OF THE ACT. 3) THE CIT (APPEALS) ERRED IN UPHOLDING THE LEVY OF INTEREST UNDER SEC. 201(1A) OF THE ACT EVEN THOUGH THE PAYMENTS FO R POWER EVACUATION FACILITY AND LEASE LAND CONSIDERATION WE RE NOT LIABLE FOR TDS UNDER SECTION 194J AND 194-I OF THE ACT RESPECT IVELY. ITA NOS. 1911 & 1912/BANG/2016 PAGE 3 OF 5 4. SIMILARLY THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMENT YEAR 2008-09 IN ITA NO. 1912/BANG/2016 ARE AS UNDER. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED COMMISSIONER OF INCOME-TAX (A) OUGHT TO HAVE ACCEPT ED THE SUBMISSIONS OF THE APPELLANT AND REFRAINED FROM UPH OLDING THE LEVY OF INTEREST U/S.201(1A) OF THE ACT. 2. ON THE FACTS THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THERE WAS ACTUAL PURCHASE OF THE B ODY OF THE BUS FROM THE VENDOR NAMELY DAMODAR BODY BUILDERS AND CONSEQU ENTLY THERE WAS NO OBLIGATION ON THE PART OF THE APPELLANT TO D EDUCT TAX AT SOURCE BY APPLYING THE PROVISIONS OF SEC.194C OF THE ACT A ND CONSEQUENTLY THE LEARNED COMMISSIONER (A) OUGHT TO HAVE REFRAINE D FROM UPHOLDING THE LEVY OF INTEREST U/S.201(1A) OF THE ACT. 3. THERE BEING NO OBLIGATION TO DEDUCT TAX AT SOURC E U/S.194C OF THE ACT, THE PROVISIONS OF SEC.201(1) HAS NO APPLICATIO N AND CONSEQUENTLY THE INTEREST U/S.201(1A) OF THE ACT AS LEVIED IS WI THOUT JURISDICTION AND ACCORDINGLY LIABLE TO BE DELETED. 4. WITHOUT PREJUDICE, THE LEARNED COMMISSIONER (A) OUGHT TO HAVE DIRECTED THE ASSESSING AUTHORITY TO CONFINE TO THE LEVY OF INTEREST U/S.201(1A) ONLY TILL THE DATE OF PAYMENT OF TAX BY THE PAYEE. 5. WITHOUT PREJUDICE, THE LEVY OF INTEREST U/S.201( 1A) AS CONFIRMED BY THE LEARNED COMMISSIONER (A) IS EXCESSIVE, ARBITRAR Y AND UNREASONABLE AND LIABLE TO BE DELETED IN TOTO. 6. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 5. IN THIS YEAR ALSO, THE ASSESSEE HAS RAISED ONE A DDITIONAL GROUND WHICH IS AS UNDER. 1) ON THE FACTS AND IN LAW, THERE BEING NO OBLIGATI ONON THE PART OF THE APPELLANT TO DEDUCT TAX AT SOURCE UNDER SECTION 194C OF THE ACT IN RESPECT OF PAYMENTS MADE TO M/S.SHREEDAMODAR COACH CRAFTS PVT.LTD., THE CIT (APPEALS) ERRED IN UPHOLDING THE ORDER OF THE DCIT (TDS) THAT THE APPELLANT WAS DEEMED TO BE AN ASSESS EE IN DEFAULT AND LIABLE AS PER THE PROVISIONS OF SUB-SECTION (1) OF SECTION 201 OF THE ACT. 6. VARIOUS ARGUMENTS WERE MADE BY LD. AR OF ASSESSE E IN RESPECT OF ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN BOTH TH E YEARS AS PER WHICH THIS IS THE CLAIM OF THE ASSESSEE THAT TDS WAS NOT DEDUCTIB LE U/S. 194C, 194J AND ITA NOS. 1911 & 1912/BANG/2016 PAGE 4 OF 5 194-I IN ASSESSMENT YEAR 2007-08 AND SIMILARLY TDS WAS NOT DEDUCTIBLE U/S. 194C IN ASSESSMENT YEAR 2008-09 AND THEREFORE, CIT( A) WAS NOT JUSTIFIED IN CONFIRMING THE LEVY OF INTEREST U/S. 201(1A) OF IT ACT IN BOTH THE YEARS. AS AGAINST THIS, THE LD. DR OF REVENUE SUPPORTED THE O RDER OF CIT (A). HE ALSO PLACED RELIANCE ON A JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF LARSEN & TOUBRO LIMITED &ANR. VS. STATE OF KARNATAK A &ANR. IN CIVIL APPEAL NOS. 8672 TO 8688, 8690 TO 8693, 8695 TO 8699 OF 20 13 AS PER JUDGEMENT DATED 26.09.2013 AND HE SUBMITTED A COPY OF THE JUD GMENT AND DRAWN OUR ATTENTION TO PARA NOS. 76,94,97,101 AND 107OF THE S AME IN SUPPORT OF THIS CONTENTION THAT EVEN IF THE CONTRACT IS A COMBINED CONTRACT OF WORKS AND LABOUR ALONG WITH CONTRACT FOR SALE, IT CANNOT BE SAID THA T THERE IS NO WORKS CONTRACT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL WE TAKE NOTE OF THE BASIS OF THE DECISION IN THESE TWO ORDERS OF CIT (A) AS P ER WHICH THE ISSUES IN DISPUTE WERE DECIDED BY CIT (A) IN THESE TWO YEARS. WE FIN D THAT IN PARA 12 OF HIS ORDER FOR ASSESSMENT YEAR 2007-08, IT IS STATED BY CIT(A) THAT EFFECTIVELY, THE APPEAL IS NOW DIRECTED AGAINST CHARGING OF INTEREST U/S. 201(1A) ONLY AMOUNTING TO RS. 1,05,73,063/-. SIMILARLY IN ASSESSMENT YEAR 2008-09 IN PARA 10 OF HIS ORDER, IT IS HELD BY CIT(A) THAT THE APPEAL WITH RE GARD TO CHARGING OF TAX U/S. 201(1) IS TREATED AS ALLOWED AND DECISION IN THIS Y EAR ALSO IS ONLY REGARDING CHARGEABILITY OF INTEREST U/S. 201(1A) OF IT ACT. HENCE IT IS SEEN THAT IN THE IMPUGNED ORDERS, LD. CIT(A) HAS NOT EXAMINED THIS A SPECT AT ALL AS TO WHETHER TDS IS DEDUCTIBLE U/S. 194J, 194-I AND 194C OF IT A CT IN ASSESSMENT YEAR 2007-08 AND U/S. 194C IN ASSESSMENT YEAR 2008-09. UNDER THESE FACTS, WE FEEL IT PROPER THAT THIS ISSUE SHOULD GO BACK TO TH E FILE OF CIT(A) FOR A DECISION ON THIS ASPECT ALSO AS TO WHETHER THE TDS IS DEDUCTIBL E OR NOT UNDER THE RELEVANT PROVISIONS OF IT ACT I.E. 194C IN BOTH YEARS AND 19 4J AND 194-I IN ASSESSMENT YEAR 2007-08 AND THEREFORE, WE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER BACK TO HIS FILE FOR FRESH DECISION AFTER EX AMINING THIS ASPECT ALSO. ITA NOS. 1911 & 1912/BANG/2016 PAGE 5 OF 5 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED ON THE CAPTION PAGE. SD/- SD/- (SUNIL KUMAR YADAV) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 31 ST AUGUST, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.