ITO (TDS) 3(5), MUMBAI V. VISHINDA DIAMOND, MUMBAI

ITA 1951/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62460 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 21-03-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 09-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Non-deduction of tax
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI F BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI VIJAY PAL RAO, JM & SHRI N K BILLAIY A, AM ITA NO.2018/MUM/2010 (ASSESSMENT YEAR 2006-07) ITA NO.1949/MUM/2011 (ASSESSMENT YEAR 2006-07) ITA NO.1950/MUM/2011 (ASSESSMENT YEAR 2007-08) ITA NO.1951/MUM/2011 (ASSESSMENT YEAR 2008-09) THE INCOME TAX OFFICER (TDS) 3(5), MUMBAI VS M/S VISHINDA DIAMONDS 102 /115 & 116 PRASAD CHAMBER OPERA HOUSER\MUMBAI 4 (APPELLANT ) (RESPONDENT) PAN NO. AACFV3647G ASSESSEE BY NONE REVENUE BY SH M MURALI DT.OF HEARING 21 ST MAY 2012 DT OF PRONOUNCEMENT 25 TH , MAY 2012 ORDER PER VIJAY PAL RAO, JM THE ITA NO.2018/MUM/2010 AND ITA NO.1949/MUM/2011 A RE TWO APPEALS AGAINST THE SAME ORDER DATED 30.12.2009 OF THE CIT (A) ARISING FROM THE ORDER PASSED U/S 201(1) AND 201(1A) OF THE I T ACT FOR TH E ASSESSMENT YEAR 2006-07. 2 IT APPEARS THAT THE REVENUE HAS FILED THESE TWO APPEALS AGAINST THE SAME ORDER IN RESPECT OF THE SAME ASSESSMENT YEAR I.E. 2 006-06. THEREFORE, THE APPEAL IN ITA NO.1949/MUM/2011 IS TREATED AS INFRUCTUOUS/NONE ST BEING A DUPLICATE APPEAL OF ITA NO.2018/MUM/2010. ACCORDINGLY, THE APPEAL IN I TA NO.1949/MUM/2011 IS DISMISSED. M/S VISHINDA DIAMONDS ITA NO.2018/MUM/2010 ITA NO.1949/MUM/2011 ITA NO.1950/MUM/2011 ITA NO.1951/MUM/2011 2 3 THE OTHER THREE APPEALS ARE RELATING TO AYS 2006- 07, 07-08 AND 08-09 AND ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF THE COMMI SSIONER OF INCOME TAX(APPEALS) 4 THE REVENUE HAS RAISED COMMON GROUNDS IN ALL THES E THREE APPEALS; THEREFORE, THE GROUNDS RAISED FOR THE AY 2006-07 AR E REPRODUCED HEREUNDER: (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (A) HAS FAILED TO APPRECIATE THAT THE LIABILITY OF THE PAYER TO MAKE DEDUCTION OF TAX IS ABSOLUTE AND ANY PERSONAL ARRANGEMENT BETW EEN PAYER AND PAYEE CAN NOT ABSOLVE THE PAYER FROM DEDUCTING TAX AS HIS STATUTORY LIABILITY. (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT (A) ERRED IN HOLDING THAT TDS IS NOT APPLICABLE ON T HE PAYMENT OF CORE SERVICE CHARGES BY M/S. VISHINDA DIAMONDS TO MIS. DILIPKUMA R V. LAKHI AS NO INCOME IS GENERATED TO M/S. DILIPKUMAR V. LAKH I. (C) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD CIT (A) HAS FAILED TO APPRECIATE THAT THE VALUE ADDITIO N CHARGES ON THE ROUGH DIAMONDS ALSO FALL UNDER ARTICLE 13 OF INDIA UK T AX TREATY AND THEREFORE, THE NATURE OF CORE SERVICE CHARGES IS NOT DISPUTED. (D) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THERE IS NO PRO VISION IN THE I.T. ACT FOR EXEMPTION FROM THE TDS FROM THE PAYMENT BY ONE ASSESS EE TO THE PAYEE FOR CORE SERVICE FEES WHEREIN, THE SAME HAS BEEN DEBITED BY THE ASSESSEE FROM PROFIT AND LOSS ACCOUNT. (E) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE PAYMENT MADE BY ASS ESSEE IS PURELY REIMBURSEMENT OF EXPENSES AND THEREFORE, IT DOES NOT FALL WITHIN THE AMBIT OF THE PROVISION OF TDS OF THE ACT.. (F) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN CONCLUDING THAT THERE IS NO ELEMENT O F SERVICE RENDERED BY M/S. DILIPKUMAR V. LAKHI, PROP. SHRI DILIPKUMAR V. LAK HI AND THEREFORE, SECTION 1 94J IS NOT ATTRACTED. 5 NONE HAS APPEARED ON BEHALF OF THE RESPONDENT ASS ESSEE WHEN THESE APPEALS WERE CALLED FOR HEARING. ACCORDINGLY, WE PR OPOSE TO HEAR AND DISPOSE OFF THESE APPEALS EXPARTE. 6 THE BRIEF FACTS ARISING FROM THE RECORDS ARE THAT THERE WAS A SURVEY ACTION U/S 133 OF THE I T ACT AT THE OFFICE PREMISES OF THE AS SESSEE. DURING THE COURSE OF SURVEY M/S VISHINDA DIAMONDS ITA NO.2018/MUM/2010 ITA NO.1949/MUM/2011 ITA NO.1950/MUM/2011 ITA NO.1951/MUM/2011 3 ACTION, STATEMENT OF MR DILIP KUMAR V LAKHI THE PAR TNER OF THE ASSESSEE FIRM WAS RECORDED. ON VERIFICATION OF THE RECORDS/DETAILS S UBMITTED BY THE ASSESSEE DURING THE COURSE OF SURVEY ACTION AND SUBSEQUENT PROCEEDI NGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS DEBITED CORE SERVICE FE ES OF ` . 59,45,937/- AND NO TDS WAS DEBITED ON THE SAME. ON ENQUIRY, THE ASSESSEE HAS EXPLAINED THAT THE CORE SERVICE FEE PAID BY THE ASSESSEE IS ONLY BY WAY OF REIMBURSEMENT TO M/S DILIPKUMAR V LAKHI, A PROPRIETARY CONCERN. THE ASSESSEE HAS E XPLAINED THE FACTS BEFORE THE ASSESSING OFFICER AS UNDER: I) TWO COMPANIES IN THE GROUP NAMELY I) MIS. DILIPK UMAR V. LAKNI PROP. SHRI DILIPKUMAR V. LAKHI (PROPRIETARY CONCERN,) (II) MIS . VSHINDA DIAMONDS HAVE EFFECTED PURCHASES OF ROUGHS FROM DIAMOND TRADING C O. (DTC) FOR WHICH THEY HAVE SEPARATE PURCHASE INVOICES AND CONFIRMATI ONS FROM DTC; HOWEVER DTC STARTED LEVYING A CHARGE FOR VALUED ADDED SERVI CES (VAS) ON ALL THE PURCHASES MADE AFTER 1ST JULY 2005 ONWARDS AND HENC E RAISED A SINGLE INVOICE ON THE PRINCIPLE SIGHT HOLDER MIS. DILIPKUM AR V. LAKHI AS IT IS THEIR POLICIES TO ENTERTAIN ONLY ONE NAME IN THE GROUP; H OWEVER, SHRI DILIPKUMAR V. LAKHI PAID THE CORE SERVICE FEES AFTER DEDUCTING 15 % AS PER ARTICLE 13 OF THE INDIA UK TAX TREATY. THE TDS PAID TO THE CREDIT O F CENTRAL GOVERNMENT ON 25.01.2006. IN SHORT NO REVENUE AND/OR INCOME IS G ENERATED VIS A VIS. THE REIMBURSEMENT; HENCE TDS IS NOT APPLICABLE NOR THE RE IS ANY LOSS TO THE REVENUE AS TDS HAS ALREADY BEEN DEDUCTED AND PAID. II) PURCHASES WERE EFFECTED BY TWO COMPANIES AND AC CORDING TO THE RATIO OF THEIR PURCHASES; THE EXPENSES PAID BY SHRI DILIPKUM AR V LAKHI WERE REIMBURSED BY THE FIRM M/S. VISHINDA DIAMONDS AS EXPENSES WERE INCURRED BY SHRI DILIPKUMAR V. LAKHI AND ON BEHALF OF MIS. V ISHINDA DIAMONDS. IT SHALL NOT BE OUT OF PLACE TO MENTION THAT THERE IS NO ELE MENT OF ANY SERVICES BY SHRI DLL!PKUMAR V. LAK1 TO M/S VISIIINDA DIAMONDS. 6.1 APART FROM THIS, THE ASSESSEE HAS ALSO CONTENDE D BEFORE THE ASSESSING OFFICER THAT SINCE THE TOTAL VALUE ADDED SERVICE CHARGES WE RE PAID BY SHRI DILIPKUMAR V LAKHI AFTER DEDUCTION OF TAX AT SOURCE AND PAID TO THE CREDIT TO THE REVENUE; M/S VISHINDA DIAMONDS ITA NO.2018/MUM/2010 ITA NO.1949/MUM/2011 ITA NO.1950/MUM/2011 ITA NO.1951/MUM/2011 4 THEREFORE, THERE IS NO REVENUE LOSS ON THE SAID AMO UNT; OTHERWISE IT SHALL BE A CASE OF DOUBLE DEDUCTION OF TAX ON THE SAME TRANSACTION. 6.2 THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLAN ATION OF THE ASSESSEE AND HELD THAT THE ASSESSEE IS TO BE DEEMED AS AN ASSE SSEE IN DEFAULT IN RESPECT OF THE TAX WHICH WAS REQUIRED TO BE DEDUCTED AND ALSO LIAB LE TO PAY SIMPLE INTEREST AS PER THE PROVISIONS OF SEC. 201(1) AND 201(1A) OF THE I T ACT. 7 ON APPEAL, THE COMMISSIONER OF INCOME TAX(APPEALS ) HAS HELD THAT THE PAYMENT MADE BY THE ASSESSEE IS PURELY REIMBURSEME NT OF EXPENSES WHICH IN NO WAY FALL WITHIN THE AMBIT OF THE PROVISIONS OF TDS. ACCORDINGLY, THE ASSESSEE CANNOT BE TREATED AS AN ASSESSEE IN DEFAULT U/S 201(!) AND CONSEQUENTLY NOT LIABLE TO PAY INTEREST U/S 201(1A) OF THE ACT. 8 WE HAVE HEARD THE LD DR AND CAREFULLY PERUSED THE RELEVANT MATERIAL ON RECORD. THE LD DR HAS HEAVILY RELIED UPON THE ORD ER OF THE ASSESSING OFFICER PASSED U/S 201(1) AND 201(1A). AS IT IS EVIDENT FROM THE RECORDS THAT THE ASSESSEE HAS EXPLAINED THAT THE PAYMENTS WERE ACTUALLY MADE BY T HE SISTER CONCERN M/S DILIPKUMAR V LAKHI TO DIAMOND TRADING COMPANY AG AINST THE PURCHASE OF ROUGH DIAMONDS. SINCE THE DIAMOND TRADING COMPANY HAD CH ARGED VALUE ADDED SERVICES ON ALL THE PURCHASES AND THE PAYMENT WAS M ADE AFTER THE DEDUCTION OF TAX @ 15% AS PER ARTICLE 13 OF INDO-UK DTAA. THE ASSESS ING OFFICER HAS NOT DENIED THE PAYMENT AGAINST THE PURCHASE OF DIAMOND BY THE SIST ER CONCERN BUT REJECTED THE EXPLANATION OF THE ASSESSEE ON TECHNICAL GROUNDS TH AT ANY ARRANGEMENT WITH THE GROUP COMPANY CANNOT EFFECT OR ALTER OR MODIFY THE STATUTORY LIABILITY OF THE TAX M/S VISHINDA DIAMONDS ITA NO.2018/MUM/2010 ITA NO.1949/MUM/2011 ITA NO.1950/MUM/2011 ITA NO.1951/MUM/2011 5 PAYER TO PAY TAX AT APPROPRIATE RATE. THE ASSESSIN G OFFICER HAS RECORDED HIS REASONING AT PAGE 4 AS UNDER: THE EXPLANATION OFFERED BY THE ASSESSEE/REPRESENTA TIVES ARE NOT ACCEPTABLE AS THE PRIVATE ARRANGEMENT CANNOT DISCHARGE LIABILI TY OF TDS AS PER THE PROVISIONS OF INCOME TAX ACT. THE LIABILITY OF PAYE R TO MAKE DEDUCTION OF TAX IS ABSOLUTE AND ANY ARRANGEMENT OR AGREEMENT BETWEEN P AYER AND PAYEE CANNOT DISCHARGE THE STATUTORY LIABILITY OF THE PAY ER TO DEDUCT TAX AT SOURCE. WHATEVER THE PRIVATE ARRANGEMENTS BETWEEN THE PAY ER AND PAYEE MAY BE, THE PAYERS LIABILITY UNDER THE STATUTE IS CLEAR. N O ARRANGEMENT OR AGREEMENT PRIVATELY ARRIVED AT BETWEEN THE PAYER AND THE PAYE E CAN EFFECT OR ALTER OR MODIFY THE STATUTORY LIABILITY OF THE TAX PAYER TO DEDUCT TAX AT THE APPROPRIATE RATE FROM THE PAYMENT MADE TO THE PAYEE. WHERE A PE RSON DECIDES TO MAKE PAYMENT OR NET OR TAX, HE HAS HIMSELF TO PAY TAXES WHICH HAS BEEN SPECIFICALLY PRESCRIBED UNDER SEC. 195A OF THE INCO ME- TAX ACT. FURTHER THE CONTENTION OF THE ASSESSEE THAT THE ASS ESSEE HAS ALSO OBTAINED LOWER DEDUCTION CERTIFICATE FROM THE DEPARTMENT FOR THE PERIOD FROM 1 ST JULY 2005 TO 31 DECEMBER 2005 WITH AN UNDERSTANDING THAT THE REIMBURSEMENT OF FEES DO NOT ATTRACT ANY TDS IS ALSO NOT ACCEPTABLE AS THE VALIDITY OR THE CERTIFICATE ISSUED UNDER SEC 197 OF THE ACT ON 28.3 .2006 FOR RS 44,23,570/- WAS IN FORCE UPTO 31 ST MARCH 2006 ONLY. WHEREAS THE AMOUNT OF RS.44,23,57 0/- WAS REMITTED TO MR. DILIPKUMAR V. LAKHI ON 23 RD JANUARY-2006 I.E. WELL BEFORE THE ISSUANCE OF THE ABOVE MENTIONED CERTIFICATE. UNDE R THE CIRCUMSTANCES, THE CONTENTION OF THE ASSESSEE IS REJECTED AND THE TOTA L AMOUNT OF RS.59,45,937.43 PAID MR. DIPUMAR V. LAKHI AS CORE SERVICE TEE ARE L IABLE FOR TDS UNDER SEC. 194-J OF THE I T ACT AND ACCORDINGLY BROUGHT TO TA X ALONG WITH INTEREST UNDER SEC. 201(1A) OF THE ACT. ON VERIFICATION, IT IS FURTHER NOTICED THAT THE ASSES SEE HAS DEDUCTED TDS RATE ON PAYMENT MADE TO M/S. KONE ELEVATORS INDIA LTD. T HE INTEREST ON SUCH DELAYED PAYMENT OF ` 6,080/- IS RECOVERED FROM THE ASSESSEE( ` 1404 ON 24.7.2007 AND ` 5,373/- ON 23.10.2008). 8.1 IT IS CLEAR FROM THE FINDINGS OF THE ASSESSING OFFICER THAT THE HE HAS NOT DISPUTED THE FACT THAT THE ORIGINAL PAYMENT WAS MAD E BY THE SISTER CONCERN OF THE ASSESSEE AFTER DEDUCTING THE TAX @ 15% AND THE ASSE SSEE HAS MADE THE REIMBURSEMENT OF THE SAME TO THE SISTER CONCERN, WH ICH IS ALREADY SUBJECTED TO TDS. WHEN THERE IS NO ELEMENT OF MARGIN, PROFIT OR VALUE ADDITION BY THE SISTER CONCERN AND IT WAS ONLY A SIMPLE CASE OF REIMBURSEMENT OF E XPENSES ON ACCOUNT OF PURCHASES MADE BY THE SISTER CONCERN ON BEHALF OF T HE ASSESSEE; THEREFORE, ONCE M/S VISHINDA DIAMONDS ITA NO.2018/MUM/2010 ITA NO.1949/MUM/2011 ITA NO.1950/MUM/2011 ITA NO.1951/MUM/2011 6 THE PAYMENT IS ALREADY SUBJECTED TO TDS AND THE ASS ESSEE HAS ONLY REIMBURSED THE PAYMENT, THEN NO TDS IS REQUIRED TO BE MADE AT THE TIME OF PAYMENT BY THE ASSESSEE TO THE SISTER CONCERN, WHICH IS PURELY A T RANSACTION OF REIMBURSEMENT. THE COMMISSIONER OF INCOME TAX(APPEALS) HAS CONSIDERED THE CONTENTION OF THE ASSESSEE AS WELL AS THE RELEVANT FACTS AND ADJUDICA TED THE ISSUE IN PARA 7 TO 9 AS UNDER: 7. I HAVE GONE THROUGH THE ABOVE SUBMISSIONS VERY C AREFULLY AND PERUSED THE ORDER OF THE ASSESSING OFFICER. IN THE ORDER S PASSED UNDER SECTION 201 (1) AND 201 (IA) OF THE ACT, THE AO HAS HELD TH E APPELLANT AS AN ASSESSEE IN DEFAULT FOR ITS FAILURE TO DEDUCT TAXES AS PER THE PROVISIONS OF SECTION 194J OF THE ACT IN RESPECT OF PAYMENTS MADE TO THE PROPRIETARY SISTER CONCERN OF SHRI DKIPKUMAR V LAKSHI AS CORE SERVICE FEES. 7.1 IN THIS REGARD THE APPELLANT HAS ARGUED THAT THE PAYMENT MADE AS CORE SERVICE FEES TO M/S. DILIPKUMAR V. LAKHI IS REIMBURSE MENT OF EXPENSES INCURRED BY THE ASSESSEE IN PROPORTION OF PURCHASES WHICH DOE S NOT ATTRACT TDS PROVISIONS AS NO REVENUE AND I OR INCOME IS GENERATED VIS A VIS THE REIMBURSEMENT NOR THERE IS ANY ELEMENT OF SERVICES REND ERED BY THE SISTER CONCERN AND IT IS A PURELY REIMBURSEMENT OF EXPENSES ONLY WHICH IS FULLY SUPPORTED BY BILLS/VOUCHERS: IN THIS CONNECTION, THE APPELLANT RELIED ON THE VARIOUS CIRCULARS ISSUED BY THE C.B.D.T. AND COURT DE CISIONS WHICH SUPPORT THE CONTENTION OF T., APPELLANT THAT PROVISIONS OF SECTI ON 194J OF THE ACT ARE NOT APPLICABLE IN RESPECT OF PAYMENTS MADE BY WAY OF REI MBURSEMENT ONLY. THE CBDT HAS ISUED GUIDELINES REGARDING THE APPLICABI LITY OF THE PROVISIONS OF SECTION 194J OF THE ACT IN THE CIRCULAR NO 715, QUERY NO.30 DATED 08-08-1995. IN ADDITION TO THE ABOVE, THE APPELLANT HAS ALSO REL IED ON SOME OF THE COURT RULINGS IN SUPPORT OF ITS CONTENTION THAT THE PAYMENT S MADE TO THE SISTER CONCERN BY WAY OF REIMBURSEMENT DO NOT FALL WITHIN T HE PROVISIONS OF SECTION 1 94J OF THE ACT. THE JUDGMENTS AS RELIED ON BY THE AP PELLANT ARE MENTIONED HEREUNDER 1. THE DECISIONS IN THE CASE OF CLIFFORD CHANCE, UNI TED KINGDOM V. DY. CIT [2002] 82 LTD 106 (MUMBAI) AND 2. IN THE CASE OF ASSTT. CIT V. ARTHUR ANDERSON & CO . [2006] 5 SOT 393 (MUMBAI). 7.2 BASED ON THE ABOVE, IT IS AMPLY CLEAR THAT THE NATURE OF PAYMENT MADE BY THE APPELLANT TO ITS SISTER CONCERN IS REIMBU RSEMENT. THE ENTIRE CORRESPONDENCE ALONG WITH THE BILLS ALSO SUPPORTS T HE CONTENTION. THE ASSESSING OFFICER FAILED TO APPRECIATE THE NATURE OF PAYMENT MADE BY THE APPELLANT. THE ASSESSING OFFICER HAS MERELY ACTED UPO N THE NOMENCLATURE OF THE PAYMENT AND HELD THAT ON THIS PAYMENT TAX U/S. 194J SHOULD HAVE BEEN M/S VISHINDA DIAMONDS ITA NO.2018/MUM/2010 ITA NO.1949/MUM/2011 ITA NO.1950/MUM/2011 ITA NO.1951/MUM/2011 7 DEDUCTED. THE ASSESSING OFFICER ALSO FAILED TO ESTAB LISH HOW THE PAYMENT MADE BY THE APPELLANT HAS BECOME INCOME TO THE RECI PIENT AS THE RECIPIENT HAS ALREADY PAID THIS AMOUNT TO THE DIAMOND TRADING COMPANY ON BEHALF OF THE APPELLANT. IT IS ALSO A FACT THAT THIS PAYMENT IS ALSO NOT AGAINST ANY SERVICES RENDERED BY THE RECIPIENT TO THE APPELLANT. IN ABSENCE OF BOTH SUCH SITUATIONS, THE PROVISIONS OF T.D.S. CANNOT BE APPLI CABLE ON THE PAYMENT. MOREOVER, SHRI DILIPKUMAR V. LAKHI, RECIPIENT HAD ALR EADY PAID THE CORE SERVICE FEES AFTER DEDUCTING TAX @ 15% AS PER ARTICL E 13 OF THE INDIA - UK TAX TREATY. THE TDS DEDUCTED IS PAID TO THE CREDIT OF CE NTRAL GOVERNMENT ACCORDINGLY. ANY FURTHER AS PROPOSED BY THE ASSESSING OFFICER WILL AMOUNT TO DOUBLE TAXATION. 7.3 THUS, IN VIEW OF THE ABOVE FACTS, I FIND MERIT IN THE SUBMISSION OF THE APPELLANT THAT OUT OF THE PAYMENT IN QUESTION, NO I NCOME IS GENERATED TO THE RECIPIENT NOR THERE IS ANY ELEMENT OF SERVICE RENDERED BY M/S. DILIPKUMAR V. LAKHI TO THE APPELLANT. THEREFORE, IN MY OPINION TH E PAYMENT MADE IS PURELY REIMBURSEMENT OF EXPENSES WHICH IN NO WAY FALL WITH IN THE AMBIT OF THE PROVISIONS OF T.D.S. OF THE ACT. 7.4 AS HELD ABOVE, SINCE THE APPELLANT WAS NOT LIA BLE FOR DEDUCTION OF TAX AS PER THE PROVISIONS OF SECTION 194J OF THE ACT, TH E ASSESSEE SHOULD NOT BE TREATED AS ASSESSEE IN DEFAULT UNDER SECTION 201(1 ) OF THE ACT. THEREFORE, I DIRECT THE ASSESSING OFFICER TO DELETE THE DEMAND. 8. AS REGARDS GROUND NO.2 I.E. INTEREST U/S. 201(IA) , THE APPELLANT SUBMITTED AS UNDER: THE APPELLANT SUBMITTED THAT THE ASSESSING OFFICER E RRED IN CHARGING INTEREST U/S. 201 (1A) WITHOUT GIVING AN OPPORTUNITY AND ALSO WITHOUT STATING ANY REASONS FOR CHARGING THE SAME. 9. IN THIS REGARD IT IS WORTHWHILE TO MENTION THAT TH E HONBLE I T.A T. BENCH JODHPUR IN THE CASE OF I.T.O. VS. EMERALD CONSTRUCTIO N (P) LTD HELD THAT WHEN THE TAX WHICH WAS TO BE DEDUCTED U/S. 201(1) WAS NOT PAYABLE AT ALL, IT WOULD BE UNJUST TO CONCLUDE THAT, IN THE ALL EVENTU ALITIES, INTEREST U/S. 201(1A) IS TO BE CHARGED FROM THE DEDUCTOR. THEREFORE, AS PER FINDING GIVEN IN RESPECT OF GROUND NO .1 AND FOLLOWING THE RATIO OF THE DECISION OF THE HONBLE I.T.A.T., JODHP UR BENCH CITED (SUPRA), THE QUESTION OF LEVY OF INTEREST UNDER SECTION 201(1A) O F THE ACT DOES NOT ARISE AND ACCORDINGLY THE ASSESSING OFFICER IS DIRECTED TO DELETE THE SAME. 9 THE FACTS, AS EMERGED FROM THE RECORDS THAT THE ORIGINAL PAYMENT WAS MADE BY THE SISTER CONCERN OF THE ASSESSEE TO DIAMOND TR ADING COMPANY ON BEHALF OF THE ASSESSEE AND SUBSEQUENTLY THE ASSESSEE HAS REIMBURS ED THE AMOUNT TO THE SISTER CONCERN. THUS, ONCE THE TDS WAS DEDUCTED BY THE SIS TER CONCERN AND DEPOSITED TO THE GOVERNMENT ACCOUNT, THEN NO SUBSEQUENT TDS IS R EQUIRED TO BE DEDUCTED ON M/S VISHINDA DIAMONDS ITA NO.2018/MUM/2010 ITA NO.1949/MUM/2011 ITA NO.1950/MUM/2011 ITA NO.1951/MUM/2011 8 THE SAME AMOUNT. ACCORDINGLY, WE DO NOT FIND ANY R EASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) ON THIS ISSUE. 10 SINCE THE PAYMENT WAS NOT SUBJECTED TO TDS PROVI SIONS, THEN THE LIABILITY OF INTEREST ALSO DOES NOT ARISE. RATHER, IN THIS CASE, THERE IS NO LOSS OF REVENUE BECAUSE THE ORIGINAL PAYMENT WAS ALREADY SUBJECTED TO TAX A ND THE AMOUNT IN QUESTION IS ONLY REIMBURSEMENT. 11 IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE APPEALS OF THE REVENUE; ACCORDINGLY, THE SAME ARE DISMISSED. 12 IN THE RESULT, ALL THE FOUR APPEALS FILED BY T HE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 25 TH , DAY OF MAY 2012 SD/ SD/- ( N K BILLAIYA ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 25 TH , MAY 2012 RAJ* M/S VISHINDA DIAMONDS ITA NO.2018/MUM/2010 ITA NO.1949/MUM/2011 ITA NO.1950/MUM/2011 ITA NO.1951/MUM/2011 9 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI DRAFT DICTATED ON 21 MAY 2012 DICT PAD PLACED IN THE ORG. FILE SR PS 2 DRAFT PLACED BEFORE AUTHOR ON 23 MAY 2012 SR PS 3 DRAFT PROPOSED & PLACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY 2 ND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR PS SR .PS 6 KEPT FOR PRONOUNCEMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DESPATCH SR PS