M/S Parabolic Drugs Limited, Chandigarh V. DCIT (TDS), Chandigarh

ITA 202/CHANDI/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9831 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 04-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 09-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N K SAINI
• Keywords: Opportunity of being heard; Bonafide belief; Relationship of principal and agent
• Section: 133A; 133(6); 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 202 TO 204/CHD/2016 A.Y : 2010-11 TO 2012-13 M/S PARABOLIC DRUGS LTD., VS THE DCIT (TDS), SCO 99-100, SECTOR 17-B, CHANDIGARH. CHANDIGARH. TAN: PTLM11833D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.SAINI RESPONDENT BY : SHRI SUSHIL KUMAR DATE OF HEARING : 05.07.2016 DATE OF PRONOUNCEMENT : 05.07.2016 O R D E R ALL THE APPEALS BY ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS OF LD. CIT(APPEALS)-1 CHANDIGARH D ATED 10.09.2015 FOR FINANCIAL YEARS 2009-10, 2010-11 AND 2011-12 (ASSESSMENT YEARS 2010-11, 2011-12 AND 2012-13) AGAINST THE ORDERS UNDER SECTION 201(1) A ND 201(1A) OF THE INCOME TAX ACT. THE ISSUE IS SAME I N ALL THE APPEALS, THEREFORE, FACTS ARE TAKEN FROM ITA 202/2016. ITA 202/2016 2. THIS APPEAL IS FILED ON THE FOLLOWING GROUNDS : 1. THE ORDER PASSED BY THE LEARNED CIT (A) IS CONTR ARY TO LAW & FACTS OF THE CASE. 2 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND FACTS IN HOLDING THE ASSESSEE TO BE PERSON IN DEFAULT U/S 201(1) & 201(1A) OF IT AC T 1961. 3 . THE LEARNED CIT (A) HAS ERRED IN LAW AND FACT S IN HOLDING THAT ASSESSEE WAS LIABLE TO PAY INTEREST OF RS.2,65,762 /- UNDER SECT ION 201(1) & 201(1 A) ON ACCOUNT OF PAYMENTS MADE TO BANKS ON ACCOUNT OF COMMISSION OF LETTER OF CREDIT, EXPORT / IMPORT GUARANTEES ETC TO ICICI BANK SECTOR 9, CHAND IGARH WITHOUT DEDUCTING TAX AT SOURCE AS REQUIRED UNDER SECTION 194H. 3. BRIEF FACTS ARE THAT SURVEY UNDER SECTION 133A O F THE INCOME TAX ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 29.08.2012. DURING THE COURSE OF SURVEY, IT WAS NOTICED BY THE ASSESSING OFFICER THAT CERTAIN PAYMENTS WERE MADE ON ACCOUNT OF COMMISSION ON LETTER OF CREDITS, EXPORTS/IMPORT GUARANTEES ETC. TO THE STATE BANK OF INDIA, SPECIAL IZED COMMERCIAL BRANCH, SCO 103-106, SECTOR 17-B WITHOUT DEDUCTING OF TDS. THE ASSESSING OFFICER CALLED FOR THE INFORMATION UNDER SECTION 133(6) OF THE ACT AND ISS UED SHOW CAUSE NOTICE TO THE ASSESSEE BUT NO REPLY WAS FILED. THE ASSESSING OFFICER HELD ASSESSEE LIABLE UNDER SECTION 201(1) FOR NOT DEDUCTING TAX AT SOURCE UNDE R SECTION 194H OF THE ACT AND CHARGED INTEREST UNDER SECTION 201(1A) OF THE ACT. HOWEVER, ASSESSEE WAS GIVEN BENEFIT OF THE RATIO DECIDED IN THE CASE OF M /S HINDUSTAN COCO COLA BEVERAGES PVT. LTD. 293 ITR 226 . 3. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(APPEALS) AND FILED WRITTEN SUBMISSIONS IN WHICH IT 3 WAS CLAIMED THAT INTEREST PAID TO THE BANKING COMPANIES IS EXCLUDED FROM TDS UNDER SECTION 194A O F THE ACT. IN THE CASE OF THE ASSESSEE, ASSESSEE WAS LIABLE/PERSON IN DEFAULT FOR NON DEDUCTION OF TAX A T SOURCE ON COMMISSION AS PER PROVISIONS OF SECTION 194H OF THE ACT. THE ASSESSEE IN THE SUBMISSION DID NOT REFER TO ANYTHING ABOUT PROVISIONS OF SECTION 1 94H OF THE ACT. THE ASSESSEE ADMITTED IN THE SUBMISSIO N THAT NOTIFICATION DATED 31.12.2012 HAVE BEEN ISSUED UNDER INCOME TAX ACT WHEREIN EXEMPTION HAS BEEN GIVEN FOR NON DEDUCTION OF TDS IN RESPECT OF PAYMEN T MADE TO BANKS IN RESPECT OF BANK GUARANTEE COMMISSION, CASH MANAGEMENT SERVICES, DEPOSITORY CHARGES ON MAINTENANCE OF DEMAT ACCOUNTS ETC. THE NOTIFICATION IS APPLICABLE FROM 01.01.2013. THE ASSESSEE CLAIMED IT WAS UNDER BONAFIDE BELIEF THAT NO TDS IS TO BE DEDUCTED. THE LD. CIT(APPEALS), THERE FORE, FOUND THAT ASSESSEE WAS AWARE OF THE NOTIFICATION I N REGARD TO EXEMPTION FROM DEDUCTION OF TAX AT SOURCE ON COMMISSION PAYMENT TO BANKS ETC. AND THERE COULD NO T BE ANY BONAFIDE BELIEF IN FAVOUR OF THE ASSESSEE, THEREFORE, APPEAL OF THE ASSESSEE WAS DISMISSED. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE IS NOT LIABLE FOR DEDUCTION OF TDS AS IT H AS NEVER PAID ANY PAYMENT TO THE BANKS ON ACCOUNT OF COMMISSION AND OTHER SERVICES PROVIDED BY THE BANK. HE HAS SUBMITTED THAT IDENTICAL ISSUE WAS CONSIDERE D 4 BY LD. CIT(APPEALS)-I CHANDIGARH IN THE CASE OF THE SAME ASSESSEE VIDE ORDER DATED 03.02.2016 FOR FINANCIAL YEAR 2011-12 (ASSESSMENT YEAR 2012-13) IN RESPECT OF PAYMENT MADE ON ACCOUNT OF COMMISSION ON LETTER OF CREDITS, EXPORT/IMPORT GUARANTEE ETC. TO ICICI BANK LTD. CHANDIGARH AND THE LD. CIT(APPEALS) ON IDENTICAL ISSUE HELD THAT ASSESSEE IS NOT REQUIRED TO DEDUCT TAX AT SOURCE UNDER SECTION 201(1) OF THE AC T THEREFORE NO INTEREST COULD BE LEVIED. THE FINDING S OF LD. CIT(APPEALS) IN PARA 6.2 AND 6.3 OF THE ORDER A RE REPRODUCED AS UNDER : I HAVE CONSIDERED THE FACTS OF THE CASE. THE PAYMENTS MADE CAN BE CALLED COMMISSION ONLY IF THERE IS A RELATIONSHIP OF PRINCIPAL AND AGENT BETWEEN THE TWO PARTIES. IF THE RELATIONSHIP IS PRINCIPAL TO PRINCIPAL, THEN THE PAYMENT CANNOT BE TERMED AS COMMISSION. IN THE INSTANT CASE, THE CHARGES PAID TO ICICI BANK LTD ARE NORMAL BANKING SERVICE CHARGES FOR PERFORMING GENERAL BANKING BUSINESS IN THE FORM OF COMMITMENT CHARGES AND USAGE CHARGES PAID TO BANK AGAINST CREDIT FACILITIES AND SO THE IMPUGNED AMOUNTS CANNOT BE TREATED AS COMMISSION UNDER SECTION 194H OF THE ACT IN VIEW OF THE DECISION OF HON'BLE ITAT MUMBAI IN THE CASE OF M/S KOTAK SECURITIES LTD. (SUPRA). 6.3 THE ASSESSING OFFICER WAS JUDICIOUS IN APPLYING THE HON'BLE SUPREME COURT DECISION IN THE CASE OF M/S HINDUSTAN COCA-COLA BEVERAGES (P) LTD. 293 ITR 226 AND HAD HELD 5 ASSESSEE LIABLE TO PAY A SUM OF RS. 1,42,729/- ONLY AS INTEREST UNDER SECTION 201(1A) OF THE ACT. SINCE IT IS HELD IN PARA ABOVE THAT PERSON RESPONSIBLE (PR) WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE UNDER SECTION 201(1) OF THE ACT, THE INTEREST PAYABLE UNDER SECTION 201(1A) OF THE ACT CEASES TO EXIST. IN VIEW OF THE SAME, THE DEMAND OF INTEREST OF RS. 1,42,729/- IS ACCORDINGLY DELETED. GROUND OF APPEAL NO. 2 IS ALLOWED. 5. THE LD. COUNSEL FOR THE ASSESSEE FAIRLY SUBMITTE D THAT THESE POINTS COULD NOT BE SUBMITTED BEFORE LD. CIT(APPEALS) AND ASSESSEE CONTESTED THE APPEAL ON SOME OTHER WRONG PREMISE. HE HAS, THEREFORE, SUBMITTED THAT MATTER REQUIRES RE-CONSIDERATION AT THE LEVEL OF THE LD. CIT(APPEALS). HE HAS SUBMITTED THA T IN THE ORDER DATED 03.02.2016, LD. CIT(APPEALS) CONSIDERED THE PAYMENT MADE ON ACCOUNT OF COMMISSION ON LETTER OF CREDIT, EXPORT/IMPORT GUARANTEES ETC. TO ICICI BANK, CHANDIGARH AND IN IT A 204/2014 FOR THE SAME ASSESSMENT YEAR 2012-13, LD. CIT(APPEALS) CONSIDERED THE IDENTICAL ISSUE ON ACCO UNT OF PAYMENT MADE TO THE BANK ON ACCOUNT OF COMMISSIO N OF LETTER OF CREDIT, EXPORT/IMPORT, GUARANTEES ETC. TO STATE BANK OF INDIA, CHANDIGARH. ON THE OTHER HAND , LD. DR SUBMITTED THAT FACTS MAY BE DIFFERENT IN ALL THESE MATTERS, HOWEVER, HE HAS SUBMITTED THAT MATTE R COULD BE REMANDED TO THE LD. CIT(APPEALS) FOR FRESH ADJUDICATION. 6 6. I HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE THROUGH THE IMPUGNED ORDERS AND ORDER OF THE LD. CIT(APPEALS) DATED 03.02.2016. THE SUBSEQUENT ORDE R OF THE LD. CIT(APPEALS) DATED 03.02.2016 IN THE CAS E OF THE SAME ASSESSEE CLEARLY PROVES THAT ASSESSEE MAY NOT BE LIABLE FOR INTEREST UNDER SECTION 201(1A) OF THE INCOME TAX ACT. THE FACTS PLEADED BEFORE LD. CIT(APPEALS) LATER ON FOR SAME ASSESSMENT YEAR 2012 - 13 WERE NOT PLEADED BEFORE LD. CIT(APPEALS) IN THE IMPUGNED ASSESSMENT YEARS. THEREFORE, THERE IS A CONTRADICTORY FINDING GIVEN BY THE LD. CIT(APPEALS) IN THE CASE OF THE SAME ASSESSEE ON SAME SET OF FACTS. THE LD. DR, HOWEVER, SUBMITTED THAT FACTS MAY BE DIFFERENT IN THESE APPEALS, THEREFORE, THESE ALSO R EQUIRE RE-CONSIDERATION AT THE LEVEL OF THE LD. CIT(APPEAL S). IN THIS VIEW OF THE MATTER AND IN VIEW OF THE SUBMISSI ONS OF PARTIES AND LATER DECISION OF LD. CIT(APPEALS), CHANDIGARH DATED 03.02.2016 (SUPRA), I SET ASIDE TH E IMPUGNED ORDER AND RESTORE THE APPEAL OF THE ASSESS EE TO THE FILE OF LD. CIT(APPEALS)-I CHANDIGARH WITH DIRECTION TO RE-DECIDE THIS ISSUE IN THE LIGHT OF H IS ORDER DATED 03.02.2016. THE ASSESSEE SHALL BE GIVE N REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD. THE ASSESSEE MAY ALSO PRODUCE SUFFICIENT MATERIAL BEFOR E LD. CIT(APPEALS) FOR FINAL ADJUDICATION OF THE MATT ER. 7. IN THE RESULT, ITA 202/2016 IS ALLOWED FOR STATISTICAL PURPOSES. 7 ITA 203/2016 AND ITA 204/2016 7. THE ASSESSEE HAS RAISED IDENTICAL GROUNDS EXCEPT THAT NAME OF THE BANK IS DIFFERENT ( I.E. STATE BAN K OF INDIA, SECTOR 17 AND ICICI BANK, SECTOR 9, CHANDIGARH). FOLLOWING THE REASONS FOR DECISION IN ITA 202/2016, I SET ASIDE THE ORDERS OF THE LD. CIT(APP EALS) AND RESTORE BOTH THESE APPEALS TO THE FILE OF LD. CIT(APPEALS)-I CHANDIGARH WITH DIRECTION TO RE-DECI DE THIS ISSUE AS IS DIRECTED IN ITA 202/2016. 8. IN THE RESULT, BOTH APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, ALL APPEALS OF THE ASSESSEES ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED: 5 TH JULY,2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD