M/s Speciality Restaurants Ltd., Kolkata V. J.C.I.T.,Range-59(TDS), Kolkata

ITA 2222/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1149 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 30-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: S K TULSIAN; PUJA SOMANI
• Keywords: Non-deduction of tax; TDS
• Section: 40(a)(ia)

Judgement Text

ITA NO. 2222/KOL/2019 ASSESSMENT YEAR: 2011-2012 M/S. SPECIALITY RESTAURANTS LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT & SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A. NO. 2222/KOL/2019 ASSESSMENT YEAR: 2011-2012 M/S. SPECIALITY RESTAURANTS LIMITED,............... .......................APPELLANT UNIWORTH HOUSE, 3A, GURUSADAY ROAD, KOLKATA-700019 -VS.- JOINT COMMISSIONER OF INCOME TAX,.................. ......................RESPONDENT RANGE-59 (TDS), KOLKATA, 10B, MIDDLETON ROW,KOLKATA-700071 APPEARANCES BY: SHRI S.K. TULSIAN, ADVOCATE & SMT. PUJA SOMANI, ADV OCATE, FOR THE APPELLANT SMT. RANU BISWAS, ADDL. CIT, D.R., FOR THE RESPONDE N T DATE OF CONCLUDING THE HEARING : MARCH 16, 2020 DATE OF PRONOUNCING THE ORDER : MAY 29, 2020 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-24, KOLKATA DA TED 16.07.2019, WHEREBY HE CONFIRMED THE PENALTY OF RS.80,406/- IMP OSED BY THE ASSESSING OFFICER UNDER SECTION 271C OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY. D URING THE YEAR UNDER CONSIDERATION, IT HAD PAID A RENT OF RS.49,24 ,850/- TO M/S. K.T. ENTERPRISE WITHOUT DEDUCTING TAX AT SOURCE ON THE B ASIS OF CERTIFICATE PRODUCED BY M/S. K.T. ENTERPRISE. ON PERUSAL OF THE SAID CERTIFICATE, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSE SSEE WAS ALLOWED TO PAY RENT UPTO RS.41,20,785/- AFTER DEDUCTING TAX AT SOURCE @ NIL. SINCE THE ASSESSEE HAD PAID A TOTAL RENT OF RS.49,24,850/ - TO M/S. K.T. ITA NO. 2222/KOL/2019 ASSESSMENT YEAR: 2011-2012 M/S. SPECIALITY RESTAURANTS LIMITED 2 ENTERPRISE, THE ASSESSING OFFICER HELD THAT THERE W AS A FAILURE ON THE PART OF THE ASSESSEE TO DEDUCT TAX AT SOURCE FROM THE BA LANCE PAYMENT OF RENT AMOUNTING TO RS.8,04,065/-. HE ACCORDINGLY DISALLOW ED THE RENT TO THAT EXTENT BY INVOKING THE PROVISION OF SECTION 40(A)(I A) OF THE ACT AND ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271C OF THE ACT. IN REPLY TO THE SHOW-CAUSE NOTICE ISSUED BY THE ASSESSING OFFIC ER DURING THE COURSE OF PENALTY PROCEEDINGS, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE DEFAULT IN DEDUCTING TAX AT SOURCE FROM THE REN T OF RS.8,04,065/- WAS UNINTENTIONAL AND IT WAS A RESULT OF INADVERTENT ON THE PART OF ITS STAFF. THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCE PTABLE BY THE ASSESSING OFFICER AND HE PROCEEDED TO IMPOSE A PENA LTY OF RS.80,406/- UNDER SECTION 271C OF THE ACT. ON APPEAL, THE LD. C IT(APPEALS) CONFIRMED THE SAID PENALTY IMPOSED BY THE ASSESSING OFFICER V IDE HIS APPELLATE ORDER DATED 16.07.2019 PASSED EX-PARTE. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEA L BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, A DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) ON ACCOUNT OF RENT TO THE EXTENT OF RS.8, 04,065/- FOR NON- DEDUCTION OF TAX AT SOURCE WAS CHALLENGED BY THE AS SESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND VIDE AN APPEL LATE ORDER DATED 27.02.2017 PASSED IN THE QUANTUM PROCEEDINGS, THE L D. CIT(APPEALS) DELETED THE SAID DISALLOWANCE MADE BY THE ASSESSING OFFICER HOLDING THAT THE CERTIFICATE ISSUED FOR LOWER OR NO DEDUCTION OF TAX AT SOURCE WAS PERSON SPECIFIC AND COULD NOT BE RESTRICTED TO AN A MOUNT. HE ALSO HELD THAT THE PAYEE M/S. K.T. ENTERPRISE, IN ANY CASE, H AD ALREADY INCLUDED THE RENTAL INCOME IN ITS TOTAL INCOME OFFERED TO TAX AN D HAD PAID TAX DUE THEREON. TO ARRIVE AT THIS CONCLUSION, THE LD. CIT( APPEALS) RELIED ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF TWENTY FIR ST CENTURY SECURITIES LIMITED (ITA NOS. 464 & 465/KOL/2014), WHEREIN IT W AS HELD THAT A CERTIFICATE ISSUED FOR DEDUCTION OF TAX AT SOURCE A T LOWER RATE IS PERSON ITA NO. 2222/KOL/2019 ASSESSMENT YEAR: 2011-2012 M/S. SPECIALITY RESTAURANTS LIMITED 3 SPECIFIC AND NOT AMOUNT SPECIFIC. KEEPING IN VIEW T HE SAID DECISION OF THIS TRIBUNAL, WE ARE OF THE VIEW THAT THE ASSESSEE CANN OT BE SAID TO BE GUILTY OF FAILURE TO DEDUCT TAX AT SOURCE FROM THE PAYMENT OF RENT OF RS.8,04,065/-. IN ANY CASE, THERE BEING A CERTIFICA TE PROVIDED BY THE CONCERNED PARTY NAMELY M/S. K.T. ENTERPRISE FOR DED UCTION OF TAX AT SOURCE AT NIL RATE FROM THE PAYMENT OF RENT AND T HE SAID CERTIFICATE AS HELD BY THE TRIBUNAL IN THE CASE OF M/S. TWENTY FIR ST CENTURY SECURITIES LIMITED (SUPRA) BEING PERSON SPECIFIC AND NOT AMOUN T SPECIFIC, WE ARE OF THE VIEW THAT THERE WAS A SUFFICIENT CAUSE FOR THE FAILURE OF THE ASSESSEE TO DEDUCT TAX AT SOURCE FROM THE PAYMENT OF RENT OF RS.8,04,065/- AND IT WAS NOT A FIT CASE TO IMPOSE PENALTY UNDER SECTION 271C OF THE ACT. WE ACCORDINGLY CANCEL THE PENALTY IMPOSED BY THE ASSES SING OFFICER UNDER SECTION 271C AND CONFIRMED BY THE LD. CIT(APPEALS) AND ALLOW THIS APPEAL OF THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 29, 2020. SD/- SD/- (SATBEER SINGH GODARA) (P.M. JAGTAP ) JUDICIAL MEMBER VICE-P RESIDENT) KOLKATA, THE 29 TH DAY OF MAY, 2020 COPIES TO : (1) M/S. SPECIALITY RESTAURANTS LIMITED, UNIWORTH HOUSE, 3A, GURUSADAY ROAD, KOLKATA-700019 (2) JOINT COMMISSIONER OF INCOME TAX, RANGE-59 (TDS), KOLKATA, 10B, MIDDLETON ROW,KOLKATA-700071 (3) COMMISSIONER OF INCOME TAX (APPEALS)-24, KOLKATA; (4) COMMISSIONER OF INCOME TAX- , KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.