ITO, TDS, Ward - 4(3) , Asansol V. IISCO Steel Plant, Burnpur, , Paschim Bardhaman

ITA 2379/KOL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5637 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-09-2021
• Assessment Year: 2007-2008
• Appeal Filed On: 16-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANTA KHANRA
• Keywords: Retrospective amendment; TDS
• Section: 201(1); 192

Judgement Text

1 ITA NO. 2379/KOL/2018 IISCO STEEL PLANT AY 2007-08 , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [BEFORE HONBLE SHRI A. T. VARKEY, JM & HONBLE SHRI MANISH BORAD, AM] I.T.A. NO. 2379/KOL/2018 ASSESSMENT YEAR: 2007-08 ITO, TDS, WARD-4(3), ASANSOL VS. IISCO STEEL PLANT, BURNPUR (PAN: AAACS 7062 A) APPELLANT RESPONDENT DATE OF HEARING (VIRTUAL) 09.09.2021 DATE OF PRONOUNCEMENT 17.09.2021 FOR THE APPELLANT SHRI JAYANTA KHANRA, JCIT FOR THE RESPONDENT NONE ORDER PER SHRI A. T. VARKEY, JM: THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)- ASANSOL DATED 28.08.2018 FOR ASSESSMENT YEAR 2007-08. 2. NONE APPEARED FOR THE ASSESSEE. 3. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READS AS UNDER: 1. THE LD. CIT(A) ERRED IN FACTS AND IN LAW HOLDING THAT FOR RETROSPECTIVE AMENDMENT CANNOT FASTEN M/S STEEL AUTHORITY OF INDIA LTD, IISCO STEEL PLANT, BURNPUR, TAN-CALTO3317G TO DEDUCT TDS, WHICH IN FACT THE ASSESSEE WAS WELL AWARE AND BOUND TO DEDUCT THE TDS, WITHOUT THE RETROSPECTIVE CLARIFICATIONARY AMENDMENT, VIDE NOTIFICATION NO. S.O. 940(E) DATED 25.09.2001 AND VIDE RULE 3 OF THE INCOME TAX RULE, 1962. 2. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-ASANSOL ERRED IN ALLOWING RELIEF OF TAX OF RS. 1,65,25,620/- AND CONSEQUENTIAL INTEREST OF RS. 62,79,735/- (TOTALING RS. 2,28,05,355/-) WITHOUT CONSIDERING THE FACT WHICH HAS BEEN ELABORATED AS PER ANNEXURE-B. 2 ITA NO. 2379/KOL/2018 IISCO STEEL PLANT AY 2007-08 4. GROUND NO. 1 AND 2 ARE THE SAME WHICH THE AGAINST THE ACTION OF THE LD. CIT(A) IN ALLOWING THE DISALLOWANCE MADE BY THE AO FOR NON-DEDUCTION OF TDS. 5. BRIEF FACTS OF THE CASE AS NOTED BY THE AO IN HIS ORDER U/S 201/201(1A) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) IS THAT DURING THE SURVEY OPERATION CARRIED OUT ON 17.01.2008 ON THE PREMISES OF ASSESSEES STEEL PLANT IT CAME TO THE NOTICE OF THE AO THAT NO TAX WAS DEDUCTED ON THE HOUSE PERQUISITES FOR THE FY 2006-07, SINCE ACCORDING TO HIM, PROVISION WAS MADE IN THE INCOME TAX RULE 3(1), TABLE-1, OF INCOME TAX (14 TH AMENDMENT) RULES, 2007 WITH RETROSPECTIVE EFFECT FROM 01.04.2006. ACCORDING TO AO AS PER THIS AMENDMENT, WHEN ACCOMMODATION IS PROVIDED BY THE EMPLOYER, VALUE OF THE PERQUISITE SHOULD HAVE TO BE DETERMINED BY DEDUCTING THE RENT, IF ANY, ACTUALLY PAID BY THE EMPLOYEE, FROM A FIXED PERCENTAGE OF SALARY, DEPENDING UPON THE POPULATION OF THE CITY. ON BEING ASKED BY THE AO TO CLARIFY ON THIS ISSUE, THE ASSESSEE CLAIMED THAT THERE WAS NO LIABILITY ON THE PART OF THE EMPLOYER TO DEDUCT THE SAID AMOUNT AND REQUESTED TO DROP THE PROCEEDINGS. IT WAS ALSO SUBMITTED BY THE ASSESSEE THAT AS THE LATEST AMENDMENT AS POINTED OUT BY THE AO WAS BROUGHT BY FINANCE BILL, 2007 WHICH BECAME LAW ON AND AFTER 2007, IT WAS NOT POSSIBLE TO DEDUCT TAX BEFORE 11.05.2007. ACCORDING TO AO, IF ARGUMENTS WERE ACCEPTED THEN THE ASSESSEE SHOULD HAVE TAKEN NECESSARY ACTION FOR RECOVERY/DEDUCTION OF TAX FROM THE SALARY OF THE EMPLOYEES RELEVANT TO FY 2006-07 AFTER 11.05.2007, WHICH THE ASSESSEE FAILED TO IMPLEMENT. THE AO ALSO EXPRESSED HIS DOUBT AS TO WHETHER THE EMPLOYEES HAVE PAID TAX ON THE PERQUISITE VALUE DURING THE INTERREGNUM. THEREAFTER THE AO NOTED THAT IN CASE THE 2007 AMENDMENT WAS EFFECTIVE AN AMOUNT OF RS. 1,65,25,620/- SHOULD HAVE BEEN DEDUCTED AT SOURCE IN RESPECT OF 67 EMPLOYEES. THUS, ACCORDING TO AO THE ASSESSEE/ EMPLOYER/DEDUCTOR BECOMES A DEFAULTER IN TERMS OF SECTION 201(1) AND IS LIABLE TO MAKE PAYMENT ALONG WITH INTEREST CHARGEABLE U/S 201(1A) OF THE ACT AND THEREBY MADE AN ADDITION OF RS. 1,65,25,620/-AND INTEREST AT RS. 62,79,735/- U/S 201(1A) THUS ACCORDING TO AO AMOUNT PAYABLE BY 31.05.2003 WAS RS. 2,28,05,355/- AND THEREAFTER HE MADE ADJUSTMENT ON THE REFUND AMOUNT TO THE TUNE OF RS. 46, 87,200/- AND FINALLY COMPUTED THE DEMAND AT RS. 1,81,18,135/- BY ORDER DATED 30.04.2010. 3 ITA NO. 2379/KOL/2018 IISCO STEEL PLANT AY 2007-08 6. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO DELETE THE ADDITION BY HOLDING AS UNDER: THE ISSUE IN THIS CASE IS THAT BY VIRTUE OF INCOME TAX (14 TH AMENDMENT) RULES, 2007 WITH RETROSPECTIVE EFFECT FROM 14-06, IN CASE OF ACCOMMODATION GIVEN BY THE EMPLOYER TO THE EMPLOYEE, THE VALUE OF PERQUISITE SHOULD HAVE TO BE DETERMINED BY DEDUCTING THE RENT, IF ANY, ACTUALLY PAID BY THE EMPLOYEE FROM A FIXED PERCENTAGE OF SALARY OF THE EMPLOYEE. IN VIEW OF THIS, THE AO CAME TO THE CONCLUSION THAT THE APPELLANT HAS NOT DEDUCTED AND DEPOSITED THE TDS ON THE PERQUISITE OF HOUSE ACCOMMODATION GIVEN TO ITS EMPLOYEES FOR THE FY 2006-07 IN RESPECT OF AY 2007-08. THE APPELLANT HAS ARGUED THAT THE AMENDMENT WAS BROUGHT IN BY THE FINANCE BILL 2007, WHICH BECAME LAW ON AND AFTER 2007 AND BECAME OPERATIVE FROM 11.05.2007. HENCE, THE APPELLANT WAS DEDUCTING THE TDS ON THE ENHANCED VALUE OF THE PERQUISITE FROM THE FY 2007-08 I.E. AFTER THE AMENDMENT CAME INTO EFFECT. HOWEVER FOR THE FY 2006-07, THE APPELLANT HAD ALREADY PAID THE SALARY TO ITS EMPLOYEES AND DURING THE FY 2006-07 IT HAD NO MEANS OF KNOWING THAT IT HAD TO DEDUCT TDS ON THE ENHANCED PERQUISITE. FURTHER THE DEDUCTION OF TDS IN THIS CASE WAS U/S 192 ACT I.E. TDS IN RESPECT OF SALARY. UNDER SECTION 192 OF THE ACT, THE TDS ON SALARY IS TO BE MADE ON PAYMENT BASIS, I.E. AT THE TIME THE PAYMENT OF SALARY IS BEING MADE.. AT THE TIME OF THE PAYMENT OF THE SALARY, THERE WAS NO SUCH PROVISIONS IN THE INCOME TAX ACT TO DEDUCT TDS ON THE ENHANCED VALUE OF THE PERQUISITE. HENCE AS THERE WAS NO SUCH PROVISION, THE APPELLANT CANNOT BE IMPOSED WITH THE LIABILITY TO DEDUCT TDS. THE APPELLANT RELIED ON THE DECISION OF THE ITAT HYDERABAD IN THE CASE OF ACIT VS. ANDHRA BANK IN ITA NO. 504/HYD/2012 DATED 07.09.2012 ON A SIMILAR ISSUE. IN THIS CASE, THE ITAT HELD THATA THE TIME OF THE PAYMENT OF THE SALARY, THERE WAS NO PROVISION FOR THE DEDUCTION OF TDS ON THE ENHANCED VALUE OF PERQUISITE. AS AT THE TIME OF THE PAYMENT OF THE SALARY U/S 192 OF THE ACT, THE EMPLOYER WAS NOT MANDATED TO MAKE SUCH TDS, THE RETROSPECTIVE AMENDMENT TO SECTION 17(2)(II) BY THE FINANCE ACT, 2007 COULD NOT HAVE BEEN ANTICIPATED BY THE ASSESSEE FOR THE PURPOSE OF EFFECTING TDS PERTAINING TO CONCESSION IN RENTAL ACCOMMODATION. RELIANCE WAS PLACED UPON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. HINDUSTHAN ELECTRO GRAPHITES LTD. (243 ITR 48) AND WAS HELD THAT AS THE AMENDMENT WAS BOUGHT WITH RETROSPECTIVE EFFECT, THE TREATMENT OF THE VALUE OF THE PERQUISITE CAN BE APPLIED TO THE EMPLOYEES BUT CANNOT BE APPLIED TO THE EMPLOYER. ALSO THE TAX CAN BE COLLECTED FROM THE EMPLOYEES FOR THE AMOUNT OF PERQUISITE AS PER THE AMENDED PROVISION OF SECTION 17(2)(II) AND THE EMPLOYER CANNOT BE FASTENED WITH THE LIABILITY U/S 201(1)/201(A) FORM NON- DEDUCTION OF TDS AT SOURCE. THE APPELLANT ALSO RELIED UPON THE ITAT DECISIONS IN THE CASE OF (I) SBI VS. DCIT-5 TAXMAN.COM 30(HYD) AY 2004-05 TO 2007-08, (II) CANARA BANK VS. ITO- 120 ITD 1 (NAGPUR) AY 2002-03 TO 2006-07. IN VIEW OF THE ABOVE, I AM IN AGREEMENT WITH THE JUDGMENT OF VARIOUS ITATS AND I AM OF THE VIEW THAT THE EFFECT OF THE RETROSPECTIVE AMENDMENT CANNOT BE FASTENED ON THE EMPLOYERS BUT IT IS UP TO THE INCOME TAX DEPARTMENT TO COLLECT THE TAXES DUE FROM THE EMPLOYEES. IN VIEW OF THIS, THE APPEAL IS ALLOWED. 7. AGGRIEVED BY THE AFORESAID ACTION OF THE LD. CIT(A) THE REVENUE HAS PREFERRED THIS APPEAL BEFORE US. 8. HAVING HEARD THE LD. D.R. SHRI JAYANTA KHANRA AND AFTER HAVING CAREFULLY PERUSED THE RECORDS WE FIND THAT THE ISSUE AROSE BECAUSE OF THE RETROSPECTIVE OPERATION OF THE INCOME TAX (14 TH AMENDMENT) RULES, 2007 FROM 1.04.2006 IN RESPECT OF SECTION 17(2)(II) OF THE ACT. WE NOTE THAT THE LD. CIT(A) HAS TAKEN NOTE OF THE FACTS THAT THE FINANCE ACT 2007 WAS 4 ITA NO. 2379/KOL/2018 IISCO STEEL PLANT AY 2007-08 PASSED BECAME OPERATIVE FROM 11.05.2007 THEREFORE THE QUESTION OF THE ASSESSEE EMPLOYER DEDUCTING TDS BEFORE THE DATE WHEN IT WAS NOTIFIED I.E. 11.05.2007 DOES NOT ARISE. THE EMPLOYER IS NOT A CLAIRVOYANT TO KNOW WHAT LAW PARLIAMENT IS GOING TO PASS AND DEDUCT TDS WHILE DISBURSING SALARY TO IT ITS EMPLOYEES BEFORE 11.05.2007. SO, THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION WHICH DOES NOT REQUIRE OUR INTERFERENCE. HAVING SAID SO, THE TAX ON THE PERQUISITE CAN BE COLLECTED FROM THE EMPLOYEE, IF LIMITATION DOES NOT COME IN THE WAY. THEREFORE WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) AND THEREFORE WE CONFIRM THE ACTION OF THE LD. CIT(A) AND DISMISS THE REVENUES APPEAL. 9. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED ORDER IS PRONOUNCED IN THE OPEN COURT ON 17TH SEPTEMBER, 2021. SD/- SD/- (MANISH BORAD) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17.09.2021 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. APPELLANT- ITO, TDS, WD-4(3), ASANSOL 2. RESPONDENT IISCO STEEL PLANT, BURNPUR WORKS, BURNPUR, DT. PASCHIM BARDHAMAN-713325. 3. CIT(A)- ASANSOL 4. CIT- KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) TRUE COPY BY ORDER ASSISTANT REGISTRAR/DDO ITAT, KOLKATA BENCHES, KOLKATA