MAHANAGAR TELEPHONE NIGAM LIMITED, THANE V. THE INCOME TAX OFFICER (TDS-I), THANE

ITA 2660/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7940 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-03-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 27-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S T BIDARI
• Assessee Lawyers: ASHOK K PRADHAN
• Keywords: Opportunity of being heard; Non-deduction of tax; Corroborative evidences; TDS; Set aside
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI R.S. SYAL (AM) AND SMT. ASHA VIJAYARAGH AVAN (JM) ITA NO.2660/MUM/2009 ASSESSMENT YEAR-1999-2000 MAHANAGAR TELEPHONE NIGAM LTD., ACCOUNTS OFFICER (CASH). E-2, CHARAI TELEPHONE EXCHANGE BLDG., MAULI MANDAL ROAD, DHOBIALI, THANE (W)-400 601 PAN-AAACM 0828R VS. THE ITO (TDS - 1) GROUND FLOOR, QURESHI MANSION, GOKHALE ROAD, NAUPADA, THANE (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ASHOK K. PRADHAN RESPONDENT BY: SHRI S.T. BIDARI O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 3.2.2009 PASSED BY THE LD. CIT(A)-II FOR THE ASSESSMENT YEAR 1999- 2000. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A LISTED PUBLIC LTD. CO. THE GOVT. OF INDIA IS THE MAJOR SHAREHOLDER OF THE COMPANY. IT IS UNDER THE CONTROL OF DEPT. OF TELECOMMUNICATIONS (D OT) WHICH IS UNDER THE MIN. OF COMMUNICATIONS. THE COMPANY IS A TELEC OM SERVICE PROVIDER AT THE METROS OF MUMBAI AND DELHI. 3. THE COMPANY IS PROVIDING LANDLINE AND MOBILE PHO NE SERVICES IN THE TWO METRO CITIES. THE LANDLINE SERVICES ARE PR OVIDED THROUGH DIRECT CONNECTIONS TO THE CONSUMERS AT THEIR RESIDENCE OR OFFICES. THESE ARE ITA NO. 2660/M/09 2 PRIVATE CONNECTIONS GIVEN ON THE BASIS OF AMOUNT OF DEPOSIT GIVEN. OWN YOUR TELEPHONE (OYT) IS GIVEN ON THE BASIS OF THE D EPOSIT BEING RS. 8,000/- AND NON-OYT ON THE BASIS OF THE DEPOSIT BEI NG RS. 3,000/-. THESE DEPOSITS ARE PAID INTEREST AT BANK RATE BY MT NL FOR THE WAITING PERIOD FROM THE DATE OF REGISTRATION OF THE DATE OF INSTALLATION. INTEREST IS ALSO PAID ON VOLUNTARY DEPOSITS MADE FOR ADJUSTMENT S OF THE FUTURE BILLS. STD PCO HOLDERS ARE GIVING INSTALLATION DEPOSIT OF RS. 5,000/- ON WHICH INTEREST IS PAID AT RATES FIXED BY SBI FOR ONE YEAR FIXED DEPOSITS. NO TDS IS MADE ON THESE INTEREST PAYMENTS. 4. THERE WAS A SURVEY U/S. 133(A) OF I.T. ACT ON 13 TH NOV. 2007 FOR VERIFICATION OF COMPLIANCE OF VARIOUS PROVISIONS OF TDS. IN RESPONSE TO SUMMONS U/S. 131, THE ACCOUNTS OFFICER ATTENDED FRO M TIME TO TIME AND SUBMITTED DETAILS AS CALLED FOR BY THE SURVEY OFFIC ER. THE TDS ASSESSMENT OFFICER HELD THAT AS DETAILS OF INTERES T ON DEPOSITS OR SUPPORTING EVIDENCE WAS NOT GIVEN, THERE WAS NO TD S U/S. 194A ON THE INTEREST PAYMENT OF RS. 30,32,953/- ON DEPOSITS. H E ALSO HELD THAT THE TDS DEDUCTION NOT MADE WAS AMOUNTING TO RS. 3,09,36 1/- ON THE SAID INTEREST @ 10.2%. THE TDS ASSESSMENT OFFICER COMPU TED INTEREST AT RS. 4,22,244/- U/S. 201(1A) ON THE NON TDS (U/S. 194A) PAYMENT OF RS. 3,09,361/-. 5. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. CIT(A). THE LD. CIT(A) VIDE ORDER DT. 3.2.2009 HAS UPHELD THE STAND OF THE TDS ASSESSMENT OFFICER AS REGARDS LIABILITY OF TDS OF R S. 3,0-9,361/- AND INTEREST OF RS. 2,55,222/-. THUS THERE IS A CONTI NUATION OF AGGREGATE DEMAND OF TAX AND INTEREST OF RS. 7,31,605/-. 6. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE U S AND RAISED THE FOLLOWING GROUND: ITA NO. 2660/M/09 3 FOR THAT THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE TDS ASSESSMENT OFFICER THAT THE PAYMENT OF INTEREST ON DEPOSITS U/S.194A WHEN THE RATE OF INTEREST WOULD BE ABNORMA LLY HIGH IF IT EXCEEDED THE CUT OFF AMOUNT OF RS. 2,500/- WHICH IS THE THRESHOLD TDS LIMIT. 7. WE FIND THAT THIS ISSUE IS COVERED BY THE DECI SION IN ASSESSEES OWN CASE FOR THE A.YRS 2002-03 TO 2008-09 IN ITA NO S. 2020 TO 2026/M/09 VIDE ORDER DT. 18 TH FEBRUARY, 2010 WHEREIN IT HAS BEEN HELD AS FOLLOWS: THE ONLY OTHER ISSUE RAISED IN THESE APPEALS REQUI RING OUR ADJUDICATION ISAGAINST THE FAILURE OF THE ASSESSEE TO DEDUCT TAX AT SOURCE ON INTEREST ON DEPOSITS U/S.194A OF THE ACT. THE FACTS APROPOS THIS ISSUE ARE THAT THE ASSESSEE ACCEPTED D EPOSITS FROM ITS CUSTOMERS AND PAID INTEREST ON DEPOSITS. IN THE OPI NION OF THEASSESSING OFFICER THE ASSESSEE WAS REQUIRED TO D EDUCT TAX AT SOURCE AS PER SECTION 194A OF THE ACT. IN RESPONSE TO SHOW CAUSE NOTICE THE ASSESSEE STATED THAT INTEREST PAID TO SU BSCRIBERS WAS LESS THAN RS.2,500 IN ALL CASES I.E. WITHIN THE EXEMPTIO N LIMIT AS PER SECTION 194A AND HENCE THERE WAS NO QUESTION OF DED UCTION OF TAX ON SUCH INTEREST. IN THE ABSENCE OF ANY DETAIL FURN ISHED BY THE ASSESSEE IN THIS REGARD, THE ASSESSING OFFICER HELD THAT THE PROVISIONS OF SECTION 201(1) WERE APPLICABLE AND AL SO THE INTEREST U/S.201(1A) WAS CHARGEABLE FOR THE SAID DEFAULT. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE CONT ENDED THAT THE DEPOSITS WERE COLLECTED BY THE ASSESSEE UN DER THE TWO SCHEMES I.E. OYT AND NON-OYT AND THE MAXIMUM AMOUNT OF DEPOSIT IN EACH CASE WAS RS.15,000. IT WAS CONTENDE D THAT UNDER NO CIRCUMSTANCE COULD THE AMOUNT OF INTEREST EXCEED TH E STIPULATED MINIMUM AMOUNT OF INTEREST ON WHICH DEDUCTION OF TA X AT SOURCE WAS REQUIRED. IN THE OPPOSITION, THE LEARNED DEPARTMENT AL REPRESENTATIVE CONTENDED THAT THE ASSESSEE FAILED TO FURNISH THE D ETAILS IN RESPECT OF INTEREST PAYMENTS AND IT WAS QUITE POSSIBLE THAT TH E ASSESSEE MAY HAVE COLLECTED SEVERAL DEPOSITS FROM SINGLE PERSON AND IN SUCH A CASE THE TOTAL AMOUNT OF INTEREST WOULD EXCEED THE BASIC MINIMUM AMOUNT AS PRESCRIBED U/S.194A FOR NON-DEDUCTION OF TAX AT SOURCE. IN THE REJOINDER THE LEARNED A.R. SUBMITTED THAT THE A SSESSEE HAS GOT ITA NO. 2660/M/09 4 COMPLETE DETAILS NOW AVAILABLE WITH IT WHICH COULD BE VERIFIED BY THE ASSESSING AUTHORITY. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSIN G THE RELEVANT MATERIAL ON RECORD IT IS FOUND THAT THE AS SESSING OFFICER HAS TREATED THE ASSESSEE IN DEFAULT FOR VIOLATION OF SE CTION 194A BASICALLY ON THE GROUND THAT THE ASSESSEE DID NOT FURNISH ANY DETAIL OF THE INTEREST PAID ON DEPOSITS. SINCE THE ASSESSEE IS NO W IN THE POSSESSION OF SUCH DETAILS, IN OUR CONSIDERED OPINI ON, IT WILL BE JUST AND FAIR IF THE IMPUGNED ORDERS ON THIS ISSUE ARE S ET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE A.O. WE ORDER ACCORDINGLY AND DIRECT THE ASSESSING AUTHORITY TO VERIFY THE DETAIL S OF INTEREST AND DECIDE THE QUESTION OF DEDUCTIBILITY OR OTHERWISE O F TAX AT SOURCE IN TERMS OF SECTION 194A AS PER LAW AFTER ALLOWING A R EASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISION IN ASSESSEES O WN CASE WE SET ASIDE THE MATTER TO THE FILE OF THE AO TO VERIFY TH E DETAILS OF INTEREST AND DECIDE THE QUESTION OF DEDUCTIBILITY OR OTHERWISE O F TAX AT SOURCE IN TERMS OF SEC. 194A AS PER LAW AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 25 TH DAY OF MARCH, 2011 SD/- SD/- (R.S. SYAL) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 25 TH MARCH, 2011 RJ ITA NO. 2660/M/09 5 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 2660/M/09 6 - DATE INITIALS 1 DRAFT DICTATED ON: 22 . 0 3 .201 1 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 2 3 .0 3 .2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10 . DATE OF DISPATCH OF ORDER: _________ ______