ITO (TDS), Shimla V. State Bank of Patiala, Shimla

ITA 271/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77072 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 14-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S KAHLON
• Keywords: Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS.269 TO 271/CHD/2014 ASSESSMENT YEARS: 2009-10, 2011-12 & 2012-13 THE ITO (TDS), VS. THE STATE BANK OF PATIALA, SHIMLA KUSUMPATI, SHIMLA PAN NO. AACCS0143D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.S. KAHLON RESPONDENT BY : SHRI VISHAL MOHAN DATE OF HEARING : 06.05.2014 DATE OF PRONOUNCEMENT : 20.05.2014 ORDER PER BENCH THE APPEALS PREFERRED BY THE REVENUE ARE AGAINST TH E ORDER DATED 29.11.2013 OF CIT (APPEALS), SHIMLA. 2. IN ALL THESE APPEALS THE REVENUE HAS RAISED THE IDENTICAL GROUND WHICH IS AS UNDER:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW IN DELEING THE DEMAND OF RS. 1,10,718/-, RS. 12,42,686/- AND RS. 7 ,79,270/- FOR THE FINANCIAL YEAR 2008-09, 2010-11 & 2011-12 RESPECTIVELY CREATED U/S 271C OF THE I.T. ACT, 1961 TREATING THE ASSESSEE TO BE IN DEFAULT FOR NOT DEDUCTING TAX AT SOURCE U/S 194A(3) ON INTEREST PAID / CREDITED TO SOCIETI ES VIZ H.P. SOCIETY FOR PROMOTION OF IT & E-GOVERNANCE (SITEG). 3. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT D URING PENALTY PROCEEDINGS U/S 271C, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT ASSESSEE BANK HAD NOT 2 DEDUCTED THE TAX AND, THEREFORE, WAS LIABLE FOR PEN ALTY. IN RESPONSE TO THE SHOW CAUSE NOTICE IT WAS MAINLY STATED THAT TAX WAS DEDU CTED WHEREVER THE SAME WAS APPLICABLE. HOWEVER, NO TAX WAS REQUIRED TO BE DED UCTED FROM THE GOVERNMENT, RESERVE BANK OF INDIA ETC. HOWEVER, TH E ASSESSING OFFICER DID NOT FIND FORCE IN THE SUBMISSIONS AND OBSERVED THAT ASSESSEE SOCIETY IS NOT A NOTIFIED AUTHORITY U/S 194A(3)(III)(F) OF THE ACT A ND ACCORDINGLY LEVIED PENALTY FOR THREE YEARS AS UNDER:- FINANCIAL YEAR AMT. PENALTY IMPOSED U/S 271C 2008-09 1,10,718/- 2010-11 12,42,,686/- 2011-12 7,79,270/- TOTAL PENALTY LEVIED RS. 21,32,674/- 4. ON APPEAL, IT WAS SUBMITTED THAT ORIGINALLY TAX WAS NOT DEDUCTED BUT LATER ON THE DEMAND OF RS. 1,10,418/-, RS. 12,42,686/-, & RS. 7,79,270/- WAS PAID BY THE BANK ALONGWITH THE INTEREST AS PER DIRECTION OF THE ASSESSING OFFICER. THEREFORE, IT CANNOT BE SAID THAT ASSESSEE HAS COMM ITTED ANY DEFAULT. FURTHER, IT WAS STATED THAT SECTION 194A WAS NOT APPLICABLE IN THE CASE OF H.P. SOCIETY FOR PROMOTION OF IT & E GOVERNANCE (SITEG). IN THIS REGARD, RELIANCE WAS PLACED ON THE DECISION OF THE CIT(A) VS. STATE BANK OF PATIALA, CHOTA SHIMLA. THIS DECISION HAS BEEN CONFIRMED BY THE CHANDIGARH BENCH OF THE IN ITA NOS. 1306 & 1307/CHD/2012. THE LD. CIT(A) FOLLOWING THE SE ORDERS DELETED THE PENALTY. 5. BEFORE US, LD. DR STRONGLY SUPPORTED THE ORDER O F ASSESSING OFFICER. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT IN CASE OF ITO V STATE BANK OF PATIALA (SUPRA), THIS BENCH OF THE TRIBUNAL HELD THAT PROVISIONS OF SECTION 194A WERE NOT APPLICABLE TO T HE H.P. SOCIETY FOR PROMOTION OF IT & E GOVERNANCE (SITEG), THEREFORE, THERE WAS NO QUESTION OF LEVY OF PENALTY. IN THIS REGARD HE RELIED ON THE D ECISION OF THE HON'BLE 3 SUPREME COURT IN THE CASE OF CIT VS. ELI LILLY AND COMPANY (INDIA) PRIVATE LIMITED 312 ITR 225 (SC) 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND THAT IN THE CASE OF ITO V STATE BANK OF PATIALA (SUPRA), IT WAS HELD BY THE CHANDIGARH BENCH OF THE TRIBUNAL AS UNDER:- 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND FORCE IN THE SUBMISSIONS OF LD. COUNSEL OF THE ASSE SSEE. THE RELEVANT PORTION OF SECTION 194A IS AS UNDER:- SECTION 194A (3) THE PROVISIONS OF SUB-SECTION (1) SHALL NOT APPLY (I). (II) .. (III) TO SUCH INCOME CREDITED OR PAID TO (A) TO (E) (F) SUCH OTHER INSTITUTION, ASSOCIATION OR BODY [OR CLASS OF INSTITUTIONS, ASSOCIATIONS OR BODIES] WHICH THE CEN TRAL GOVERNMENT MAY, FOR REASONS TO BE RECORDED IN WRITING, NOTIFY IN THIS BEHALF IN THE OFFICIAL GAZETTE; 9. THE ABOVE CLEARLY SHOWS THAT THERE IS NO REQUIRE MENT FOR ISSUING INDIVIDUAL INSTRUCTIONS BY THE CENTRAL GOVT . BECAUSE CLAUSE (F) TALKS ABOUT PARTICULAR TYPES OF INSTITUTIONS. THE REASON FOR THIS IS THAT GOVT. MIGHT HAVE DECIDED THAT WHEREVER VARI OUS FUNDS ARE BEING PROVIDED TO VARIOUS SOCIETIES OR TRUSTS FOR S PECIFIED SCHEMES, THAT SINCE FUNDS BELONG TO THE GOVT. AND CAN BE USE D ONLY FOR THE PURPOSE OF A PARTICULAR PROJECT, THERE WAS NO REASO N TO DEDUCT THE TAX BECAUSE SUCH SOCIETIES ARE BEING FUNDED BY THE GOVT. ON 100% BASIS. THE NOTIFICATION ISSUED BY THE CENTRAL GOVT. U/S 194A MENTIONS VARIOUS SOCIETIES AND THE ENTRY AT SR. NO . 40 STIPULATES AS UNDER:- ANY UNDERTAKING OR BODY INCLUDING A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1 860 (XXI OF 1860) FINANCED WHOLLY BY THE GOVERNMENT 10. THIS WOULD SHOW THAT SOCIETIES WHICH ARE BEING WHOLLY FUNDED BY THE GOVT. WOULD QUALIFY FOR NON-DEDUCTION OF TAX . IT HAS NOT BEEN 4 DISPUTED BEFORE US THAT THE SAID SOCIETIES ARE NOT WHOLLY FINANCED BY THE CENTRAL GOVT. IN VIEW OF THIS, WE FIND NOTHING WRONG WITH THE ORDER OF LD. CIT(A) AND WE CONFIRM THE SAME. 8. FROM THE ABOVE, IT WAS CLEAR THAT PROVISIONS OF SECTION 194A WERE NOT APPLICABLE TO H.P. SOCIETY FOR PROMOTION OF IT & E GOVERNANCE (SITEG) FROM WHOM TAX HAS NOT BEEN DEDUCTED BY THE BANK AND, THE REFORE, IT IS CLEAR THAT ASSESSEE BANK WAS NOT LIABLE TO DEDUCT TAX. IN ANY CASE THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ELI LILLY AND COMPANY (INDIA) PRIVATE LIMITED HAS CLEARLY HELD THAT IF THE ASSESSEE HAS A GENUINE BELIEF THAT ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX THEN PENALTY U/S 271C OF THE ACT WAS NOT LIABLE. THEREFORE, WE FIND NOTHING WRONG WITH THE ORDER OF LD. CIT(A) AND WE C ONFIRM THE SAME. 9. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.05.2 014 SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 20 TH MAY, 2014 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSTT REGISTRAR ITAT, CHANDIGARH