Gujarat State Financial Services Ltd., Ahmedabad V. The ACIT.,TDS Circle, TDS RAnge, Ahmedabad

ITA 2918/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63170 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-11-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 20-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Assessee Lawyers: SANJAY R SHAH

Judgement Text

, , , , B, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ %& %& %& %& , , , , &' ( & &' ( & &' ( & &' ( & ' ' ' ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO.2918/AHD/2010 [ASSTT.YEAR : 2009-2010] GUJARAT STATE FINANCIAL SERVICES LTD. WING-B, 3 RD FLOOR, KHANIJ BHAVAN 132 FT. RING ROAD, NR.UNIVERSITY GROUND VASTRAPUR, AHMEDABAD 380 052. PAN : AAACG 5581 G /VS. ACIT, TDS CIRCLE TDS RANGE AHMEDABAD. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) .% / 0 &/ ASSESSEE BY : SHRI SANJAY R. SHAH ( / 0 &/ REVENUE BY : SHRI Y.P. VERMA 2 / %3'/ DATE OF HEARING : 5 TH NOVEMBER, 2012 456 / %3'/ DATE OF PRONOUNCEMENT : 07-12-2012 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-2010 IS DIREC TED AGAINST THE ORDER OF THE CIT(A)-VI, AHMEDABAD DATED 2.8.2010. 2. THE GROUNDS RAISED IN THE APPEAL OF THE ASSESSE E ARE AS UNDER: ITA NO.2918/AHD/2010 -2 1. THE ORDER PASSED BY THE LD.CIT(A) IS ERRONEOUS AND REQUIRES TO BE MODIFIED. IT IS SUBMITTED THAT BE S O DONE NOW. 2. THE LD.CIT(A) ERRED IN CONFIRMING THAT THE APPEL LANT WAS LIABLE TO PAY INTEREST U/S.201(1A) OF THE ACT. 3. THE LD.CIT(A) ERRED IN HOLDING THAT INTEREST BEI NG COMPENSATORY IN NATURE AND THEREFORE THE SAME IS PA YABLE EVEN WHEN THERE IS NO DEFAULT U/S.201(1). 4. THE LD.CIT9A) HAS ERRED IN RELYING ON THE HONBL E SUPREME COURT DECISION IN THE CASE OF COCA COLA. I T IS SUBMITTED THAT THE SAID DECISION IS NOT APPLICABLE IN THE FACTS OF THE CASE. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT ANY TDS, AND THEREFORE IN ACCORDANCE WITH THE SCHEME OF THE ACT AND IN PARTICULAR THE PROVISI ON OF SECTION 201(1A) OF THE ACT, THE ASSESSEE WAS NOT LIABLE TO MAKE ANY TDS ON THE DISPUTED AMOUNT. HE SUBMITTED THAT FOR LEVY OF INTEREST PRE- REQUISITE IS THAT THE ASSESSEE SHOULD BE LEGALLY LI ABLE TO DEDUCT AND DEPOSIT THE TDS AMOUNT. HE REFERRED TO THE NOTIFIE D INSTITUTIONS UNDER SECTION 194A(3)(III)(F) OF THE ACT WHEREIN ANY UNDE RTAKING OR BODY INCLUDING THE SOCIETY REGISTERED UNDER THE SOCIETIE S REGISTRATION ACT, 1860 FINANCED WHOLLY BY THE GOVERNMENT WERE NOT BE SUBJECT TO TDS. HE SUBMITTED THAT ANNEXURE-2 TO THE LETTER DATED 19 .11.2009 OF THE ASSESSEE SUBMITTED TO THE AO BEING THE DETAILS OF 2 9 PAYEE PARTIES AND ALL OF THEM WERE WHOLLY FINANCED BY THE GOVERNMENT OF GUJARAT. 4. THE LEARNED DR OPPOSED THE SUBMISSIONS OF THE LE ARNED COUNSEL OF THE ASSESSEE. HE SUBMITTED THAT SINCE THE ASSES SEE ITSELF HAS DEDUCTED THE TDS VOLUNTARILY AND HAS DEPOSITED THE SAME LATE, CHARGING OF INTEREST UNDER THE PROVISIONS OF THE AC T WAS MERELY ITA NO.2918/AHD/2010 -3 CONSEQUENTIAL IN NATURE. HE REFERRED TO RELEVANT P ROVISIONS OF THE ORDER OF THE AO AND CIT(A) IN SUPPORT OF THE CASE O F THE REVENUE. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE ASSESSEE IS A GOVERNMENT OF GUJARAT UNDERTAKING. WE HAVE PERUSED THE NOTIFICATION ISSUED UNDER SECTION 194A(3)(III)(F) OF THE ACT NOT IFYING VARIOUS INSTITUTIONS ON WHICH THE TDS PROVISION WAS NOT APP LICABLE. WE FIND THAT THE PROVISION OF SECTION 194A DOES NOT APPLY T O ANY UNDERTAKING OR BODY INCLUDING THE SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860, FINANCED WHOLLY BY THE GOVE RNMENT. THE CLAIM OF THE ASSESSEE THAT NONE OF THE PAYEES OF TH E INTEREST DETAILED IN ANNEXURE-2 BY THE ASSESSEE IN ITS LETTER DATED 19.1 1.2009 SUBMITTED TO THE AO ARE LIABLE TO TDS AS ALL THESE 29 PAYEE-PART IES WERE WHOLLY FINANCED BY THE GOVERNMENT OF GUJARAT, NEEDS VERIFI CATION THAT WHETHER THESE 29 PARTIES ARE WHOLLY FINANCED BY THE GOVT. OF GUJARAT. WE FIND THAT IN CASE IT IS FOUND THAT THESE PAYEE-P ARTIES ARE WHOLLY FINANCED BY THE GOVT. OF GUJARAT, THEN THE PROVISIO N OF SECTION 194A SHALL NOT APPLY, AND IN THAT EVENTUALITY THE ASSESS EE COULD NOT BE HELD AS DEEMED TO BE AN ASSESSEE-IN-DEFAULT IN RESPECT OF SUCH DEDUCTION AND PAYMENT OF TDS, AND ACCORDINGLY COULD NOT BE HE LD LIABLE TO PAYMENT OF INTEREST ON THE TDS AMOUNT. IN THESE FA CTS OF THE CASE, WE RESTORE THIS ISSUE BEFORE US TO THE FILE OF THE AO WITH DIRECTION TO VERIFY THAT WHETHER THESE 29 PAYEE-PARTIES WERE WHO LLY FINANCED BY THE GOVT. OF GUJARAT. IF THE ANSWER IS AFFIRMATIVE , THEN, NOT TO MAKE ASSESSEE LIABLE FOR CONSEQUENCE OF SECTION 201 R.W. S. 201(1A) OF THE ACT. WE DIRECT ACCORDINGLY. ITA NO.2918/AHD/2010 -4 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD