Skytech Construction Pvt. Ltd., Delhi V. ITO (TDS), New Delhi

ITA 3034/DEL/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6730 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 15-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause; TDS
• Section: 201(1); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.3034/DEL/2017 ASSESSMENT YEAR: 2012-13 M/S. SKYTECH CONSTRUCTION PVT. LTD., 385, KOHAT ENCLAVE, PITAMPURA, DELHI VS. INCOME TAX OFFICER(TDS), WARD-51(3), NEW DELHI PAN :AAICS5940A (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST O RDER DATED 30/03/2017 PASSED BY THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-41, NEW DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 2012-13 RAISING FOLLOWING GROUNDS: THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN LAW AND IN FACT IN UPHOLDING THE INTEREST LIABIL ITY UNDER THE PROVISO TO SECTION 201(1A) OF THE ACT I.E., FROM THE DATE ON W HICH TAX WAS DEDUCTIBLE TILL THE DATE OF FILLING OF THE RETURN BY THE DEDUC TEE. WHILE ISSUING SUCH DIRECTIONS TO THE THE AO, LD. CIT(A) HAS FAILED TO APPRECIATE:- I) THAT SUCH DIRECTION IS CONTRARY TO THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF RAJESH PROJECTS (P) LTD. (78 T AXMANN.COM 263(DEL)) WHERE IT HAS BEEN HELD BY HIGH COURT THAT SINCE DEDUCTION OF TAX COULD NOT BE MADE DUE TO INSISTENCE OF GNOID A, THE LIABILITY TO APPELLANT BY SHRI VIVEK BANSAL, ADV. RESPONDENT BY SHRI SHAILESH KUMAR, SR.DR DATE OF HEARING 17.10.2019 DATE OF PRONOUNCEMENT 30.10.2019 2 ITA NO.3034/DEL/2017 PAY THE DEDUCTION OF TAX WITH INTEREST TILL THE DAT E OF JUDGMENT (16.02.2017) WOULD BE OF GNOIDA AND AFTER THAT THE LIABILITY TO DEDUCT TAX WILL BE ON THE DEDUCTOR. (PARA 20(2) AND 21 OF THE JUDGMENT). II) THAT WHEN THE ASSESSEE IS HELD TO BE THE ASSESS EE NOT-IN-DEFAULT THEN FIRST PROVISO TO SECTION 201(1) CANNOT BE APPL IED. III) THAT THE AFORE-MENTIONED DECISION OF HIGH COUR T IS APPLICABLE TO ALL INCOME TAX AUTHORITIES WHICH INCLUDES CIT(A) AND SH E IS BOUND BY THE DECISION OF JURISDICTIONAL HIGH COURT. IV) THEREFORE, LD. CIT(A) HAS ERRED IN NOT FOLLOWIN G THE DIRECTIONS OF HON'BLE HIGH COURT SO FOR AS IT RELATED TO CHARGING OF INTEREST UNDER PROVISO TO SUB-SECTION (IA) TO SECTION 201 OF THE A CT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A R EAL ESTATE DEVELOPER, PURCHASED A PLOT OF LAND ON 29/07/2010 F ROM THE NOIDA AUTHORITY FOR DEVELOPMENT PURPOSES FOR A TOTA L CONSIDERATION OF RS.40,67,98,900/-, OUT OF WHICH, 10% BEING A SUM OF 4,26,79,890/-, WAS PAID AS ALLOTMENT MONEY AND BALANCE 90% WAS PAYABLE IN 16 EQUAL HALF YEARLY INS TALLMENTS AFTER A MORATORIUM PERIOD OF 24 MONTHS. THE BALANCE PAYMENT OF 90% WAS BEARING INTEREST AT THE RATE OF 11% PER ANN UM. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE PAID ANN UAL LEASE RENT OF 32,56,250/- TO THE NOIDA AUTHORITY. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE (TDS) ON SUCH LEASE RENTAL PAYMENT AND INTEREST TO THE NO IDA AUTHORITY, ACCORDINGLY, HE PASSED ORDER UNDER SECTION 201(1)/2 01(1A) OF THE ACT, HOLDING THE ASSESSEE AS ASSESSEE-IN-DEFAULT AN D DEMAND WAS RAISED UNDER SECTION 201(1) AND INTEREST UNDER SECT ION 201(1A) OF THE ACT. THE LEARNED CIT(A) AFTER CONSIDERING VARIO US DECISIONS OF THE HONBLE COURTS, HELD THAT ASSESSEE WAS LIABLE T O DEDUCT TDS ON THE ANNUAL LEASE RENT PAYMENT MADE TO THE NOIDA AUTHORITY. 3 ITA NO.3034/DEL/2017 HOWEVER, IN VIEW OF THE DECISION OF THE HONBLE DEL HI HIGH COURT IN THE CASE OF RAJESH PROJECT (INDIA) (P) LTD. VS C IT (TDS)-II, (2017) 78 TAXMANN.COM 263 (DELHI), THE LEARNED CIT(A) DELE TED THE LIABILITY UNDER SECTION 201(1), BUT SUSTAINED THE I NTEREST LIABILITY UNDER SECTION 201(1A) OF THE ACT, OBSERVING AS UNDE R: 4.11 IN VIEW OF THE LETTER RECEIVED FROM NOIDA AUT HORITY THE APPELLANT HAD REASONABLE CAUSE NOT TO DEDUCT TDS ON PAYMENTS MADE TO NOIDA. THEREFORE, FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT THE APPELLANT IS NOT CONSIDERED TO BE AN ASSESSEE- IN-DEFAULT; HOWEVER, IT DOES NOT ABSOLVE THE APPELL ANT FROM THE INTEREST LIABILITY U/S 201(1 A). HENCE, IN VIEW OF THE PROVISIONS OF THE FIRST PROVISO TO SECTION 201(1), THE ASSESSING OFFI CER IS DIRECTED TO MODIFY THE DEMAND AFTER ASCERTAINING THAT THE DEDUC TEE HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING ITS INCOME. THE AO IS FURTHER DIRECTED TO RE-CALCULATE THE INTEREST U/S 201(1 A) FROM THE DATE ON WHICH TAX WAS DEDUCTIBLE TILL DATE OF FILING OF RET URN BY THE DEDUCTEE. THIS CLAIM OF THE APPELLANT IS THEREFORE PARTLY ALL OWED. 3. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE RELYING ON THE DECISION OF THE RAJESH PROJECTS (INDIA) PVT. LTD (S UPRA) SUBMITTED THAT ONCE THE ORIGINAL DEMAND UNDER SECTION 201(1) OF THE ACT HAS ALREADY BEEN DELETED AND THUS, THE ASSESSEE IS NO M ORE ASSESSEE- IN-DEFAULT, THE INTEREST LIABILITY UNDER SECTION 20 1(1A) CANNOT BE ENFORCED UPON THE ASSESSEE. THE LD. COUNSEL ALSO SU BMITTED THAT IN THE SUBSEQUENT ORDER PASSED BY THE COMMISSIONER OF INCOME- TAX (APPEALS) ON 12/09/2019 FOR ASSESSMENT YEAR 201 1-12, HE HAS DELETED LIABILITY OF INTEREST UNDER SECTION 201 (1A) IN THE CASE OF THE ASSESSEE AND NO FURTHER APPEAL HAS BEEN PREF ERRED BY THE DEPARTMENT AGAINST THE SAID ORDER OF THE LD. FIRST APPELLATE AUTHORITY. 4. ON THE CONTRARY, THE LD. DR SUBMITTED THAT LEARNED CIT(A) HAS FOLLOWED THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF RAJESH PROJECTS (INDIA) (P) LTD (SUPRA) AND ACCORDINGLY, 4 ITA NO.3034/DEL/2017 RETAINED THE INTEREST LIABILITY FOR NON-DEDUCTION O F TAX AT SOURCE, TO BE PAID BY THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE HONB LE DELHI HIGH COURT IN THE CASE OF RAJESH PROJECTS (INDIA) (P) LT D (SUPRA) HAS DIRECTED AS UNDER: 21. IN VIEW OF THE ABOVE CONCLUSIONS, IT IS HEREBY DIRECTED THAT WHEREVER AMOUNTS HAVE BEEN PAID BY THE PETITIONERS, TOWARDS TDS AS A RESULT OF THE COERCIVE PROCESS USED BY THE REV ENUE, THE GNOIDA SHALL MAKE APPROPRIATE ORDERS TO CREDIT/REIMBURSE S UCH PAYMENTS. IN CASE PAYMENTS ARE MADE THROUGH DEPOSIT, OVER AND ABOVE THE RENTAL AMOUNTS PAID TO THE GNOIDA, WITHOUT TDS, THE INCOME TAX AUTHORITIES SHALL NOT PURSUE ANY COERCIVE PROCEEDIN GS; GNOIDA SHALL DULY REIMBURSE THE PETITIONERS FOR SUCH AMOUNTS. AN Y AMOUNTS DEPOSITED IN THE COURT OR WITH THE REVENUE, SHALL, TO THE EXTENT OF TDS LIABILITY ONLY BE APPROPRIATED FOR SUCH PURPOSE . IT IS CLARIFIED THAT GNOIDA SHALL ENSURE THAT REIMBURSEMENT IS MADE TO COMPENSATE THE PETITIONERS' EXCESS PAYMENTS; THE INCOME TAX AUTHORITIES SHALL NOT PURSUE ANY COERCIVE METHODS F OR RECOVERY OF THE AMOUNTS, OR PENALTY, ONCE THE BASIC LIABILITY (WITH INTEREST, TO BE PAID BY GNOIDA) IS SATISFIED. THE IMPUGNED ORDERS ARE QUASHED; THE REVENUE SHALL MAKE CONSEQUE NTIAL ORDERS, TO GIVE EFFECT TO THIS JUDGMENT, AFTER DULY HEARING THE PETITIONERS AND THOSE LIKELY TO BE AFFECTED, WITHIN 12 WEEKS FROM T ODAY. (EMPHASIS SUPPLIED EXTERNALLY) 6. THUS, IT IS EVIDENT THAT HONBLE COURT HAS DIRECTE D NOT TO TAKE ANY COERCIVE METHOD FOR RECOVERY OF THE AMOUNT OR PENALTY ONCE THE BASIC LIABILITY (WITH INTEREST TO BE PAID BY THE GNOIDA) IS SATISFIED. IN VIEW OF THE DIRECTION, IT IS CLEAR TH AT IF THE TAX ON THE UNDER DISPUTE LEASE RENTAL INCOME ALONG WITH THE IN TEREST HAS BEEN PAID BY THE DEDUCTEE, I.E., GNOIDA, NO RECOVER Y CAN BE MADE FROM THE DEDUCTOR. IN THE LIGHT OF THE RATIO O F THE DECISION, IN THE INSTANT CASE, THE NOIDA AUTHORITY IS REQUIRE D TO PAY TAX AS WELL AS INTEREST IF ANY CORRESPONDING TO THE LEASE RENTAL PAID THE ASSESSEE. HOWEVER, IF SUCH TAX AND INTEREST ARE NOT PAID BY THE 5 ITA NO.3034/DEL/2017 NOIDA, THE ASSESSEE CANNOT BE EXONERATED FROM THE L IABILITY UNDER SECTION 201(1) AND 201(1A). WE FIND THAT IN T HE INSTANT CASE, THE LEARNED CIT(A) HAS DELETED LIABILITY UNDE R SECTION 201(1) OF THE ACT BUT RETAINED THE INTEREST LIABILITY UNDE R SECTION 201(1A) OF THE ACT. THE FIRST APPELLATE AUTHORITY IN ASSESS MENT YEAR 2011- 12, HAS DELETED THE INTEREST LIABILITY OBSERVING A S UNDER: 5(V). THUS, THE DIRECTIONS GIVEN BY HONBLE JURISD ICTIONAL DELHI HIGH COURT IN THE CASE OF RAJESH PROJECTS (INDIA) (P.) L TD. VS CIT (SUPRA) HAVE ALSO BEEN UPHELD BY HONBLE SUPREME COURT AND THESE DIRECTIONS ARE UPHELD ON THE GROUND OF ADJUSTED EQ UITIES. CONSIDERING THE ABOVE POSITION OF TACT AND LAW. I A M LEAD TO CONCLUDED THE APPELLANT HAS NOT BEEN CONSIDERED TO BE LIABLE FOR DEDUCTION OF TAX AND NOIDA HAS BEEN HELD TO BE UNDE R AN OBLIGATION TO COMPLY WITH THE PROVISION OF LAW RELATING TO TDS AND ALSO FOR MAKING ALL RELATED PAYMENTS. THUS THE APPELLANT CAN NOT BE SADDLED WITH THE LIABILITY OF INTEREST U/S 201(1A). THEREFO RE, THE INTEREST LIABILITY OF THE APPELLANT IS DIRECTED TO BE DELETE D. 7. THUS, LEARNED FIRST APPELLATE AUTHORITY IN ASSESSM ENT YEAR 2011-12 HAS HELD THAT NOIDA AUTHORITIES ARE UNDER AN OBLIGATION TO COMPLY WITH THE PROVISION OF THE LAW RELATING TO TDS AND ALSO FOR MAKING ALL RELATED PAYMENTS. IN OUR OPINION, IF THE INTEREST HAS ALREADY BEEN PAID BY THE NOIDA AUTHORITY ON THE LEASE RENTAL INCOME CORRESPONDING TO PAYMENT OF THE ASSESSEE (I. E. RS.32,56,250/-), NO LIABILITY CAN BE RAISED ON THE ASSESSEE U/S 201(1A) OF THE ACT. THIS IS A MATTER OF VERIFICATIO N AND CANNOT BE PRESUMED. IN VIEW OF THE FACTS AND CIRCUMSTANCES, W E FEEL IT APPROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF TH E ASSESSING OFFICER FOR VERIFYING THE FACTS OF INTEREST PAID ON THE TAX LIABILITY BY THE NOIDA AUTHORITY, CORRESPONDING TO LEASE RENTAL PAID BY THE ASSESSEE, AND DECIDE THE ISSUE IN ACCORDANCE WITH L AW. IT IS 6 ITA NO.3034/DEL/2017 NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE AFFO RDED ADEQUATE OPPORTUNITY FOR PRODUCING ALL THE RELEVANT RECORDS AND OF BEING HEARD. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCOR DINGLY ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER, 2019. SD/- SD/- (H.S. SIDHU) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH OCTOBER, 2019. RK/-(D.T.D.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI