Prateek Buildtech (India) Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 3109/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3849 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 17-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH KR GUPTA
• Keywords: Opportunity of being heard; Non-deduction of tax; Reasonable cause; TDS
• Section: 201(1); 13

Judgement Text

1 ITA NOS. 3109 & 3110/DEL/2017 IN THE INCOME TAX APPELLATE TRIBU NAL DELHI BENCH: F NEW DEL HI BEFORE MS SUSHMA CHOWLA, VICE PRESIDENT AND SHRI O. P. KANT, ACCOUNTANT MEMBER ITA NOS. 3109 & 3110/DEL/2017 (ASSESSMENT YEARS 2012-13 & 2013-14) PRATEEK BUILDTECH (INDIA) PVT. LTD., G-50, LOWER GROUND FLOOR, LAJPAT NAGAR-III, NEW DELHI-110 024 (PAN : AADCP 7864 P) (APPELLANT) VS ACIT, CIRCLE 76(1), NEW DELHI (RESPONDENT) APPELLANT BY SH SANJAY KR AGARWAL, C.A MS NEHA AGARWAL, C.A RESPONDENT BY SH SATISH KR GUPTA, SR. D.R ORDER PER O. P. KANT, ACCOUNTANT MEMBER THESE TWO APPEALS HAVE BEEN FILED BY THE ASSESSEE AGGRIEVED WITH THE ORDERS DATED 23.02.2017 AND 24.03.2017 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-41, NEW DELHI UPHOLDING THE LIABILITY U/S 201(1) AND 201(1A) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FOR ASSESSMENT YEAR 2012- 13 AND ASSESSMENT YEAR 2013-14 RESPECTIVELY. DATE OF HEARING 20.02.2020 DATE OF PRONOUNCEMENT 28.02.2020 2 ITA NOS. 3109 & 3110/DEL/2017 2. IN VIEW OF THE IDENTICAL IMPUGNED ORDERS AND GROUNDS RAISED IN BOTH THE APPEALS, SAME WERE HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS CONSOLIDATE D ORDER FOR CONVENIENCE. THE GROUNDS IN ITA NO. 3109/DEL/2017 FOR ASSESSMENT YEAR 2012-13 ARE REPRODUCED AS UNDER: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AND ON FACTS, IN HOLDING THAT ASSESSEE IS LIABLE TO PAY INTEREST U/S 201(1A) OF THE INCOME TA X ACT, 1961 FOR NON-DEDUCTION OF TAX AT SOURCE U/S 194-I O F THE INCOME TAX ACT, 1961 ON PAYMENT OF 1% OF LEASE PREMIUM OF RS. 1,35,12,047/- (RS.71,89,000/- AND RS.63,23,047/-) WITHOUT APPRECIATING THE FACTS OF T HE CASE AND EXPLANATION FURNISHED BY THE ASSESSEE. AS SUCH, THE DIRECTION ISSUED BY THE LD. CIT(A) TO THE LD. AO FOR RE-COMPUTATION OF INTEREST U/S 201(1A) OF THE I NCOME TAX ACT. 1961 IS BAD IN LAW AND THE SAME MAY PLEASE BE RESCINDED. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND ON FACTS, IN HOLDING THAT THE ASSE SSEE IS LIABLE TO PAY INTEREST U/S 201(1A) OF THE INCOME TAX ACT, 1961 EVEN WHEN THE ASSESSEE HAS NOT BEEN CONSIDERED AS ASSESSEE-IN-DEFAULT FOR THE PURPOSE SECTION 201(1) OF THE INCOME TAX ACT, 1961. AS SUCH , THE DIRECTION ISSUED BY THE LD. CIT(A) TO THE LD. AO FO R RE- COMPUTATION OF INTEREST U/S 201(1A) OF THE INCOME T AX ACT, 1961 IS BAD IN LAW AND THE SAME MAY PLEASE BE RESCINDED. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW, WHILE NOT FOLLOWING THE JUDGEMENT OF HONBLE DELHI HIGH COURT IN RAJESH PROJECTS (INDIA) PVT. LTD. VS CIT(TDS)-II &ORS., W.P.(C) 8085/2014 IN ITS TRUE SPIRIT AND HOLDING THE ASSESSEE LIABLE FOR INTEREST U/S 201(1A) OF THE INCOME TAX ACT, 1961. AS SUCH, THE DIRECTION ISSUED BY THE LD. CIT(A) TO THE LD. AO FOR RE- COMPUTATION OF INTEREST U/S 201(1A) OF THE INCOME T AX 3 ITA NOS. 3109 & 3110/DEL/2017 ACT, 1961 IS BAD IN LAW AND THE SAME MAY PLEASE BE RESCINDED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, D ELETE & MODIFY ANY OF THE GROUND OF APPEAL AT THE TIME OF HEARING. 3. IDENTICAL GROUNDS HAVE BEEN RAISED IN ASSESSMENT YEAR 2013-14 EXCEPT CHANGE OF THE AMOUNT. 4. THE SOLITARY ISSUE INVOLVED IS LEVY OF INTEREST UNDER SECTION 201(1A) OF THE ACT IN RESPECT OF THE TDS OF 13,51,205/- AND OF 6,32,310/- FOR ASSESSMENT YEAR 2012-13 AND 2013-14 RESPECTIVELY, ON LEASE RENT PAI D TO NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY (NOIDA), ON WHICH TAX WAS NOT DEDUCTED BY THE ASSESSEE COMPANY. 5. BRIEFLY STATED FACTS OF THE CASE ARE THAT FOR ASSESSMENT YEAR 2012-13 NOTICE UNDER SECTION 201(1)/201(1A) OF THE ACT WAS ISSUED ON 18/03/2014 AND ORDER DATED 28/03/2014 WAS PASSED BY THE LEARNE D ASSESSING OFFICER HOLDING THE ASSESSEE AS ASSESSEE- IN- DEFAULT AND CREATING LIABILITY OF 55,15,938/- ( 43,55,239/- ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE UNDER SECTION 194I OF THE ACT ON AMOUNT OF 4,35,52,987/- AND 11,60,699/- AS INTEREST FOR DELAYED 4 ITA NOS. 3109 & 3110/DEL/2017 PAYMENT) IN RESPECT OF THE LAND ACQUIRED ON LEASE F ROM NOIDA HAVING DETAIL AS UNDER: S. NO. DATE OF PAYMENT AMOUNT SUBJECT TO TDS NATURE OF AMOUNT AMOUNT OF TDS PAYABLE U/S 194I (RS.) AMOUNT OF INTEREST @1% PM, U/S 201(1A) OF THE ACT (RS.) 1. 24.03.2012 3,00,40,340 ONE-TIME LEASE RENT 30,04,034 7,51,008 2. 16.05.2011 71,89,000 LEASE PREMIUM IN RESPECT OF F.Y. 2011-12 7,18,900 2,51,615 3. 29.03.2012 63,23,047 LEASE PREMIUM IN RESPECT OF F.Y. 2012-13 6,32,305 1,58,076 TOTAL 4,35,52,987 43,55,239 11,60,699 6. SIMILARLY FOR ASSESSMENT YEAR 2013-14, NOTICE UN DER SECTION 201(1)/201(1A) OF THE ACT WAS ISSUED ON 18/03/2014 AND ORDER DATED 30/03/2015 WAS PASSED BY THE ASSESSING OFFICER HOLDING THE ASSESSEE AS ASSES SEE- IN-DEFAULT AND CREATING LIABILITY OF 7,90,388/- ( 6,32,310/- ON ACCOUNT OF NON-DEDUCTION OF TAX UNDER SECTION 194I OF THE ACT ON AMOUNT OF 63,23,100/- AND 1,58,078/- AS INTEREST FOR DELAYED PAYMENT) IN RESP ECT OF THE LAND ACQUIRED ON LEASE FROM NOIDA. 5 ITA NOS. 3109 & 3110/DEL/2017 7. AGGRIEVED WITH THE ORDERS OF THE ASSESSING OFFIC ER, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLAT E AUTHORITY IN RESPECTIVE YEARS. THE LD. CIT(A), WHIL E PASSING THE ORDERS DELETED THE TDS LIABILITY ON PAY MENTS STATING THAT THE ASSESSEE IS NOT CONSIDERED AS ASSE SSEE- IN-DEFAULT AND HAD A REASONABLE CAUSE FOR NON-DEDUC TING TDS ON THE PAYMENTS MADE TO NOIDA FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF RAJESH PROJECTS (INDIA) LTD. VERSUS CIT (2017) 392 ITR 483 (DELHI), BUT THE LD. CIT(A) FURTHER DIRECTED TH E ASSESSING OFFICER TO RE-COMPUTE THE INTEREST AS PER FIRST PROVISO TO SECTION 201(1A) FROM THE DATE ON WHICH T AX WAS DEDUCTIBLE TILL THE DATE OF FILING OF THE RETUR N OF INCOME BY THE DEDUCTEE (I.E. NOIDA) IN RESPECT OF T HE TDS OF 13,51,205/- ON LEASE RENT PAID TO NOIDA FOR ASSESSMENT YEAR 2012-13 AND TDS OF 6,32,310/- ON LEASE RENT PAID FOR ASSESSMENT YEAR 2013-14. 8. BEFORE US, THE ASSESSEE IS AGGRIEVED WITH THE DIRECTION OF THE LD. CIT(A) FOR RAISING LIABILITY O F INTEREST ON THE AMOUNT OF TDS FOR THE PERIOD FROM THE DUE DA TE TO THE DATE OF THE FILING OF THE RETURN OF INCOME BY T HE NOIDA IN RESPECT OF ASSESSMENT YEARS. 6 ITA NOS. 3109 & 3110/DEL/2017 9. THE LEARNED COUNSEL OF THE ASSESSEE BEFORE US SUBMITTED THAT THE LEARNED CIT(A) HAS NOT FOLLOWED THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF RAJESH PROJECTS (INDIA) PRIVATE LIMITED (SUPRA). AC CORDING TO HIM, IN VIEW OF THE DECISION OF THE HONBLE DELH I HIGH COURT, ONCE THE PAYMENT MADE PRIOR TO THE DATE OF T HE SAID JUDGEMENT TO THE NOIDA, THE ENTIRE RESPONSIBIL ITY OF MAKING TAX AND INTEREST TOWARD SUCH TDS LIABILITY I S OF THE NOIDA AND NOT OF THE ASSESSEE. ACCORDINGLY SUBMITTED THAT THE DIRECTION OF THE LD. CIT(A) MIGH T BE CANCELLED. 10. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT HONBLE DELHI HIGH COURT HAS SAID THAT TO THE EXTENT NO RECOVERY SHOULD BE MADE FROM THE ASSESSEE IF THE LIABILITY I N RESPECT OF THE TDS ALONG WITH THE INTEREST HAS BEEN SATISFIED BY THE NOIDA. HE SUBMITTED THAT IN THE IN STANT CASE, THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE T HAT INTEREST LIABILITY HAS BEEN SATISFIED BY THE NOIDA, THEREFORE THE LD. CIT(A) IS JUSTIFIED IN RAISING TH E SAID LIABILITY ON THE ASSESSEE, FOLLOWING THE DECISION O F THE HONBLE DELHI HIGH COURT IN THE CASE OF RAJESH PROJ ECT (INDIA) PRIVATE LIMITED (SUPRA). 7 ITA NOS. 3109 & 3110/DEL/2017 11. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE ONLY DISPUTE IN T HE CASE OF THE ASSESSEE IS WHETHER THE INTEREST LIABILITY U NDER SECTION 201(1A) OF THE ACT HAS TO PAID BY THE ASSES SEE OR NOT. WE FIND THAT THE HONBLE DELHI HIGH COURT IN T HE CASE OF RAJESH PROJECT (INDIA) PRIVATE LIMITED (SUP RA) ON THE ISSUE OF LIABILITY TO PAY TDS ON LEASE RENTALS TO THE GNOIDA HAS DIRECTED AS UNDER: IN VIEW OF THE ABOVE CONCLUSIONS, IT IS HEREBY DIR ECTED THAT WHEREVER AMOUNTS HAVE BEEN PAID BY THE PETITIONERS, TOWARDS TDS AS A RESULT OF THE COERCIVE PROCESS USE D BY THE REVENUE, THE GNOIDA SHALL MAKE APPROPRIATE ORDERS T O CREDIT/REIMBURSE SUCH PAYMENTS. IN CASE PAYMENTS AR E MADE THROUGH DEPOSIT, OVER AND ABOVE THE RENTAL AMOUNTS PAID TO THE GNOIDA, WITHOUT TDS, THE INCOME TAX AUTHORITIES SHALL NOT PURSUE ANY COERCIVE PROCEEDINGS; GNOIDA SHALL D ULY REIMBURSE THE PETITIONERS FOR SUCH AMOUNTS. ANY AMO UNTS DEPOSITED IN THE COURT OR WITH THE REVENUE, SHALL, TO THE EXTENT OF TDS LIABILITY ONLY BE APPROPRIATED FOR SUCH PURP OSE. IT IS CLARIFIED THAT GNOIDA SHALL ENSURE THAT REIMBURS EMENT IS MADE TO COMPENSATE THE PETITIONERS' EXCESS PAYMENTS ; THE INCOME TAX AUTHORITIES SHALL NOT PURSUE ANY COERCIV E METHODS FOR RECOVERY OF THE AMOUNTS, OR PENALTY, ONCE THE B ASIC LIABILITY (WITH INTEREST, TO BE PAID BY GNOIDA) IS SATISFIED. THE IMPUGNED ORDERS ARE QUASHED; THE REVENUE SHALL MAKE CONSEQUENTIAL ORDERS, TO GIVE EFFECT TO THIS JUDGME NT, AFTER DULY HEARING THE PETITIONERS AND THOSE LIKELY TO BE AFFECTED, WITHIN 12 WEEKS FROM TODAY. 12. IN THE ABOVE CASE LEASE RENTALS PAYMENT HAVE BE EN MADE TO GREATER NOIDA, WHEREIN THE INSTANT CASE LEA SE RENTALS BEEN PAID TO NOIDA. THUS ONLY DIFFERENCE IS OF THE AUTHORITY TO WHOM PAYMENT HAVE BEEN MADE, OTHERWISE 8 ITA NOS. 3109 & 3110/DEL/2017 ALL THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE ARE IDENTICAL TO THE CASE OF RAJESH PROJECT (INDIA) PRI VATE LIMITED. IN ABOVE CASE FOUR SITUATIONS HAVE BEEN SUMMARISED BY THE HONBLE DELHI HIGH COURT. 13. FIRSTLY, WHEREVER THE AMOUNTS HAVE BEEN PAID BY THE BUYER (ASSESSEE), TOWARDS TDS TO THE INCOME-TAX DEPARTMENT IN THE PROCESS OF COERCIVE MEASURES USED , THE GNOIDA HAS BEEN DIRECTED TO CREDIT OR REIMBURSE D THE SAID AMOUNT TO THE BUYER. BECAUSE, THE BUYER HA S ALREADY PAID FULL PAYMENT TO THE GNOIDA AND AGAIN T HE TDS AMOUNT HAS BEEN RECOVERED BY THE INCOME TAX DEPARTMENT FROM THE ASSESSEE. 14. SECONDLY, WHERE THE PAYMENT HAVE BEEN MADE THOUGH DEPOSIT OVER AND ABOVE THE RENTAL PAID TO GNOIDA, WITHOUT TDS, THE INCOME-TAX AUTHORITIES HAS BEEN DIRECTED NOT TO ISSUE ANY COERCIVE PROCEEDINGS AND GNOIDA HAS BEEN DIRECTED TO REIMBURSE THE ASSESSEE FOR SUCH AMOUNTS AND ANY AMOUNT DEPOSITED IN THE COURT OR WITH THE REVENUE TO THE EXTENT OF TDS LIABILITY. 9 ITA NOS. 3109 & 3110/DEL/2017 15. THIRDLY, THE INCOME-TAX AUTHORITIES HAVE BEEN DIRECTED NOT TO TAKE ANY COERCIVE METHOD FOR RECOVE RY OF THE AMOUNTS OR THE PENALTY, ONCE THE BASIC LIABILIT Y (WITH INTEREST TO BE PAID BY THE GNOIDA) HAS BEEN SATISFI ED. 16. IN THE INSTANT CASE, THE LD. CIT(A) IN ASSESSME NT YEAR 2012-13 HAS DIRECTED THE LEARNED ASSESSING OFF ICER AS UNDER: 7.11 THIS CLAIM OF THE APPELLANT HAS SOME MERIT. T HE APPELLANT HAD A REASONABLE CAUSE FOR NOT DEDUCTING TAX ON THE PAYMENTS AS IT WAS GUIDED BY THE ADVISE GIVEN B Y THE DEDUCTEE, NOIDA. HENCE, FOLLOWING THE OBSERVATION O F THE HONBLE HIGH COURT, IT IS NOT TREATED AS AN ASSESSE E-IN- DEFAULT. HOWEVER, IT DOES NOT ABSOLVE THE APPELLANT FROM THE INTEREST LIABILITY U/S 201(1A), EVEN IF IT IS NOT C ONSIDERED TO BE AN ASSESSEE-IN-DEFAULT. HENCE, IN VIEW OF THE PROVI SIONS OF THE FIRST PROVISO TO SECTION 201(1), THE ASSESSING OFFI CER IS DIRECTED TO GIVE OPPORTUNITY TO THE APPELLANT TO PR ODUCE THE CERTIFICATE IN FORM 26A AS PER RULE AND MODIFY THE DEMAND AFTER ASCERTAINING THAT THE DEDUCTEE HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING ITS INCOME. THE AO IS FURTHE R DIRECTED TO RE-CALCULATE THE INTEREST U/S 201(1A) FROM THE D ATE ON WHICH TAX WAS DEDUCTIBLE TILL DATE OF FILING OF RET URN BY THE DEDUCTEE. THIS CLAIM OF THE APPELLANT IS THEREFORE PARTLY ALLOWED. 17. IDENTICAL DIRECTION HAVE BEEN ISSUED IN ASSESSM ENT YEAR 2013-14. 10 ITA NOS. 3109 & 3110/DEL/2017 18. THUS, THE LD. CIT(A) HAS DIRECTED TO REDUCE OR DELETE THE DEMAND U/S 201(1) OF THE ACT TO THE EXTENT, THE DEDUCTEE (I.E. THE NOIDA) HAS PAID TAX ON THE INCOM E UNDER REFERENCE BUT DIRECTED TO RAISE INTEREST UNDE R SECTION 201(1A) OF THE ACT FROM THE DATE ON WHICH T AX WAS DEDUCTIBLE TILL THE DATE OF FILING OF THE WRITT EN BY THE DEDUCTEE (I.E NOIDA). 19. IN OUR OPINION, IT WAS THE RESPONSIBILITY OF TH E ASSESSEE TO FURNISH DOCUMENTARY EVIDENCE IN SUPPORT THAT THE NOIDA HAS PAID TAX TO THE INCOME-TAX DEPARTMENT ON LEASE RENTAL INCOME I.E. FOR THE AMOU NT OF THE TAX WHICH WAS DEDUCTIBLE ON LEASE RENTAL PAYMEN T UNDER REFERENCE, ALONG WITH THE INTEREST. IF THE SA ID INTEREST HAS ALREADY BEEN PAID BY THE NOIDA, NO REC OVERY CAN BE MADE FROM THE ASSESSEE FOR THE SAID AMOUNT O F THE INTEREST. THE HONBLE HIGH COURT HAS DIRECTED T HAT IF THE BASIC LIABILITY ALONG WITH INTEREST TO BE PAID BY THE GNOIDA HAS BEEN SATISFIED, NO RECOVERY SHALL BE PUR SUED FROM THE BUYER. IN VIEW OF THE FACTS AND CIRCUMSTAN CES, WE FEEL IT APPROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF THE LEARNED ASSESSING OFFICER, WITH THE DIRECTION T O VERIFY WHETHER THE NOIDA HAS MADE PAYMENT OF THE BASIC TDS LIABILITY ALONG WITH THE INTEREST DUE THEREON. THE ASSESSEE 11 ITA NOS. 3109 & 3110/DEL/2017 SHALL COOPERATE AND PROVIDE THE RELEVANT INFORMATIO N REQUIRED BY THE ASSESSING OFFICER. IF AFTER VERIFIC ATION, IT IS FOUND THAT THE BASIC TDS LIABILITY AND INTEREST THE REON HAS ALREADY BEEN PAID BY THE NOIDA, THEN NO SUCH LIABILITY SHALL BE RAISED ON THE ASSESSEE. ACCORDIN GLY, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFF ICER WITH ABOVE DIRECTIONS IN BOTH THE APPEAL BEFORE US. IT I S NEEDLESS TO MENTION THAT A SHALL BE AFFORDED ADEQ UATE OPPORTUNITY OF BEING HEARD. 20. IN THE RESULT, THE APPEALS OF THE ASSESSEE FOR BOTH ASSESSMENT YEARS ARE ALLOWED FOR STATISTICAL PURPOS ES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2020 . SD/- SD/- SD/- (SUSHMA CHOWLA) (O. P. KAN T) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 28/02/2020 PRITI YADAV, SR. PS* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI