Income Tax Officer,TDS Ward, Panaji,Goa., Panaji V. Department of Tourism, Govt. of Goa., Panaji

ITA 330/PAN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93479 (ITAT-PANAJI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-06-2015
• Assessment Year: 2012-2013
• Appeal Filed On: 15-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MEHBOOB ALI KHAN LD
• Assessee Lawyers: RAGHU K PIKALE
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI GEORGE MATHAN , HONBLE JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, HON'BLE ACCOUNTANT MEMBER ITA N OS . 330 & 331 /PNJ/20 14 : (A.Y S 2012 - 13 & 2013 - 14 ) ITO, TDS WARD - 1, PANAJI, GOA ( APPELLANT) VS. DEPARTMENT OF TOURISM, GOVT. OF GOA, PURUSHOTTAM BHAGWAN BUILDING, OPP. NOVA GOA, AB ROAD, PANAJI, GOA. TAN : BLRD03827F (RESPONDENT) ASSESSEE BY : RAGHU K. PIKALE, CA REVENUE BY : MEHBOOB ALI KHAN, LD. DR DATE OF HEARING : 16 / 06 /201 5 DATE OF PRONOUNCEMENT : 16 / 06 /201 5 O R D E R PER GEORGE MATHAN : 1. ITA NO. 330/PNJ/2014 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), PANAJI IN ITA NO. 13/PNJ/13 - 14 DT. 23.6.2014 FOR THE A.Y 2012 - 13 RELEVANT TO THE FINANCIAL YEAR 2011 - 12 AND ITA NO. 331/PNJ/2014 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), PANAJI IN ITA NO. 13/PNJ/13 - 14 DT. 23.6.2014 FOR THE A.Y 2013 - 14 RELEV ANT TO THE FINANCIAL YEAR 2012 - 13. SHRI MEHBOOB ALI KHAN, LD. DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI RAGHU R. PIKALE, CA REPRESENTED ON BEHALF OF THE ASSESSEE. AS THE ISSUES IN BOTH THE APPEALS ARE INTERCONNECTED, BOTH THE APPEALS ARE DISPOSED OFF BY THIS COMMON ORDER. 2. IT WAS THE SUBMISSION BY THE LD. DR THAT THE ASSESSEE, DEPARTMENT OF TOURISM HAD ENTERED INTO A CONTRACT WITH ONE M/S. ARIHANT SHIP BREAKERS PVT. 2 ITA NOS. 330 & 331/PNJ/2014 (A.Y : 2012 - 13 & 2013 - 14) LTD. , MUMBAI FOR THE REMOVAL OF A STRANDED VESSEL, M.V RIVER PRINCESS WHICH WAS STRANDED IN THE SHALLOW WATERS OFF SINQUERIM BEACH. THE CONTRACT WAS FOR AN AMOUNT OF RS. 99 CRORES. THE GOVERNMENT APPROVED VALUERS HAD VALUED THE SCRAP FROM THE VESSEL AT RS. 14.01 CRORES WHICH WAS TO BE ADJUSTED TOWARDS THE FINAL PAYMENT. IT WAS THE SUBMISSION THAT THE SCRAP FROM THE VESSEL HAD BEEN SOLD AND AN AMOUNT OF NEARLY RS. 1 9 .0 0 CRORES HAD BEEN COLLECTED. AN AMOUNT OF RS. 10 CRORES WAS RETAINED BY M/S. ARIHANT SHIP BREAKERS PVT. LTD. WHICH WAS TO BE ADJUSTED AGAINST THE FINAL CONSIDERATION A ND THE BALANCE HAD ALSO BEEN PAID BACK TO THE ASSESSEE, DEPARTMENT OF TOURISM, GOVT. OF GOA. IT WAS THE SUBMISSION THAT IN RESPECT OF THIS RS. 10 CRORES WHICH HAD BEEN RETAINED BY M/S. ARIHANT SHIP BREAKERS PVT. LTD. , THE ASSESSEE, BEING DEPARTMENT OF TOU RISM, GOVT. OF GOA, HAD NOT DEDUCTED TDS. CONSEQUENTLY, LEVY U/S 201(1) WAS RAISED ALONGWITH INTEREST U/S 201(1 A ) FOR THE F.Y 2010 - 11 AND 2011 - 12. IT WAS THE SUBMISSION BY THE LD. DR THAT AS THE TDS HAD NOT BEEN MADE, THE LEVY WAS RIGHTLY MADE U/S 201 & 201(1 A ) FOR BOTH THE FINANCIAL YEARS. IT WAS THE SUBMISSION THAT BEFORE THE LD. CIT(A) THE ASSESSEE HAD CONTENDED THAT THE CONTRACT WAS ON NO CURE NO PAY CONDITION AND AS THE COMPLETE SCRAP HAD NOT BEEN LIFTED, NO PAYMENT HAD BEEN MADE TO M/S. ARIHANT S HIP BREAKERS PVT. LTD. AND CONSEQUENTLY, NO TDS WAS LIABLE TO BE MADE. IT WAS THE SUBMISSION THAT THE LD. CIT(A) CONSEQUENTLY HELD THAT THE AMOUNT OF RS. 10 CRORES, WHICH WAS LYING WITH M/S. ARIHANT SHIP BREAKERS PVT. LTD. , WAS IN EFFECT ONLY A DEPOSIT AG AINST THE BANK GUARANTEE AND NO TDS WAS LIABLE TO BE MADE. CONSEQUENTLY, HE GAVE RELIEF TO THE ASSESSEE. IT WAS THE SUBMISSION THAT THE AMOUNT OF RS. 10 CRORES RETAINED BY M/S. ARIHANT SHIP BREAKERS PVT. LTD. WAS PART OF THE CONTRACT AND THERE WAS NO CON DITION OF DEPOSIT IN THE CONTRACT BETWEEN THE ASSESSEE AND M/S. ARIHANT SHIP BREAKERS PVT. LTD. AND CONSEQUENTLY, THE SAME SHOULD NOT HAVE BEEN TREATED AS A DEPOSIT BUT AS PART PAYMENT OF THE TOTAL CONSIDERATION OF RS. 99 3 ITA NOS. 330 & 331/PNJ/2014 (A.Y : 2012 - 13 & 2013 - 14) CRORES FOR WHICH THE CONTRACT WAS ENTERED INTO BETWEEN THE ASSESSEE AND M/S. ARIHANT SHIP BREAKERS PVT. LTD. 3. IN REPLY, THE LD. AR SUBMITTED THAT THE SAID AMOUNT OF RS. 10 CRORES WAS ONLY A DEPOSIT AGAINST THE BANK GUARANTEE OF RS. 10 CRORES WHICH M/S. ARIHANT SHIP BREAKERS PVT. LTD. HAD GIVEN FOR THE DUE PERFORMANCE. THE LD. AR DREW OUR ATTENTION TO THE COPY OF THE AGREEMENT BETWEEN THE ASSESSEE AND M/S. ARIHANT SHIP BREAKERS PVT. LTD. , BOMBAY DT. 25.4.2011 BY WHICH THE SAID M/S. ARIHANT SHIP BREAKERS PVT. LTD. WERE ENTITLED TO SELL THE SCRAP GENERATED BY WAY OF REMOVAL ON A DAILY BASIS AND THAT THE CONTRACT WAS FOR RS. 99 CRORES. HE DREW OUR ATTENTION TO THE CONTRACT WHEREIN IT WAS SPECIFICALLY ACCEPTED THAT THE CONTRACT WAS ON NO CURE NO PAY BASIS. IT WAS THE SUBMISSION THAT EVE N AS ON TODAY AS THERE IS STILL CERTAIN PORTION OF THE WRECK AT THE SITE BURIED 3 TO 6 MTRS. BELOW THE SEA BED AND CONSEQUENTLY , THE PAYMENT HAS NOT BEEN DISBURSED TO THE CONTRACTOR, VIZ. M/S. ARIHANT SHIP BREAKERS PVT. LTD. , BOMBAY. IT WAS THE SUBMISSION THAT EVEN THE LD. CIT(A) HAS CATEGORICALLY CONFIRMED IN PG. 18 OF HIS ORDER THAT THE ASSESSEE, DEPARTMENT OF TOURISM HAS NEITHER CREDITED NOR PAID ANY AMOUNT TO THE CONTRACTOR. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE CONFI RMED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. AT THE OUTSET, A PERUSAL OF THE CONTRACT CLEARLY SHOWS THAT IN PARA 3(E) OF THE CONTRACT, THE CONTRACTOR VIZ. M/S. ARIHANT SHIP BREAKERS PVT. LTD., BOMBAY HAS BEEN HELD TO BE ENTITLED TO SELL THE SCRAP GENERA TED BY WAY OF REMOVAL ON A DAILY BASIS OR ON SUCH INTERVALS AS THE CONTRACTOR DEEMS FIT. THE SAID CLAUSE ALSO PERMITS THE CONTRACTOR TO RETAIN THE SALE PROCEEDS RECEIVED BY SELLING THE SCRAP AND SUCH SALE PROCEEDS WAS TO BE ULTIMATELY ADJUSTED AGAINST THE BID AMOUNT DUE AND PAYABLE BY THE ASSESSEE TO THE CONTRACTOR. THE VALUE OF THE SCRAP HAS BEEN DETERMINED BY THE DEPARTMENT 4 ITA NOS. 330 & 331/PNJ/2014 (A.Y : 2012 - 13 & 2013 - 14) OF TOURISM, GOVT. OF GOA AT RS. 14.01 CRORES. THE SAID CLAUSE SPECIFICALLY ALLOWS THE CONTRACTOR TO RETAIN THE SCRAP VALUE EQUIVAL ENT TO AN AMOUNT OF RS. 10 CRORES AND THE BALANCE IS TO BE DEPOSITED WITH THE ASSESSEE. CLAUSE 3(F) CLEARLY ADMITS THAT NO PAYMENT OR ANY BENEFIT OF WHATSOEVER NATURE SHALL ENSUE TO THE CONTRACTOR EXCEPT AS PROVIDED IN CLAUSE 3(E) UNTIL THE ENTIRE WORK AT THAT STAGE IS FULLY COMPLETED SATISFACTORILY IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT. THUS, CLAUSE 3(E) AND 3(F) CLEARLY SHOWS THAT THE AMOUNT OF RS. 10 CRORES RETAINED BY THE CONTRACTOR, M/S. ARIHANT SHIP BREAKERS PVT. LTD. FROM THE SALE OF THE SC RAP IS CLEARLY PAYMENT RECEIVED BY M/S. ARIHANT SHIP BREAKERS PVT. LTD. IN LIEU OF THE CONTRACT AND AGAINST THE BID OF RS. 99 CRORES BEING THE FINAL AMOUNT DUE TO THE CONTRACTOR. JUST BECAUSE THE CONTRACT HAS NOT BEEN COMPLETED FOR REASONS BEST KNOWN TO T HE CONTRACTOR AND THE CONTRACTEE, IT DOES NOT MEAN THAT THE PAYMENT MADE BY THE CONTRACTEE TO THE CONTRACTOR CHANGES ITS CHARACTER FROM PAYMENT OF CONSIDERATION TO DEPOSIT NOR CAN SUCH ARRANGEMENT BE PERMITTED TO STOP THE LEVY OF THE DUES TO THE CROWN. HERE CLEARLY, THE AMOUNT RETAINED BY M/S. ARIHANT SHIP BREAKERS PVT. LTD. IS A PART OF THE TOTAL CONTRACT AND THE PROVISIONS OF SEC. 194C IS CLEARLY ATTRACTED TO THE SAID AMOUNT. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ORDER OF THE LD. CIT(A) ON THIS ISSUE IS NOT SUSTAINABLE ON THE FACTS OF THE CASE AND CONSEQUENTLY STANDS REVERSED. 5. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/06/2015. S D / - (N.K. BILLAIYA) ACCOUNTANT MEMBER S D / - ( GEORGE MATHAN ) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 1 6 /06/ 201 5 *SSL* 5 ITA NOS. 330 & 331/PNJ/2014 (A.Y : 2012 - 13 & 2013 - 14) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , 6 ITA NOS. 330 & 331/PNJ/2014 (A.Y : 2012 - 13 & 2013 - 14) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 16/06/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 1 7 /06/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 1 7 /06/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 1 7 /06/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 1 7 /06/2015 SR.PS 6. DATE OF PRONOUNCEMENT 16/06/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 1 7 /06/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER