RAJASTHAN HALF BODY TRUCK UNION, Jaipur V. ITO, Jaipur

ITA 34/JPR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99610 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 17-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJINDER SINGH JCIT DR DHK
• Assessee Lawyers: TANUJ AGARWAL
• Section: 143(3); 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 34/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 M/S. RAJASTHAN HALF BODY TRUCK UNION S-5, MAHAVEER NAGAR, TONK ROAD, JAIPUR CUKE VS. THE ITO WARD- 6 (2) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAATR 6011 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI TANUJ AGARWAL , CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI RAJINDER SINGH, JCIT -DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 14/12/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 15/12/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-II, JAIPUR DATED 7-11-2013 FOR THE ASSESSMEN T YEAR 2008-09 WHEREIN THE SOLITARY GROUND OF THE ASSESSEE IS AS U NDER:- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN NOT ALLOWING CREDIT FOR TAX COL LECTED AT SOURCE (I.E. TCS) AMOUNTING TO RS. 4,81,000/- 2.1 BRIEF FACTS OF THE CASE ARE THAT ASSESSEE'S INC OME WAS ASSESSED U/S 143(3) VIDE ORDER DATED 15-11-2010 ACCEPTING INCOME FROM COLLECTION OF ITA NO. 34/JP/2014 M/S. RAJASTHAN HALF BODY TRUCK UNION VS. ITO, WARD - 6 (2), JAIPUR . 2 ROYALTY PAYMENTS BASED ON AN AGREEMENT WITH RAJASTH AN MINES DEPARTMENTS (FOR SHORT RMD). TCS WAS COLLECTED BY GOVT. THEREON U/S 206C. ASSESSEE CLAIMED CREDIT OF SAID TCS AMOUNTING TO RS. 4.81 LACS WHICH WAS NOT GIVEN BY LD. AO. TO CORRECT THIS MIST AKE ASSESSEE FILED APPLICATION U/S 154 REQUESTING FOR THE CREDIT OF TC S. THE AO DISMISSED THE APPLICATION U/S 154 OF THE ACT HOLDING THAT:- (1) CREDIT OF TDS / TCS IS NOT REFLECTED IN THE I T DEPARTMENTS SOFTWARE (OLTAS). (2) TCS WAS TO BE COLLECTED BY THE MINES DEPARTMENT FROM THE LESSEE OF THE MINES AND NOT FROM THE APPEL LANT AS IT WAS MERELY AN AGENT. THUS THE TCS WAS COLLECTED FROM A WRONG PERSON. 2.2 ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LD. CIT(A) WHO UPHELD THE ORDER OF THE AO DISMISSING 154 APPLICATION. 2.3 AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL BEFORE ITAT. LD. COUNSEL CONTENDS THAT INCOME FROM COLLECTION OF ROY ALTY FROM MINING ACTIVITY HAS BEEN TAXED IN THE HANDS OF THE ASSESSE E U/S 143(3). THE TCS IN QUESTION IS INTRINSICALLY LINKED TO THE COLLECTI ON OF SAID ROYALTY AND THE INCOME OFFERED BY ASSESSEE, IF THE INCOME IS TAXED THERE IS NO JUSTIFICATION WHATSOEVER IN DENYING THE CREDIT OF TCS. IT IS NOT AT ALL JUSTIFIED TO DENY THE CREDIT OF TAXES LAWFULLY COLLECTED AND PAID IN THE GOVT. TREASURY BY THE PAYER I.E. RAJASTHAN MINING DEPARTMENT FLIMSILY HOL DING THAT THE APPELLANT IS MERELY AN AGENT AND NOT MINE OWNER/LIC ENSEE. THE PAYER (I.E. ITA NO. 34/JP/2014 M/S. RAJASTHAN HALF BODY TRUCK UNION VS. ITO, WARD - 6 (2), JAIPUR . 3 MINES DEPARTMENT, GOVERNMENT OF RAJASTHAN) HAS COLL ECTED TAX AT SOURCE (TCS) FROM THE APPELLANT WITH RESPECT TO THE TRANSA CTIONS AS PER THE AGREEMENT. THERE ARE NO TRANSACTIONS BETWEEN THE MI NE OWNERS AND THE MINES DEPARTMENT DIRECTLY, HENCE THE QUESTION OF CO LLECTING TCS BY MINES DEPARTMENT FROM MINES OWNERS AND PASSING ON C REDIT TO THEM DOES NOT ARISE. IT IS CONTENDED THAT, HAVING COLLECTED T HE TAXES, IF CREDIT THEREOF IS NOT ALLOWED, THEN AN ABSURD AND UNREASONABLE SIT UATION ARISE WHEREBY TCS AMOUNT GETS CONFISCATED BY GOVT. THE MINES OWNERS CANNOT CLAIM THE TCS CREDIT BECAUSE THEY HAVE NO TRANSACTIONS DI RECTLY WITH THE MINES DEPARTMENT, THERE IS NO TCS CERTIFICATE IN THEIR NA ME AND THEY DO NOT ENJOY TCS CREDIT IN THEIR ONLINE ANNUAL TAX CREDIT STATEMENT COMMONLY KNOWN AS FORM NO. 26AS. WHILE FRAMING ASSESSEES ASSESSMENT LD. AO HAS NO JURISDICTION TO DECIDE WHETHER THE TCS WAS N OT REQUIRED TO BE COLLECTED BY THE MINES DEPARTMENT FROM THE APPELLAN T. THE TAX CREDIT HAS TO BE ALLOWED IN TERMS OF SECTION 206C(4) AS THE AP PELLANT HAS BORNE THE TCS AMOUNT FROM ITS POCKET. ASSESSEE HAS NO CONTROL OVER THE FUNCTIONING OF A GOVERNMENT DEPARTMENT. UNDER THE PRESENT TAX LAWS NON-COMPLIANCE OF WITHHOLDING TAX PROVISIONS ATTRAC T SEVERE PENAL CONSEQUENCES, THEREFORE, THE DEDUCTORS, WITHHOLD TA X EVEN IN DOUBTFUL CASES. IT IS HIGHLY UNJUSTIFIED ON THE PART OF THE TAX DEPARTMENT TO INCLUDE ITA NO. 34/JP/2014 M/S. RAJASTHAN HALF BODY TRUCK UNION VS. ITO, WARD - 6 (2), JAIPUR . 4 THE INCOME AND DENY TCS CREDIT ON THE SAME INCOME B Y ANY HOW HOLDING THAT THE DEDUCTOR WAS NOT REQUIRED TO WITHHOLD TCS. LD. A.O. ALSO GOT THE DETAILS OF TCS VERIFIED FROM THE MINES DEPARTMENT. RELIANCE IS PLACED ON THE FOLLOWING CASE LAWS. (1) ON ITS OWN MOTION VS. CIT [2013] 352 ITR 273 (DELHI) HOLDING AS UNDER:- DENYING THE BENEFIT OF TAX DEDUCTED AT SOURCE TO A TAX PAYER BECAUSE OF THE FAULT OF THE DEDUCTOR, WHICH I S NOT ATTRIBUTABLE TO THE DEDUCTEE, CAUSES UNWARRANTED HA RASSMENT AND INCONVENIENCE. THE DEDUCTEE FEELS CHEATED. THE REVENUE CANNOT BE A SILENT SPECTATOR. RECTIFICATION AND GET TING CORRECTIONS MADE BY THE DEDUCTOR AND TO GET THEM UP LOADED IS NOT AN EASY TASK. THE SECOND PHASE OF FILING A R EVISED RETURN OR AN APPLICATION UNDER SECTION 154 IS EQUAL LY DAUNTING AND EXPENSIVE. THE ACT EMPOWERS AND AUTHORISES THE ASSESSING OFFICER TO VERIFY THE CONT ENTS OF THE RETURN AND NOTICES CAN BE ISSUED TO A THIRD PARTY, THAT IS THE DEDUCTOR, TO FURNISH INFORMATION AND DETAILS. THE S TATUTORY POWERS GIVEN TO THE ASSESSING OFFICER ARE SUFFICIE NT AND SHOULD BE RESORTED TO AND THE ASSESSEE CAN NOT BE L EFT TO THE MERCY OR THE SWEET WILL OF THE DEDUCTOR. THEREFORE, WHEN AN ASSESSEE APPROACHES THE ASSESSING OFFICER WITH REQU ISITE DETAILS AND PARTICULARS, THE ASSESSING OFFICER WILL VERIFY WHETHER OR NOT THE DEDUCTOR HAS MADE PAYMENT OF THE TDS AND IF THE PAYMENT HAS BEEN MADE, CREDIT OF THE SAM E SHOULD BE GIVEN TO THE ASSESSEE. THESE DETAILS OR THE TDS CERTIFICATE SHOULD BE THE STARTING POINT FOR THE ASSESSING OFFI CER TO ASCERTAIN AND VERIFY THE TRUE AND CORRECT POSITION. (2) SUMIT DEVENDRA RAJANI VS. ACIT, (GUJ) DECIDED ON 23.06.2014 WHEREIN IT WAS HELD AS UNDER :- UNDER THE CIRCUMSTANCES AND CONSIDERING SECTIONS 204 AND 205 WHEN THE DEDUCTOR WHO IS LIABLE TO DEDU CT THE TAX AT SOURCE UNDER CHAPTER XVII DEDUCTS THE TDS AN D ITA NO. 34/JP/2014 M/S. RAJASTHAN HALF BODY TRUCK UNION VS. ITO, WARD - 6 (2), JAIPUR . 5 ISSUED FORM NO. 16A THE ASSESSEE DEDUCTEE SHALL B E ENTITLED TO CREDIT OF THE SAME. AS STATED ABOVE AND AS PER S ECTION 205 OF THE ACT WHETHER TAX IS DEDUCTIBLE AT SOURCE UNDE R CHAPTER XVII, THE ASSESSEE SHALL NOT BE CALLED UPON TO PAY THE TAX HIMSELF TO THE EXTENT OF WHICH TAX HAS BEEN DEDUCTE D FROM THAT INCOME. MEANING THEREBY, THE ASSESSEE / DEDUCT EE IS ENTITLED TO CREDIT OF SUCH AMOUNT OF TDS. ASSUMING THAT IN A GIVEN CASE THE DEDUCTOR AFTER DEDUCTING THE TDS MAY NOT HAVE DEPOSITED WITH THE DEPARTMENT. HOWEVER, IN SUC H SITUATION, THE DEPARTMENT IS TO RECOVER THE SAID AM OUNT FROM THE DEDUCTOR AND ASSESSEE DEDUCTEE CANNOT DENY TH E CREDIT OF THE SAME. 2.4 THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AU THORITIES. 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. I FIND THAT SUCH ISSUE HAS ALR EADY BEEN DECIDED BY THIS BENCH IN THE CASE OF M/S. KAILA DEVI & PARTY VS. IT O, WARD- 3, BHARATPUR IN ITA NO. 470 & 502/JP/2014 VIDE ITS ORD ER DATED 30-10-2015 OBSERVING THEREIN AS UNDER:- 2.6 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. A PERUSAL OF ASSESSE E'S AGREEMENT WITH RAJASTHAN STATE MINING DEPARTMENT AND THE CORR ESPONDENCE WITH THEM REGARDING TDS CERTIFICATE AND ASSESSEE'S REPLY, IT CLEARLY EMERGES THAT THE ASSESSEE WAS ACCORDED THE STATUS O F A CONTRACTOR UNDER STATUTORY RULES OF STATE GOVT. THERE IS NO GA INS AS MENTIONED BY THE LD. CIT(A) THAT THE ASSESSEE THOUGH A CONTRA CTOR IS NOT MINING CONTRACTOR BUT THE CONTRACT WAS IN CONNECTIO N WITH EXCESS ROYALTY THIS APPROACH AMOUNTS TO BLOWING HOT AND CO LD. THE FACT THAT STATE GOVT. HAS COLLECTED TDS AND PAID IT TO G OVT. TREASURY IS ITA NO. 34/JP/2014 M/S. RAJASTHAN HALF BODY TRUCK UNION VS. ITO, WARD - 6 (2), JAIPUR . 6 UNDISPUTED. IT IS ABUNDANTLY CLEAR THAT ASSESSEE'S CASE IS COVERED UNDER THE TCS PROVISIONS AND THAT IS WHY THE TCS IS COLLECTED IN THIS BEHALF U/S 206C. IT IS UNDISPUTED FACT THAT TH AT TCS PAYMENT IS DULY CERTIFIED BY PAYER RAJASTHAN GOVT. IN PRESCRIB ED FORM NO. 27D; CONSEQUENTLY THE CREDIT OF TCS HAS TO BE GIVEN TO ASSESSEE AS A MATTER OF RIGHT, MORE SO, WHEN THE CORRESPONDING INCOME FROM CONTRACTED ACTIVITIES AS PER RAJASTHAN MINOR MINERA LS CONCESSION RULES, 1986, IS INCLUDED IN ASSESSEE'S INCOME. IN T HESE FACTS AND CIRCUMSTANCES, I FIND MERIT IN THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT DENIAL OF CREDIT TANTAMOUNT TO CO NFISCATING ASSESSEE'S TAX FOR WHICH CORRESPONDING INCOME IS IN CLUDED IN ITS TAXABLE INCOME. SUCH CONFISCATION AMOUNTS TO UNJUST ENRICHMENT ON THE PART OF THE GOVT. WHICH IS NOT PERMISSIBLE. IN VIEW OF THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE , THE ASSESSEE CLAIM OF CREDIT OF TCS AMOUNT AS MENTIONED ABOVE IS JUSTIFIED AND DESERVES TO BE ALLOWED. THIS GROUND OF THE ASSESSEE IN BOTH THE YEARS IS ALLOWED. RESPECTFULLY FOLLOWING THE ABOVE DECISION IN THE CA SE OF KAILA DEVI & PARTY VS. ITO, WARD- 3, BHARATPUR (SUPRA), I HOLD THAT THE ASSESSEE IS ELIGIBLE FOR CREDIT OF TCS WHICH SHOULD BE GIVEN TO THE ASSESSEE AND ASSESSEE'S APPLICATION U/S 154 OUGHT TO HAVE BEEN A LLOWED. THE AO WILL GIVE THE CREDIT OF TCS TO THE ASSESSEE. THUS THE GR OUND OF THE ASSESSEE IN THIS BEHALF IS ALLOWED. ITA NO. 34/JP/2014 M/S. RAJASTHAN HALF BODY TRUCK UNION VS. ITO, WARD - 6 (2), JAIPUR . 7 3.0 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D ORDER PRONOUNCED IN THE OPEN COURT ON 15 /12/2015 . SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 15 /12/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THEAPPELLANT- M/S.RAJASTHAN HALF BODY TRUCK UNION, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD-6 (2),JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 34/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR