ADDL CIT (TDS) RG 2, MUMBAI V. MOBILE 2 WIN INDIA P.LTD, MUMBAI

ITA 3520/MUM/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8143 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 17-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Assessee Lawyers: NIKHIL JAIN
• Keywords: Bonafide belief; Reasonable cause
• Section: 273B; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.3520/M/2012 ASSESSMENT YEAR: 2008-09 ADDL. COMMISSIONER OF INCOME TAX (TDS)-2(1), R.NO.702, 7 TH FLOOR, SMT. K.G. MITTAL AYURVEDIC HOSPITAL BUILDING, CHARNI ROAD, MUMBAI - 400002 VS. M/S. MOBILE 2 WIN INDIA PVT. LTD., ECO SPACE BUILDING, 3 RD FLOOR, OFFICE NO.306, I.T. PARK, OFF OLD NAGAR DAS ROAD, MOGRA VILLAGE, ANDHERI (EAST), MUMBAI-400 069 PAN: AADCM6165C (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI NIKHIL JAIN, A.R. REVENUE BY : SHRI T.A. KHAN, D.R. DATE OF HEARING : 06.12.2017 DATE OF PRONOUNCEMENT : 21.12.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 22.02.2012 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2008-09. 2. THE SHORT FACTS OF THE CASE ARE AS UNDER: ITA NO.3520/M/2012 M/S. MOBILE 2 WIN INDIA PVT. LTD. 2 THE ASSESSEE COMPANY IS ENGAGED IN PROVIDING VALUE ADDED SERVICES TO TELECOM OPERATORS AND MEDIA PARTNERS HA VING ITS REGISTERED OFFICE AT TODI ESTATE, 3 RD FLOOR, B-WING, SUN MILL COMPOUND, LOWER PAREL, MUMBAI. THE ASSESSEE HAS MA DE PAYMENT IN INDIA AND FROM THE CHART OF TDS IT COMES OUT THA T THE ASSESSEE HAD PAID RS.10,23,677/- BUT THE TOTAL AMOUNT WAS PAYABL E @ RS.92,84,371/-. HOWEVER, FOR THE REMAINING AMOUNT OF RS.12,63,280/- TDS PAYABLE @ 11.33% WOULD BE RS.1,4 3,130/-. HENCE, THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS LIABLE TO PAY RS.11,66,807/- UNDER SECTION 201(1) OF THE ACT. 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS ALLOWED THE APPEAL BY OBSERVING AS UNDER: 12. I HAVE CONSIDERED THE FACTS OF THE CASE ABOVE SUBMISSIONS OF THE APPELLANT, AS WELL AS THE CASE LAWS CITED IN THIS REGARD. THE APPELLANT HAS TAKEN MANY FOLD ARGUMENTS. FIRSTLY, T HE APPELLANT HAS CHALLENGED THE LEGALITY OF THE PENALTY ORDER ON ACC OUNT OF LIMITATION. IT S CONTENDED THAT THE PENALTY WAS INITIATED BY DC IT(TDS)2(1), MUMBAI ON 12.02.2009, WHEN THE ORDER U/S 201(1)/201 (1A) WAS PASSED BY HIM. THEREFORE, THE PENALTY ORDER COULD H AVE BEEN PASSED ONLY BY 31.08.2009. SINCE THE IMPUGNED ORDER HAS BE EN PASSED ON 26.03.2010, IT IS TIME BARRED. I DO NOT AGREE WITH THE APPELLANT IN THIS REGARD. IT IS SEEN FROM THE RECORDS THAT THE ADDI.C IT(TDS), RANGE-2, MUMBAI, I.E. THE OFFICER WHO HAS IMPOSED PENALTY IN ITIATED THE PENALTY BY THE ISSUE OF NOTICE U/S 274 READ WITH SECTION 271C ONLY ON 10.06.2009. THEREFORE, THE DATE OF LIMITATION WAS 31.03.2010 AS PER PROVISIONS OF SECTION 275(1)(C). THE PROVISIONS OF SECTION 271C C ANNOT BE EQUATED WITH THE PROVISIONS OF SECTION 271(1)(C) VIS-A-VIS THE ASSESSMENT ORDER WHERE THE PENALTY IS REQUIRED TO BE NECESSARILY INI TIATED AT THE TIME OF PASSING OF THE ASSESSMENT ORDER BECAUSE FIRSTLY, TH E PENALTY ORDER U/S 271(1)(C) IS PASSED BY THE SAME OFFICER, AND SECOND LY, THE PENALTY U/S 271(1)(C) ARISES AND IS DEPENDENT UPON THE FINDINGS GIVEN IN THE ASSESSMENT ORDER. SAME IS NOT THE CASE WITH THE PEN ALTY UNDER SECTION 271C, WHICH CAN BE INDEPENDENTLY INITIATED AND IS N OT NECESSARILY DEPENDENT UPON THE ORDER U/S 201(1)/201(1A). SINCE THE PENALTY UNDER SECTION 271C IS GENERALLY IMPOSED BY A DIFFERENT OF FICER, THE ASSESSEE IS REQUIRED TO PLEAD ITS CASE ONLY ON THE BASIS OF PROVISIONS OF ITA NO.3520/M/2012 M/S. MOBILE 2 WIN INDIA PVT. LTD. 3 SECTION 273B. THEREFORE, IN THE CASE OF PENALTY UND ER SECTION 271C, THE DATE OF INITIATION OF PENALTY HAS TO BE THE DAT E WHEN THE OFFICER COMPETENT TO IMPOSE PENALTY HAS INITIATED THE PENAL TY PROCEEDINGS. IF THAT BE SO, IT IS EVIDENT THAT THE IMPUGNED PENA LTY ORDER IN THE CASE OF THE APPELLANT IS WELL WITHIN THE LIMITATION DATE AND IS A VALID ORDER ON THAT GROUND. HENCE, THIS ARGUMENT OF THE A PPELLANT IS REJECTED. 13. THE SECOND ARGUMENT OF THE APPELLANT IS THAT TH E TAX WAS NOT AT ALL DEDUCTIBLE FROM THE PAYMENTS MADE TO CONTENT PR OVIDERS. IN THIS REGARD, IT IS TO BE NOTED THAT THE APPELLANT HAD AL SO FILED APPEAL AGAINST THE ORDER DATED 12.02.2009 PASSED BY DCIT(T DS)-2(1), MUMBAI U/S 201(1)/201(1A) OF THE ACT, WHICH HAS BEE N DECIDED BY ME AS PER MY APPELLATE ORDER OF EVEN DATE IN APPEAL NUMBER CIT(A)- 14/IT 16/TDS RG.2/10-11. IN THE SAID APPELLATE ORDE R, I HAVE HELD THAT THE APPELLANT ITSELF HAD SUO-MOTO DEDUCTED AND PAID THE TAX UNDER SECTION 194J OF THE ACT FROM OUT OF PAYMENTS MADE TO CONTENT PROVIDERS. HENCE, PROVISIONS OF SECTION 194J ARE AP PLICABLE AND THE TAX WAS LIABLE TO BE DEDUCTED. ACCORDINGLY, AS PER THE SAID APPELLATE ORDER, THE DEMAND RAISED U/S 201(1)/201(1A) OF THE ACT HAS BEEN PARTLY SUSTAINED TO THE EXTENT THE APPELLANT HAD NO T DEDUCTED AND PAID THE TDS. THEREFORE, THIS ARGUMENT OF THE APPE LLANT CAN ALSO NOT BE ACCEPTED. 14. LASTLY, THE APPELLANT HAS, AS PER THE PROVISION S OF SECTION 273B PLEADED THAT THERE WAS REASONABLE CAUSE BECAUSE THE APPELLANT WAS UNDER A BONA FIDE BELIEF THAT THE TAX WAS NOT REQUI RED TO BE DEDUCTED IN RESPECT OF PAYMENTS MADE TO CONTENT PRO VIDERS. FOR THIS PURPOSE, THE APPELLANT HAS ALSO FURNISHED A COPY OF THE OPINION DATED 16.05.2005 OBTAINED FROM M/S. DELOITTE HASKIN S & SELLS, WHO I ADVISED THAT NO TDS IS DEDUCTIBLE ON THESE TYPES OF PAYMENTS AS THESE PAYOUTS ARE SIMPLY SHARING OF THE REVENUE. BE SIDES THIS, THE APPELLANT HAS ALSO ANALYSED THE CONSIDERATION INVOL VED IN THE NATURE OF PAYMENTS TO SHOW THAT THE PAYMENTS MADE TO CONTE NT PROVIDERS DO NOT SQUARELY FALL IN THE CATEGORY OF 'FEES FOR T ECHNICAL SERVICES OR PROFESSIONAL SERVICES. THE APPELLANT HAS ALSO CIT ED A NUMBER OF DECISIONS AS WELL, WHERE IT HAS BEEN HELD THAT A BO NA FIDE BELIEF THAT THE RELEVANT PAYMENTS WOULD NOT BE SUBJECT TO TAX IS A REASONABLE CAUSE FOR THE PURPOSES OF SECTION 273B O F THE ACT. HENCE, IN MY OPINION, ON THIS GROUND, THE APPELLANT DESERVES TO SUCCEED, AND THE PENALTY IS, THEREFORE, LIABLE TO B E DELETED. I ORDER ACCORDINGLY. 15. THUS, THE GROUNDS OF APPEAL NOS. I AND 5 ARE AL LOWED AND GROUNDS OF APPEAL NOS. 2 AND 3 ARE DISMISSED. GROUN D OF APPEAL NO. 4 IS PARTLY ALLOWED. ITA NO.3520/M/2012 M/S. MOBILE 2 WIN INDIA PVT. LTD. 4 4. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. WE FIND THAT LD. CIT(A) HAS DECIDED THE APPEAL ON THE GROUND THAT THERE WAS BONAFIDE BELIEF THAT TAX WAS NOT REQUIRED TO BE DEDUCTED IN PAYMENT MADE FOR PROFESSIONAL SERVICES AND THEY ARE NOT SUBJECT O TDS AND HENCE, THE LD. CIT(A) HAS RIGHTLY DELETED T HE PENALTY AND OUR INTERFERENCE IS NOT REQUIRED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 21.12.2017. SD/- SD/- (RAJESH KUMAR) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 21.12.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.