ORACLE FINANCIAL SERVICES SOFTWARE LTD, MUMBAI V. ITO (TDS) 2(1, MUMBAI

ITA 3653/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3532 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 22-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAVEEN GUPTA
• Assessee Lawyers: PARAS S SAVLA; PRATIC PODDAR
• Section: 133A; 201(1)

Judgement Text

C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 3653 /MUM/2014 ( / ASSESSMENT YEAR : 2006-07) ORACLE FINANCIAL SERVICES SOFTWARE LIMITED, ORACLE PARK, OFF WESTERN EXPRESS HIGHWAY, GOREGAON(EAST), MUMBAI-400057 / V. INCOME TAX OFFICER(TDS) 2(1), MUMBAI ./ PAN : AAACC1448B ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI PARAS S. SAVLA AND SH PRATIC PODDAR REVENUE BY : SHRI NAVEEN GUPTA / DATE OF HEARING : 13-06-2016 / DATE OF PRONOUNCEMENT : 17.08.2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE COMPANY, BEING I TA NO. 3653/MUM/2014, IS DIRECTED AGAINST APPELLATE ORDER DATED 17 TH FEBRUARY, 2014 PASSED BY LEARNED COMMISSIONER OF INCOME TAX ( APPEALS)- 13, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSME NT YEAR 2006-07, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARI SING FROM THE ORDER DATED 31 ST MARCH 2011 PASSED BY THE LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 201(1) AND 201(1A) OF THE INCOME TAX ACT,1961 (HEREINAFTER CALLED THE ACT). ITA 3653/MUM/2014 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE I N THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READS AS UNDER:- 1. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX APPEALS, MUMBAI ( CIT(A)-13) HAS ERRED IN CONFIRMING INTEREST OF RS.9,65,226 LEVIED BY THE ASSESSING OFFICER (AO) UNDER SECTION 201(1A) OF THE ACT IN RE SPECT OF PROVISION OF EXPENSES. 2. WITHOUT PREJUDICE, ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING INTEREST COMPUTED UNDER SECTION 201(1A) OF THE ACT UPTO THE DATE OF ASSES SMENT ORDER INSTEAD ONLY UPTO THE DATE OF PAYMENT OF TDS IN SUBSE QUENT YEAR. 3. THE BRIEF FACTS OF THE CASE ARE THAT SURVEY ACT ION WAS CONDUCTED AGAINST THE ASSESSEE ON 19.02.2008 U/S. 133A OF THE ACT AT THE BUSINESS PREMISES OF THE ASSESSEE. THE ASSESSEE IS ENGAGED IN THE BUSINE SS OF PROVIDING IT SOLUTIONS TO THE FINANCIAL SERVICES INDUSTRY WORLD WIDE THROUGH A COMPREHENSIVE RANGE OF PRODUCTS AND SERVICES. PERSU ANT TO SURVEY U/S 133A OF THE ACT, NOTICES U/S 201(1) AND 201(1A) OF THE A CT WERE ISSUED TO THE ASSESSEE CALLING FOR DETAILS WHICH WERE SUBMITTED B Y THE ASSESSEE. THE AO OBSERVED FROM THE TAX AUDIT REPORT THAT RS. 7,06,97 ,110/- WAS DISALLOWED U/S 40(A) FOR NON-DEDUCTION AND PAYMENT OF TAX DEDU CTED AT SOURCE U/S. 194C, 194J AND 194I OF THE ACT. THE ASSESSEE ALSO P ROVIDED DETAILS OF TDS DEDUCTED AND PAID ON THE AFORESAID AMOUNT IN SUBSEQ UENT YEARS, FROM WHICH THE AO OBSERVED THAT THE ASSESSEE ONLY PAID TDS ON GROSS AMOUNT OF EXPENSES OF RS.4,73,32,802/- WHILE NO TDS WAS DEDUC TED ON THE BALANCE AMOUNT OF RS.2,33,64,308/- FOR WHICH NO DETAILS AND EXPLANATION WERE FURNISHED. THE AO RAISED A DEMAND OF RS.12,61,734/- FOR SUCH NON-DEDUCTION AND NON PAYMENT OF TDS BY THE ASSESSEE U/S. 201(1) OF THE ACT AND ALSO RAISED FURTHER DEMAND OF RS.9,65,226/- U/S 201(1A) OF THE ACT TOWARDS ITA 3653/MUM/2014 3 INTEREST FROM THE PERIOD FROM APRIL 2005 TO MARCH 2 011, VIDE ORDERS DATED 31.03.2011 PASSED BY THE AO U/S 201(1) AND 201(1A) OF THE ACT. 4. AGGRIEVED BY THE ORDERS DATED 31.03.2011 PASSED BY THE AO 31.03.2011 U/S 201(1) AND 201(1A) OF THE ACT, THE ASSESSEE PRE FERRED APPEAL BEFORE THE LEARNED CIT(A) WHO AFTER CONSIDERING THE FACT THAT THE ASSESSEE HAS DULY MADE PAYMENTS OF TDS ON THE SAID AMOUNT OF RS.2,33,64,30 8/- IN SUBSEQUENT ASSESSMENT YEAR 2007-08 HELD THAT THE ASSESSEE CANN OT BE HELD LIABLE U/S. 201(1) OF THE ACT , AND THE LEARNED CIT(A) ORDERED DELETION OF DEMAND OF RS.12,61,734/- RAISED AGAINST THE ASSESSEE U/S 201( 1) OF THE ACT, WHILE THE LEARNED CIT(A) CONFIRMED THE DEMAND OF RS.9,65,226/ - RAISED AGAINST THE ASSESSEE TOWARDS INTEREST U/S 201(1A) OF THE ACT FO R THE PERIOD STARTING FROM APRIL 2005 TO MARCH 2011 ON THE GROUNDS THAT INTERE ST IS COMPENSATORY IN NATURE RELYING ON DECISION OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA-COLA LIMITED (2007) 293 ITR 226(SC) , VIDE APP ELLATE ORDERS DATED 17.02.2014 PASSED BY THE LEARNED CIT(A). 5. AGGRIEVED BY THE APPELLATE ORDERS DATED 17.02.20 14 PASSED BY THE LEARNED CIT(A), THE ASSESSEE HAS FILED SECOND APPEAL WITH T HE TRIBUNAL. 6. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTS ET SUBMITTED THAT INTEREST U/S 201(1A) OF THE ACT IS CHARGED BY THE REVENUE FR OM THE BEGINNING OF ASSESSMENT YEAR I.E. STARTING FROM APRIL 2005 TILL THE FINALIZATION OF THE ORDER U/S 201/201(1A) OF THE ACT ON 31-03-2011 WHILE THE INTEREST SHOULD HAVE BEEN CHARGED BY THE AUTHORITIES BELOW TILL THE DATE OF ACTUAL PAYMENT OF TDS BY THE ASSESSEE TO THE CREDIT OF CENTRAL GOVERNMENT AS IN THAT CASE THE REVENUE SHOULD NOT HAVE GRIEVANCE ONCE TDS IS DULY PAID BY THE ASSESSEE TO THE CREDIT OF CENTRAL GOVERNMENT AS INTEREST IN COM PENSATORY IN NATURE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT LEA RNED CIT(A) HAS DELETED THE DEMAND OF RS.12,61,734/- RAISED AGAINST THE ASS ESSEE U/S. 201(1) OF THE ITA 3653/MUM/2014 4 ACT ON THE GROUNDS THAT THE SAME STOOD PAID IN THE SUBSEQUENT ASSESSMENT YEAR 2007-08. THUS, IT WAS SUBMITTED THAT THE ASSES SEE IS AGREEABLE TO PAY INTEREST TILL THE DATE OF ACTUAL PAYMENT OF TDS BY THE ASSESSEE TO THE CREDIT OF CENTRAL GOVERNMENT. THE LEARNED DR SUBMITTED THAT M ATTER MAY BE SET ASIDE TO THE FILE OF AO FOR VERIFICATION OF THE AFORE-STA TED CLAIM OF THE ASSESSEE . 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE MATERIAL ON RECORDS INCLUDING THE CASE LAWS RELIED UPON. WE HAV E OBSERVED THAT THE ASSESSEE WAS HELD AS ASSESSEE IN-DEFAULT U/S 201(1) /201(1A) OF THE ACT FOR NON-DEDUCTION/PAYMENT OF TDS AMOUNT OF RS.12,61,734 /- ON THE GROSS AMOUNT OF EXPENSES OF RS.2,33,64,308/- UNDER SECTIO N 194C, 194J AND 194I OF THE ACT AND INTEREST THEREOF FOR NON-PAYMENT OF TDS TO THE CREDIT OF CENTRAL GOVERNMENT . THE SAID AMOUNT OF RS. 2,33,64,308/- O N WHICH TDS WAS NOT DEDUCTED / PAID TO THE CREDIT OF CENTRAL GOVERNMENT STOOD DISALLOWED U/S. 40(A) OF THE ACT WHILE COMPUTING INCOME OF THE ASSE SSEE FOR THE ASSESSMENT YEAR 2006-07 , WHICH AMOUNT LATER ON STOOD ALLOWED AS DEDUCTION WHILE COMPUTING INCOME OF THE ASSESSEE IN THE SUBSEQUENT ASSESSMENT YEAR 2007- 08 AS THE ASSESSEE DULY PAID THE TDS OF RS.12,61,73 4/- IN THE SUBSEQUENT ASSESSMENT YEAR 2007-08. THE LEARNED CIT(A) THEREFO RE ORDERED THE DELETION OF THE SAID AMOUNT OF DEMAND OF RS.12,61,734/- RAISED AGAINST THE ASSESSEE U/S. 201(1) OF THE ACT VIDE ORDERS DATED 17.2.2014 AND MATTER STOOD CONCLUDED SO FAR DEMAND OF RS. 12,61,734/- WAS RAIS ED U/S. 201(1) OF THE ACT IS CONCERNED. THE ASSESSEE IS AGGRIEVED BY THE LEVY OF INTEREST U/S 201(1A) OF THE ACT AMOUNTING TO RS.9,65,226/- RAISED AGAINS T THE ASSESSEE FROM APRIL 2005 TO MARCH 2011 I.E. TILL THE DATE OF THE ORDER DATED 31.3.2011 PASSED BY THE AO U/S 201(1) AND 201(1A) OF THE ACT . IT IS TH E SAY OF LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE IS AGREEABLE TO PAY INTEREST U/S 201(1A) OF THE ACT TILL THE DATE OF PAYMENT OF TDS BY THE ASSESSEE TO THE CREDIT OF CENTRAL GOVERNMENT . THE PROVISIONS OF SECTION 201(1A) OF T HE ACT ARE VERY CLEAR THAT INTEREST CAN ONLY BE CHARGED TILL THE DATE ON WHICH SUCH TAX WAS ACTUALLY PAID ITA 3653/MUM/2014 5 BY THE ASSESSEE. WE ARE OF CONSIDERED VIEW THAT IN TEREST BEING COMPENSATORY IN NATURE, THE ASSESSEE IS LIABLE TO PAY INTEREST U /S 201(1A) OF THE ACT TILL THE DATE OF ACTUAL PAYMENT OF TDS BY THE ASSESSEE TO TH E CREDIT OF CENTRAL GOVERNMENT AND WE DO NOT SEE THAT HOW REVENUE IS AG GRIEVED ONCE OUTSTANDING TDS AMOUNT STOOD DULY PAID BY THE ASSES SEE TO THE CREDIT OF CENTRAL GOVERNMENT AND THUS WE ORDER THAT REVENUE I S ENTITLED FOR INTEREST ON OUTSTANDING AMOUNT OF TDS ONLY TILL THE DATE OF ACTUAL PAYMENT OF TDS BY THE ASSESSEE TO THE CREDIT OF CENTRAL GOVERNMENT AN D NOT TILL THE DATE OF FRAMING OF THE ORDER ON 31-03-2011 BY THE AO U/S 20 1(1) AND 201(1A) OF THE ACT. WE ORDER ACCORDINGLY. 8. IN THE RESULT, ASSESSEES APPEAL IN ITA NO 3653 /MUM/2014 FOR THE ASSESSMENT YEAR 2006-07 IS ALLOWED AS INDICATED ABO VE. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH AUGUST , 2016. # $% &' 17-08-2016 ( ) SD/- SD/- (MAHAVIR SINGH ) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 17-08-2016 [ ITA 3653/MUM/2014 6 .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI A BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI