Project Director,District Rural Development Agency, Mathura V. ITO (TDS), Mathura

ITA 378/AGR/2009

• Counselvise Citation: 37820314 RSA 2009
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 14-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: M M AGARWALA
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NOS.378 & 379/AGR/2009 ASSESSMENT YEARS: 2006-07 & 2007-08 PROJECT DIRECTOR, VS. INCOME TAX OFFICER (TDS), DISTRICT RURAL DEVELOPMENT AGENCY MATHURA. RAJEEV BHAVAN, MATHURA. (PAN : AAATZ 0364 J). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.M. AGARWALA, C.A. RESPONDENT BY : SHRI A.K. SHARMA, JR. D.R. DATE OF HEARING : 12.08.2011 DATE OF PRONOUNCEMENT : 16.08.2011 ORDER PER BENCH : THE ASSESSEE HAS FILED THE AFORESAID TWO APPEALS AG AINST THE COMMON IMPUGNED ORDER DATED 16.06.2009 PASSED BY THE LD. C IT(A)-I, AGRA FOR THE ASSESSMENT YEARS 2006-07 & 2007-08. 2. SINCE THE ISSUES INVOLVED AND THE GROUNDS RAISED IN THESE APPEALS BY THE ASSESSEE ARE IDENTICAL, THEREFORE, THESE APPEALS AR E DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 3. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO.378 /AGR/2009 FOR THE ASSESSMENT YEAR 2006-07 READ AS UNDER :- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THE ASSESSEE LIABLE TO DEDUCT TAX AT SOURCE FROM PAYMENT TO U.P. RAJKIYA NIRMAN NIGAM LIMITED WITHOUT APPRECIAT ING THE FACT THAT THE FUNDS WERE ACTUALLY TRANSFERRED BY THE AS SESSEE AGENCY TO THE U.P. RAJKIYA NIRMAN NIGAM AS ALLOTTED BY THE U.P. S TATE GOVERNMENT. 2. THAT THE LD. CIT(APPEALS) HAS ERRED IN LAW AS WE LL AS ON FACTS IN HOLDING THAT THE ASSESSEE IS LIABLE FOR PAYMENT OF TAX DEMANDED U/S.201(1)/201(1A) OF THE I.T. ACT WITHOUT APPRECIA TING THE FACT THAT U.P. RAJKIYA NIRMAN NIGAM LIMITED IS ASSESSED TO TA X AT LUCKNOW REGUARLY WITH P.A. NO.AAACU5701F AND THEREFORE THE ASSESSEE IS NOT LIABLE TO DEMAND U/S 201(1)/201(1A) OF THE I.T. ACT , 1291. 3. THAT THE LD. CIT(APPEALS) WHILE DECIDING THE APP EAL HAS NOT APPRECIATED THE LEGAL POSITION THAT INCOME TAX IS A CHARGE ON INCOME AND IS PAID BY THE RECIPIENT OF INCOME. THE ASSESS EE IS NOT BEING RECIPIENT OF ANY INCOME IS NOT LIABLE TO PAY THE IN COME TAX PARTICULARLY WHEN RECIPIENT OF INCOME IS BEING ASSESSED REGULARL Y. 4. THAT THE ORDERS OF THE LD. CIT (APPEALS) AND ITO (TDS) BEING ERRONEOUS DESERVE TO BE CANCELLED AND THE APPEAL OF THE ASSESSEE BE ALLOWED. 4. THE BRIEF FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE ASSESSEE IS A GOVERNMENT UNDERTAKING BY THE UTTAR PRADESH GOVERNM ENT. THE TAX-DEDUCTOR IS A PROJECT DIRECTOR OF DISTRICT RURAL DEVELOPMENT AG ENCY (DRDA), MATHURA AND RESPONSIBLE FOR DEDUCTION OF TAX AT SOURCE UNDER TH E PROVISIONS OF TDS ON PAYMENT FOR CONTRACT AND OTHERS. THE ASSESSING OFFICER REC EIVED INFORMATION THAT THE ASSESSEE HAD MADE PAYMENTS FOR CONTRACT WORKS TO U. P. RAJKIYA NIRMAN NIGAM 3 LIMITED BUT HAS NOT DEDUCTED THE TDS WHICH IS REQUI RED UNDER SECTION 194C OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) AND, T HEREFORE, THE ASSESSEE HAS TO BE TREATED AS ASSESSEE IN DEFAULT UNDER SECTION 201 OF THE ACT. THE ASSESSING OFFICER RECEIVED INFORMATION REGARDING DETAILS OF P AYMENTS MADE TO NIRMAN NIGAM LIMITED, AGRA FOR FINANCIAL YEARS 2005-06 & 2006-07 . ON THE BASIS OF THE SAME, HE ISSUED SHOW CAUSE NOTICE UNDER SECTION 201(1) OF THE ACT TO THE TAX-DEDUCTOR ON 05.09.2008 FIXING THE HEARING FOR 17.09.2008. I N COMPLIANCE OF THE SAME, THE TAX-DEDUCTOR STATED THAT HE WAS NOT RESPONSIBLE FOR TDS ON PAYMENTS FOR CONTRACT TO NIRMAN NIGAM LIMITED AND OTHERS AS PER DIRECTION S OF U.P. GOVERNMENT. HE FURTHER STATED THAT THE PAYMENTS WERE MADE OUT OF T HE BUDGET ALLOTTED BY THE GOVERNMENT TO THE U.P. RAJKIYA NIRMAN NIGAM LIMITED AND THERE WAS NO MENTION IN THE GOVERNMENT ORDER THAT THE AMOUNT BE PAID AFT ER MAKING TDS. THE U.P. RAJKIYA NIRMAN NIGAM LIMITED IS A GOVERNMENT CONSTR UCTION UNIT AND, THEREFORE, IT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE. THE ASS ESSING OFFICER FOUND THAT THE EXPLANATION OF THE TAX-DEDUCTOR WAS NOT SATISFACTOR Y AS U.P. RAJKIYA NIRMAN NIGAM LIMITED IS ASSESSABLE ENTITY AND ITS INCOME I S NOT EXEMPT UNDER THE PROVISIONS OF THE INCOME TAX ACT, 1961. THE ASSES SING OFFICER HELD THAT THE TAX- DEDUCTOR FAILED TO DEDUCT TAX AT SOURCE WITHOUT ANY COGENT REASON ON PAYMENTS MADE TO NIRMAN NIGAM LIMITED UNDER SECTION 194C OF THE ACT. THEREFORE, THE ASSESSEE IS ASSESSEE IN DEFAULT UNDER SECTION 201 (1) OF THE ACT AND LIABLE FOR PAYMENT OF AMOUNT DEDUCTIBLE UNDER SECTION 194C AND TAX & INTEREST THEREON UNDER 4 SECTION 201(1)/201(1A) OF THE ACT FOR THE FINANCIAL YEARS 2005-06 & 2006-07 AND PASSED THE ORDER ON 27.10.2008. AGGRIEVED BY THE S AME, THE ASSESSEE FILED APPEALS BEFORE THE LD. FIRST APPELLATE AUTHORITY WHO, VIDE THE IMPUGNED ORDER DATED 16.06.2009, DISMISSED THE APPEALS FILED BY THE ASSE SSEE, UPHOLDING THE ORDER PASSED BY THE I.T.O. (TDS), MATHURA ON 27.10.2008. NOW, A GGRIEVED BY THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY, THE ASSESSEE FILED T HE PRESENT APPEALS BEFORE THE TRIBUNAL. 5. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE I.E. DISTRICT RURAL DEVELOPMENT AGENCY HAS WORKED AS CONDUIT TO TRANSFE R THE GOVERNMENT FUND AS RELEASED BY THE GOVERNMENT OF UTTAR PRADESH FOR THE CONSTRUCTION OF ADVOCATES HALL AND CHAMBER IN MATHURA BY U.P. RAJKIYA NIRMAN NIGAM LIMITED. THE FUNDS BELONG TO THE DISTRICT MAGISTRATE, MATHURA. AS THE DISTRICT ECONOMIC & STATISTICAL OFFICER, MATHURA HAS NO PL ACCOUNT, THEREFORE, THE DISTRICT MAGISTRATE, MATHURA INSTRUCT CHIEF DEVELOPMENT OFFICER, MATHURA TO KEEP THE FUND IN PL ACCOUNT OF DISTRICT RURAL DEVELOPMENT AGENCY AS PER GOVERNMENT ORDER DATED 30.07.2005 AND THE ASSESSEE HAS TRANSFERRED THESE FUNDS AS PER THE ORDER OF THE DISTRICT MAGISTRATE, MATHURA. HE FURTHER STATED THAT THERE IS NO RELATIONSHIP OF CONTRACTOR OR CONTRACTEE BETWEEN THE ASSESSEE AND THE U.P. RAJKIY A NIRMAN NIGAM LIMITED. THEREFORE, THE ASSESSEE IS NOT LIABLE TO BE DEDUCTE D TAX AT SOURCE FROM THE PAYMENTS MADE TO THE CONTRACTOR I.E. U.P. RAJKIYA NIRMAN NIG AM LIMITED. THUS, THE 5 PROVISIONS OF SECTION 194C OF THE ACT IS NOT APPLIC ABLE AND THE ASSESSEE IS NOT ASSESSEE IN DEFAULT. 6. ON THE CONTRARY, THE LD. DEPARTMENTAL REPRESENTA TIVE RELIED UPON THE ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US ESPECIALLY ONE SMALL PAPER BOOK FILED BY TH E LD. COUNSEL FOR THE ASSESSEE CONTAINING PAGE NOS.1 TO 27 IN WHICH HE HAS ATTACHE D CERTIFICATE ISSUED BY REGISTRAR OF SOCIETIES, UTTAR PRADESH ALONGWITH MEMORANDUM AN D ARTICLES OF ASSOCIATION OF DISTRICT RURAL DEVELOPMENT ABHIKARAN, MATHURA, NOTI CE DATED 05.09.2008 ISSUED BY THE INCOME TAX OFFICER (TDS), MATHURA UNDER SECT ION 201(1)/201(1A) OF THE INCOME TAX ACT, 1961, REPLY LETTER DATED 15.09.2008 SUBMITTED TO ITO IN RESPONSE TO HIS NOTICE DATED 05.09.2008, ANOTHER NOTICE DATE D 24.09.2008 ISSUED BY THE ITO UNDER SECTION 201(1)/201(1A) OF THE ACT, REPLY LETT ER DATED 06.10.2008 SUBMITTED TO THE ITO IN RESPONSE TO HIS NOTICE DATED 24.09.20 08, WRITTEN SUBMISSION DATED 28.04.2009 AND 26.05.2009 SUBMITTED BEFORE LEARNED CIT(APPEALS)-I, AGRA ALONGWITH (I) LETTER DATED 08.09.2008 WRITTEN BY PR OJECT DIRECTOR, DRDA TO ECONOMICAL AND STATISTICAL OFFICER, MATHURA, (II) L ETTER DATED 08.09.2005 WRITTEN BY DISTRICT MAGISTRATE, MATHURA TO CHIEF DEVELOPMENT O FFICER, MATHURA, (III) LETTER DATED 19.09.2005 WRITTEN BY PROJECT DIRECTOR, DRDA, MATHURA TO DISTRICT 6 ECONOMIC AND STATISTICAL OFFICER, MATHURA, (IV) GOV ERNMENT ORDER NO.1310/35-4- 2005 DATED 12.08.2005 ISSUED BY SRI ARVIND NARAYAN MISHRA, SPECIAL SECRETARY, GOVERNMENT OF UTTAR PRADESH ADDRESSED TO THE DISTRI CT MAGISTRATE, MATHURA AND ORDER DATED 16.07.2009 PASSED BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. TRANS BHARAT AVIATIN (P) LTD. REPORTED AS (2010) 32 0 ITR 671 (DELHI). WE HAVE PERUSED THE SAME AND WE ARE OF THE CONSIDERED OPINI ON THAT THERE IS NO RELATIONSHIP OF CONTRACTOR OR CONTRACTEE BETWEEN THE ASSESSEE I. E. DISTRICT RURAL DEVELOPMENT AGENCY AND U.P. RAJKIYA NIRMAN NIGAM LIMITED AND TH E STATE GOVERNMENT HAS OVERALL RESPONSIBILITY FOR THE SUPERVISION AND MONI TORING OF THE PROJECTS TAKEN UP UNDER THE APPROVED PROGRAMS AND THE ASSESSEE IS ONL Y A CONDUIT BETWEEN THE STATE GOVERNMENT AND THE U.P. RAJKIYA NIRMAN NIGAM LIMITE D. AS THE DISTRICT ECONOMIC AND STATISTICAL OFFICER, MATHURA HAS NO P L ACCOUNT, THEREFORE, THE DISTRICT MAGISTRATE, MATHURA INSTRUCT CHIEF DEVELOP MENT OFFICER, MATHURA TO KEEP THE FUND IN P L ACCOUNT OF THE ASSESSEE I.E. DISTRI CT RURAL DEVELOPMENT AGENCY AS PER GOVERNMENT ORDER DATED 30.07.2005 AND THE ASSES SEE HAS TRANSFERRED THE FUNDS ACCORDING TO THE DIRECTION OF THE DISTRICT MAGISTRA TE, MATHURA. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES EXPLAINED ABOVE, WE ARE OF THE VIEW THAT THE ASSESSEE IS NOT RESPONSIBLE FOR DEDUCTING TAX AT SOURCE. THEREFORE , THE LD. FIRST APPELLATE AUTHORITY HAS PASSED THE IMPUGNED ORDER CONTRARY TO THE FACTS ON RECORD. THE REVENUE HAS FAILED TO PROVE ANY RELATIONSHIP OF CON TRACTOR OR CONTRACTEE FOR DOING THE WORK BETWEEN THE ASSESSEE AND THE U.P. RAJKIYA NIRMAN NIGAM LIMITED. IN 7 ABSENCE OF CORROBORATING EVIDENCE, WE ARE UNABLE TO UPHOLD THE IMPUGNED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY. THERE FORE, WE CANCEL THE SAME BY ACCEPTING THE APPEALS FILED BY THE ASSESSEE AND HOL D THAT THE ASSESSEE IS NOT RESPONSIBLE FOR DEDUCTING TAX AT SOURCE AND THE ASS ESSEE IS NOT ASSESSEE IN DEFAULT UNDER SECTION 201/201(1A) OF THE ACT. 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. SD/- SD/- (K.G. BANSAL) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: AGRA DATE: 16 TH AUGUST, 2011 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT/RESPONDENT/CIT CONCERNED/CIT(APPEALS) CO NCERNED/D.R., ITAT, AGRA BENCH, AGRA/GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY