The Executive Officer Jalandhar Improvement Trust, Jalandhar V. The Income-tax Officer, Jalandhar

ITA 41/ASR/2015

• Counselvise Citation: 4120914 RSA 2015
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 14-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TARSEM LAL
• Assessee Lawyers: ASHWANI GUPTA
• Keywords: Non-deduction of tax
• Section: 194C; 201(1)

Judgement Text

I.T.A. NOS.40 TO 43/ASR/2015 ASSESSMENT YEARS 2007-08 TO 2010-11 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR [CORAM:PRAMOD KUMAR AM AND A.D. JAIN JM] I.T.A. NOS. 40 TO 43/ASR/2015 ASSESSMENT YEARS:2007-08 TO 2010-11 EXECUTIVE OFFICER, ..APPELLANT JALANDHAR IMPROVEMENT TRUST, MODEL TOWN ROAD, JALANDHAR. [PAN:AAATJ 4768 N] VS. INCOME-TAX OFFICER TDS-II, .RESPONDENT JALANDHAR APPEARANCES BY: ASHWANI GUPTA FOR THE APPELLANT TARSEM LAL FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: JUNE 05, 2015 DATE OF PRONOUNCING THE ORDER : JUNE 10, 2015 ORDER PER PRAMOD KUMAR: 1. THESE FOUR APPEALS, FILED BY THE ASSESSEE, ARE DIRECTED AGAINST THE CONSOLIDATED ORDER DATED 31 ST OCTOBER 2014 IN THE MATTER OF TAX WITHHOLDING DEMAND RAISED ON THE ASSESSEE UNDER SECTION 201(1) AND 201(1A) R.W.S. 19 4C OF THE INCOME TAX ACT 1961, FOR THE ASSESSMENT YEARS 2 007-08, 2008-09, 2009-10 AND 2010-11. AS ALL THESE APPEALS ARISE OUT OF COMMON SET OF FACTS, DEAL WITH A COMMON LEGA L ISSUE AND PERTAIN TO THE SAME IMPUGNED ORDER, ALL THESE A PPEALS ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER. GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOLLOWS : I.T.A. NOS.40 TO 43/ASR/2015 ASSESSMENT YEARS 2007-08 TO 2010-11 PAGE 2 OF 4 A.Y. 2007-08: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS MISDIRECTED HIMSELF IN LAW , IN SUSTAINING THE ORDER OF LD ITO, TDS-II BY UPHOLDING THE TRUST (JIT) AS PR AND FURTHER ASSESSEE IN DEFAULT IN TERMS OF SEC 201(1) FOR ALLEGING FAILURE TO DEDUCT TAX AT SOURCE AMOUNTING RS.57334/- ON PAYMENT MADE ON ACCOUNT OF FINANCIAL TRANSACTIONS BOUNDED BY STATUTE, TO PUNJAB WATER SUPPLY & SEWERAGE BOARD. 2. THAT, THE LD CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES IN CONFIRMING THAT PAYME NT ON ACCOUNT OF FINANCIAL TRANSACTIONS BOUNDED BY STATUTE FOR LAYING OF SEWERAGE PIPE LINES, WATER SUPPLY LINES MADE TO PUNJAB WATER SUPPLY & SEWERAGE BOARD, FOR WORK UNDERTAKEN AS ENTRUSTED BY STATUTOR Y LAW, WAS IN PURSUANCE OF A CONTRACT AND THEREFORE, LIABLE TO DEDUCTION OF TAX AT SOURCE U/S. 194C. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, EVEN THE LEVY OF INTEREST U/S. 201(1A) WAS NOT SUSTAINABLE. 4. THAT THE ORDERS AND FINDINGS OF AUTHORITIES BELO W, TO THE EXTENT DISPUTED HEREIN ABOVE, ARE AGAINST LA W AND FACTS OF THE CASE. 2. THE GRIEVANCES RAISED BY THE ASSESSEE IN OTHER T HREE APPEALS PERTAINING TO ASSESSMENT YEARS 2008-09, 200 9-10 AND 2010-11 ARE ALTOGETHER COMMON, BARRING THE AMOU NTS OF TDS WHICH STAND AT RS.61,843, RS.3,03,777 AND RS.61 ,843 RESPECTIVELY. 3. TO ADJUDICATE ON THESE APPEALS, ONLY A FEW MATER IAL FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSEE BEFORE US IS A PUBLIC TRUST SET UP UNDER PUNJAB TOWNS IMPROVEMEN T ACT, 1922. A TDS SURVEY WAS CARRIED OUT ON THE PREMISES OF THE ASSESSEE ON 4 TH FEBRUARY 2010 AND 5 TH FEBRUARY 2010. DURING THIS SURVEY, IT WAS NOTED THAT THE ASSESSEE WAS MAK ING PAYMENTS TO PUNJAB WATER SUPPLY AND SEWERAGE BOARD, BUT HAS NOT DEDUCTED TAX SOURCE FROM THESE PAYMENTS. IT WAS IN THIS BACKGROUND AND PROCEEDING ON THE BASIS THAT TH E I.T.A. NOS.40 TO 43/ASR/2015 ASSESSMENT YEARS 2007-08 TO 2010-11 PAGE 3 OF 4 ASSESSEE WAS UNDER AN OBLIGATION, UNDER SECTION 194 C, TO DEDUCT TAX AT SOURCE FROM THESE PAYMENTS, THAT DEMA NDS UNDER SECTION 201(1) AND 201(1A) R.W.S. 194C WERE R AISED ON THE ASSESSEE. AGGRIEVED ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE THE CIT(A)BUT NOT WITH COMPLETE SUCCE SS. WHILE LEARNED CIT(A) UPHELD THE ACTION OF THE ASSES SING OFFICER IN PRINCIPLE, HE RESTRICTED THE DEMAND ONLY TO THE EXTENT PRINCIPAL LIABILITY OF THE RECIPIENT REMAINE D UNPAID AND IN RESPECT OF THE DELAY IN EVENTUAL REAL IZATION OF TAX. THE ASSESSEE IS NOT SATISFIED AND IS IN FUR THER APPEALS BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. THERE IS NO DISPUTE THAT THE APPELLANT HAS MADE PAYMENTS TO PUNJAB WATER SUPPLY AND SEWERAGE BOARD FOR EXECUTION OF WORK RELATING TO SEWERAGE PIPE LINES A ND FOR TREATMENT OF POLLUTED WATER OF THE CITY. HOWEVER, A S LEARNED COUNSEL FOR THE ASSESSEE RIGHTLY POINTS OUT , SUCH PAYMENTS ARE OUT OF LEGAL OBLIGATIONS RATHER THAN CONTRACTUAL ARRANGEMENTS, AND IT IS ONLY WHEN PAYME NTS ARE MADE IN PURSUANCE OF A CONTRACT THAT THE PROVISIO NS OF SECTION 194C COME INTO PLAY. THE CONTRACT MAY BE OR AL OR WRITTEN, EXPRESS OR IMPLIED BUT THERE MUST BE A CON TRACT NEVERTHELESS. IN THE PRESENT CASE, HOWEVER, THE PAY MENT IS ON ACCOUNT OF LEGAL OBLIGATION UNDER SECTION 24(1) OF THE PUNJAB WATER SUPPLY AND SEWERAGE BOARD ACT 1976 WHI CH PROVIDES AS FOLLOWS : 24(1). THE COST OF INVESTIGATION, PREPARATION AND EXECUTION OF ANY SCHEME UNDERTAKEN BY THE BOARD SHA LL BE INITIALLY INCURRED BY THE BOARD OUT OF ITS FUNDS BUT IT SHALL BE RECOVERABLE FROM THE CONCERNED LOCA L I.T.A. NOS.40 TO 43/ASR/2015 ASSESSMENT YEARS 2007-08 TO 2010-11 PAGE 4 OF 4 AUTHORITY OR LOCAL AUTHORITIES IN SUCH MANNER AND I N SUCH INSTALMENTS AS MAY BE PRESCRIBED. 6. FOR THE REASONS SET OUT ABOVE, THE PROVISIONS OF SECTION 194C DID NOT COME INTO PLAY ON THE FACTS OF THIS CASE. CLEARLY, THEREFORE, THE IMPUGNED DEMANDS UNDE R SECTION 201(1) AND 201(1A) R.W.S. 194C ARE WHOLLY D EVOID OF ANY LEGALLY SUSTAINABLE MERITS. WE QUASH THESE D EMANDS. 7. AS THE APPELLANT SUCCEEDS IN THE ABOVE GROUNDS, WE SEE NO NEED TO DEAL WITH THE OTHER ISSUES RAISED BY THE ASSESSEE AND THE GROUNDS ON WHICH THE PARTIAL RELIE F HAS BEEN GRANTED BY THE CIT(A). THAT ASPECT OF THE MATT ER IS WHOLLY ACADEMIC AT THIS STAGE. 8. IN THE RESULT, THE APPEALS ARE ALLOWED IN THE TE RMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON 10 TH DAY OF JUNE, 2015 SD/- SD/- A D JAIN PRAMOD KUMAR JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: THE 10 TH DAY OF JUNE 2015 *AKS/- COPIES TO: (1) THE APPELLANT (2) THE RESPONDE NT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR