ADDL CIT (TDS) RG 1, MUMBAI V. BHARTI AIRTEL LTD, MUMBAI

ITA 4198/MUM/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3496 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 15-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SANDEEP GOEL
• Keywords: Non-deduction of tax
• Section: 133A; 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B, MU MBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.4198/MUM/2012 ASSESSMENT YEAR: 2009-10 DCIT TDS-1(1), ROOM NO. 803, K.G. MITTAL HOSPITAL BUILDING, CHARNI ROAD, MUMBAI-400002 VS. M/S BHARTI AIRTEL LIMITED. INTERFACE-7, 7 TH FLOOR, LINK ROAD, MALAD (W), MUMBAI. PAN:AAACB2894G (APPELLANT) (RESPONDENT) ITA NO.4199/MUM/2012 ASSESSMENT YEAR: 2010-11 DCIT TDS-1(1), ROOM NO. 803, K.G. MITTAL HOSPITAL BUILDING, CHARNI ROAD, MUMBAI-400002 VS. M/S BHARTI AIRTEL LIMITED. INTERFACE-7, 7 TH FLOOR, LINK ROAD, MALAD (W), MUMBAI. PAN:AAACB2894G (APPELLANT) (RESPONDENT) REVENUE BY : SHRI DR. SANDEEP GOEL (DR) ASSESSEE BY : SHR I JAYANT BHATT DATE OF HEAR ING: 21.03.2016 DATE OF ORDER : 25. 05.2016 O R D E R PER PAWAN SINGH, JM: 1. THESE TWO APPALS ARE FILED BY THE REVENUE IN RESPEC T OF ASSESSMENT YEAR (AY) 2009-10 & 2010-11 RESPECTIVELY AGAINST TH E ORDER OF 2 ITA NOS. 4198 & 4199/M/20012 M/S BHARTI AIRTEL LTD. COMMISSIONER OF INCOME TAX (APPEALS), MUMBAI (FOR S HORT CIT(A), DATED 30.03.2012 WERE HEARD TOGETHER AND BEING DECI DED BY COMMON ORDER AS IDENTICAL GROUNDS OF APPEAL ARE RAISED IN BOTH THE APPEALS. GROUND OF APPEAL ITA NO.4198/M/2012 FOR AY-2009-10 ARE AS UNDER: 1 (I) THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN N OT APPRECIATING THE CORRECT NATURE OF THE EXPENSES INCURRED ON OUTSOURC ING OF MANPOWER SUPPLY, WHEREAS SUCH EXPENSES, IN SUBSTANC E AND EFFECT, ARE IN NATURE OF FEES FOR TECHNICAL AND PRO FESSIONAL SERVICES WITHIN THE MEANING OF SECTION 194J OF THE INCOME-TA X ACT, 1961. (II) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N DELETING THE INTEREST OF RS. 31,12,322/- WITHOUT PROPERLY APPREC IATING THE FACTUAL AND LEGAL MATRIX OF THE CASE AS CLEARLY BRO UGHT OUT BY THE LD. AO IN ORDER U/S. 201(1A) OF THE INCOME-TAX ACT, 1961. (III) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DIRECTING THE AO TO EXAMINE THE ISSUE PERTAINING TO THE PAYMENT O F NATIONAL ROAMING CHARGES AND INTER CONNECTION CHARGES IN THE LIGHT OF SUPREME COURT DECISION IN THE CASE OF CIT VS. BHART I CELLULAR LTD. AS REPORTED IN 319 ITR 139, SETTING ASIDE THIS ISSU E IN SUBSTANCE AND IN EFFECT. AS CIT(A) HAS NO POWER TO SET ASIDE AN ASSESSMENT, HIS DECISION IN RESPECT OF SETTING ASIDE OF ROAMING CHARGES AND INTER CONNECTION CHARGES ARE ERRONEOUS IN LAW AND O N FACTS AND MAY BE DELETED AND AOS FINDING BE UPHELD. 2. THE APPLICANT CRAVES LEAVE TO AMEND OR ALTER AN Y GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY AT THE TIME OF TH E HEARING OF THE CASE THEREAFTER. 3. THE ORDER OF THE CIT(A) BEING ERRONEOUS BE SET A SIDE AND LD. AOS ORDER BE RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SURVEY U/S. 133A OF THE ACT WAS CONDUCTED ON 14.01.2010 AND 15.01.2010 AND IN SURVE Y IT WAS FOUND THAT ASSESSEE HAD FAILED TO DEDUCT TDS ON THE FOLLO WING PAYMENTS:- PAYMENTS HEADS AMOUNT OF PAYMENTS AMOUNT OF TDS REQ UIRED IUC CHARGES RS. 86,41,21,222 RS.9,79,04,934 ROAMING CHARGES RS.128,74,72,326 RS.14,58,70,615 MARGIN TO DISTRIBUTORS RS. 150,94,91,627 RS. 17,10 ,25,401 OUTSOURCING EXPENSES DEDUCTED U/S 194C RS. 11,68,57,985 RS. 1,05,99,010 3 ITA NOS. 4198 & 4199/M/20012 M/S BHARTI AIRTEL LTD. INSTEAD OF 194J TOTAL RS.42,53,99,960 AND VIDE ORDER DATED 02.03.2010 THE ASSESSEE WAS HE LD IN DEFAULT FOR TDS OF RS. 42,53,99,960/-. THEREAFTER, AO ISSUED A NOTICE U/S. 201(1A) ON 26.10.2010 TO COMPUTE THE INTEREST IN RE SPECT OF DEFAULTED AMOUNTED ON ACCOUNT OF TDS. AND AFTER TAKING INTO A CCOUNT OF ALL FACTS THE AO CALCULATED INTEREST U/S. 201(1A) AT RS .7,93,69,592/- IN ITS ORDER DATED 12.01.2011, MAKING THE FOLLOWING CALCUL ATION:- PAYMENT HEAD AMOUNT OF PAYMENT AMOUNT OF TDS REQUIRED AMOUNT OF INTEREST U/S 201(1A) 1 IUC CHARGES RS. 86,41,21,222 RS.9,79,04,934 RS. 1,6 7,74,176 2 ROAMING CHARGES RS.128,74,72,326 RS.14,58,70,615 RS. 2,66,85,704 3 MARGIN TO DISTRIBUTORS RS.150,94,91,627 RS.17,10,25,401 RS. 3,27,97,390 4 OUTSOURCING EXPENSES DEDUCTED U/S 194C INSTEAD OF 194J RS. 11,68,57,985 RS. 1,05,99,010 RS. 31,12,322 TOTAL RS.42,53,99,960 RS.7,93,69,592 3. AGGRIEVED BY THE ORDER OF AO, DATED 12/01/2011, ASS ESSEE FILED APPEAL BEFORE CIT(A). THE LD. CIT(A) WHILE HEARIN G THE APPEAL CATEGORIZED THE VARIOUS ISSUE IN FOUR CATEGORIES: 1. INTEREST U/S. 201(1A) IN RESPECT OF NON-DEDUCTION O F TAX AT SOURCE ON INTER USAGE CHARGES . 2. INTEREST U/S. 201(A) IN RESPECT OF NON-DEDUCTION OF TAX ON ROAMING CHARGES. 3. INTEREST U/S. 201(A) IN RESPECT OF NON-DEDUCTION O F TAX ON MARGIN TO DISTRIBUTOR (PREPARED PARTS). 4. INTEREST U/S. 201(A) IN RESPECT OF NON-DEDUCTION OF TAX ON MAN POWER SUPPLY U/S. 194J AS AGAINST ASSESSEE-COMPANY WAS DEDUCTING TDS U/S.194C. 4 ITA NOS. 4198 & 4199/M/20012 M/S BHARTI AIRTEL LTD. 5. THE LD. CIT(A) WHILE PASSING ORDER ON THE APPEAL OF ASSESSEE OBSERVED FROM THE RECORD THAT AN APPEAL WAS PREFERR ED BY ASSESSEE AGAINST THE ORDER U/S. 201(1) OF THE ACT, DATED 02/ 03/2010 AND SAME WAS DECIDED VIDE ORDER DATED 17.02.2011, WHEREIN IS SUE AT SL. NOS. 1 & 2 WERE REFERRED BACK TO AO , ISSUE AT SL. NO.3 WA S DECIDED IN FAVOUR OF REVENUE AND ISSUE AT SL. NO. 4 WAS DECIDE D IN FAVOUR OF THE ASSESSEE. 6. THE LD. CIT(A) WHILE PASSING ORDER IN THE SAID APPE AL ALSO OBSERVED THAT WITH REGARD TO FIRST AND SECOND ISSUES I.E. IN TER CONNECT USAGE CHARGES AND ROAMING CHARGES THE AO IS DIRECTED TO T AKE THE FRESH DECISION ON THE APPLICABILITY OF SECTION 194J TO SU CH PAYMENTS IN ACCORDANCE WITH THE DIRECTION OF HONBLE SUPREME CO URT JUDGEMENT IN CIT VS BHARTI CELLULAR DATED 12AUGUST ,2010 AND IN THIRD ISSUE I.E. MARGIN TO DISTRIBUTORS( PREPAID CARDS) CONFIRMED TH E ACTION OF AO AND FOR FOURTH ISSUE OF TDS ON PAYMENTS IN RESPECT OF MANPOWER SUPPLY CHARGES WAS DECIDED IN FAVOUR OF ASSESSEE AN D DELETED THE DEMAND. HOWEVER IN THE MEANTIME ORDER U/S 201(1A) D ATED 12.01.2011, WAS PASSED BY AO, WHO CALCULATED INTERE ST ON THE ALLEGED AMOUNT DUE ON ACCOUNT OF NON DEDUCTION OF TDS. AGGR IEVED BY THE ORDER OF AO ASSESSEE FILED APPEAL BEFORE CIT(A), WH EREIN THE APPEAL OF THE ASSESSEE WAS PARTLY ALLOWED FOLLOWING THE OR DER DATED 17/02/2011, AGAINST WHICH THE PRESENT APPEAL IS FIL ED BEFORE US. 7. WE HAVE HEARD LD AR FOR THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LD AR FOR THE ASSESSEE ARGUED THAT AGAINST THE ORDER OF CIT(A) DATED 17/02/2011, BOTH THE PARTIES FILED APPEAL BEFORE ITAT IN RESPECT OF BOTH THE ASSESSMENT YEAR WHICH WERE REGISTERED AS ITA NO. 3981,3682,3877&3878/MUM/2011, AND WAS DECIDED VIDE ORDER DATED 13/04/2013, WHEREIN ALL TH E ADDITION MADE U/S 201 OF THE ACT, HAS BEEN DELETED/ CONFIRMED AN D THE APPEAL FILED 5 ITA NOS. 4198 & 4199/M/20012 M/S BHARTI AIRTEL LTD. BY REVENUE IS DISMISSED BY THE COORDINATE BENCH OF THIS TRIBUNAL. IN SUCH CIRCUMSTANCES THE ORDER PASSED U/S 201(1A) DOE S NOT SURVIVE. LD. DR FOR REVENUE HAS ALSO ACCEPTED THE CONTENTION OF THE ASSESSEE. COPY OF THE ORDER PASSED IN ITA NO. 3981, 3682, 387 7 & 3878/MUM/2011IS PLACED ON RECORD. WE HAVE CAREFULL Y GONE THROUGH THE ORDER DATED 13/04/2013 PASSED IN ITA NO. 3981,3682,3877&3878/MUM/2011, BY THE COORDINATE BEN CH OF THIS TRIBUNAL AND FIND THAT ALL THE ADDITION ON ACCOUNT OF HOLDING THE ASSESSEE IN DEFAULT FOR TDS HAS BEEN DELETED. HENCE KEEPING IN VIEW THE DIRECTION CONTAINED IN THE ORDER DATED 13/04/20 13, ALL THE GROUNDS RAISED IN THE PRESENT APPEAL BY REVENUE BECAME INFR UCTUOUS, AND CONSEQUENT UPON THE PRESENT APPEAL IS DISMISSED. 8. NOW WE SHALL TAKE UP APPEAL ITA NO. 4199/M/2012, FO R AY 2010-11 THE GROUNDS RAISED IN THIS APPEAL ARE IDENTICAL TO THE APPEAL NO. 4198/M/2012; HENCE THIS APPEAL OF THE REVENUE IS AL SO DISMISSED. 9. IN THE RESULT, THE BOTH THE APPEAL FILED BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH MAY, 2016. SD/- SD/- (R.C.SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 25/05/2016 S.K.PS /COPY OF THE ORDER FORWARDED TO : / BY ORDER, / (ASSTT.REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. !'# / GUARD FILE. $ //TRUE COPY/