Gujarat State Electricity Corporation Ltd., Baroda V. The Income tax Officer,TDS, Baroda

ITA 421/AHD/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6146 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2004-2005
• Appeal Filed On: 15-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Keywords: Non-deduction of tax
• Section: 194C; 201(1)

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI, JM AND D.C.AGRAWAL, A M GUJARAT STATE ELECTRICITY CORPORATION LTD., SARDAR PATEL VIDYUT BHAVAN, RACE COURSE CIRCLE, BARODA. VS. INCOME-TAX OFFICER (TDS),PETLAD. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- NONE. RESPONDENT BY:- SHRI H. K. LAL, DR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUND :- (1) THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CONFIR MING THE INTEREST OF RS.3,74,677/- LEVIED UNDER SECTION 201( 1A) FOR THE ALLEGED NON-DEDUCTION OF TAX AT SOURCE FROM TRANSPO RTATION CHARGES PAID TO GAIL. 2. THUS THE ONLY ISSUE INVOLVED IN THE APPEAL IS AB OUT LEVY OF INTEREST OF RS.3,74,677/- U/S 201(1A) OF THE ACT FOR THE ALL EGED LATE PAYMENT OF TAX DEDUCTED AT SOURCE FROM TRANSPORTATION CHARGES. 3. THE FACTS OF THE CASE ARE THAT ASSESSEE PAID, DU RING THE FINANCIAL YEAR 2003-04 TRANSPORTATION CHARGES OF RS.4,67,48,6 28/- TO GAIL (INDIA) ITA NO.421/AHD/2011 ASST. YEAR 2004-05 ITA NO.421/AHD/2011 ASST. YEAR 2004-05 2 LTD. BUT DID NOT DEDUCT ANY TDS THEREON. SUBSEQUENT LY THE ASSESSEE DEPOSITED A SUM OF RS.10,35,511/- AS TDS IN THE GOV ERNMENT ACCOUNT ON 14.12.2006. THE AO, THEREFORE, CHARGED INTEREST U/S 201(1A) AT RS.3,74,677/- FOR THE DELAYED PAYMENT. 4. THE ASSESSEE WENT IN APPEAL BEFORE LD. CIT(A) WH O VIDE HIS ORDER DATED 27.12.2010 CONFIRMED THE ORDER OF THE AO BY O BSERVING AS UNDER :- 4.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, THE SUBMISSIONS OF THE APPELLANT. THE MATTER BEFORE ME RELATES TO INTE REST DEMAND OF RS.374677/- U/S 201(1A). THE VARIOUS PLEAS RAISED B Y THE APPELLANT ARE PERTINENT TO EITHER DEMAND RAISED U/S 201(1) OR PEN ALTY LEVIABLE FOR DEFAULT U/S 201(1A) FOR WHICH SEPARATE APPEAL LIES AND ARE THUS NOT RELEVANT FOR THE PRESENT APPEAL. IN REGARD TO THE I NTEREST U/S 201(1A) IT HAS BEEN HELD IN MANY COURT DECISIONS LIKE BENNET C OLEMAN & CO. LTD. VS. V.P. DAMLE, THIRD ITO (1986) 157 ITR 812 (BOM), CIT VS. DHANALAKSHMY WEAVING WORKS (2000) 245 ITR 13 (KER), CIT VS. K.K. ENGG. CO. (2001) 116 TAXMAN 390 (KER), CIT VS. ASSA M SMALL INDUSTRIES DEVELOPMENT CORPORATION (1996) 219 ITR 324, CIT VS. PREM NATH MOTORS (P) LTD. (2002) 120 TAXMAN 584 (DELHI) THAT THE INTEREST U/S 201(1A) IS COMPENSATORY AND MANDATORY IN NATURE. TH US THE AO IS JUSTIFIED IN LEVYING INTEREST U/S 201(1A) OF THE AC T. GROUND IS DISMISSED. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE BEFORE U S EXCEPT FILING WRITTEN SUBMISSIONS. IN THE WRITTEN SUBMISSIONS IT HAS BEEN ARGUED THAT - (1) SAID PAYMENTS AS TRANSPORTATION CHARGES WERE PART A ND PARCEL OF TOTAL COST OF GAS PURCHASED AND, THEREFORE, SUCH TY PE OF PAYMENT WAS OUTSIDE THE PURVIEW OF PROVISIONS RELATING TO T DS. (2) THE ASSESSEE IS PURCHASING GAS AND PAYMENT IS MADE AS COMPOSITE GAS AND TRANSPORTATION AND THE SAME HAS B EEN DEBITED IN THE PURCHASE ACCOUNT. THERE IS NO SEPARATE INVOI CE RAISED BY GAIL OR BY ANY OTHER TRANSPORTER SEPARATELY. ITA NO.421/AHD/2011 ASST. YEAR 2004-05 3 (3) PROVISIONS OF SECTION 194C ARE APPLICABLE IN CASE O F TRANSPORT CONTRACT AND WHEREVER THERE IS NO TRANSPORT CONTRAC T, ASSESSEE IS NOT LIABLE FOR MAKING TDS. (4) CBDT CIRCULAR NO.681 CLARIES THAT PROVISIONS OF SEC TION 194C ARE NOT APPLICABLE FOR CONTRACT OF SALE. (5) IN ASST. YEAR 2005-06 IN THE CASE OF THE ASSESSEE V IDE ORDER DATED 23.12.2010 IN ITA NO.2558/AHD/2009 THE TRIBUN AL HAD OBSERVED AS UNDER :- 9. WE FIND THAT IN THE CASE OF CIT (TDS) VS. ASSTT . MANAGER (ACCOUNTS) FOOD CORPORATION OF INDIA (2010) 326 ITR 106 (P & H) IT WAS FOUND THAT INVOICES RAISED BY VARIOU S STATE ORGANIZATIONS WHO PROCURED FOOD GRAINS ON BEHALF OF THE ASSESSEE, THE COST OF WHEAT HAS BEEN SHOWN APART FR OM THE COST ON ACCOUNT OF OTHER INCIDENTAL EXPENSES INCURR ED BY THE PROCUREMENT AGENCIES, VAT HAS ALSO BEEN CHARGED. IT IS FOUND THAT INCIDENTAL EXPENSES WERE PART OF THE COST AT W HICH THE FOOD-GRAINS WERE TO BE TRANSFERRED BY THE PROCUREME NT AGENCIES TO THE ASSESSEE. WITH THIS FACT IT WAS HEL D THAT ASSESSEE HAD NOT PAID ANY AMOUNT TO THE PROCUREMENT AGENCIES ON ACCOUNT OF TRANSPORTATION, INTEREST, OR STORAGE CHARGES AS SUCH, ACCORDINGLY, THERE WAS NO LIABILIT Y FOR DEDUCTION OF TAX. THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE RELIED ON THE ABOVE DECISION TO CONTEND TH AT AS THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX, INTEREST U/S 201(1A) OUGHT NOT TO HAVE BEEN CHARGED IN THE INSTANT CASE. WE FIND THAT COPY OF THE AGREEMENT WITH GAIL (INDIA) LTD., BILL RAISED BY GAIL (INDIA) LTD. ETC. HAVE NOT BEEN PROD UCED BEFORE US. IN ABSENCE OF THE SAME WE ARE UNABLE TO DECIDE WHETHER THE TRANSPORTATION COST SHOWN SEPARATELY IN THE BILL ITA NO.421/AHD/2011 ASST. YEAR 2004-05 4 FORMED PART OF THE COST AT WHICH THE GAS WAS TRANSF ERRED BY GAIL (INDIA) LTD., TO THE ASSESSEE. IT IS NOT CLEAR WHETHER ANY VAT WAS CHARGED OR NOT AND IF CHARGED THEN ON WHICH AMOUNT. NEITHER OF THE LOWER AUTHORITIES HAVE EXAMI NED THE ISSUE FROM THIS ANGLE. WE, THEREFORE, ARE NOT IN A POSITION TO ADJUDICATE THIS ISSUE COMPLETELY. (6) IF THE TAXES HAVE BEEN PAID BY THE RECIPIENT THEN T HERE IS NO LIABILITY FOR FURTHER TAX ON THE PAYER. (7) REGULAR ASSESSMENT OF THE PAYEE HAS BEEN COMPLETED AND AMOUNT HAS BEEN FULLY PAID BY HIM THEN THE AO CANNO T RAISE DEMAND U/S 201 AGAINST THE PAYER. 6. THE LD. DR ON THE OTHER HAND SUPPORTED THE ORDER S OF AUTHORITIES BELOW. 7. WE HAVE HEARD THE LD. DR AND PERUSED THE WRITTEN SUBMISSIONS. IN ASST. YEAR 2005-06 THE TRIBUNAL HAS RESTORED THE MA TTER TO THE FILE OF AO FOR FINDING OUT WHETHER TRANSPORTATION COST WAS SEP ARATELY SHOWN IN THE BILL FORMING PART OF THE COST AT WHICH THE GAS WAS TRANSFERRED BY GAIL (INDIA) LTD. TO THE ASSESSEE. SINCE THE LOWER AUTHO RITIES HAVE NOT EXAMINED THIS ISSUE FROM THIS ANGLE, THE MATTER WAS RESTORED FOR FRESH ADJUDICATION. SINCE THE FACTS OF THE CASE ARE SAME, WE RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL RESTORE T HE MATTER TO THE FILE OF AO. AS A RESULT THE MATTER IS RESTORED TO THE FILE OF AO FOR DECIDING AFRESH AS PER DIRECTIONS OF THE TRIBUNAL IN ASST. YEAR 200 5-06. ITA NO.421/AHD/2011 ASST. YEAR 2004-05 5 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED BUT STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 8/7/11. SD/- SD/- (BHAVNESH SAINI) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD, DATED : 8/7/2011. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 1/7/11. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 4/7/11. /OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..