Japyee Sports International Ltd., Noida V. DCIT (TDS), Noida

ITA 4291/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3229 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 02-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Keywords: Non-deduction of tax; Reasonable cause
• Section: 273B; 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SMT BEENA PILLAI, JUDICIAL MEMBER ITA NOS.4837 TO 4839/DEL/2015 ASSESSMENT YEARS: 2011-12 TO 2013-14 ADDL.CIT (TDS), CGO-1, HAPUR CHUNGI, GHAZIABAD. VS. THE PRINCIPAL OFFICER, M/S JAYPEE SPORT INTERNATIONAL LTD., SECTOR-128, NOIDA. PAN: AABCJ9037E ITA NOS.4291 TO 4293/DEL/2015 ASSESSMENT YEARS: 2011-12 TO 2013-14 M/S JAYPEE SPORT INTERNATIONAL LTD., SECTOR-128, NOIDA. PAN: AABCJ9037E VS. DCIT (TDS), NOIDA. ITA NOS.4840 TO 4842/DEL/2015 ASSESSMENT YEARS: 2011-12 TO 2013-14 ADDL. CIT (TDS), CGO-1, HAPUR CHUNGI, GHAZIABAD. VS. M/S JAYPEE INFRATECH LTD., SECTOR-128, NOIDA. AABCJ9042R (APPELLANTS) (RESPONDENTS) ITA NOS.4837 TO 4839; .4291 TO 4293 &.4840 TO 4842/ DEL/2015 2 ASSESSEE BY : SHRI ASHWANI KUMAR GARG, ADVOCATE DEPARTMENT BY : SMT. PARAMITA TRIPATHY, CIT, DR DATE OF HEARING : 23.11.2017 DATE OF PRONOUNCEMENT : 23.11.2017 ORDER PER R.S. SYAL, VP: THIS BATCH OF NINE APPEALS COMPRISES OF SIX CROSS APPEALS IN RESPECT OF JAYPEE SPORTS INTERNATIONAL LTD. RELATING TO ASS ESSMENT YEARS 2011-12 TO 2013-14 AND THE REMAINING THREE APPEALS BY THE REVE NUE IN RESPECT OF JAYPEE INFRATECH LTD. FOR ASSESSMENT YEARS 2011-12 TO 2013-14. ALL THESE APPEALS INVOLVE A SOLITARY ISSUE OF CONFIRMATION/RE DUCTION OF PENALTY U/S 271C OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT). JAYPEE SPORTS INTERNATIONAL LTD . 2. FACTS OF THIS ASSESSEE RELATING TO THE ASSESSMEN T YEAR 2011-12 ARE THAT A SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON THE A SSESSEE ON 24.02.2014 TO VERIFY THE APPLICABILITY OF TDS PROVI SIONS. DURING THE COURSE OF SUCH SURVEY, IT TRANSPIRED THAT THE ASSES SEE MADE PAYMENTS OF LEASE RENT AND INTEREST TO YAMUNA EXPRESSWAY INDUST RIAL DEVELOPMENT AUTHORITY (YEIDA) WITHOUT DEDUCTION OF TAX AT SOURC E U/S 194I AND 194A ITA NOS.4837 TO 4839; .4291 TO 4293 &.4840 TO 4842/ DEL/2015 3 RESPECTIVELY OF THE ACT. AN ORDER U/S 201(1)/201(1 A) OF THE ACT WAS PASSED. PURSUANT TO THAT, PENALTY WAS IMPOSED U/S 271C OF THE ACT FOR A SUM OF RS.7,55,18,885/-. THE LD. CIT(A) WAIVED THE PENALTY IN RESPECT OF LIABILITY OF THE ASSESSEE CREATED IN RELATION TO IN TEREST PAYMENT, BUT, UPHELD IT IN RELATION TO LEASE RENT. THAT IS HOW, BOTH TH E SIDES ARE IN APPEAL ON THEIR RESPECTIVE STANDS. 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ORDER U/S 201(1)/20 1(1A) CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL. VIDE ORDER DATE D 31.08.2017 IN ITA NO.4279 TO 4281/DEL/2015 ETC., THE TRIBUNAL HAS HEL D THE ASSESSEE LIABLE FOR DEDUCTION OF TAX AT SOURCE IN RESPECT OF LEASE RENT AND THE LIABILITY IN RESPECT OF INTEREST PAYMENT HAS BEEN HAS BEEN DELET ED. A COPY OF SUCH ORDER IS PLACED ON PAGE 99 ONWARDS OF THE PAPER BOO K. IN VIEW OF THE FACT THAT THE LIABILITY OF THE ASSESSEE FOR DEDUCTION OF TAX AT SOURCE IN RESPECT OF INTEREST PAYMENT HAS BEEN WAIVED BY THE TRIBUNAL, T HERE REMAINS NO QUESTION OF IMPOSING ANY PENALTY U/S 271C IN THAT R ESPECT. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER TO THIS EXTENT. ITA NOS.4837 TO 4839; .4291 TO 4293 &.4840 TO 4842/ DEL/2015 4 4. AS REGARDS TDS ON PAYMENT OF LEASE RENT, TH E TRIBUNAL HAS DECIDED THIS ISSUE AGAINST THE ASSESSEE BY FOLLOWING THE JU DGMENT OF THE HON'BLE DELHI HIGH COURT IN RAJESH PROJECTS (INDIA) (P) LTD. VS. CIT-TDS (2017) 78 TAXMANN.COM 263 (DEL). 5. BEFORE CONSIDERING THE SUSTAINABILITY OR OTH ERWISE OF PENALTY U/S 271C IN RESPECT OF LEASE RENT, IT IS NECESSARY TO RECORD THE RELEVANT FACTUAL MATRIX. THE ASSESSEE WAS GIVEN SOME LAND ON LEASE F OR A PERIOD OF 90 YEARS. THE ASSESSEE WAS FREE TO MAKE ANY CONSTRUCT ION ON SUCH LAND. ANNUAL LEASE RENT WAS PAID FOR SUCH LAND, WHICH THE ASSESSEE TREATED AS NOT ATTRACTING THE PROVISIONS OF SECTION 194-I. IT IS IN RESPECT OF SUCH PAYMENT OF LEASE RENT THAT THE ISSUE HAS BEEN DECIDED BY TH E TRIBUNAL AGAINST THE ASSESSEE BY FOLLOWING THE JUDGMENT OF THE HON'BLE D ELHI HIGH COURT, WHICH WAS DELIVERED ON 16.02.2017. ASSESSMENT YEARS UNDER CONSIDERATION ARE 2011-12 TO 2013-14. OUR ATTENTION HAS NOT BEEN DRAWN TOWARDS ANY JUDGMENT PREVALENT AT THE MATERIAL TIME CASTING OBL IGATION ON THE ASSESSEE TO DEDUCT TAX AT SOURCE UNDER SIMILAR CIRCUMSTANCES . 6. THE KOLKATA BENCH OF THE TRIBUNAL IN ITO VS. EARNEST TOWERS (P) LTD., VIDE ITS ORDER DATED 13.05.2015 (ITA NO.265/KOL/20 12), A COPY OF ITA NOS.4837 TO 4839; .4291 TO 4293 &.4840 TO 4842/ DEL/2015 5 WHICH IS AVAILABLE AT PAGE 72 ONWARDS OF THE PAPER BOOK, HAS HELD THAT PAYMENT OF LEASE PREMIUM IN RESPECT OF PROPERTY ON WHICH DEVELOPMENT OF THE AREA OF LAND WAS ALLOWED, CANNOT CONVERT LEASE PREMIUM INTO TENANCY AS PER SECTION 194-I OF THE ACT. IT IS AN ADMITTED POSITION THAT THE ASSESSEE GOT POSSESSION OF THE LAND SOMEWHERE IN THE YEAR 20 08 AND STARTED PAYING RENT WITHOUT ANY DEDUCTION OF TAX AT SOURCE. IT WA S ONLY PURSUANT TO SURVEY CARRIED OUT IN THE YEAR 2014 THAT THE ASSESS EE WAS HELD TO BE LIABLE FOR DEDUCTION OF TAX AT SOURCE IN RESPECT OF SUCH L EASE RENT PAYMENT. THE FACT THAT THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE FROM THE LEASE RENTAL PAYMENTS IN PRECEDING YEARS, IS NOT DISPUTED. 7. SECTION 273B OF THE ACT PROVIDES THAT IN CASE OF A REASONABLE CAUSE, PENALTY OTHERWISE EXIGIBLE, INTER ALIA, U/S 271C OF THE ACT, CANNOT BE IMPOSED. WHEN WE ADVERT TO THE FACTS OF THE INSTAN T CASE, BEING - NO DEDUCTION OF TAX AT SOURCE MADE PRIOR TO THE YEAR O F SURVEY ON 24.02.2014; NO OTHER ORDER AGAINST THE ASSESSEE REQUIRING DEDUC TION OF TAX AT SOURCE AT THAT TIME WHEN THE ASSESSEE MADE PAYMENT OF LEASE R ENTAL; AND THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT DELIVERED ONLY ON 16.02.2017 CASTING OBLIGATION FOR MAKING DEDUCTION OF TAX AT S OURCE -, IT BECOMES ITA NOS.4837 TO 4839; .4291 TO 4293 &.4840 TO 4842/ DEL/2015 6 ABUNDANTLY CLEAR THAT THE ASSESSEE ENTERTAINED A BONA FIDE BELIEF THAT NO TAX WITHHOLDING WAS REQUIRED ON LEASE RENT PAYMENTS. T HIS BELIEF, BEING A REASONABLE CAUSE, FOR NON DEDUCTION OF TAX AT SOURC E IN RESPECT OF LEASE RENT PAYMENT, MAGNETIZES THE PROVISIONS OF SECTION 273B. CONSIDERING THE PROVISIONS OF SECTION 271C READ WITH SECTION 273B, WE HOLD THAT THE PENALTY IMPOSED U/S 271C IS NOT SUSTAINABLE. 8. FACTS OF THE CROSS APPEALS FOR SUBSEQUENT TWO AS SESSMENT YEARS, NAMELY, 2012-13 AND 2013-14 ARE, ADMITTEDLY, SIMILA R. FOLLOWING THE VIEW TAKEN HEREINABOVE, WHILE UPHOLDING THE ACTION OF THE LD. CIT(A) IN DELETING THE PENALTY U/S 271C IN RESPECT OF INTERES T PAYMENT, WE ORDER TO DELETE PENALTY IN RESPECT OF LEASE RENT AS WELL. JAYPEE INFRATECH LTD . 9. THESE THREE APPEALS BY THE REVENUE FOR ASSESSMEN T YEARS 2011-12 TO 2013-14 ASSAIL THE DELETION OF PENALTY U/S 271C IN RESPECT OF INTEREST PAYMENT MADE BY THE ASSESSEE. 10. IT HAS BEEN CANDIDLY ACCEPTED BY THE LD. DR TH AT THE FACTS LEADING TO NON-DEDUCTION OF TAX AT SOURCE, INTER ALIA, ON INTEREST PAYMENT, BEING PASSING OF ORDER U/S 201(1)/201(1A) TREATING THE AS SESSEE AS ASSESSEE IN ITA NOS.4837 TO 4839; .4291 TO 4293 &.4840 TO 4842/ DEL/2015 7 DEFAULT AND THE TRIBUNAL ORDER WAVING SUCH LIABILIT Y, ARE MUTATIS MUTANDIS SIMILAR TO THOSE IN RESPECT OF THE REVENUES APPEAL S IN JAYPEE SPORTS INTERNATIONAL LTD., WHICH HAVE BEEN DISPOSED OFF IN EARLIER PARAS. FOLLOWING THE VIEW TAKEN HEREINABOVE, WE UPHOLD THE DELETION OF PENALTY ON INTEREST PAYMENT U/S 271C OF THE ACT. 11. IN THE RESULT, THE THREE APPEALS OF THE A SSESSEE ARE ALLOWED AND SIX APPEALS OF THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD NOVEMBER, 2017. SD/- SD/- [BEENA PILLAI] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 23 RD NOVEMBER, 2017. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.