M/s. Varun Beverages Ltd., Uttar Pradesh V. ITO (TDS), Noida

ITA 4315/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3412 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: misc
• Appeal Filed On: 04-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SARAS KUMAR
• Keywords: Principle of natural justice; Additional evidence; TDS; Set aside
• Section: 194C; 201(1); 201; 13

Judgement Text

ITA NO.- 4315 AND 4316/DEL/2016. M/S VARUN BEVERAGES LIMITED. PAGE 1 OF 15 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: G: NEW DELHI) BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO:- 4315/DEL/2016 ( ASSESSMENT YEAR: 2014-15) M/S VARUN BEVERAGES LTD., 2E, UDYOG KENDRA, ECOTECH- III, GREATER NOIDA-201306, UTTAR PRADESH. VS. INCOME TAX OFFICER (TDS), ROOM NO. 109, AAYAKAR BHAWAN, A-2D, SECTOR-24, NOIDA. PAN NO: AAACV2678L APPELLANT RESPONDENT ITA NO:- 4316/DEL/2016 ( ASSESSMENT YEAR: 2015-16) M/S VARUN BEVERAGES LTD., 2E, UDYOG KENDRA, ECOTECH- III, GREATER NOIDA-201306, UTTAR PRADESH. VS. INCOME TAX OFFICER (TDS), ROOM NO. 109, AAYAKAR BHAWAN, A-2D, SECTOR-24, NOIDA. PAN NO: AAACV2678L APPELLANT RESPONDENT ASSESSEE BY : SHRI RAJAT JAIN, CA AND SHRI AKSHAT JAIN, CA REVENUE BY : SHRI SARAS KUMAR, SR. DR ITA NO.- 4315 AND 4316/DEL/2016. M/S VARUN BEVERAGES LIMITED. PAGE 2 OF 15 ORDER PER ANADEE NATH MISSHRA, AM (A) THESE TWO APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED CONSOLIDATED APPELLATE ORDER DATED 30.05.2016 PASSE D BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I, NOIDA [IN SHORT, LD.CIT(A) ] PERTAINING TO ASSESSMENT YEARS 2014-15 AND 2015-16. THESE APPEALS ARE TAKEN UP TOG ETHER FOR THE SAKE OF CONVENIENCE AND BREVITY; AND ARE HEREBY DISPOSED OFF THROUGH TH IS CONSOLIDATED ORDER. GROUNDS TAKEN IN THESE APPEALS ARE AS UNDER: ITA NO.- 4315/DEL/2016 1. THE ORDER PASSED BY THE LD. CIT(A) IS BAD IN LA W, WRONG ON FACTS AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2.(A) THAT THE ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ORDER OF INCOME TAX OFFICER (TDS), NOIDA, TREATING THE APPELLANT AS AN ASSESSEE IN DEFAULT FO R NON-DEDUCTION OF TDS U/S 194C ON PAYMENTS MADE TO THE TRANSPORTERS. (B) THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE APPELLANT ASSESSEE HAS COMPLIED THE PROVISIONS OF SUB SECTION 7 OF SECTION 194C OF INCOME TAX ACT, 1961 AND FURNISHED PRESCRIBED FORM NO. 26Q TO THE INCOME TAX OFFICER (TDS) ALONGWITH RELEVANT DETAILS REQUIRED BY THE LAW. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, MO DIFY OR FOREGO ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. ITA NO.-4316/DEL/2016 1. THE ORDER PASSED BY THE LD. CIT(A) IS BAD IN LA W, WRONG ON FACTS AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. ITA NO.- 4315 AND 4316/DEL/2016. M/S VARUN BEVERAGES LIMITED. PAGE 3 OF 15 2.(A) THAT THE ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ORDER OF INCOME TAX OFFICER (TDS), NOIDA, TREATING THE APPELLANT AS AN ASSESSEE IN DEFAULT FO R NON-DEDUCTION OF TDS U/S 194C ON PAYMENTS MADE TO THE TRANSPORTERS. (B) THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE APPELLANT ASSESSEE HAS COMPLIED THE PROVISIONS OF SUB SECTION 7 OF SECTION 194C OF INCOME TAX ACT, 1961 AND FURNISHED PRESCRIBED FORM NO. 26Q TO THE INCOME TAX OFFICER (TDS) ALONGWITH RELEVANT DETAILS REQUIRED BY THE LAW. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, MO DIFY OR FOREGO ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. (B) CONSOLIDATED ORDER DATED 23.03.2015 WAS PASSED BY THE ASSESSING OFFICER (AO, FOR SHORT) UNDER SECTION 201(1) / 201(1A) OF INCOME TAX ACT, 1961 (I.T. ACT, FOR SHORT) READ WITH SECTION 194C OF I.T. ACT FOR FINANCIAL YE AR 2013-14 (ASSESSMENT YEAR 2014-15) AND FINANCIAL YEAR 2014-15 UP TO DECEMBER 2014 (ASS ESSMENT YEAR 2015-16) WHEREIN DEMAND AMOUNTING TO RS. 8,84,807/- FOR FINANCIAL YE AR 2013-14 AND RS. 19,07,235/- FOR FINANCIAL YEAR 2014-15 WAS RAISED BY THE AO. THE R ELEVANT PORTION OF THE AFORESAID CONSOLIDATED ORDER DATED 23.03.2015 IS REPRODUCED A S UNDER FOR EASE OF REFERENCE: ITA NO.- 4315 AND 4316/DEL/2016. M/S VARUN BEVERAGES LIMITED. PAGE 4 OF 15 ITA NO.- 4315 AND 4316/DEL/2016. M/S VARUN BEVERAGES LIMITED. PAGE 5 OF 15 ITA NO.- 4315 AND 4316/DEL/2016. M/S VARUN BEVERAGES LIMITED. PAGE 6 OF 15 ITA NO.- 4315 AND 4316/DEL/2016. M/S VARUN BEVERAGES LIMITED. PAGE 7 OF 15 ITA NO.- 4315 AND 4316/DEL/2016. M/S VARUN BEVERAGES LIMITED. PAGE 8 OF 15 ITA NO.- 4315 AND 4316/DEL/2016. M/S VARUN BEVERAGES LIMITED. PAGE 9 OF 15 ITA NO.- 4315 AND 4316/DEL/2016. M/S VARUN BEVERAGES LIMITED. PAGE 10 OF 15 (C) THE ASSESSEE FILED APPEALS BEFORE THE LD. CIT(A), FOR ASSESSMENT YEAR 2014-15 AND ASSESSMENT YEAR 2015-16, AGAINST THE AFORESAID CONSOLIDATED ORDER DATED 23.03.2015 OF THE AO. VIDE IMPUGNED CONSOLIDATED A PPELLATE ORDER DATED 30.05.2016 PASSED BY THE LD. CIT(A), THE ASSESSEES APPEALS W ERE DISMISSED ON THE GROUND [AS EXPRESSED IN PARAGRAPH 4 AND 5 OF THE IMPUGNED CONS OLIDATED APPELLATE ORDER DATED 30.05.2016 OF THE LD. CIT(A);] THAT THE ASSESSEE HA S NOT COMPLIED WITH REQUIREMENTS UNDER SECTION 194C(7) OF I.T. ACT. THE RELEVANT PO RTION OF THE IMPUGNED CONSOLIDATED APPELLATE ORDER DATED 30.05.2016 IS REPRODUCED AS U NDER: 2. THE DISPUTE BETWEEN THE APPELLANT AND THE ID. A.O. IS FAIRLY SIMPLE. THERE IS NO DISPUTE ON FACTS. ADMITTEDLY, THE APPELLANT HAS MADE PAYME NT TO THE TRANSPORTERS AND HAS NOT ITA NO.- 4315 AND 4316/DEL/2016. M/S VARUN BEVERAGES LIMITED. PAGE 11 OF 15 DEDUCTED TAX AS WAS CONSIDERED NECESSARY BY THE ID. A.O. U/S. 194C OF L.T. ACT, 1961.THE APPELLANT HAS TAKEN A VIEW THAT AFTER THE AMENDMENT TO THE PROVISIONS OF SECTION 194C BY THE FINANCE ACT NO.2 OF 2009 BY WHICH A NEW PROVISION O F SUB-SECTION 6 WAS INSERTED IN SECTION 194C THERE WAS NO REQUIREMENT TO DEDUCT TAX AT SOURCE ON PAYMENTS TO A CONTRACTOR FOR PLYING GOOD CARRIAGES ETC., AND AS T HE PAYMENT UNDER CONSIDERATION WERE TO SUCH TRANSPORTERS ONLY THE APPELLANT WAS CORRECT IN NOT DEDUCTING THE TAX ON PAYMENT MADE TO THOSE CONTRACTORS. THE LD. A.O, IS NOT DISP UTING THESE FACTS. 3. HOWEVER, THE ID. A.O. HAS PLACED RELIANCE ON TH E EXPLANATORY CIRCULARS ISSUED BY THE GOVERNMENT TO EXPLAIN THE NEW PROVISIONS AND WHEREU NDER A CASE WAS MADE OUT THAT THE EXEMPTION PROVIDED IN SUB-SECTION OF SECTION 194C W AS RESTRICTED TO THE SMALL TRANSPORTERS WHO WERE COVERED UNDER SECTION 44AE OF THE I.T. ACT , 1961 AND RELYING UPON THE CIRCULAR NO. 5 OF 2010 THE LD. A.O. HAS REJECTED THE CLAIMS OF THE APPELLANT AND HAS HELD THE SAME TO BE AN ASSESSEE IN DEFAULT AND PASSED THE IMPUGNE D ORDER AGAINST THE APPELLANT. 4. THE EXPLANATORY CIRCULAR CANNOT TAKE THE POSITI ON OF LAW. IN RETROSPECT THE REVENUE HAS REALIZED THAT THERE WAS A LACUNA IN THE PROVISI ONS OF SUB-SECTION 6 OF SECTION 194C AS IT DID NOT CONVEY THE MEANING WHICH WAS THE INTENDE D PURPOSE OF THE SAID SUB-SECTION AND WHICH WAS CONVEYED BY THE CIRCULAR NO. 5 OF 201 0 DATED 03/06/2010. IF THE LAW IS NOT PROPERLY WORDED AND BECAUSE OF SUCH DEFICIENCIES IS GETTING INTERPRETED IN MORE THAN ONE WAYS AN ASSESSEE CANNOT BE FAULTED FOR TAKING THE I NTERPRETATION MORE CONVENIENT TO IT. IN VIEW OF THIS THE RELIANCE PLACED BY THE ID. A.O. ON THE EXPLANATORY O.M. AND NOT ON THE LAW IS MISPLACED. THERE IS NO DENYING THAT THE LEGI SLATURE INTENDED TO MITIGATE THE HARDSHIPS FACE BY A SMALL TRANSPORTERS AND NOT TO G RANT AN IMMUNITY FROM DEDUCTING TAX AT SOURCE TO THE TRANSPORTERS AT LARGE. BUT THE DRA FTING OF SUB-SECTION 6 OF SECTION 194C FAILED TO TAKE CARE OF THE INTENT OF THE LEGISLATUR E AND CREATED A SITUATION WHERE SUCH AN IMMUNITY GOT GRANTED TO EVERY TRANSPORTER IRRESPECT IVE OF THE SIZE OF ITS BUSINESS. IT WAS BECAUSE OF THIS THAT FINANCE ACT, 2015 AMENDED THE PROVISION OF SUB-SECTION 6 OF SECTION 194C AND REMOVED THE SAID DEFICIENCY W.E.F. 01/06/2 015. IN VIEW OF THIS THE STAND TAKEN BY THE ID. A.O. IS NOT SUSTAINABLE IN THE EYES OF T HE LAW. 4. HOWEVER, HAVING SAID AS ABOVE, THE PROVISIONS O F SUB-SECTION 7 OF SECTION 194C WERE ALSO BROUGHT ON THE STATUE BY THE FINANCE ACT NO.2 OF 2009 AND IT IS SEEN THAT THE APPELLANT APPEARS NOT TO HAVE COMPLIED WITH THE REQUIREMENTS OF SUB-SECTION 7, THE LD. A.O. THOUGH HAS NOT EXAMINED THIS ISSUE SPECIFICALLY BUT THE SPIRIT OF THE LAW SEEMS TO HAVE BEEN COMPLIED WITH AS THE LD. A.O. HAS MADE ENQUIRIES ABOUT THE S TATUS OF THE TRANSPORTERS AND FURNISHING OF PAN ETC. BY THOSE TRANSPORTERS. 5. AS THE APPELLANT HAS NOT COMPLIED WITH THE REQU IREMENT OF SUB SECTION 7 OF SECTION 194C IT IS NOT ENTITLED TO THE BENEFIT OF SUB-SECTI ON 6 THOUGH IN THE CASE OF LAWFUL COMPLIANCE OF SUB SECTION 7 IT WOULD HAVE BEEN ENTI TLED FOR THE SAME. IN VIEW OF THIS THE IMPUGNED ASSESSMENT ORDERS FOR BOTH THE YEARS ARE C ONFIRMED. THE APPEAL OF THE APPELLANT FAILS AND IS DISMISSED. (C.1) THE PRESENT APPEALS HAVE BEEN FILED BY THE ASSESSE E AGAINST THE AFORESAID IMPUGNED CONSOLIDATED APPELLATE ORDER DATED 30.05.2 016 OF THE LD. CIT(A). IN THE ITA NO.- 4315 AND 4316/DEL/2016. M/S VARUN BEVERAGES LIMITED. PAGE 12 OF 15 COURSE OF APPELLATE PROCEEDINGS IN INCOME TAX APPEL LATE TRIBUNAL (ITAT, FOR SHORT) A PAPER BOOK CONSISTING THE FOLLOWING PARTICULARS WER E FILED FROM THE ASSESSEES SIDE. 1. WRITTEN SUBMISSIONS FILED BEFORE THE HONBLE COM MISSIONER OF INCOME TAX (APPEALS)-1, NOIDA 2. INDEX OF PAPER BOOK FILED BEFORE HONBLE COMMISS IONER OF INCOME TAX (APPEALS)-1, NOIDA DURING THE COURSE OF APPELLATE P ROCEEDINGS 3. COPY OF NOTICE DATED 16.10.2014 ISSUED BY INCOME TAX OFFICER (TDS), NOIDA FOR VERIFICATION OF TDS FOR THE FINANCIAL YEA R 2013-14 AND 2014-15 4. COPY OF LETTER DATED 17.11.2014 FILED BEFORE THE LD. AO ALONGWITH THE COPY OF FORM 24Q AND 26Q FOR THE FINANCIAL YEAR 201 3-14 AND 2014-15 5. COPY OF NOTICE DATED 23.02.2015 ISSUED BY THE IN COME TAX OFFICER (TDS), NOIDA TO FURNISH DETAILS OF PERSON AND PAYMENT OF F REIGHT AND CARTAGE / PAYMENT TO TRANSPORTS. 6. COPY OF LETTER DATED 27.02.2015 FILED BEFORE THE INCOME TAX OFFICER (TDS), NOIDA IN RESPONSE TO NOTICE DATED 23.02.2015 FURNISHING THE DETAILS OF PAYMENT OF FREIGHT AND CARTAGE MADE TO TRANSPORT OP ERATORS BY THE APPELLANT COMPANY FOR THE FINANCIAL YEAR 2013-14. 7. COPY OF LETTER DATED 05.03.2015 FILED BEFORE THE INCOME TAX OFFICER (TDS), NOIDA IN RESPONSE TO NOTICE DATED 23.02.2015 FURNISHING THE DETAILS OF PAYMENT OF FREIGHT AND CARTAGE MADE TO TRANSPORT OP ERATORS BY THE APPELLANT COMPANY FOR THE FINANCIAL YEAR 2014-15 (UPTO DEC 20 14). 8. COPY OF ANNEXURES TO THE FORM 26Q FILED FOR THE FINANCIAL YEAR 2013-14 AND 2014-15 DULY SHOWING THE NAME, PAN OF THE TRANS PORTERS ETC. AND APPELLANT HAS ALSO MENTIONED T IN THE REMARK COLUMN EVIDENC ING THAT AS THE CONCERN PARTY IS TRANSPORTER AND HENCE TDS HAS NOT BEEN DED UCTED IN COMPLIANCE TO REQUIREMENT U/S 194C(7) OF THE INCOME TAX ACT, 1961 . 6. ADDITIONAL EVIDENCE, IF ANY (C.1.1) ALSO, A COPY OF THE ORDER IN THE CASE OF DILIP KUM AR VS. ACIT [2019] 111 TAXMANN.COM 52 (MADRAS) WAS ALSO FILED FROM THE ASS ESSEES SIDE DURING APPELLATE PROCEEDINGS IN ITAT. ITA NO.- 4315 AND 4316/DEL/2016. M/S VARUN BEVERAGES LIMITED. PAGE 13 OF 15 (D) AT THE TIME OF HEARING BEFORE US, THE LEARNED AUTH ORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED, WITH THE HELP OF THE AFORESAID PAPER BOOK (REFERRED IN FOREGOING PARAGRAPH (C.1) OF THIS ORDER] THAT THE ASSESSEE HAD COMPLIED WITH THE PROVISION OF SECTION 194C(7) OF I.T. ACT, AND RELEVANT DETAILS W ERE ON THE RECORDS OF THE LD. CIT(A) AS WELL AS THE AO. THE LD. AR ALSO PLACED RELIANCE ON THE ORDER IN THE CASE OF DILIP KUMAR VS. ACIT (SUPRA). THE LEARNED DEPARTMENTAL REPRESEN TATIVE (LD. DR, FOR SHORT) FOR REVENUE RELIED ON THE ORDERS OF THE LD. CIT(A) AND THE AO. (E) WE HAVE HEARD BOTH SIDES. WE HAVE ALSO PERUSED MA TERIALS ON RECORD. THE CONTENTION MADE ON BEHALF OF THE ASSESSEE, THAT THE ASSESSEE HAD COMPLIED WITH REQUIREMENTS UNDER SECTION 194C(7) OF I.T. ACT AND FURTHER, THAT THE RELEVANT PARTICULARS WERE ON THE RECORDS OF THE LD. CIT(A) AND THE AO; I S CONTRARY TO THE OBSERVATION OF THE LD. CIT(A) IN PARAGRAPH 4 AND 5 OF THE IMPUGNED CON SOLIDATED APPELLATE ORDER DATED 30.05.2016. IN THE WORDS OF LD. CIT(A): APPELLANT APPEARS NOT TO HAVE COMPLIED WITH THE REQUIREMENTS OF SUB-SECTION 7. THE LD. A.O. TH OUGH HAS NOT EXAMINED THIS ISSUE SPECIFICALLY BUT THE SPIRIT OF THE LAW SEEMS TO HAV E BEEN COMPLIED WITH AS THE LD. A.O. HAS MADE ENQUIRIES ABOUT THE STATUS OF THE TRANSPORTERS AND FURNISHING OF PAN ETC. BY THOSE TRANSPORTERS. 5. AS THE APPELLANT HAS NOT COMPLIED WITH THE REQUIREMENT OF SUB SECTION 7 OF SECTION 194C IT IS NOT ENTITLED TO THE BENEFIT O F SUB-SECTION 6 THOUGH IN THE CASE OF LAWFUL COMPLIANCE OF SUB SECTION 7 IT WOULD HAVE BE EN ENTITLED FOR THE SAME. . IN VIEW OF THE FOREGOING, IT WILL BE IN FITNESS OF THINGS T O REMIT THE MATTER TO THE FILE OF THE AO FOR FRESH ORDER AFTER DUE VERIFICATION AT THE END OF TH E AO WHETHER THE REQUIREMENTS UNDER SECTION 194C(7) HAVE BEEN COMPLIED WITH BY THE ASSE SSEE. ACCORDINGLY, WE SET ASIDE THE ITA NO.- 4315 AND 4316/DEL/2016. M/S VARUN BEVERAGES LIMITED. PAGE 14 OF 15 IMPUGNED CONSOLIDATED APPELLATE ORDER DATED 30.05.2 016 OF THE LD. CIT(A) AND THE AFORESAID CONSOLIDATED ORDER DATED 23.03.2015 OF TH E AO AND RESTORE THE ISSUE IN DISPUTE TO THE FILE OF THE AO FOR FRESH ORDER IN ACCORDANCE WITH LAW AFTER DUE VERIFICATION AT HIS END WHETHER THE REQUIREMENTS UNDER SECTION 194C(7) OF I.T. ACT HAVE BEEN DULY COMPLIED WITH BY THE ASSESSEE. NEEDLESS TO SAY, THE AO WILL PROVIDE REASONABLE OPPORTUNITY TO THE ASSESSEE BEFORE PASSING FRESH ORDER, IN ORDER TO SU BSTANTIATE THE CLAIM THAT REQUIREMENTS UNDER SECTION 194C(7) OF I.T. ACT HAVE BEEN DULY CO MPLIED WITH BY THE ASSESSEE. (F) IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN OPEN COURT ON 05/03/20. SD/- SD/- (AMIT SHUKLA) (ANADEE NATH MISSHR A) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 05/03/20 POOJA/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO.- 4315 AND 4316/DEL/2016. M/S VARUN BEVERAGES LIMITED. PAGE 15 OF 15 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER