AO(DAD) HAL, Lucknow V. Dy. Commissioner of Income Tax(TDS), Lucknow

ITA 440/LKW/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83269 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-07-2014
• Assessment Year: misc
• Appeal Filed On: 06-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Keywords: Principle of natural justice; Reasonable cause
• Section: 273B; 194C; 201(1); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO S . 440,441,442 & 4 6 6/LKW/2012 ASSESSMENT YEAR: 2008 - 09 AO(DAD)HAL DEFENCE ACCOUNTS DEPAR TMENT AERONAUTICS LTD. FAIZABAD ROAD, LUCKNOW V. DCIT (TDS) LUCKNOW PAN: LKNAO6990E (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. SANDEEP KUMAR, FCA RESPONDENT BY: SHRI. ALOK MITRA, D.R. DATE OF HEARING: 01 0 7 2014 DATE OF PRONOUNCEMENT: 21 0 8 201 4 O R D E R PER SUNIL KUMAR YADAV: THROUGH THESE APPEALS IN I.T.A. NOS.4 4 0, 441 AND 466/LKW/2012, THE ASSESSEE HAS ASSAILED THE CONSOLIDATED ORDER OF THE LD. CIT(A) PASSED FOR SECOND, THIRD AND FOURTH QUARTERS OF ASSESSMENT YEAR 2008 - 09 FOR NON - DEDUCT ION OF TDS ON COMMON GROUNDS AND FOR THE SAKE OF REFERENCE, WE EXTRACT GROUNDS RAISED IN I.T.A. NO.440/LKW/2012 AS UNDER: - 1 . BECAUSE THE LEARNED FIRST APPELLATE AUTHORITY ERRED IN UPHOLDING THE ACTION OF LEARNED ASSESSING OFFICER OF DISREGARDING THE LOWER DE DUCTION OR NON - DEDUCTION OF TAX AT SOURCE CERTIFICATE U/S 197 OF THE INCOME TAX ACT, 1961 ISSUED BY THE DEPUTY COMMI SSIONER OF INCOME TAX, CIRCLE II (4), BANGALORE AND TREATING THE APPELLANT IN DEFAULT FOR SHORT DEDUCTION. 2 . BECAUSE THE LOWER DEDUCTION OR NON - DEDUCTION OF TAX AT SOURCE CERTIFICATE U/S 197 OF THE INCOME TAX ACT, 1961 ISSUED BY THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : DCIT, CIRCLE II (4), BANGALORE HAD NAMED CONTROLLER OF DEFENSE ACCOUNTS (DAD), BANGALORE AT S L . NO.50 AND AO (DAD), LUCKNOW IS A SUB OFFICE OF THE CDA, BANGALORE AND HENCE THE CERTIFICATE WAS APPLICABLE TO AO (DAD), LUCKNOW. 3 . BECAUSE IN THE PAST ALSO THE AO (DAD), LUCKNOW WAS ACTING ON SIMILAR CERTIFICATE(S) U/S 197 OF THE INCOME TAX ACT, 1961 ISSUED BY THE ASSESSING OFFICERS AND NO OBJECTION WAS EVER RAISED BY THE INCO ME TAX DEPARTMENT. 4 . BECAUSE THE CDA, BANGALORE MAKES PAYMENTS TO HAL ONLY THROUGH ITS SUB OFFICES LIKE AO (DAD), LUCKNOW AND HENCE THE HYPER TECHNICAL VIEW TAKEN BY THE LOWER AUTHORITIES WOULD RENDER THE CERTIFICATE U/S 197 ISSUED BY ANOTHER AUTHORITY OF TH E SAME DEPARTMENT AS REDUNDANT/ INFRUCTUOUS. 5 . BEC AUSE THE LEARNED DCIT, CIRCLE II (4), BANGALORE HAS NOT MENTIONED ANY TAN IN THE CERTIFICATE IN LOWER DEDUCTION OR NON - DEDUCTION OF TAX AT SOURCE AS THE PRACTICE OF MENTIONING THE TAN (IN LOWER DEDUCTION OR NO N - DEDUCTION OF TAX AT SOURCE CERTIFICATE) HAS BEEN STARTED ONLY FROM FINANCIAL YEAR 2010 - 11 AFTER ISSUE OF INSTRUCTION NO. 4 OF 2010 DATED 25 - 05 - 2010 BY THE CBDT ON PROPER COMPUTERIZATION IN THE TDS MODULE OF THE ITD SYSTEM; AND THE CERTIFICATE ISSUED IN A N EARLIER YEAR WHEN THE PREVALENT PRACTICE IN THE DEPARTMENT WAS DIFFERENT CANNOT BE REJECTED ON THE BASIS OF PRACTICE ADOPTED ON TOTAL COMPUTERIZATION OF TDS PROVISIONS AND HENCE THE FINDING OF LOWER AUTHORITIES THAT CDA, BANGALORE IS DIFFERENT FROM AO(DA D), LUCKNOW ON THE BASIS OF TAN IS ERRONEOUS. 6 . BECAUSE THE FINDING OF LEARNED FIRST APPELLATE AUTHORITY IN POINT NO.3.3.3 OF APPELLATE ORDER THAT WHILE THERE IS OVERALL CLAIM FOR REFUND, BUT THERE IS SHORT PAYMENT OF ADVANCE TAX IN VARIOUS QUARTERS WHEN CON SIDERED WITH REFERENCE TO THE LIABILITY TO DEDUCT TAX AT SOURCE ON VARIOUS DATES BY THE DEDUCTOR AND THE ACTUAL DATES OF PAYMENTS BY WAY OF ADVANCE TAX BY THE DEDUCTEE IS ERRONEOUS IN VIEW OF CLEAR POSITION DISPLAYED IN THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : CHART OF SHORT DEDUCTION POINTED BY THE ASSESSING OFFICER AND DETAILS OF ADVANCE TAX LIABILITY AND ADVANCE TAX PAID BY THE DEDUCTEE; BOTH GIVEN ON PAGE 6 OF THE APPELLATE ORDER. 7 . BECAUSE IN VIEW OF THE CLEAR POSITION BROUGHT OUT IN CHART AND THE EVIDENCE OF (I) ADVANCE TAX PAID BY THE DED UCTEE AND (II) FILING THE RETURN OF INCOME, FILED IN APPELLATE PROCEEDINGS, THE LEARNED FIRST APPELLATE AUTHORITY OUGHT TO HAVE HELD THAT NO INTEREST WAS PAYABLE BY THE DEDUCTOR U/S 201(1A) OF THE I.T. ACT, 1961. 8 . BECAUSE THE LEARNED FIRST APPELLATE AUTHORI TY OFFICER DID NOT ALLOW THE APPELLANT SUFFICIENT OPPORTUNITY TO PRODUCE EVIDENCE OF ADVANCE TAX PAID BY THE DEDUCTEE, AS PER CHART AS ALSO THE RETURN OF INCOME TO ARRIVE AT A CLEAR CUT POSITION BEFORE PASSING THE APPELLATE ORDER BY THE LEARNED BY THE FIRS T APPELLATE AUTHORITY. 9 . BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 2 . IN I.T.A. NO.442/LKW/2012, THE ASSESSEE HAS ASSAILED THE ORDER OF THE LD. CIT(A) CONFIRMING THE REJECTION OF RECTIFICATION APPLICATION M OVED BY THE ASSESSEE. THE GROUNDS RAISED IN THIS APPEAL ARE ALSO EXTRACTED HEREUNDER: - 1 . BECAUSE THE LEARNED FIRST APPELLATE AUTHORITY ERRED IN UPHOLDING THE ACTION OF LEARNED ASSESSING OFFICER OF DISREGARDING THE LOWER DEDUCTION OR NON - DEDUCTION OF TAX AT SOURCE CERTIFICATE U/S 197 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11(4), BANGALORE AND TREATING THE APPELLANT IN DEFAULT FOR SHORT DEDUCTION. 2 . BECAUSE THE LOWER DEDUCTION OR NON - DEDUCTION OF TAX AT SOURCE CERTIFICATE U/S 197 OF THE INCOME T AX ACT, 1961 ISSUED BY THE DCIT, CIRCLE II (4), BANGALORE HAD NAMED CONTROLLER OF DEFENSE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : ACCOUNTS (DAD), BANGALORE AT S L . NO.50 AND AO (DAD), LUCKNOW IS A SUB OFFICE OF THE CDA, BANGALORE AND HENCE THE CERTIFICATE WAS APPLICABLE TO AO (DAD), LUCKNOW. 3 . BECA USE IN THE PAST ALSO THE AO (DAD), LUCKNOW WAS ACTING ON SIMILAR CERTIFICATE(S) U/S 197 OF THE INCOME TAX ACT, 1961 ISSUED BY THE ASSESSING OFFICERS AND NO OBJECTION WAS EVER RAISED BY THE INCOME TAX DEPARTMENT. 4 . BECAUSE THE CDA, BANGALORE MAKES PAYMENTS TO HAL ONLY THROUGH ITS SUB OFFICES LIKE AO (DAD), LUCKNOW AND HENCE THE HYPER TECHNICAL VIEW TAKEN BY THE LOWER AUTHORITIES WOULD RENDER THE CERTIFICATE' - U/S 197 ISSUED BY ANOTHER AUTHORITY OF THE SAME DEPARTMENT AS REDUNDANT/ INFRUCTUOUS. 5 . BE CAUSE THE LEAR NED DCIT, CIRCLE II (4), BANGALORE HAS NOT MENTIONED ANY TAN IN THE CERTIFICATE AS THE PRACTICE OF MENTIONING THE TAN IN LOWER DEDUCTION OR NON - DEDUCTION OF TAX AT SOURCE CERTIFICATE HAS BEEN STARTED ONLY FROM FINANCIAL YEAR 2010 - 11 AFTER ISSUE OF INSTRUCTI ON NO. 4 OF 2010 DATED 25 - 05 - 2010 BY THE CBDT ON PROPER COMPUTERIZATION IN THE TDS MODULE OF THE ITD SYSTEM; AND THE CERTIFICATE ISSUED IN AN EARLIER YEAR WHEN THE PREVALENT PRACTICE IN THE DEPARTMENT WAS DIFFERENT CANNOT BE REJECTED ON THE BASIS OF PRACTI CE ADOPTED ON TOTAL COMPUTERIZATION OF TDS PROVISIONS AND HENCE THE FINDING OF LOWER AUTHORITIES THAT CDA, BANGALORE IS DIFFERENT FROM AO(DAD), LUCKNOW ON THE BASIS OF TAN IS ERRONEOUS. 6 . BECAUSE IN ANY CASE (WITHOUT PREJUDICE TO THE ABOVE) LEARNED FIRST APP ELLATE AUTHORITY OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO REDUCE/DELETE THE DEMAND RAISED ON THE ASSESSEE TO THE EXTENT TAX LIABILITY OF THE DEDUCTEE STOOD DISCHARGED BY PAYMENT OF ADVANCE TAX BY THE DEDUCTEE; THE SAME TREATMENT WAS DONE BY THE ASSE SSING OFFICER HIMSELF IN SECOND AND THIRD QUARTERS OF FINANCIAL YEAR 2007 - 08 RELEVANT TO A. Y. 2008 - 09. 7 . BECAUSE IN VIEW OF THE EVIDENCE OF (I) ADVANCE TAX PAID BY THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : DEDUCTEE AND (II) FILING THE RETURN OF INCOME, FILED IN APPELLATE PROCEEDINGS, THE LEARNE D FIRST APPELLATE AUTHORITY OUGHT TO HAVE HELD THAT NO INTEREST WAS PAYABLE BY THE DEDUCTOR U/S 201(1 A) OF THE I.T. ACT, 1961. 8 . BECAUSE THE LEARNED FIRST APPELLATE AUTHORITY OFFICER DID NOT ALLOW THE APPELLANT SUFFICIENT OPPORTUNITY TO PRODUCE EVIDENCE OF A DVANCE TAX PAID BY THE DEDUCTEE, AS PER CHART AS ALSO THE RETURN OF INCOME TO ARRIVE AT A CLEAR CUT POSITION BEFORE PASSING THE APPELLATE ORDER BY THE LEARNED BY THE FIRST APPELLATE AUTHORITY. 9 . BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO FACTS, LAW AN D PRINCIPLES OF NATURAL JUSTICE. 3 . DURING THE COURSE OF HEARING OF THE APPEALS, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION THAT THE DEDUCTEE HAS PAID ADVANCE TAX IN SECOND AND FOURTH QUARTER, THEREFORE, THE ASSESSEE CANNOT BE HELD IN DEFAULT UNDER SECTION 201(1) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') AND FOR THE SAME REASON INTEREST UNDER SECTION 201(1A) OF THE ACT CANNOT BE CHARGED. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIAN CE UPON THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF J AGRAN PRAKASHAN LTD. V. DEPUTY COMMISSIONER OF INCOME - TAX (TDS) 345 ITR 228 (ALLD) AND THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE P. LT D. VS. CIT, 293 ITR 226 ( SC) AND ALSO THE CBDT CIRCULAR NO.275/201/95 - IT(B) DATED 29.1.1997. THE ASSESSING OFFICER HAS TREATED THE ASSESSEE IN DEFAULT AND HAS ALSO COMPUTED INTEREST UNDER SECTION 201(1A) OF THE ACT FROM THE DATE OF DEDUCTION OF TAX TO THE DATE ON WHICH LIABILITY HAS BEEN DISCHARGED I.E. UPTO THE DATE OF FILING OF THE RETURN BY THE DEDUCTEE. 4 . THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) RE - EXAMINED THE ISSUE IN DETAIL IN THE LIGHT OF VARIOUS JUDGMENTS PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : REFERRED T O BY THE ASSESSEE AND HAS NOTIC ED THAT WHILE THERE IS OVERALL CLAIM FOR REFUND, BUT THERE IS SHORT PAYMENT OF ADVANCE TAX IN VARIOUS QUARTERS WHEN CONSIDERED WITH REFERENCE TO THE LIABILITY TO DEDUCT TAX AT SOURCE ON VARIOUS DATES BY THE DEDUCTOR AND THE A CTUAL DATES OF PAYMENTS BY WAY OF ADVANCE TAX BY THE DEDUCTEE. HE FURTHER OBSERVED THAT EVEN IF THE TAX DUE HAS BEEN PAID BY THE DEDUCTEE, YET INTEREST UNDER SECTION 201(1A) IS MANDATORY AND THE SAME IS LIABLE TO BE PAID FROM THE DATE THE TAX WAS DEDUCTIBL E AT SOURCE TILL THE DATE OF PAYMENT BY THE PAYEE BY WAY OF ADVANCE TAX OR ANY OTHER MODE FOR THE RESPECTIVE QUARTER AND NOT TILL THE DATE OF FILING OF THE RETURN AS HAS BEEN ERRONEOUSLY HELD BY THE ASSESSING OFFICER. THE LD. CIT(A) ACCORDINGLY DIRECTED T HE ASSESSING OFFICER TO RE - COMPUTE THE SHORT DEDUCTION OF TDS FOR VARIOUS DATE OF PAYMENTS BY THE DEDUCTOR TO THE DEDUCTEE AND CHARGE INTEREST UNDER SECTION 201(1A) OF THE ACT FROM THE DATE OF TDS WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PA ID BY THE DEDUCTEE BY WAY OF PAYMENT OF ADVANCE TO THE EXTENT OF INCLUDING THIS LIABILITY FOR THE RESPECTIVE QUARTER AND NOT TILL THE DATE OF FILING OF THE RETURN OF INCOME BY THE DEDUCTEE AFTER THE ASSESSEE FURNISHES EVIDENCE FOR DATE - WISE PAYMENT OF TAXE S BY THE DEDUCTEE. 5 . AGGRIEVED, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT SINCE ADVANCE TAX WAS PAID BY THE DEDUCTEE AND THERE WAS SURPLUS PAYMENT IN DIFFERENT QUARTERS, NO INTEREST SHALL BE CHARGED UNDER SECTION 201(1 A) OF THE ACT. 6 . THE LD. D.R., ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE ORDER OF THE LD. CIT(A) WITH THE SUBMISSION THAT UNDER THE GIVE N FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS TAKEN A COGNIZANCE OF THE ADVANCE TAX PAID BY THE DEDUCTEE AND HAS GIVEN PROPER DIRECTIONS AS REQUIRED UNDER THE LAW. 7 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 7 - : THAT UNDISPUTEDLY THERE WAS A SHORT DEDUCTION OF TAX UND ER SECTION 194C OF THE ACT, BUT THE DEDUCTEE HAS ALSO PAID ADVANCE TAX IN DIFFERENT QUARTERS. IN THE LIGHT OF THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT J AGRAN PRAKASHAN LTD. V. DEPUTY COMMISSIONER OF INCOME - TAX (TDS) (SUPRA) AND THE HON'BLE AP EX COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE P. LTD. VS. CIT (SUPRA) AND ALSO CBDT CIRCULAR NO.275/201/95 - IT(B) DATED 29.1.1997 AND OTHER VARIOUS ORDERS OF THE TRIBUNAL , WE ARE OF THE VIEW THAT WHEN TAX WAS PAID BY THE DEDUCTEE, THE ASSESSEE SHALL NOT BE HELD TO BE IN DEFAULT, BUT THE INTEREST UNDER SECTION 201(1A) OF THE ACT IS MANDATORY AND IS TO BE CALCULATED FROM THE DATE TAX WAS DEDUCTIBLE AT SOURCE TILL PAYMENT BY THE PAYEE BY WAY OF ADVANCE TAX OR ANY OTHER MODE. IN THE LIGHT OF THESE LEGAL POSITION, WE EXAMINED THE ORDER OF THE LD. CIT(A) AND WE FIND THAT THE LD. CIT(A) HAS PASSED A JUST AND PROPER ORDER BY DIRECTING THE ASSESSING OFFICER TO COMPUTE THE INTEREST CHARGEABLE UN 201(1A) OF THE ACT. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) A RE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: - 3.1.1 IN THE COURSE OF THE APPEAL, THE ASSESSEE HAS ALSO FILED COPY OF SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER IN WHICH IT IS STATED THAT IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE PVT. LTD. REPORTED IN 293 ITR 226 IN WHICH FOLLOWING THE CBDT CIRCULAR NO. 275/201/95 DATED 29.01.1997 IT HAS BEEN HELD THAT IF TAX DUE HAD BEEN PAID BY THE DEDUCTEE, THE TAX SHOULD NOT BE RECOVERED FROM THE DEDUCTOR. COPY OF ACKNOWLEDGMENT OF THE RETURN OF INCOME OF HINDUSTAN AERONAUTICS LTD. CLAIMING REFUND OF ?121.14 CRORES FILED ON 30TH SEPTEMBER 2008 FOR A.Y. 2008 - 09 HAS ALSO BEEN FILED. 3.1.2 I HAVE CONSIDERED THE GROUND OF APPEAL, THE ORDER OF THE ASSESSING OFFICER AN D THE SUBMISSIONS MADE. AS PER THE PROVISION OF SECTION 197, THE CERTIFICATE FOR LOWER DEDUCTION HAS TO BE ISSUED TO THE PERSON RESPONSIBLE FOR PAYING THE INCOME. THE CERTIFICATE HAS TO BE ISSUED AS PER THE PROVISIONS OF RULE 28(1), 28AA, 28AB, PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 8 - : 29 AND FORM NO. 13. AS PER SUB - RULE (3) OF RULE 28AA, THE CERTIFICATE SHALL BE VALID ONLY FOR THE PERSON NAMED THEREIN AND AS PER SUB - RULE (4) OF RULE 28AA, THE CERTIFICATE SHALL BE ISSUED DIRECT TO THE PERSON RESPONSIBLE FOR PAYING THE INCOME UNDER ADVICE TO THE APP LICANT. HENCE, AS THE PERSON RESPONSIBLE FOR PAYING IS A.O. (DAD), HAL, LUCKNOW, THEREFORE, A CERTIFICATE FOR LOWER DEDUCTION OF TAX ISSUED TO PCDA, BANGALORE IS NOT APPLICABLE FOR THE APPELLANT WHO IS A DIFFERENT ENTITY AS REGARDS THE PERSON RESPONSIBLE F OR PAYING THE INCOME. THE APPELLANT HAS A UNIQUE TAN WHICH IS DIFFERENT FROM THAT OF PCDA, BANGALORE AND HE IS ALSO REQUIRED TO COMPLY WITH THE PROVISIONS OF TDS INDEPENDENTLY. THEREFORE, THE ACTION OF THE ASSESSING OFFICER IN DISREGARDING THE CERTIFICATE ISSUED IN THE NAME OF CDA (DAD), BANGALORE AND TREATING THE APPELLANT IN DEFAULT FOR SHORT DEDUCTION'S IN ACCORDANCE WITH LAW AND IS CORRECT. HENCE, GROUNDS NO. 1, 2 AND 3 ARE REJECTED. IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF HINDUS TAN COCA COLA BEVERAGE PVT. LTD. 293 ITR 226, THE ASSESSING OFFICER HAS HIMSELF OBSERVED THAT THE SHORT DEDUCTION CANNOT BE REALIZED FROM THE DEDUCTOR AS THE DEDUCTEE HAS MADE PAYMENT OF THE TAX DEDUCTED SHORT BY WAY OF ADVANCE TAX. 3.3 GROUND NO. 4 IS REG ARDING CHARGING OF INTEREST ON SHORT DEDUCTION. IN THE COURSE OF THE APPEAL, THE APPELLANT RELIED UPON THE DECISION OF CIT V. GOEL BUILDERS (2011) 331 ITR 344 (ALL.) AND ALSO THE DECISION OF HON'BLE SUPREME COURT IN RADHASOAMI SATSANG 193 ITR 321. HOWEVER, THE ISSUES AND THE FACTS IN THESE CASES ARE DIFFERENT AND, THEREFORE, THESE CASES BEING DISTINGUISHABLE, ARE NOT APPLICABLE TO THE FACTS OF THE CASE. THE APPELLANT HAS FURTHER SUBMITTED AS UNDER: - 13. WITHOUT PREJUDICE TO THE ABOVE PLEA, IT WAS ARGUED BEF ORE THE LEARNED DCIT (TDS), THAT SIN CE NO TAX IS DUE FROM THE DEDUCT EE, TAX NOW CANNOT BE RECOVERED FROM THE DEDUCTOR. THE EVIDENCE IN THIS REGARD WAS FILED DURING ASSESSMENT PROCEEDINGS. THE LEARNED ASSESSING OFFICER HAD ACCEPTED THIS VIEW OF THE ASSESSEE BUT HAS PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 9 - : LEVIED INTEREST U/S 201(1 A) BY TAKING THE DEFAULT ON SHORT DEDUCTION UPTO THE DATE OF FILING OF RETURN OF INCOME BY THE DEDUCTEE WHICH WAS 30TH SEPTEMBER, 2008. 14. IT IS NOTEWORTHY THAT THE DEDUCTEE HAD DISCHARGED ITS ENTIRE TAX LIABILITY BY WAY OF TDS AND ADVANCE TAX AND IN FACT A REFUND OF MORE THAN RS. 121.13 CRORES WAS DUE TO THE DEDUCTEE. AS SUCH, NO INTEREST CAN BE LEVIED U/S 201(1A) ON THE DEDUCTOR. IT IS BECAUSE THE LIABILITY OF THE ASSESSEE TO DEDUCT TAX AT SOURCE AND PAY THE TAX TO REVE NUE IS NOT INDEPENDENT OF THE LIABILITY OF THE DE DUCTOR TO PAY THE TAX. IT HAS BEEN SO HELD BY THE HON'BLE GUJARAT HIGH COURT ALSO IN THE CASE OF CIT VS. RISHIKESH APARTMENTS CO - OPERATIVE HOUSING SOCIETY LTD. (2002) 253 ITR 310. 15. THE LEARNED ASSESSING O FFICER WHILE LEVYING INTEREST HAS PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE (P) LTD. VS. COMMISSIONER OF INCOME - TAX REPORTED IN (2007) 293 ITR 226 (SC). HOWEVER, WHILE CALCULATING THE INTEREST THE LEARNED A. O. ESCAPED THAT THE INTEREST IS TO BE LEVIED UP TO THE DATE OF FILING OF RETURN BY DEDUCTEE WHICH IS 30 - 9 - 2008. SINCE THE ASSESSEE HAS DISCHARGED THE ENTIRE TAX LIABILITY BY WAY OF ADVANCE TAX AND TDS, THE LIABILITY S TOOD DISCHARGED BY 15 MARCH AND THE DATE OF FILING OF RETURN FOR CALCULATING INTEREST UPTO 30 - 09 - 2008 IS NOT AT ALL RELEVANT. 16. IN ANY CASE AS PER THE SUPREME COURT DECISION IN HINDUSTAN COCA COLA AND CBDT CIRCULAR NO. 275/201 /95 - IT(B), DATED 29TH JANUARY, 1997 IT HAS BEEN CLEARLY LAID DOWN THEREIN THAT 'INTEREST U/S 201(1 A) OF THE ACT TILL THE PAYMENT OF TAXES' WILL BE APPLICABLE. IN THE LAST HEARING YOUR GOODSELF HAD CALLED FOR CHALLANS OF PAYMENT OF ADVANCE TAX BY THE DEDUCTEE. AS DIRECTED THE CHALLANS HA VE BEEN OBTAINED FROM TH E DEDUCT EE AND ARE ENCLOSED HEREWITH. IT WILL BE NOTICED THAT TAX FAR IN EXCESS OF THE SHORT DEDUCTION HAS BEEN PAID BY THE DEDUCTEE AND FOR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 10 - : CONVENIENT AND READY REFERENCE WE HAVE TABULATED THE POSITION BELOW. WORKING OF TAX LIABILITY AND DETAILS OF DEPOSI T OF ADVANCE TAX FOR AY 2008 - 09 (RELEVANT TO THE PREVIOUS YEAR 2007 - 08) OF THE DEDUCTEE HINDUSTAN AERONAUTICS LIMITED. A. DETAILS OF SHORT DEDUCTION POINTED OUT BY THE ASSESSING OFFICER QUARTERS SHORT DEDUCTION POINTED OUT INTEREST U/S 201(1)(A) 2 ND QR . RS.4,90,71,880/ - RS.24,30,868/ - 3 RD QR. RS.1,74,53,260/ - RS.19,02,137/ - 4 TH QR. RS.1,44,30,880/ - RS.53,32,650/ - B. ASSESSEE'S TAX LIABILITY FOR A. Y. 2008 - 09 RS.2,39,75,7,750/ - LESS: TAX DEDUCTED AT SOURCE. RS.107,44,66,104/ - NET LIABILITY OF ADVANC E TAX. RS.1,32,31,06,646/ - C. DETAILS OF ADVANCE TAX LIABILITY FOR A.Y. 2008 - 09 AND DEPOSITS OF ADVANCE TAX. DUE DATE ADVANCE TAX DUE ADVANCE TAX PAID PROGRESSIVE TAX PAID CUMULATIVE EXCESS DEPOSIT OF ADVANCE TAX BY 15'' JUNE 07 15% 19, 84,66,000 45,00,00,000 45,00,00,000 25,15,34,000 BY 1 5 TH SEP,07 45% 59,53,98,000 82,00,00,000 127,00,00,000 67,46,02,000 BY 15 TH DEC, 07 75% 99,23,30,000 88,25,00,000 215,25,00,000 116,01,70,000 BY 1 5 TH MAR,08 100% 1 32,31,0 6 ,646 38,20 ,00,000 253,45,00,000 121,13,93,354 TOTAL 132,31,06,646 253,45,00,000 253,45,00,000 121,13,93,354 17. THE INTEREST CHARGED BY THE LEARNED DCIT (TDS) IS LIABLE TO BE DELETED. IN FACT, IF ANY OTHER VIEW IS TAKEN IT WILL BE AGAINST THE VERY CONTEX T OF LEVY OF INTEREST WHICH THE COURT HAS HELD TIME AND AGAIN IS THAT THE INTEREST IS COMPENSATORY IN NATURE. THE APPELLANT HAS THUS SUBMITTED THAT THE INTEREST CHARGED BY THE ASSESSING OFFICE IS LIABLE TO BE DELETED. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 11 - : 3.3.1 1 HAVE CONSIDERED THE GROUND OF APPEAL AND THE WRITTEN SUBMISSIONS FILED. THE HON'BLE APEX COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE (P.) LTD. V. COMMISSIONER OF INCOME - TAX [2007] 163 TAXMAN 355 (SC) RELIED UPON BY THE APPELLANT HAS HELD THAT THE CIRCULAR NO. 275/201/95 - IT(B), DA TED 29 - 1 - 1997 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES WOULD PUT AN END TO THE CONTROVERSY. THE CIRCULAR DECLARES THAT NO DEMAND VISUALIZED UNDER SECTION 201(1) SHOULD BE ENFORCED AFTER THE TAX DEDUCTOR HAS SATISFIED THE OFFICER - IN - CHARGE OF TDS THAT TA XES DUE HAVE BEEN PAID BY THE DEDUCTEE - ASSESSEE. HOWEVER, THIS WILL NOT ALTER THE LIABILITY TO CHARGE INTEREST UNDER SECTION 201(1 A) TILL THE DATE OF PAYMENT OF TAXES BY THE DEDUCTEE - ASSESSEE OR THE LIABILITY FOR PENALTY UNDER SECTION 271C. [PARA 10] IN T HE INSTANT CASE, THE ASSESSEE HAD PAID T HE INTEREST UNDER SECTION 201(1 A) AND THERE WAS NO DISPUTE THAT THE TAX DUE HAD BEEN PAID BY 'P'. IT WAS NOT DISPUTED THAT THE CIRCULAR WAS APPLICABLE TO THE FACTS SITUATION AT HAND. [PARA 11] 3.3.2 IT HAS BEEN HELD IN BENNET COLEMAN & CO. LTD. V. V.P. DAMLE, THIRD I TO [1986] 157 1TR 812 (BOM.) THAT SECTION 201(1 A) MAKES THE PAYMENT OF SIMPLE INTEREST MANDATORY. THE PAYMENT OF INTEREST UNDER THAT PROVISION IS NOT A PENAL PROVISION. THERE IS, THEREFORE, NO QUESTION OF WAIVER OF SUCH INTEREST ON THE BASIS THAT THE DEFAULT WAS NOT INTENTIONAL OR ON ANY OTHER BASIS. SIMILAR VIEW HAS BEEN HELD IN CIT V. DHANALAKSHMY WEAVING WORKS [2000] 245 ITR 13 (KER.), CIT V. K.K. ENGG. CO. [2001] 116 TAXMAN 390 (KER.), CIT V. ASSAM SMAL L INDUSTRIES DEVELOPMENT CORPORATION LTD. [1996] 219 ITR 324/88 TAXMAN 1 (GAUHATI), CIT V. PREM NATH MOTORS (P.) LTD. [2002] 120 TAXMAN 584 (DELHI). FURTHER, IT HAS BEEN HELD IN CIT V. MAJESTIC HOTEL LTD. [2006] 155 TAXMAN 447 (DELHI) AND CIT V. MUNNI LAL & CO. [2006] 157 TAXMAN 466 (RAJ.) THAT THE QUESTION WHETHER THE ASSESSEE HAD ANY BONA FIDE BELIEF OR REASONABLE CAUSE FOR NOT MAKING THE DEDUCTION AT SOURCE IS WHOLLY IRRELEVANT TO THE QUESTION WHETHER IT IS IN DEFAULT WITHIN THE MEANING OF SECTION 201. I T IS ONLY FOR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 12 - : PURPOSES OF LEVY OF A PENALTY AS CONTEMPLATED UNDER SECTION 201, READ WITH SECTION 221, THAT THE SUFFICIENCY OF REASONS FOR THE FAILURE TO DEDUCT OR TO PAY THE TAX ASSUMES IMPORTANCE. EVEN UNDER SECTION 273B, THE REASONABLENESS OF THE CAUSE F OR THE IMPOSITION OF A PENALTY IS RELEVANT ONLY IN RELATION TO THE PROVISIONS DEFERRED TO IN THE SAID SECTION. LEVY OF INTEREST UNDER SECTION 201(1 A) IS NEITHER TREATED AS A PENALTY NOR HAS THE SAID PROVISION BEEN INCLUDED IN SECTION 273B TO MAKE 'REASONAB LENESS OF THE CAUSE FOR THE FAILURE TO DEDUCT, A RELEVANT CONSIDERATION. 3.3.3 IT IS NOTICED THAT WHILE THERE IS OVERALL CLAIM FOR REFUND, BUT THERE IS SHORT PAYMENT OF ADVANCE TAX IN VARIOUS QUARTERS WHEN CONSIDERED WITH REFERENCE TO THE LIABILITY TO DEDU CT TAX AT SOURCE ON VARIOUS DATES BY THE DEDUCTOR AND THE ACTUAL DATES OF PAYMENTS BY WAY OF ADVANCE TAX BY THE DEDUCTEE. THE APPELLANT MADE THE PAYMENTS TO HAL ON DIFFERENT DATES ON WHICH IT WAS LIABLE TO DEDUCT TAX AT SOURCE AT THE SPECIFIED RATES WHILE THE INSTALLMENTS OF ADVANCE TAX HAVE BEEN DEPOSITED ON 15.06.2007, 14.09.2007, 14.12.2007 AND 14.03.2008 BY HAL AND THE SHORT DEDUCTIONS CAN BE SAID TO HAVE BEEN PAID ON THE DATES OF PAYMENTS OF ADVANCE TAX BY THE DEDUCTEE. ACCORDINGLY, EVEN IF THE TAX DUE HAS BEEN PAID BY THE DEDUCTEE, YET INTEREST U/S 201(1A) IS MANDATO R Y AND THE SAME IS LIABLE TO BE PAID FROM THE DATE THE TAX WAS DEDUCTIBLE AT SOURCE TILL THE DATE OF PAYMENT BY THE PAYEE BY WAY OF ADVANCE TAX OR ANY OTHER MODE FOR THE RESPECTIVE QUARTER (AND NOT TILL THE DATE OF FILING OF THE RETURN AS HAS BEEN ERRONEOUSLY HELD BY THE ASSESSING OFFICER). AS CHARGING OF INTEREST UNDER SECTION 201(1 A) IS MANDATORY AND THERE IS SHORT DEDUCTION AS THE CERTIFICATE FOR LOWER DEDUCTION OF TAX HAS BEEN HELD TO B E NOT APPLICABLE TO THE APPELLANT, THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE SHORT DEDUCTION OF TDS FOR VARIOUS DATES OF PAYMENTS BY THE DEDUCTOR TO THE DEDUCTEE AND CHARGE INTEREST U/S 201(1A) FROM THE DATE THE TDS WAS DEDUCTIBLE TO THE DATE ON W HICH SUCH TAX IS ACTUALLY PAID BY THE DEDUCTEE BY WAY OF PAYMENT OF ADVANCE TAX TO THE EXTENT OF INCLUDING THIS LIABILITY FOR THE RESPECTIVE QUARTER (AND NOT TILL THE DATE OF FILING OF THE RETURN PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 13 - : OF INCOME BY THE DEDUCTEE AS HAS BEEN HELD BY THE ASSESSING OFFICER) AFTER THE ASSESSEE FURNISHES EVIDENCE FOR DATE WISE PAYMENT OF TAXES BY THE DEDUCTEE. THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE INTEREST UNDER SECTION 201(1A) OF THE L.T. ACT, 1961 FOR THE 2ND AND 3RD QUARTERS ACCORDINGLY AND GROUND NO. 4 OF THE APPEAL IS, THEREFORE, PARTLY ALLOWED. 3.4 GROUNDS NO. 5, 6 AND 7 ARE GENERAL IN NATURE AND DO NOT CALL FOR ANY SEPARATE ADJUDICATION. 4. IN THE RESULT, THE APPEALS FOR THE 2IU1 AND 3RD QUARTERS ARE PARTLY ALLOWED. 5. A. NO. 11/DY.CIT/TDS/LK O /CIT(A) - III/LKO/LL - 12, A.Y.:2008 - 09 (4TH QUARTER): AS REGARDS THE APPEAL FOR THE 4 TH QUARTER, THE AUTHORISED REPRESENTATIVES RELIED ON THE SUBMISSIONS MADE IN THE APPEALS OF THE 2ND AND 3RD QUARTERS AND ALSO REQUESTED FOR RELIEF ON ACCOUNT OF SHORT DEDUC TION. THE APPELLANT WAS FOUND TO HAVE FILED A RECTIFICATION APPLICATION ALSO AGAINST THE ORDER U/S 201(1)/201(1A) WHICH HAD BEEN REJECTED VIDE ORDER DATED NIL BY THE ASSESSING OFFICER AND A CERTIFIED COPY OF WHICH DATED 19.07.2011 HAD BEEN FILED WITH THE A PPEAL MEMO IN THE APPEAL FILED AGAINST THE ORDER U/S 154. AS THE APPELLANT HAS ALREADY FILED AN APPEAL AGAINST THE ORDER U/S 154, THE APPEAL FILED AGAINST THE ORIGINAL ORDER ON THE SAME ISSUE IS PRIMA FACIE INFRUCTUOUS AND IS HEREBY DISMISSED AS THE ORIGIN AL ORDER HAS BEEN SUBJECTED TO RECTIFICATION ON THE SAME ISSUE. HENCE, THE APPEAL FOR THE 4TH QUARTER IS DISMISSED AS BEING INFRUCTUOUS AND THE ISSUES RAISED SHALL BE CONSIDERED IN THE APPEAL FILED AGAINST THE ORDER U/S 154 OF THE INCOME - TAX ACT, 1961. 8 . S INCE THE DIRECTION ISSUED BY THE LD. CIT(A) ARE IN ACCORDANCE WITH THE LAW, WE FIND NO INFIRMITY THEREIN AND WE ACCORDINGLY CONFIRM THE SAME. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 14 - : I.T.A. NO.442/LKW/2012: 9 . IN THIS APPEAL, THE ASSESSEE HAS SOUGHT RECTIFICATION IN THE ASSESSMENT ORDER BESIDES FI LING OF THE APPEAL BEFORE THE LD. CIT(A), BUT THE RECTIFICATION APPLICATION WAS REJECTED BY THE ASSESSING OFFICER, AGAINST WHICH AN APPEAL WAS FILED BEFORE THE LD. CIT(A) AND THE LD. CIT(A) HAS PLACED RELIANCE UPON THE ORDER PASSED IN REGULAR APPEAL S IN WH ICH HE HAS ISSUED NECESSARY DIRECTIONS TO THE ASSESSING OFFICER FOR COMPUTING INTEREST UNDER SECTION 201(1A) OF THE ACT AND CONFIRMED THE REJECTION OF THE RECTIFICATION APPLICATION. SINCE PROPER DIRECTION HAS ALREADY BEEN ISSUED TO THE ASSESSING OFFICER I N THE REGULAR APPEALS FOR COMPUTING INTEREST UNDER SECTION 201(1A) OF THE ACT, WE FIND NO MERIT IN THIS APPEAL. ACCORDINGLY WE DISMISS THE SAME. 10 . IN THE RESULT, ALL APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.8.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21 ST AUGUST , 2014 JJ: 0108 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )