M/s Tata Projects Ltd., Noida V. ACIT (TDS), Noida

ITA 4403/DEL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6521 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 08-12-2016
• Assessment Year: 2014-2015
• Appeal Filed On: 11-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K BANSAL
• Keywords: Opportunity of being heard; Principle of natural justice; Non-deduction of tax; Non compliance
• Section: 133A; 194C; 201(1); 6

Judgement Text

1 ITA NOS. 4403 & 4404/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI O.P. KANT, ACCOUNTAN T MEMBER AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO.-4403/DEL/2016 (A.Y 2014-15) & I.T.A .NO.-4404/DEL/2016 (A.Y 2015-16) TATA PROJECTS LTD, PLOT NO. B-3/A, GROUND FLOOR, TOWER-H, GREEN BOULEVARD, SECTOR-62 NOIDA AAACT4119L (APPELLANT) VS ACIT (TDS) 2D, 1 ST FLOOR, AYAKAR BHAWAN, ROOM NO. 110, SECTOR-24 NOIDA (RESPONDENT) APPELLANT BY SH. RAVI BHARDAWAJ, CA, SH. SANTOSH SHARMA, CA RESPONDENT BY SH. S. K. BANSAL, SR. DR ORDER PER SUCHITRA KAMBLE, JM THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDER DATED 24/6/2016 PASSED BY CIT(A)-1, NOIDA. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- I.T.A .NO.-4403/DEL/2016 (A.Y 2014-15) BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN:- DATE OF HEARING 08.12.2016 DATE OF PRONOUNCEMENT 14.12.2016 2 ITA NOS. 4403 & 4404/DEL/2016 1. UPHOLDING THE ORDER PASSED BY A.O EVEN AFTER NOT ING DISAGREEMENT WITH THE REASONS GIVEN BY THE A.O. 2. PASSING THE ORDER BASED ON PRESUMPTIONS OF NON-C OMPLIANCE WITH PROVISIONS OF SECTION 194C (7) WITHOUT UNDERTAKING/ DIRECTING A THOROUGH EXAMINATION OF FACTS. 3. CONCLUDING THAT THE BENEFIT OF NON-DEDUCTION OF TAX U/S 194C (6) WAS NOT APPLICABLE TO THE ASSESSEE ON ACCOUNT OF THE NO N-COMPLIANCE OF SECTION 194C(7). 4. PASSING AN EX-PARTE ORDER BY NOT FOLLOWING THE P RINCIPLES OF NATURAL JUSTICE INCLUDING BUT NOT LIMITED TO AFFORDING A RE ASONABLE OPPORTUNITY OF BEING HEARD. 3. THE GROUNDS OF APPEAL ARE AS UNDER:- I.T.A .NO.-4404/DEL/2016 (A.Y 2015-16) BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN:- 1. UPHOLDING THE ORDER PASSED BY A.O EVEN AFTER NOT ING DISAGREEMENT WITH THE REASONS GIVEN BY THE A.O. 2. PASSING THE ORDER BASED ON PRESUMPTIONS OF NON-C OMPLIANCE WITH PROVISIONS OF SECTION 194C (7) WITHOUT UNDERTAKING/ DIRECTING A THOROUGH EXAMINATION OF FACTS. 3. CONCLUDING THAT THE BENEFIT OF NON-DEDUCTION OF TAX U/S 194C (6) WAS NOT APPLICABLE TO THE ASSESSEE ON ACCOUNT OF THE NO N-COMPLIANCE OF SECTION 194C(7). 4. PASSING AN EX-PARTE ORDER BY NOT FOLLOWING THE P RINCIPLES OF NATURAL JUSTICE INCLUDING BUT NOT LIMITED TO AFFORDING A RE ASONABLE OPPORTUNITY OF BEING HEARD. 4. THE DEDUCTOR ASSESSEE IS ENGAGED IN THE BUSINESS OF EXECUTING EPC PROJECT RELATED TO TRANSMISSION LINES AND SUB STATI ON PROJECTS. THE ASSESSEE GETS CONTRACT FROM POWER GRID CORPORATION OF INDIA/ STATE ELECTRICITY AUTHORITIES AND PRIVATE PLAYERS TO EXECUTE TRANSMISSION LINE AN D SUB STATION PROJECTS. FOR ERECTION PORTION, THE ASSESSEE GIVE SUB CONTRACT TO VARIOUS PARTIES TO EXECUTE 3 ITA NOS. 4403 & 4404/DEL/2016 FOUNDATION, TOWER ERECTION & STRINGING WORK. IN TH IS CASE, IN ORDER TO ASCERTAIN GROWTH IN TDS COLLECTION DURING THE FINANCIAL YEAR 2014-15, A SURVEY U/S 133A (2A) WAS CONDUCTED ON 24/2/2015. A SHOW CAUSE NOTI CE U/S 201 (1)/201 (IA) READ WITH SECTION 194C OF INCOME TAX ACT, 1961 DATE D 25/2/2015 WAS ISSUED TO THE DEDUCTOR ASSESSEE FOR NON DEDUCTION OF TAX A T SOURCE RELATING TO THE HEADS FREIGHT & CARTAGE /PAYMENT OF TRANSPORT OPERA TION & AND RAW HIDE CARTRIDGE. IN COMPLIANCE TO THE SUMMON, THE DED UCTOR ASSESSEE FILED REPLY ALONG WITH DOCUMENTS. THE ASSESSING OFFICER OBSERV ED THAT THE DEDUCTOR IS NOT MAKING TDS ON PAYMENTS MADE TO THE TRANSPORTERS ON THE PLEA THAT THE PROVISIONS OF SECTION 194C (6) ARE APPLICABLE TO TH ESE PAYMENTS AND THEREFORE, TDS ON THESE PAYMENTS ARE NOT MADE, ONCE THE TRANSP ORTERS SUBMITS HIS PAN TO THE DEDUCTOR. THE ASSESSING OFFICER HELD THAT P RIOR TO AMENDMENT OF SECTION 194C W.E.F. 1/10/2009, THE SECOND PROVISO BELOW SUB SECTION 3 OF SECTION 194C GRANTED EXEMPTION FROM DEDUCTION OF TAX AT SOU RCE ON PAYMENT MADE TO SMALL TRANSPORT OPERATORS WHO DID NOT OWN MORE THAN TWO TRANSPORT GOODS CARRIAGES. TRANSPORTER OPERATORS WERE REPORTING PR OBLEMS IN OBTAINING TDS SERVICE AS THESE ARE NOT ISSUED IMMEDIATELY BY CLIE NTS AND THEY ASSESSMENT YEAR NOT ABLE TO APPROACH THE CLIENT GAIN AS THEY MAY HAVE TO MOVE ACROSS THE COUNTRY FOR THEIR BUSINESS AND COLLECT TDS SERVICE FROM ALL OVER THE COUNTRY WAS A MAMMOTH TASK. THUS, IT WAS CLEAR THAT EVEN E ARLIER BIG TRANSPORT OPERATORS ARE REGULARLY CONTRACT AND BUSINESS FROM BIG ASSESSEES WERE NOT COVERED WITHIN THE AMBIT OF NON DEDUCTION OF TDS ON PAYMENT TO TRANSPORT OPERATORS. THE EXPLANATORY NOT FOR AMENDMENT ALSO MENTIONS UNDER HEADING (B) PROVISIONS FOR PAYMENT AND TASK DEDUCTOR AT SO URCE TO TRANSPORTERS. THAT THE DIFFICULTIES FACED BY SMALL TRANSPORTERS W AS CONSIDERED BY CBDT AND THEIR DIFFICULTY WAS SOUGHT TO BE REMOVED BY INTROD UCING SUB SECTION 6 IN SECTION 194C IN VIEW OF ERSTWHILE SECTION PROVISO B ELOW SUB SECTION 3 OF SECTION 194C. THE ASSESSING OFFICER WHILE TREATING ASSESSEE DEDUCTOR AS DEFAULTER U/S 201 (1) & 201 (1A) OF THE ACT HELD TH AT THE DEDUCTOR IS NOT IN THE BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAG ES AND, THEREFORE, THE PROVISIONS OF SECTION 194C (6) OF THE INCOME TAX AC T ARE NOT APPLICABLE TO THE 4 ITA NOS. 4403 & 4404/DEL/2016 DEDUCTOR AND A DEDUCTOR IS LIABLE TO DEDUCT TDS U/S 194C. THUS, THE ASSESSING OFFICER HELD THAT THE DEDUCTOR FAILED TO DEDUCT TDS U/S 201(1) READ WITH SECTION 194C AND DIRECTED TO DEPOSIT THE TDS A S PER THE PROVISIONS OF SECTION 201(1) & 201(1A) READ WITH SECTION 194C OF THE ACT. 5. BEING AGGRIEVED BY THIS, THE ASSESSEE FILED APPE AL BEFORE THE CIT(A). THE CIT(A) OBSERVED THAT THE ASSESSEE HAS TAKEN A VIEW THAT AFTER THE AMENDMENT OF THE PROVISIONS OF SECTION 194C BY THE FINANCE ACT N O. 2/2009 BY WHICH A NEW PROVISION OF 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 THE PAYMENT UNDER CONSID ERATION WERE TO SUCH TRANSPORTERS ONLY, THE ASSESSEE WAS CORRECT IN NOT DEDUCTING THE TAX ON PAYMENT MADE TO THOSE CONTRACTORS. THE CIT(A) OBS ERVED THAT THE ASSESSING OFFICER WAS NOT DISPUTED THESE FACTS. BUT THE OVER ALL EXPLANATORY CIRCULAR AND ITS EFFECT AND STAND TAKEN BY THE ASSESSING OFFICER ON THE SAME WAS NOT INTERFERED BY THE CIT (A). THE CIT (A) HELD THAT T HE PROVISIONS OF SUB SECTION 7 OF SECTION 194C WAS NOT COMPLIED AND THE SAME WAS N OT EXAMINED BY THE ASSESSING OFFICER AND THUS CONFIRMED THE ORDER OF T HE ASSESSING OFFICER. 6. THE LD. AR SUBMITS THAT MERELY NON-COMPLIANCE OF SUB SECTION 7 OF 194C CANNOT DISREGARD THE ASSESSEES CLAIM FOR APPL ICATION OF SUB SECTION 6 OF 194C. THE EXEMPTION IS AVAILABLE TO THE ASSESSEE A T THAT PARTICULAR MOMENT AS WELL. THE LD. AR SUBMITTED CASE LAWS OF THE KOLKAT A ITAT AND HYDERABAD ITAT AS WELL AS HONBLE GUJARAT HIGH COURT AND KARNATAKA HIGH COURT WHICH ARE AS UNDER:- SOMA-RANI-GHOSE VS. DEPUTY COMMISSIONER OF INCOME T AX [ITA NO. 1420 (KOL) OF 2015] ACIT VS. MOHAMMED SUHAIL, KURNOOL [ITA NO. 1536/HYD /2014] 5 ITA NOS. 4403 & 4404/DEL/2016 COMMISSIONER OF INCOME-TAX VS. SRI MARIKAMBA TRANSP ORT CO. [ITA NO. 553 OF 2015] COMMISSIONER OF INCOME-TAX 1 VS. VALIBHAI KHANBHAI MANKAD [ITA NO. 1182 OF 2011] 7. IN ALL THESE CASES, THE FUNDAMENTAL REQUIREMENT FOR CLAIMING EXEMPTION UNDER SECTION 194C (6) OF THE ACT WAS THAT, FROM TH E ASSESSMENT YEAR 2010-11 ONWARDS WHEN TRANSPORT OPERATORS FURNISHED THEIR PA N TO THE PERSONAL RESPONSIBLE FOR MAKING PAYMENTS TO THEM. THE TRANS PORT OPERATOR WOULD BE OUTSIDE THE PURVIEW OF TDS U/S 194C THE JUDICIAL FO RUMS HELD THAT IF THE ASSESSEE COMPLY WITH THE PROVISIONS OF SECTION 194C (6) DISALLOWANCE UNDER PARTICULAR SECTION DOES NOT ARISE JUST BECAUSE THER E IS VIOLATION OF PROVISIONS OF SECTION 194C (7) OF THE ACT. 8. THE LD. DR SUBMITTED THAT THE JUDGMENTS RELIED U PON BY THE ASSESSEE THAT OF THE KOLKATA BENCH WAS DEALING WITH SECTION 40A(1A) & NOT THAT OF SECTION 201(1) EVEN THE HYDERABAD BENCH ALSO DEALIN G WITH THE SAME. THE HONBLE HIGH COURTS JUDGMENTS WAS ALSO DEALT WITH SECTION 40A(1A) OF THE ACT. 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE RECORDS. THE LD. AR IS NOT COMPLIED WITH THE REQUIREMENTS OF SUB SEC TION 7 OF SECTION 194C WHILE CLAIMING BENEFIT U/S 194C (6) OF THE ACT. BU T THE FACT REMAINS THAT THE AMENDMENT IN THE YEAR 2009 IS APPLICABLE IN ASSESSE ES CASE WHICH WAS NOT DISPUTED BY THE CIT(A). THE ASSESSING OFFICER DISA LLOWED THIS ON THE GROUND THAT THE ASSESSEE IS NOT ENGAGED IN THE BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES BUT DOES NOT DISCARD THE ASSESSEES BENEFIT WHICH WAS GIVEN TO BY THE LEGISLATION UNDER SECTION 194C(6) OF THE ACT . THE CASE LAWS CITED THOUGH 6 ITA NOS. 4403 & 4404/DEL/2016 WAS RELATED TO 40A (1A) BUT MORE SO IT WAS DEALT WI TH THE ISSUE AND THE AMBIT OF SECTION 194C OF THE ACT ITSELF. IN-FACT 40A(1A) OF THE ACT HAS A HUNDRED PERCENT TAX LIABILITY WHILE TAX LIABILITY U/S 201(1)/201(1A ) OF THE ACT IS 2%. THUS, MERELY NON COMPLIANCE OF SUB SECTION 7 OF SECTION 1 94C WILL NOT DISENTITLE THE ASSESSEE FOR CLAIMING BENEFIT UNDER SUB SECTION 6 O F SECTION 194C OF THE ACT. 10. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH DECEMBER, 2016. SD/- SD/- (O.P. KANT) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 14/12/2016 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA NOS. 4403 & 4404/DEL/2016 DATE 1. DRAFT DICTATED ON 08/12/2016 PS 2. DRAFT PLACED BEFORE AUTHOR 08/12/2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 14.12.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 14.12.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.