ITO (TDS) 2(4), MUMBAI V. NAGARI NIVARA PARISHAD, MUMBAI

ITA 4442/MUM/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 7823 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 25-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR; PADMA RAM MIRDHA
• Assessee Lawyers: RUTURAJ GURJAR
• Keywords: Charitable institution; Period of limitation; Additional evidence; Time period of passing order
• Section: 133A; 194C; 201(1); 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI , JM ITA NO. 4442 / MUM/20 1 4 (ASSESSMENT YEAR : 2003 - 04 ) ITA NO.2090/MUM/2014 (ASSESSMENT YEAR :2000 - 01) ITA NO.4443/MUM/2014 (ASSESSMENT YEAR :2 004 - 05) ITA NO.2092/MUM/2014 (ASSESSMENT YEAR :2002 - 03) ITA NO.2091/MUM/2014 (ASSESSMENT YEAR :2001 - 02) ITO (TDS) - 2(4) R.NO.705, 7 TH FLOOR SMT. K.G. MITTAL AYURVEDIC HOSPITAL BUILDING CHARNI ROAD MUMBAI 400 002 VS. NAGARI NIVARA PARISHAD 1 ST FLOOR, NAGARI NIVARA VASAHAT SANSKRUTIK KENDRA NEAR VIDYA BUILDING NO.10 ZONE NO.4, N.N.P. COLONY DINDOSHI, MALAD (E) MUMBAI 400 097 PAN/GIR NO. AAATN0480B ( APPELLANT ) .. ( RESPONDENT ) CO NO.205/MUM/2015 ITA NO.4442/MUM/2014 (ASSESSMENT YEAR :2003 - 04) CO NO .123/MUM/2015 (ARISING OUT OF ITA NO.2090/MUM/2014 (ASSESSMENT YEAR :2000 - 01) CO NO.206/MUM/2015 (ARISING OUT OF ITA NO.4443/MUM/2014) (ASSESSMENT YEAR :2004 - 05) CO NO.125/MUM/2015 ITA NO. 4442/MUM/2014 AND OTHER APPEALS NAGARI NIVARA PARISHAD 2 (ARISING OUT OF ITA NO.2092/MUM/2014) (ASSESSMENT YEAR :2002 - 03) CO NO.1 24/MUM/2015 (ARISING OUT OF ITA NO.2091/MUM/2014) (ASSESSMENT YEAR :2001 - 02) NAGARI NIVARA PARISHAD 1 ST FLOOR, NAGARI NIVARA VASAHAT SANSKRUTIK KENDRA NEAR VIDYA BUILDING NO.10 ZONE NO.4, N.N.P. COLONY DINDOSHI, MALAD (E) MUMBAI 400 097 VS. ITO (TDS) - 2( 4) R.NO.705, 7 TH FLOOR SMT. K.G. MITTAL AYURVEDIC HOSPITAL BUILDING CHARNI ROAD MUMBAI 400 002 PAN/GIR NO.AAATN0480B (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI SUMAN KUMAR AND SHRI PADMA RAM MIRDHA ASSESSEE BY SHRI RUTURAJ GURJAR DATE OF HEAR ING 14 / 12 /201 8 DATE OF PRONOUNCEMENT 26 / 12 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE APPEALS FILED BY REVENUE AND CROSS OBJECTION BY ASSESSEE AGAINST THE ORDER OF CIT(A)14, MUMBAI DATED 07/04/2014 FOR A.Y.2000 - 01 TO 2004 - 05 IN THE MATTER OF ORDER PASSED U/S.201(1) AND 201(1A) OF THE IT ACT. ITA NO. 4442/MUM/2014 AND OTHER APPEALS NAGARI NIVARA PARISHAD 3 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE NAGARI NIVARA PARISHAD IS A REGISTERED CHARITABLE TRUST INCOME OF WHICH IS EXEMPT U/S 11 OF T HE INCOME TAX ACT, 1961. A SURVEY ACTION U/S 133A WAS CONDUCTED ON 29TH OF MARCH 2004 AT THE PREMISES OF THE ASSESSEE . THE ASSESSEE TRUST WAS SET UP WITH A VIEW TO ALLEVIATE THE HOUSING PROBLEM OF THE WEAKER SECTIONS OF THE SOCIETY. IT IS ENGAGED IN PROVID ING AFFORDABLE HOUSING TO THE WEAKER SECTIONS OF THE SOCIETY AND RUNNING A SCHOOL IN THE RESIDENTIAL COMPLEX WHERE THESE AFFORDABLE HOUSES HAVE BEEN PROVIDED. AFTER SURVEY ASSESSEE WAS ASKED TO FILE RETURN OF TAX DEDUCTED AT SOURCE U/S.201. 3. FOR THE A. Y .2002 - 03, THE RETURN WAS FILED ON 20 T H APRIL 2004 WHILE ORDER U/S 201 DEEMING THE ASSESSES I N DEFAULT U/S 201(1) AND LEVYING INTEREST U/S 201(1A) WAS PASSED ON 28 TH MARCH 2011 . THE ORDER WAS PASSED MORE THAN 7 YEARS AFTER THE COMMENCEMENT OF THE PROCEEDIN GS. THE PROCEEDINGS COMMENCED BY ISSUE OF NOTICE TO FILE THE RETURN OF TAX DEDUCTED AT SOURCE. 4. IT WAS SUBMITTED TO THE INCOME TAX OFFICER THAT THE PROCEEDINGS HAD BECOME BARRED BY TIME DUE TO LAPSE OF MORE THAN REASONABLE TIME AS ON THE DATE OF INTRODU CTION, OF SECTOR 201(3) WITH EFFECT FROM THE 1 APRIL 2010. THE ASSESSING OFFICER, RELYING ON SUB - SECTION (3) OF SECTION 201 OF THE ACT HAS PASSED THE ORDER U/S 201. 5. IT WAS EXPLAINED BEFORE THE A.O THAT D URING THE C OURSE OF CONSTRUCTION WORK TH ERE WERE, CERTAIN FINANCIAL DIFFICULTIES. AS A RESULT, ITA NO. 4442/MUM/2014 AND OTHER APPEALS NAGARI NIVARA PARISHAD 4 THE ASSESSEE COULD NOT PAY THE RUNNING BILLS OF B. E. BILLIMORIA & CO. LTD. ON TIME WHILE B. E. BILLIMORIA & CO. LTD. REQUIRED THE FUNDS. THE ASSESSEE THEREFORE SUGGESTED TO B. E. BILLIMORIA & CO. LT D - THAT THEY (BILLIMORIA) SHOULD TAKE APPROPRIATE A DVANCE FROM HDFC TO MEET THEIR FINANCIAL REQUIREMENT. THE ASSESSEE AGREED TO REIMBURSE INTEREST THAT B. E. BILLIMORIA & CO. LTD. WERE REQUIRED TO PAY TO HDFC. THERE WAS EXCHANGE OF LETTERS TO THIS EFFECT BETWEEN THE ASSESSEE 'AND B, E. BILLIMO RIA & CO. LTD,. COPIES OF WHICH ARE ON THE RECORD OF THE 'LEARNED INCOME TAX OFFICER. ACCORDINGLY, THE ASSESSEE REIMBURSED B. E.' BILLIIMORIA ST CO. LTD. AN AMOUNT OF RS, 42 ; 52,055/ - BEING THE EXACT AMOUNT OF INTEREST CHARGED BY HDFC. THE ASSESSEE HAS ALSO FILED BEFORE THE INCOME TAX OFFICER RELEVANT DOCUMENTS IN RESPECT OF THE AMOUNT REIMBURSED. IT WAS SUBMITTED TO THE INCOME TAX OFFI CER THAT: (I) THE AMOUNT OF RS. 42,52,055/ - REIMBURSED TO B.E.BILLIMORIA & CO. LT D. WAS NOT INTEREST AS DEFINED U/S 2(2 8A } OF THE INCOME TAX ACT, 1961. (II) THE AMOUNT WAS NOT PAID IN RESPECT OF ANY MONIES BORROWED OR DEBT INCURRED .BY THE ASSESSEE (III) PRESUMING IT WAS INTEREST, IT WAS PAID TO HDFC IN RESPECT OF MONIES BORROWED F ROM HDFC AND IN TERMS 'OF NOTIFICATION NO. F. HO. 275/43/79 - 116 DATED 2 ND JUNE 1980 , NO TAX WAS DEDUCTIBLE FROM INTEREST PAYABLE TO HDFC. (IV) THE ASSESSEE, AS AN ABUNDANT CAUTION, HAD DEDUCTED TAX AT SOURCE U/S 194C OF THE ACT AS THE PAY MENT WAS TO A CONTRACTOR. ITA NO. 4442/MUM/2014 AND OTHER APPEALS NAGARI NIVARA PARISHAD 5 6 . THE INCOME TAX OFFICER DID NOT ACCEPT, THE SUBMISSIONS. HE, WITHOUT : ANY' EVIDENCE ON RECORD HAS HELD THAT THE TRANSACTION HAD TWO LIMBS. THE FIRST ONE IS THE LOAN ARRANGEMENT BETWEEN HDFC AND BEBCL WHILE THE SECOND ONE IS BE TW EEN THE ASSESSEE AND THE BEBCL HE HAS FURTHER INCORRECTLY STATED THAT THE INTEREST LIABILITY ON LOAN TAKEN BY BEBCL WAS U LTIMATELY UTILISED BY THE ASSESSEE . HE HELD THAT THE AMOUNT PAID WAS INTEREST AND TAX OUGHT TO HAVE BEEN DEDUCTED ACCORDINGLY. 7 . IN TH E ORDER PASSED U/S.201 (1) & 201(1A), AO HELD THAT ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE U/S.194 A INSTEAD OF U/S.194 C OF THE IT ACT. 8 . IN VIEW OF THE ABOVE, AO HELD THAT ASSESSEE WAS IN DEFAULT FOR WRONGLY DEDUCTION OF TAX AT SOURCE U/S.194 A IN PLAC E OF 194C . 9 . BY THE IMPUGNED ORDER, CIT(A) HELD THAT ASSESSEE HAS CORRECTLY DEDUCTED TAX AT SOURCE U/S.194 C IN PLACE OF 194 A AFTER HAVING FOLLOWING OBSERVATION: - 6.3 'I HAVE CONSIDERED THE FACTS OF THE CASE SUBMISSION, OF THE APPELLANT, A DDITIONAL EVIDENCES AND THE REMAND REPORT AND THE REJOINDERS DATED 03.10.2013 AND 20.12 . 2013. THE A.O. HAS NOT OBJECTED TO THE ADMISSION .OF ADDITIONAL EVIDENCE. THE ADDITIONAL EVIDENCE IS INTEGR AL FOR ADJUDICATION OF APPEAL. IN THE INTEREST OF JUSTICE THE ADDITIONA L EVIDENCE FILED BY THE .APPELLANT I S : ADMITTED AND IS CONSIDERED WHILE ADJUDICATING THE GROUNDS OF APPEAL . ON CONSIDERATION OF MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACTS 'THAT EMERGE AS .UNDER ; - THE APPELLANT NAGARI NIVARA PARI SHAD IS A REGISTERED .CHARITABLE TRUST, INCOME W HICH IS EXEMPT U/S 11 OF THE INCOME TAX ACT, 1961. ITA NO. 4442/MUM/2014 AND OTHER APPEALS NAGARI NIVARA PARISHAD 6 THE APPELLANT TRUST WAS SET UP WITH A VIEW TO ALLEVIATE THE - HOUSING PROBLEM O F THE WEAKER SECTIONS OF THE SOCIETY . AS A PART OF ITS ACTIVITY TOWARDS - THIS , OBJECT, .THE' APPELLANT HAD UNDERTAKEN CONSTRUCTION, OF LOW COST DWELLING HOUSES - AT'. MALAD '( E), MUMBAI ON LAND PROVIDED BY THE STATE GOVERNMENT. THE APPELLANT IS ALSO RUNNING A SCHOOL IN TRIE RESIDENTIAL COMPLEX WHERE ABOUT '6000. AFFORDABLE HOUSES HAVE BEEN PROVIDED TILL DATE. FOR CONSTRUCTIONS OF THE AFFORDABLE HOUSING TENEMENTS ON THE LAND ALLOTTED BY THE GOVERNMENT, THE APPELLANT : HAD APPOINTED' VARIOUS AGENCIES INCLUDING CONSTRUCTION C ONTRACTOR - B. E,. BILLIMORIA & CO.LTD., . (BEBL). THE APPELLANT DUE TO FINANCIAL CONSTRAINTS COULD NOT PAY THE RUNNING BILLS OF M/S. B.E. BILLIMORIA & CO. LTD. [BEB CL]. T HEREFO RE APPELLANT REQUESTED THAT BEBCL SHOULD TAK E LOAN - FROM HDFC TO MEET THE - FINANCIAL REQUIREMENT - AND THE APPELLANT WOULD REIMB URSE THE INTEREST THAT WOULD ARISE ON THE LOAN. '6.4.1 THE ISSUE IN DISPUTE IS WHETHER TDS IS TO B DONE - O.N THE AMOUNT OF INTEREST 'PAID BY 'THE APPELLANT TO BEBCL WHICH IS IN .TURN IS PAID, TO HDFC, - IT SO, THEN UNDER WHAT SECTION TDS IT TO BE MADE ON T HIS AMOUNT, 'BEFORE DECIDING THE ISSUE OF TDS THE IMPORTANT QUESTION, IS WHAT IS TH E'. NATURE, OF THIS AMOUNT IN THE HAND OF THE APPELLANT ? 6.4 . 2 THE APPELLANT'S A,R. HAS ARGUED THAT THIS IS IN THE NATURE 'OF : REIMBURSEMENT, AND THERE FORE NO TDS IS DE DUCTIBLE ON THE SAME,. HOWE VER R THEY HAVE DEDUCTED TDS U/S.'194C OUT OF ABUNDANT' PRECAUTION 6. 4.3 TH E A.O 'IN TURN HAS STATED, THAT 'THIS' IS;, INTERE ST AMOUNT/SO TDS SHOULD BE. DEDUCTED U/S.194A. FURTHER, THE APPELLANT .IS NOT. ENTITLED .TO EXEMPTION U/S.L.94A(3) AS INTEREST IS NOT PAID TO SCHEDULE BANK . 6.4.4. IT IS AN ADMITTED FACT THAT APPELLANT DID NOT BAKE, LOAN WAS TAKEN BY BEBCL FROM HDFC AT THE BEHEST OF THE APPELLANT AS THE APPELLANT COULD NOT PAY THE RUNNING BILL. THE APPELLANT AGREED TO PAY THE AMOUNT SE NT BY BEBCL AN EXPENDITURE INCURRED ON ACCOUNT OF INTEREST. 6.4.5. THUS IT IS IMPERATIVE TO DECIDE THE CHARACTER - OF. THE AMOUN T PAID TO BEBCL BEFORE DECIDING UNDER THE SECTION IN WHICH TDS IS TO BE DONE . ITA NO. 4442/MUM/2014 AND OTHER APPEALS NAGARI NIVARA PARISHAD 7 8 :.4,6 TO DEDUCT TDS U/S.194A FIRSTLY IT. HAS TO 'BE 'DETERMINED, WHETHER SUCH PAYMENT - BY APPELLANT TO BEBCL QUALIFIES TO BE IN NA TURE OF INTEREST U/S,2(28A) OF T HE ACT. THE RELEVANT EXTRACTS OF SECTION 2(28A) O F THE ACT ARE REPRODUCED, AS FOLLOWS' '(28A) INTEREST MEANS INTER EST' PAYABLE IN ANY MANNER IN RESPECT OF ANY MONEYS BORROWED OR DEBT INCURRED, [INCLUDIN G A DEPOSIT CLAIM OR OTHER SIMILAR RIGHT OR OBLIGATION] AND INCLUDES . - ANY SERVICE - FEE OR OTHER C HARGES IN RESPECT OF MONEYS BORROWED OR DEBT INCURRED OR IN RESPECT O F ANY CREDIT FACILITY WHICH HAD NOT BEEN UTILIZED. 6.4.7 - FROM THE SIMPLE READING OF THE' ABOVE .CLAUSE 1 , IT. CANNOT BE DISPUTED THAT THE ..AMOUNT' PAID 'IS NOT' FOR ANY LOAN OR DEBT INCURRED BY THE ASSESSEE BUT FOR DELAY IN, ' - HE PAYMENT OF RUNNING BILL. THEREFORE, THE - AMOUNT PAID BY APPELLANT TO BEBCL DOES NOT PARTAKE THE CHARACTER OF INTEREST. THE. HON'BLE.'MUMBAI; TRIBUNAL IN THE CASE OF M/S. ONWARD E - SECURITIES LTD. 22 TAXMAN 60 HAS HELD THAT NO TDS U/S.194A IS TO BE MADE IF INTEREST IS REIMBURSED BY ASSESSEE TO. ITS. PARENT COMPANY' 1 WHO. HAS TAKEN LOAN FROM BANK 6. 5 IN THE CASE OF GHAZIABAD DEVELOPMENT AUTHORITY 258 ITR 337 IT WAS HELD THAT IF THE NATURE OF PAYMENT IS TO COMPENSATE AN ALLOTTEE THEN THE PROVISION OF SECTION 194A NEED - NOT BE APPL IED, AS FAR AS QUESTION OF DEDUCTION OF TDS OH INTEREST IS CONCERNED, THOUGH THE SAID COMPENSATION WAS MENTIONED AS 'INTEREST' BUT THE MEMBERS HELD THAT THE WORD USED, 'INTEREST.' .DID. FALL WITHIN TH E DEFINITION AS DECINES U/S.2(28A). 6.5.1. AVERTING TO THE FACTS IN THE INSTANT CASE,'IT - IS'SETTLED THAT THE ASSESSEE HAS NOT TAKEN ANY L OAN/ DEPOSIT FROM BEBCU THE PAYMENT TO BEBCL .IS COMPENSATORY IN NATURE . THEREFORE IT IS OUT OF THE AMBIT - OF - .SECTION'194A . 6. 5 . 2 THE ARGUMENT OF THE A.R. THAT THE'' PAYMENT OF THIS 'AMOUNT IS IN THE 'NATURE 'OF - REIMBU RSEMENT SO NO TDS AT ALL NEEDS TO 'BE DONE - IS D ISMISSED IN VIEW OF THE FACT THAT THE PAYMENT OF THE A MOUNT - TO EJEBCL HAS INCREASED' THE PROJECT COST OF APPELLANT. HENCE IT PARTAKES THE CHARACTER OF WORKS CONTR ACT . THEREFORE TDS IS TO BE DEDUCTED U/ S.1 94C, WHICH THE APPELLANT HAS DONE THEREFORE , GROUND NO.4TAKEN WITHOUT PREJUDICE IS CORRECT, AND IS ACCEPTED. 10 . AGAINST THE ABOVE ORDER OF CIT(A), REVENUE IS IN FURTHER APPEAL BEFORE US, WHEREAS ASSESSEE HAS ALSO FILED CROSS OBJECTION IN SUPPORT OF ITA NO. 4442/MUM/2014 AND OTHER APPEALS NAGARI NIVARA PARISHAD 8 THE CONTENTION THAT THE ORDER PASSED BY THE AO IS TIME BARRED ON THE LAPSE OF REASONABLE PERIOD OF TIME, AFTER EXECUTION OF THE PROCEEDINGS. 11. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE O RDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT FACTS AND CIRCUMSTANCES FOR THE A.Y.200 4 - 05 AND ARE SAME WHEREIN AO HAS ALLEGED THAT ASSESSEE HAS DEDUCTED TAX AT SOURCE U/S.194C IN PLACE OF 194A. FROM THE RECORD WE FOUND THAT THE ASSESSEE NAGARI NIVARA PARISHAD IS A REGISTERED CHARITABLE TRUST INCOME OF WHICH IS EXEMPT U/S 11 OF THE INCOME TAX ACT, 1961. A SURVEY ACTION U/S 133A WAS CONDUCTED ON 29TH OF MARCH 2004 AT THE PREMISES OF THE ASSESSEE. THE ASSESSEE TRUST WAS SET UP WITH A VIEW TO ALLEVI ATE THE HOUSING PROBLEM OF THE WEAKER SECTIONS OF THE SOCIETY. IT IS ENGAGED IN PROVIDING AFFORDABLE HOUSING TO THE WEAKER SECTIONS OF THE SOCIETY AND RUNNING A SCHOOL IN THE RESIDENTIAL COMPLEX WHERE THESE AFFORDABLE HOUSES HAVE BEEN PROVIDED. AFTER FILIN G RETURN OF TAX DEDUCTED AT SOURCE, AO PASSED ORDER WHEREIN IT WAS HELD THAT ASSESSEE WAS IN DEFAULT FOR WRONGLY DEDUCTION OF TAX AT SOURCE U/S.194C IN PLACE OF 194A. ASSESSEE WAS LIABLE TO DEDUCT TAX U/S.194A OF THE ACT IN RESPECT OF PAYMENT MADE TO B.E B ILLIMORIA & CO. LTD., (BEBCL). FROM THE RECORD WE FOUND THAT THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE TOWARDS ANY PAYMENTS MADE TO M/S. B.E. BILLIMORIA & CO. LTD. (M/S. BEBL). ALL THE PAYMENTS ARE ADDED TO THE CONSTRUCTION COST WHICH IS CAPITALIZED IN THE BOOKS. WE FOUND THAT THE ENTIRE PAYMENTS WERE MADE AS PER THE TERMS OF THE CONTRACT & TDS WAS DEDUCTED U/S 194C & ITA NO. 4442/MUM/2014 AND OTHER APPEALS NAGARI NIVARA PARISHAD 9 PROVISIONS OF SECTION 194A R.W.S 2(28A) WERE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. IN ITS ORDER, THE AO HAS RELIED ON THE PROVISION S OF SUBSECTION - (3) OF SECTION 201, IT WAS BROUGHT IN BY FINANCE ACT 2010 W.E.F. 01/04/2010. 12 . IT IS CLEAR FROM THE INCOME AND EXPENDITURE ACCOUNT OF THE ASSESSEE THAT IT HAS NOT CLAIMED ANY INTEREST EXPENDITURE AGAINST THE PAYMENT MADE TO BEBL. IT WAS P AYMENT OF COMPENSATION OF EXPENSES INCURRED BY BEBL AGAINST LOAN AVAILED BY BEBL AS THE ASSESSEE WAS NOT ABLE TO PAY RUNNING BILLS, AS PER THE TERMS OF THE CONTRACT ENTERED INTO WITH THE ASSESSEE. TDS IS DEDUCTED U/S 194C. BEBL HAD ACCOUNTED FOR THE SAID I NTEREST IN THEIR ITR FOR THE YEAR ENDED31/3/2000. THE ASSESSEE HAS DEBITED & CREDITED ENTIRE INTEREST EXPENDITURE AMOUNT AS PER THE INTEREST SCHEDULE & THE SAME IS ADDED TO THE PROJECT COST OF THE ASSESSEE. RELEVANT FIGURES ARE HIGHLIGHTED IN BALANCE SHEET , I & E A/C & INTEREST SCHEDULE. 13 . FROM THE RECORD WE FOUND THAT AMOUNTS INVOLVED RS.39,83,245/ - , RS.78,38,904/ - AND RS.1,31,75,301/ - I.E. RS.2,49,97,450/ - REIMBURSEMENT OF BILL DISCOUNTING CHARGES TO ANZ GRINDLAYS BANK LTD. IS RS.39,83,245/ - IS NOT INTEREST U/S 2(28A) BUT IS COVERED U/S 194C. PAYMENT OF COMPENSATION OF EXPENSES OF RS.78,38,904/ - INCURRED BY BEBL AGAINST LOAN AVAILED BY BEBL AS THE ASSESSEE WAS NOT ABLE TO PAY RUNNING BILLS, AS PER THE TERMS OF THE CONTRACT ENTERED INTO WITH T HE ASSESSEE. TDS IS DEDUCTED U/S 194C. THE AMOUNT OF RS.1,31,75,307/ - H AS ITA NO. 4442/MUM/2014 AND OTHER APPEALS NAGARI NIVARA PARISHAD 10 BEEN PAID BY ASSESSEE TO BEB L TOWARDS COMPENSATION/DAMAGES (TERMED AS INTEREST) FOR NOT FULFILLING THE OBLIGATIONS UNDER THE WORKS CONTRACT. CERTIFICATE DATED 11/11/2005 FROM R.N. BH ANSALI & CO., CHARTERED ACCOUNTANTS IS ENCLOSED AT PAGE.21. BEBCL HAS ACCOUNTED FOR THE SAME IN THEIR BOOKS OF ACCOUNT FOR THE YEAR ENDED 31 ST MARCH, 2005. 14 . WITH REGARD TO THE CROSS OBJECTION FILED BY THE ASSESSEE, IT WAS CONTENTION OF LEARNED AR THAT AT THE TIME OF INITIATION OF THE PROCEEDINGS U/S 201, THERE WAS' 'NO TIME LIMIT TO COMPLETE THE PROCEEDINGS AS PER THE PROVISION OF THE ACT. HOWEVER IT WAS ARGUED THAT REASONABLE TIME TO COMPLETE SUCH PROCEEDINGS SHOULD BE CONSIDERED AT 4 YEARS & RELIANCE WAS PLACED ON THE JUDGEMENT OF HON'BLE HIGH COURT OF HIMACHAL PRADESH IN THE CASE OF COMMISSIONER OF INCOME - TAX V. SATLUJ JAL VIDYUT NIGAM LTD (345 ITR 552) WHEREIN IT IS HELD THAT, 'EVEN IF NO PERIOD OF LIMITATION IS PRESCRIBED FOR TAKING ACTION UNDER SEC TION 201, THE STATUTORY POWER MUST BE EXERCISED WITHIN A REASONABLE PERIOD. THIS REASONABLE PERIOD TAKING INTO CONSIDERATION THE VARIOUS PROVISIONS OF THE INCOME - TAX ACT, HAS BEEN HELD TO BE FOUR YEARS IN A NUMBER OF CASES. THEREFORE, ORDER UNDER SECTION 2 01 AND 201(1A) PASSED BY ASSESSING OFFICER BEYOND FOUR YEARS WAS BARRED BY TIME LIMITATION.' 1 5 . THE RELIANCE WAS ALSO PLACED ON RECENT DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF VODAFONE ESSAR MOBILE SERVICES LTD. V. UNION OF INDIA (385 ITR 436) IT IS HELD THAT, 'CBDT CIRCULAR NO. 5 OF 2010, DATED 3 - 6 - 2010 CANNOT BE INTERPRETED, TO ENABLE DEPARTMENT TO INITIATE PROCEEDINGS FOR DECLARING AN ASSESSEE TO BE ITA NO. 4442/MUM/2014 AND OTHER APPEALS NAGARI NIVARA PARISHAD 11 AN ASSESSEE IN DEFAULT UNDER SECTION 201 FOR A PERIOD EARLIER THAN FOUR YEARS PRIOR TO 31 - 3 - 2011. 16 . ON THE OTHER HAND LEARNED DR PLACED A RELIANCE ON HON'BLE CALCUTTA HIGH COURT DECISION IN THE CASE OF BHURA EXPORTS LTD (13 TAXMANN.COM 162) WHERE IT IS HELD THAT , 'WHEN THERE WAS NO PERIOD OF LIMITATION FIXED FOR EXERCISING POWER UNDER SECTIO N 201 AT RELEVANT POINT AT TIME, THERE IS NO QUESTION OF INVOKING A REASONABLE PERIOD OF LIMITATION FOR APPLYING PROVISIONS CONTAINED IN SECTION 201. 17 . RIVAL CONTENTIONS HAVE HEARD AND PERUSED. FACTS AND CIRCUMSTANCES IN ALL THE YEARS ARE CONSIDERED SAM E, WHEREIN THE ASSESSEE HAS EFFECTED DEDUCTION OF TAX AT SOURCES U/S 194C OF THE ACT IN RESPECT OF PAYMENT MADE TO THE CONTRACTOR. FROM THE RECORD, WE FOUND THAT THE ASSESSEE HAS MADE PAYMENT TO THE CONTRACTOR ON WHICH TAX HAS BEEN CORRECTLY DEDUCTED AT S OURCE U/S 194C OF THE ACT. HOWEVER, A.O WAS OF THE OPINION THAT SINCE INTEREST WAS PAID AS COMPENSATION TO THE CONTRACTOR, THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE U/S 194A OF THE ACT. AFTER CONSIDERING ALL THE MATERIAL PLACED ON RECORD THE LD. C IT(A) HAS COME TO CONCLUSION THAT NOT ONLY THE TRANSACTIONS ARE OUTSIDE OF THE PURVIEW OF SEC. 194A R.W.S 2(28A) OF THE ACT BUT THE TRANSACTIONS ARE COVERED U/S 194C OF THE ACT & ASSESSEE HAS COMPLIED WITH THE PROVISIONS OF SEC. 194C THEREFORE THERE IS NO LIABILITY U/S 201/2011(1A) OF THE ACT. ITA NO. 4442/MUM/2014 AND OTHER APPEALS NAGARI NIVARA PARISHAD 12 18. WE ALSO FOUND THAT ASSESSEE HAS NEITHER CLAIMED INTEREST AS EXPENDITURE NOR DEBITED THE SAME TO PROFIT AND LOSS ACCOUNT. THUS THE AMOUNTS SO PAID TO THE CONTRACTOR WAS LIABLE TO DEDUCTION OF TAX AT SOURCE U/S 19 4C OF THE ACT, WHICH THE ASSESSEE CORRECTLY MADE. THE DETAILED FINDINGS SO RECORDED BY THE CIT(A) HAS NOT BEEN CONTROVERTER BY THE LD. DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD, ACCORDINGLY WE DO NOT FOUND ANY REASON TO INTERFERE WITH THE ORDER OF TH E CIT(A) FOR UPHOLDING THAT THE ASSESSEE WAS LIABLE TO DEDUCT THE TAX AT SOURCE U/S 194C OF THE ACT. 19. AS WE HAVE ALREADY DECIDED THE ISSUE ON MERITS, WE ARE NOT GOING IN THE PLEA TAKEN BY THE ASSESSEE IN ITS CROSS OBJECTION WITH REGARD TO THE LIMITATION PERIOD FOR PASSING THE ORDER U/S 201/201A OF THE ACT. 20 IN THE RESULT ALL THE APPEALS FILED BY THE REVENUE AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 / 12 /201 8 SD/ - ( RAM LA L NEGI ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 26 / 12 /201 8 KARUNA SR. PS ITA NO. 4442/MUM/2014 AND OTHER APPEALS NAGARI NIVARA PARISHAD 13 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//