Sri Chaitanya Educational Society, Kakinada V. The Income-tax Officer, (TDS), Rajahmundry

ITA 453/VIZ/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3739 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 11-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAVI
• Keywords: Depreciation
• Section: 133A; 194C; 201(1); 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , ' BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A. NO. 453/VIZAG/2013 ( / ASSESSMENT YEAR : 2010-11) SRI CHAITANYA EDUCATIONAL SOCIETY, KAKINADA VS. INCOME TAX OFFICER (TDS) , RAJAHMUNDRY [ PAN: VPNSO2954A ] ( / APPELLANT) ( / RESPONDENT ) / APPELLANT BY : SHRI C. SUBRAHMANYAM, AR '# / RESPONDENT BY : S HRI K . RAV I , DR ' / DATE OF HEARING : 24 - 0 5 - 2016 ' / DATE OF PRONOUNCEMENT : 17 - 06 - 2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), VISAKHAPA TNAM DATED 20-03-2013 AND IT PERTAINS TO THE A.Y. 2010-11. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A SOCIETY, REGISTERED UNDER THE SOCIETIES REGISTRATIO N ACT, 1860 ITA NO. 453/VIZAG/2013 SRI CHAITANYA EDUCATIONAL SOCIETY 2 WITH THE MAIN OBJECTS OF IMPARTING EDUCATION. THERE WAS A SURVEY OPERATION U/S. 133A OF THE INCOME TAX ACT, 1 961 [ACT] WAS CONDUCTED IN THE BUSINESS PREMISES OF ASSESSEE ON 23-09- 2010. CONSEQUENT TO SURVEY OPERATIONS, THE A.O. CA LLED UPON THE ASSESSEE TO FURNISH VARIOUS INFORMATION OF TDS DEDUCTIONS AND REMITTANCES, IN RESPECT OF VARIOUS PAYMENTS INC LUDING SALARIES PAID TO STAFF, ADVERTISEMENT EXPENDITURE, INTEREST PAYMENTS, RENT AND BUILDING CONSTRUCTIONS. IN SPIT E OF REPEATED OPPORTUNITIES GIVEN ON VARIOUS DATES, THE ASSESSEE DID NOT FURNISH ANY INFORMATION WITH REGARD TO THE DETAILS SOUGHT BY THE A.O. SINCE, ASSESSEE HAS NOT CHOSEN TO FURNISH THE REQUIRED INFORMATION DESPITE REPEATED REMINDERS, THE A.O. HA S COMPLETED THE ASSESSMENT WITH THE AVAILABLE INFORMATION ON RE CORD AND HELD ASSESSEE AS ASSESSEE IN DEFAULT U/S. 201(1) AN D 201(1A) OF THE ACT AND COMPUTED TAX AND INTEREST. 3. THEREAFTER, THE ASSESSEE HAS FILED A RECTIFICATI ON PETITION U/S. 154 OF THE ACT, BY BRINGING INTO THE NOTICE OF THE A.O. THAT DUE TO UNFORESEEN REASONS AND CIRCUMSTANCES, THERE WAS NO REPRESENTATION FROM THE ASSESSEE SIDE; ACCORDINGLY, SOUGHT AN OPPORTUNITY TO SUBMIT THE INFORMATION. DURING THE C OURSE OF RECTIFICATION PROCEEDINGS, THE A.O. AFTER CONSIDERI NG THE ITA NO. 453/VIZAG/2013 SRI CHAITANYA EDUCATIONAL SOCIETY 3 EXPLANATION FURNISHED BY THE ASSESSEE, PASSED ORDER U/S. 154 OF THE ACT, ON 06-04-2011 AND HELD THAT THERE WAS NO L IABILITY TO DEDUCT TAX AT SOURCE INSOFAR AS SALARIES, ADVERTISE MENT, INTEREST, PROFESSIONAL FEE, RENT AND REMUNERATION. HOWEVER, IN RESPECT OF BUILDING CONSTRUCTION, THE A.O. STATED THAT SINCE A SSESSEE HAS ACCEPTED TDS LIABILITY IN THE COURSE OF SURVEY PROC EEDINGS, IT CANNOT DISOWN THE SAME NOW FOR ANY REASONS. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), TH E ASSESSEE SUBMITTED THAT THE A.O. WAS ERRED IN REJECTING THE APPLICATION FILED BY THE ASSESSEE U/S. 154 OF THE ACT, AS THE L EVY OF TDS ON BUILDING CONSTRUCTIONS IS A MISTAKE APPARENT FROM T HE RECORDS WHICH NEEDS TO BE RECTIFIED U/S. 154 OF THE ACT. TH E ASSESSEE FURTHER SUBMITTED THAT DURING THE COURSE OF SURVEY PROCEEDINGS, WHILE RECORDING STATEMENT, THE SECRETARY OF THE ASS ESSEE-SOCIETY HAS ADMITTED THAT THERE IS A LAPSE ON TDS COMPLIANC E; THEREFORE, HE WOULD COMPLIED WITH THE TDS PROVISIONS AS PER LA W. BUT, THE FACT IS THAT THE IMPUGNED AMOUNT WAS NOT INCURRED F OR THE RELEVANT FINANCIAL YEAR, THEREFORE, THE QUESTION OF DEDUCTION OF TDS U/S. 194C OF THE ACT DOES NOT ARISE WHICH IS EV IDENT FROM ITA NO. 453/VIZAG/2013 SRI CHAITANYA EDUCATIONAL SOCIETY 4 THE ASSESSMENT ORDER PASSED BY THE AO U/S. 201(1) A ND 201(1A) OF THE ACT. THE LD. CIT(A) AFTER CONSIDERING THE E XPLANATIONS OF THE ASSESSEE HELD THAT THE ASSESSEE SOUGHT TO RECTI FY THE ORDER PASSED BY THE A.O. U/S. 154 ON THE BASIS OF FRESH F ACTS WHICH WERE NOT BEFORE THE A.O. THE CIT(A) FURTHER HELD TH AT U/S. 154 OF THE ACT, ANY MISTAKE APPARENT FROM RECORD ONLY C AN BE RECTIFIED. SINCE THE ASSESSEE NEVER SUBMITTED DETA ILS BEFORE THE A.O., IT CANNOT BE SAID THAT THE A.O. HAS COMMITTED ANY MISTAKE LIABLE FOR RECTIFICATION U/S. 154 OF THE ACT. WITH THESE OBSERVATIONS, DISMISSED THE APPEAL FILED BY THE ASS ESSEE. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS IN AP PEAL BEFORE US. 5. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE L D. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE A.O. HA S COMPUTED SHORT DEDUCTION OF TAX AND INTEREST U/S. 201(1) AND 201(1A) IN RESPECT OF BUILDING CONSTRUCTIONS BASED ON THE ADMI SSION OF THE ASSESSEE. THE LD. A.R. FURTHER SUBMITTED THAT THE I MPUGNED PAYMENTS ARE NOT INCURRED DURING THE RELEVANT FINAN CIAL YEAR. THE ASSESSEE HAS CONSTRUCTED BUILDING IN THE FINANC IAL YEAR 2005-06 AND CLAIMED DEPRECIATION OVER A PERIOD OF F OUR YEARS. ITA NO. 453/VIZAG/2013 SRI CHAITANYA EDUCATIONAL SOCIETY 5 THE A.O. HAS TAKEN THE OPENING BALANCE OF WRITTEN D OWN VALUE OF ASSETS AS PER THE PROVISIONAL BALANCE SHEET AND LEV IED THE TDS U/S. 194C OF THE ACT. THE AO HAS NOT EXAMINED WHETH ER PROVISIONS OF SECTION 194C ARE APPLICABLE OR NOT, W ITHOUT DOING SO, SIMPLY COMPUTED SHORT DEDUCTION OF TAX BASED ON THE OPENING BALANCE OF WDV, WHICH IS A MISTAKE APPARENT FROM THE RECORDS WHICH NEEDS TO BE RECTIFIED U/S. 154. BUT, THE AO HAS REJECTED THE APPLICATION FILED BY THE ASSESSEE BY S TATING THAT THE ASSESSEE HAS ADMITTED THE TDS LAPSES DURING THE COU RSE OF SURVEY PROCEEDINGS . THE A.R. FURTHER SUBMITTED THAT IF THE PROVISIONS OF SECTION 194C COMES INTO PLAY, THE A.O . OUGHT TO HAVE BIFURCATED THE TOTAL VALUE OF WORKS CONTRACT I NTO VALUE OF MATERIALS AND VALUE OF LABOUR COMPONENT AND WITHOUT BIFURCATING THE TOTAL WORKS CONTRACTS, COMPUTED SHORT DEDUCTION OF TDS ON TOTAL VALUE OF BUILDING WHICH IS NOT CORRECT. 6. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE FACTUAL MATRIX OF THE CAS E IS THAT THERE ITA NO. 453/VIZAG/2013 SRI CHAITANYA EDUCATIONAL SOCIETY 6 WAS A SURVEY OPERATION U/S. 133A IN THE BUSINESS PR EMISES OF THE ASSESSEE. DURING THE COURSE OF SURVEY PROCEEDIN GS, THE SECRETARY OF THE SOCIETY HAS ADMITTED THAT THERE IS A LAPSE IN RESPECT OF TDS COMPLIANCE TOWARDS BUILDING CONSTRUC TIONS; THEREFORE, HE WOULD COMPLIED WITH THE TDS PROVISION S AS PER LAW. THE A.O. COMPUTED SHORT LEVY OF TDS AND INTER EST BASED ON THE ADMISSION OF THE ASSESSEE. THE ASSESSEE FILED A RECTIFICATION APPLICATION U/S. 154 AND SUBMITTED THAT THERE IS A MISTAKE APPARENT ON THE RECORD IN RESPECT OF TDS ON BUILDIN G CONSTRUCTIONS AS THE IMPUGNED PAYMENT IS NOT INCURR ED DURING THE RELEVANT FINANCIAL YEAR. THE AO WITHOUT EXAMINI NG THE APPLICABILITY OF PROVISIONS OF SECTION 194C, SIMPLY HELD ASSESSEE AS ASSESSEE IN DEFAULT AND LEVIED TDS AND INTEREST, WHICH IS A MISTAKE APPARENT FROM THE FACE OF THE ORDER WHICH N EEDS TO BE RECTIFIED. 8. SECTION 154 OF THE ACT PROVIDES FOR RECTIFICATIO N OF MISTAKE APPARENT FROM THE RECORDS. AS PER THE SAID SECTION , MISTAKE NOT CONFINED TO MERE CLERICAL OR ARITHMETICAL MISTAKE. THE ONLY POINT IS THAT THE MISTAKE MUST BE OBVIOUS AND PATENT AND NOT INVOLVING A DEBATABLE POINT. IN THE PRESENT CASE ON HAND, ON PERUSAL OF ITA NO. 453/VIZAG/2013 SRI CHAITANYA EDUCATIONAL SOCIETY 7 THE FACTS AVAILABLE ON RECORD, WE FIND THAT THE A.O . HAS LEVIED TDS ON THE OPENING BALANCE OF WRITTEN DOWN VALUE OF BUILDING WHICH WAS CONSTRUCTED IN THE YEAR 2005-06. THE ASSE SSEE HAS NOT INCURRED ANY AMOUNT TOWARDS BUILDING CONSTRUCTI ONS FOR THE YEAR UNDER CONSIDERATION. THE A.O. WITHOUT EXAMININ G THE APPLICABILITY OF THE PROVISIONS OF SECTION 194C, ME RELY ON THE BASIS OF ADMISSION OF ASSESSEE HELD ASSESSEE AS ASS ESSEE IN DEFAULT U/S. 201(1) AND 201(1A) IN RESPECT OF BUILD ING CONSTRUCTION. IN OUR CONSIDERED OPINION, THE SAID MISTAKE IS A MISTAKE APPARENT FROM THE RECORD WHICH NEEDS TO BE RECTIFIED U/S. 154 OF THE ACT. THE CIT(A) WITHOUT APPRECIATIN G THE FACTS REJECTED THE APPEAL FILED BY THE ASSESSEE. THEREFO RE, WE SET ASIDE THE ORDER PASSED BY THE CIT(A) AND REMIT THE ISSUE BACK TO THE FILE OF A.O. AND DIRECT THE A.O. TO EXAMINE WHE THER ANY AMOUNT IS INCURRED DURING THE FINANCIAL YEAR TOWARD S BUILDING CONSTRUCTIONS; IN CASE THE AMOUNT IS NOT INCURRED D URING THE RELEVANT FINANCIAL YEAR, THE A.O. CANNOT HOLD ASSES SEE AS ASSESSEE IN DEFAULT U/S. 201(1) AND 201(1A) OF THE ACT FOR THE ASSESSMENT YEAR 2010-11. ITA NO. 453/VIZAG/2013 SRI CHAITANYA EDUCATIONAL SOCIETY 8 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 17 TH JUNE, 2016 SD/- SD/- (. ) ( . ) ( V. DURGA RAO ) ( G. MANJUNATHA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER + / VISAKHAPATNAM / / DATED : 17.06.2016 TNMM ' 1+ 2+/ COPY OF THE ORDER FORWARDED TO :- 1. / THE APPELLANT SRI CHAITANYA EDUCATIONAL SOCIETY, 63-3A-19, CHAITANYA NAGAR, KAKINADA. 2. '# / THE RESPONDENT INCOME TAX OFFICER (TDS), RAJAHMUND RY. 3. 5 () / THE CIT(APPEALS), VISAKHAPATNAM. 4. 5 / THE CIT(TDS), HYDERABAD. 5. + ' :, ' : , + / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // >? : ( SR.PRIVATE SECRETARY ) ' : , + / ITAT, VISAKHAPATNAM