M/s. CJ International Hotels Ltd., New Delhi V. Addl. CIT, Delhi

ITA 4533/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3754 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: misc
• Appeal Filed On: 09-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Section: 133A; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 4533/DEL /2015 ASSESSMENT YEAR: 2005-06 CJ INTERNATIONAL HOTELS LTD., 8, HOTEL LE MERIDIAN, WINDSOR PLACE, NEW DELHI. (PAN: AAAC00174E) VS ADDL. COMMISSIONER OF INCOME TAX, RANGE-49, AAYAKAR BHAVAN, DISTRICT CENTRE, LAXMI NAGAR, DELHI-110092 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TARANDEEP SINGH, ADV. SHRI SHUBHAM GUPTA, ADVOCATE RESPONDENT BY: SHRI F.R. MEENA, SR. DR DATE OF HEARING : 23.10.2017 DATE OF PRONOUNCEMENT: 31.10.2017 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE LD. CIT (A)-41, NEW DELHI VIDE ORDER DATED 21.04.2015 CONFIRMING THE IMPOSITI ON OF PENALTY IMPOSED U/S 271C OF THE INCOME TAX ACT, 196 1 ITA NO. 4533/DEL/2015 ASSESSMENT YEAR 2005-06 2 (HEREINAFTER CALLED THE ACT) FOR ASSESSMENT YEAR 2005- 06. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS DERIVING INCOME FROM THE BUSINESS OF RUNNING OF HOT EL UNDER THE NAME AND STYLE OF HOTEL LE MERIDIAN. A S URVEY U/S 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 5.10.2006 WHEREIN IT WA S NOTED THAT TDS AMOUNTING TO RS. 8,54,026/- WAS NOT DEDUCTED BY THE ASSESSEE COMPANY ON TIPS PAID TO TH E EMPLOYEES. ACCORDINGLY, ORDER U/S 201(1)/201(1A) O F THE ACT WAS PASSED TREATING THE ASSESSEE AS ASSESSEE I N DEFAULT FOR NOT DEDUCTING TAX AT SOURCE ON THE PAY MENT OF TIPS TO ITS EMPLOYEES. THE MATTER WAS REFERRED TO THE ADDL. CIT, RANGE-49, NEW DELHI FOR INITIATION OF PE NALTY PROCEEDINGS U/S 271C OF THE ACT AND SUBSEQUENTLY, PENALTY OF RS. 8,54,026/- WAS IMPOSED VIDE ORDER DA TED 24.1.2012 WHICH WAS LATER UPHELD BY THE LD. CIT(A). NOW, THE ASSESSEE HAS APPROACHED THE ITAT AND HAS CHALLENGED THE UPHOLDING OF PENALTY BY THE LD. CIT (A). 3. THE LD. AR SUBMITTED THAT THE ONLY QUESTION BEFO RE THE ITAT WAS WHETHER THE TIPS MEANT FOR HOTEL EMPLO YEES, ITA NO. 4533/DEL/2015 ASSESSMENT YEAR 2005-06 3 INCLUDED AND PAID BY CREDIT CARD BY THE CUSTOMERS A ND COLLECTED BY THE EMPLOYER AND DISBURSED TO THE EMPLOYEES, AMOUNTED TO SALARY OR PAYMENT MADE IN LI EU OF SALARY BY OR ON BEHALF OF THE EMPLOYER. THE LD. AR SUBMITTED THAT THE HONBLE APEX COURT IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2005-06 HAD HELD T HAT TIPS FOR HOTEL EMPLOYEES INCLUDED AND PAID BY CREDI T CARD BY THE CUSTOMERS AND COLLECTED BY THE EMPLOYER AND DISBURSED TO THE EMPLOYEES DID NOT AMOUNT TO SALARY OR PROFIT IN LIEU OF SALARY OR PAYMENT MADE BY OR ON B EHALF OF THE EMPLOYER AND AS SUCH, THE PROVISIONS REQUIRI NG DEDUCTION OF TAX AT SOURCE WERE NOT ATTRACTED. THE LD. AR ALSO PLACED ON RECORD A COPY OF ORDER OF ITAT DE LHI IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010-11 IN ITA NO. 379 & 380/DEL/2014 WHEREIN A SIMILAR PENALTY WA S DIRECTED TO BE DELETED BY FOLLOWING THE HONBLE APE X COURTS JUDGMENT IN ASSESSEES OWN CASE. 4. THE LD. DEPARTMENTAL REPRESENTATIVE PLACED RELIA NCE ON THE ORDER OF THE ASSESSING OFFICER AND THE LD. C IT (A) AND VEHEMENTLY ARGUED THAT THE PENALTY SHOULD BE UPHELD. ITA NO. 4533/DEL/2015 ASSESSMENT YEAR 2005-06 4 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS UNDISPUTED THAT THE HON'BLE APEX COURT IN THE CASE OF ITC LTD. VS CIT(TDS) REPORTED IN 384 ITR 14(SC) AND CONNECTED APPEALS (OF WHICH ASSESSEE WAS ONE OF THE PARTIES) HAD RULED IN FAVOUR OF THE ASSESSEE BY HOLDING THAT PAY MENTS OF COLLECTED TIPS WOULD NOT BE PAYMENTS MADE BY OR ON BEHALF OF AN EMPLOYER. THE HON'BLE APEX COURT FURT HER OPINED THAT THERE WAS NO GROUND FOR SAYING THAT THE SE TIPS EVER BECAME THE PROPERTY OF THE EMPLOYERS AND EVEN IF THE BOX FOR TIPS WAS TO BE KEPT IN THE ACTUAL CU STODY OF THE EMPLOYER, HE WOULD HAVE NO TITLE TO THE MONEY A S HE WOULD BE HOLDING SUCH MONEY IN A FIDUCIARY CAPACITY FOR AND ON BEHALF OF HIS EMPLOYEES. THEREFORE, IT IS O BVIOUS THAT THE ISSUE BEFORE US IS NO LONGER RES INTEGRA AND RESPECTFULLY FOLLOWING THE HON'BLE APEX COURTS JUD GMENT IN THE CASE OF ITC LTD. VS CIT (TDS) (SUPRA), WE HO LD THAT SINCE THERE WAS NO LIABILITY TO DEDUCT TAX ON THE IMPUGNED PAYMENTS AND SINCE THERE WAS NO LIABILITY TO TAX U/S 201(1) AND 201(1A), THE PENALTY U/S 271C IS ALSO ITA NO. 4533/DEL/2015 ASSESSMENT YEAR 2005-06 5 NOT ATTRACTED. WE ACCORDINGLY DIRECT THE ASSESSING OFFICER TO DELETE THE SAME. 6. IN THE FINAL RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31ST O CTOBER, 2017. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 31 ST OCTOBER, 2017 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR