Addl. CIT, Ghaziabad V. M/s. Lotus Valley Education Society, Noida

ITA 4904/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65834 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 12-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 04-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMANA SEN
• Assessee Lawyers: RAM BHUVNESH
• Keywords: Reasonable cause; Difference of opinion
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.4904 & 4905 /DEL/2011 ASSESSMENT YEAR : 2008-09 & 2009-10 ADDL. ACIT, LOTUS VALLEY EDUCATION GHAZIABAD. V. SOCIETY, 2, SECTOR-126, TAJ EXPRESSWAY, NOIDA. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAATL AAATL AAATL AAATL- -- -3200 3200 3200 3200- -- -H HH H APPELLANT BY : SMT. SUMANA SEN, DR. RESPONDENT BY : SHRI RAM BHUVNESH, ADVOCATE. ORDER PER TS KAPOOR, AM: THESE ARE TWO APPEALS FILED BY THE REVENUE AGAINST TH E COMMON ORDER OF LD CIT(A) DATED 9.8.2011 FOR BOTH YEARS. TH E GROUNDS OF APPEALS TAKEN BY THE REVENUE FOR BOTH THE YEARS ARE SA ME EXCEPT THE DIFFERENCE IN AMOUNT. FOR THE SAKE OF CONVENIENCE, T HE GROUNDS OF APPEALS FOR THE ASSESSMENT YEAR 2008-09 ARE REPRODUCED B ELOW:- 1. THAT THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN C ANCELLING THE PENALTY U/S 271C DATED 20.11.2010 PASSED BY ADDL. CIT (TDS), GHAZIABAD AND IN HOLDING THAT THE DEFAULT IN SHORT D EDUCTION OF TAX BY M/S LOTUS VALLEY EDUCATION SOCIETY (LOTUS VALL EY INTERNATIONAL SCHOOL), 2 SECTOR-126, EXPRESSWAY NOIDA IS BONA ITA NO4804&4805/DEL/11 2 FIDE ONE AND THERE IS REASONABLE CAUSE FOR THE SAME, IG NORING THE FACTS OF THE CASE THAT THE DEDUCTOR COMPANY IS LIABLE TO DEDUCT TAX U/S 194-I AT THE RATE OF 10% FOR HIRING THE BUSES AND FOR MAKING THE PAYMENT FOR COACHING TO THE STUDENTS. 2. THAT THE ORDER OF THE LD CIT(A) DESERVES TO BE CANCEL LED AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SOCIETY RUNNING SCHOOL UNDER THE NAME & STYLE M/S LOTUS VALLEY INTERNATIONAL SCHOOL, SECTOR-126, TAJ EXPRESSWAY, NOIDA. THE ASSESSEE HAD DEDUCTED TAX AT SOURCE UNDER THE HEAD PROFESSIONAL AND TECHNICAL FEES FOR MAKING PAYMENTS FOR HIRE OF BUSES MEANT FOR PICKI NG & DROPPING STUDENTS AND IT HAD DEDUCTED TAX U/S 194-C @ 2%. SIM ILARLY, IT HAD DEDUCTED TAX @ 2% ON THE PAYMENTS MADE TO COACHES FOR GIVING TRAINING TO STUDENTS FOR HORSE RIDING, TENNIS, & GOLF ETC. THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS, FORMED AN OPINIO N THAT ASSESSEE WAS REQUIRED TO DEDUCT INCOME TAX U/S 194-I AND 194-J @ 10% AND THEREFORE HE MADE AN ADDITION ACCORDINGLY AND I NITIATED PENALTY PROCEEDINGS U/S 271(1) (A) OF THE INCOME TAX ACT, 196 1 IN RESPECT OF BOTH YEARS. 3. DISSATISFIED WITH THE ORDER OF ASSESSING OFFICER, THE ASSESSEE FILED APPEALS BEFORE LD CIT(A) AND LD CIT(A) VIDE HIS CONSOL IDATED ORDER DATED 9.8.2011 IN RESPECT OF BOTH YEARS DELETED THE P ENALTY. THE RELEVANT PARAGRAPH OF LD CIT(A)S ORDER IS REPRODUCED BELOW:- 5.1. I FIND THAT PENALTY U/S 271C WAS IMPOSED ON 2 TY PES OF SHORT DEDUCTION ONE FOR COVERING PAYMENT FOR HIRED B USES, BY THE ASSESSING OFFICER U/S 194-I IN PLACE OF SECTION 194-C AS A PPLIED BY APPELLANT AND THE SECOND FOR COVERING PAYMENTS FOR COACHING ITA NO4804&4805/DEL/11 3 U/S 194-J BY THE ASSESSING OFFICER IN PLACE OF 194-C BY THE APPELLANT. THE FIRST LIMB I.E. APPLYING 194-I FOR HI RE OF BUSES HAS ALREADY BEEN REJECTED BY ITAT AND THEREFORE THIS FIR ST TYPE OF SHORT DEDUCTION CEASED TO EXIST. THEREFORE, TO THAT EX TENT THE BASIS FOR LEVY OF PENALTY GOES AWAY. EVEN REGARDING TH E SECOND LIMB I.E. PAYMENT TO COACHES, I FIND THAT:- I) IT CAN VERY WELL BE BECAUSE OF BONAFIDE DIFFERENC E IN INTERPRETATION OF WHETHER IT IS PAYMENT TO THE PROVI SION COVERED U/S 94-J OR WHETHER IT IS A CONTRACTUAL PAYMENT. II) THE APPELLANT HAS ALREADY SUBMITTED THE PROOF OF PAYMENT OF TAX BY THE DEDUCTEE HIMSELF. III) THE AMOUNTS INVOLVED ARE SMALL AND IT IS THE FIRST TIME DEFAULT. CONSIDERING THE ABOVE, I HOLD THAT ALTHOUGH SHORT DED UCTION WAS UPHELD BY CIT(A) AND ITAT, THE DEFAULT IS BONAFIDE O NE AND THERE IS A REASONABLE CAUSE FOR THE SAME. HENCE, IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271C. 4. AGGRIEVED, THE REVENUE HAS FILED APPEALS BEFORE TH IS TRIBUNAL. 5. AT THE OUTSET, THE LD AR INVITED OUR ATTENTION TO PAGE 8 TO 11 OF PAPER BOOK WHEREIN HE POINTED OUT THAT MATTER OF QU ANTUM IN RESPECT OF BOTH YEARS HAS BEEN DECIDED BY HON'BLE TRIBUNAL D ATED 14.1.2011 IN FAVOUR OF ASSESSEE. THEREFORE, IN VIEW OF THE ABOVE, TH E LD AR ARGUED THAT SINCE QUANTUM HAS BEEN DELETED BY ITAT, THEREFOR E PENALTY U/S 271C CANNOT SUSTAIN ITA NO4804&4805/DEL/11 4 6. THE LD DR, ON THE OTHER HAND, RELIED UPON THE OR DER OF ASSESSING OFFICER AND ARGUED THAT THE HON'BLE ITAT IN THE SAME ORDER HAD GIVEN RELIEF TO THE ASSESSEE PARTLY IN RESPECT OF PAYMENT TO B USES ONLY AND IN RESPECT OF PAYMENT TO COACHES THE ADDITION WAS UPHELD. THEREFORE, IN VIEW OF THE ABOVE, HE ARGUED THAT PENALTY IMPOSED BE CAUSE OF SHORT DEDUCTION IN RESPECT OF PAYMENTS TO COACHES BE CONFIRM ED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES A ND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE F IND FROM THE ORDER OF TRIBUNAL THAT THE TRIBUNAL HAD UPHELD THE ADDITI ON ON ACCOUNT OF PAYMENTS TO COACHES MADE IN RESPECT OF TENNIS, GOLF SER VICES AND HORSE RIDING. HOWEVER, IN THE SAME YEAR, THE HON'BLE TRIBUNAL HAD HELD THAT THE PAYMENTS MADE ON ACCOUNT OF HIRING OF BUSES W AS ELIGIBLE FOR TAX DEDUCTION U/S 194-C INSTEAD OF SECTION 194-I. THER EFORE, THERE WAS NO SHORT DEDUCTION IN RESPECT OF PAYMENTS FOR HIRE OF BUSES AND THEREFORE NO PENALTY IS LEVIABLE FOR PAYMENTS FOR HIR E OF BUSES. WE HAVE ALSO NOTED THAT PAYMENT TO COACHES AND TRAINERS H AS BEEN SPECIFICALLY INCLUDED UNDER PROFESSIONAL SERVICES U/S 194 -J VIDE NOTIFICATION NO.S0-2085(E) DATED 21.8.2008 W.E.F. 2 1.8.2008 I.E. FROM THE FINANCIAL YEAR 2008-09 RELEVANT FOR ASSESSMENT YEAR 2009-10. IN VIEW OF THE ABOVE, THE SHORT DEDUCTION IN RESPECT OF PAYMENTS MADE TO COACHES IN THE ASSESSMENT YEAR 2008-09 CAN BE SAID TO BE DUE TO DIFFERENCE OF OPINION REGARDING APPLICABILITY OF A PARTICULAR SECTION,. THEREFORE, FOR ASSESSMENT YEAR 2008-09, WE SEE JUSTIFICAT ION IN LD CIT(A)S ORDER FOR DROPPING PENALTY U/S 271C AND TO T HAT EXTENT WE AGREE WITH THE ORDER OF LD CIT(A). HOWEVER, IN RESPE CT OF PAYMENTS MADE FOR THE ASSESSMENT YEAR 2009-10 IN RESPECT OF COACH ES AND TRAINERS WE HOLD THAT THE ASSESSEE INDEED DEDUCTED SHORT TAX AT SOURCE FROM 21.8.2008. THE ASSESSEE WAS DUTY BOUND TO DEDUCT TA X AT SOURCE ON PAYMENTS TO COACHES U/S 194J @ 10% FROM 21.8.2008. THEREFORE, ITA NO4804&4805/DEL/11 5 WE HOLD THAT PENALTY IS LEVIABLE IN RESPECT OF PAYMEN TS TO COACHES FROM 21.8.2008 TO 31.3.2009 IN RESPECT OF ASSESSMENT YEAR 200 9-10. THE ASSESSING OFFICER THEREFORE IS DIRECTED TO RECALCULATE T HE PENALTY ON SHORT DEDUCTION OF TAX ON PAYMENTS MADE TO COACHES & T RAINERS FROM 21.8.2008 TO 31.3.2009. 8. IN VIEW OF THE ABOVE, THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2008-09 IS DISMISSED AND FOR ASSESSMENT YEAR 2009-10 I T IS PARTLY ALLOWED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 31ST DAY OF 31ST OCTOBER, 2012. SD/- SD/- (U.B.S. BEDI) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 31.10.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 12.9.2012 DATE OF DICTATION 30.10.2012 DATE OF TYPING 30.10.2012 DATE OF ORDER SIGNED BY 31.10.2012 BOTH THE MEMBERS & PRONOUNCEMENT. ITA NO4804&4805/DEL/11 6 DATE OF ORDER UPLOADED ON NET & SENT TO THE BENCH CONCERNED.