ACIT (TDS), Dehradun V. The Director General Health, Dehradun

ITA 4936/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86843 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 28-01-2015
• Assessment Year: misc
• Appeal Filed On: 22-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJIV NANDA
• Assessee Lawyers: B R R KUMAR
• Keywords: Charitable institution
• Section: 133A; 194C; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H : NEW DELHI BEFORE SHRI S.V. MEHROTRA , ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K , JUDICIAL MEMBER ITA NO . 4936 /DEL/ 2013 ASSESSMENT YEAR : 2012 - 13 ACIT(TDS), 13 - A, SUBHASH ROAD, DEHRADUN. VS. THE DI RECTOR GENERAL HEALTH, NEAR IT PARK, SAHASTRADHARA ROAD, DEHRADUN. MRTD00478C (APPELLANT) (RESPONDENT) APPELLANT BY: SH. RAJIV NANDA, STANDING COUNSEL RESPONDENT BY: SH. B.R.R. KUMAR, SR. DR O R D E R PER S.V. ME HROTRA, A.M. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) - 1 , DEHRADUN DATED 30/03/2013 FOR A.Y. 2012 - 13 . 2. THE ASSESSEE IS A GOVERNMENT DEPARTMENT DEALING IN VARIOUS ACTIVITIES RELATED TO HEALTH DEPARTMENT. THE ASSESSEE S PREMISES WAS SURVEYED U/S 133A ON 7 TH SEPTEMBER, 2011. DURING THE SURVEY PROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE HAD MADE CONTRACTUAL PAYMENTS AMOUNTING TO RS. 12,28,58,000/ - TO VARIOUS PUBLIC SECTOR UNDERTAKING S OF THE GOVERNMENT OF UTTARAKHAND AND UTTAR PR ADESH BUT DID NOT DEDUCT TAX AT SOURCE FROM SUCH PAYMENTS. ACCORDINGLY, THE AO PASSED THE ORDER U/S ITA NO. 4936/D/ 2013 2 201(1)/201(1A) TREATING THE ASSESSEE IN DEAFULT AND A DEMAND OF RS. 79,21,918/ - (SHORT CHARGE OF RS. 64,57,160/ - AND INTEREST OF RS. 14,64,778/ - ) WAS CREAT ED. THIS DEMAND HAS BEEN CREATED IN RESPECT OF NON DEDUCTION OF TAX U/S 194C @ 2% ON THE TOTAL PAYMENTS OF RS. 12,28,58,000/ - AND U/S 194J @ 10% ON TOTAL PAYMENTS OF RS. 4 CRORES. 3. BRIEF FACTS APROPOS THE ISSUE RELATING TO NON - DEDUCTION OF TAX U/S 19 4C ARE THAT THE AO NOTICED THAT THE ASSESSEE HAD MADE CONTRACTUAL PAYMENTS TO VARIOUS ORGANIZATIONS OF GOVERNMENT AS NOTED IN PAGE 3 TO 5 OF HIS ORDER. HE OBSERVED THAT THE ASSESSEE S CONTENTION THAT THE VARIOUS NIRMAN UNITS WERE ONLY ALLOTTED BUDGET BY THE OFFICE A ND, THEREFORE, NO TDS WAS DEDUCTIBLE AS THE ALLOCATION WAS UNDER THE ORDERS OF GOVT. OF UTTARAKHAND , WAS NOT ACCETABLE AS THE PAYMENTS HAD BEEN MADE FOR CONSTRUCTION OF HOSPITALS, DISPENSARIES, BLOOD BANKS, TRANSIT HOSTELS ETC. AS REGARDS THE NON - DEDUCTION OF TDS U/S 194J BRIEF FACTS ARE THAT THERE WAS MEMORANDUM OF UNDERSTANDING EXECUTED BETWEEN DEPARTMENT OF HEALTH AND FAMILY WELFARE, GOVERNMENT OF UTTARAKHAND & EMERGENCY MANAGEMENT & RESEARCH INSTITUTE (EMRI) , SECUNDERABAD FOR PROVIDING EMER GENCY RESPONSE SERVICES TO THE ENTIRE POPULATION OF THE STATE OF UTTARAKHAND AS A NODAL AGENCY AND TO OPERATIONALISE EMERGENCY MEDICAL SERVICES. THE AO OBSERVED THAT GROSS CONTRACTUAL PAYMENTS MADE TO EMRI WERE SUBJECT TO TDS U/S 194J @ 10% AS THEY WERE I N THE NATURE OF FEES FOR PROFESSIONAL AND TECHNICAL SERVICES . BEFORE LD. CIT(A) IN RESPECT OF THE ISSUE RELATING TO TDS U/S 194C IT WAS, ITA NO. 4936/D/ 2013 3 INTER - ALIA, SUBMITTED THAT THERE WAS NO REVENUE LOSS IN THIS CASE BECAUSE OF THE DEDUCTEE S WERE LIABLE FOR INCOME TAX AND SUBMITTED THEIR RETURN OF INCOME REGULARLY AND ALSO DEPOSITED TAX. 4. LD. CIT(A) HELD THAT SINCE ENTIRE CONTRACT VALUE WAS ACTUALLY PAID TO THE GOVERNMENT ENTITIES THEY WERE ASSESSEE S CONTRACTORS AND, THEREFORE, TDS WAS REQUIRED TO BE MADE. AS REG ARDS DEFAULT IN DEDUCTION U/S 194J , THE LD. CIT(A) DID NOT ACCEPT THE ASSESSEE S CONTENTION THAT THE TDS PROVISIONS WERE NOT APPLICABLE TO EMRI. HE HELD THAT THE MOU SIGNED BETWEEN THE DEPARTMENT OF HEALTH & FAMILY WELFARE GOVERNMENT OF UTTARAKHAND AND EM RI SHOWED CLEARLY THAT EMRI WAS SIMPLY A TRANSPORT CONTRACTOR BUT IT WAS ITS RESPONSIBILITY TO PROVIDE FOR THE DEVELOPMENT, MANAGEMENT AND FUNCTIONING OF ALL THE FACILITIES AND SERVICES MENTIONED IN THE MOU. THUS, IT WAS PROVIDING SPECIALIZED COMPREHEN SIVE EMERGENCY RESPONSE SERVICES TO THE PEOPLE OF THE STATE IN PURSUANCE OF THE MOU WHICH COMES WITHIN THE AMBIT OF TECHNICAL/PROFESSIONAL SERVICES . 5. LD. CIT(A) ALSO DID NOT ACCEPT THE ASSESSEE S CONTENTIONS THAT EMRI SHOULD BE EXEMPTED FROM TDS AS I T WAS A CHARITABLE INSTITUTION REGISTERED U/S 12AA OF THE INCOME TAX ACT. HOWEVER, HE ACCEPTED THE ALTERNA TE CONTENTION OF THE ASSESSEE AND DIRECTED THE ASSESSEE TO FURNISH THE DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CONTENTIN BEFORE THE AO REGARDING TAX B EING PAID BY DEDUCTEES. HE ALSO HELD THAT INTEREST WOULD BE CHARGEABLE ITA NO. 4936/D/ 2013 4 IN RESPECT OF TAX THAT WAS PAID BY THE PAYEE DIRECTLY, FOR THE PERIOD BETWEEN THE TIME WHEN THE TAX WAS DEDUCTIBLE AND THE TIME IT WAS ACTUALLY PAID. 6. THE DEPARTMENT IS IN APEPAL BEFORE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSEE TO FURNISH THE DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CONTENTION (TO THE EFFECT THE PAYEE HAS DISCLOSED THE RECEIPT IN HIS RETURN OF IN COME AND PAID TAX DUE THEREON) BEFORE THE AO AND ALSO DIRECTING THE AO TO SATISFY HIMSELF ABOUT THE CORRECTNESS OF THE SAME IN LIGHT OF THE DECISION OF THE APEX COURT IN THE CASE OF COCA COLA BEVERAGE PVT. LTD. VS. CIT (2007) 293 ITR 226 (SC) WITHOUT APPRE CIATING THE FACTS THAT THE SAME IS TANTAMOUNT TO SET A SAID OF THE CASE. 7. AT THE TIME OF HEARING, LD. COUNSEL FILED BEFORE US TRIBUNAL S ORDER IN ASSESSEE S OWN CASE FOR A.YS. 2011 - 12 & 2012 - 13 AND FOR THE DEPARTMENT S APPEAL FOR A.Y. 2011 - 12. WE FIND THAT THE TRIBUNAL FOLLOWING THE ORDER FOR A.Y. 2011 - 12 HAS SET ASIDE THE ORDER FOR A.Y. 2012 - 13 AND RESTORE D THE MATTER TO THE FILE OF AO OBSERVING AS UNDER: 8. IN BOTH THESE APPEALS, THE GROUNDS RAISED BY THE ASSESSEE ARE IDENTICAL TO THE GROUNDS RAISE D BY THE ASSESSEE AND THE REVENUE FOR AY 2011 - 12. FOR THE DETAILED DISCUSSION THEREIN, THE ORDERS OF THE AUTHORITIES BELOW FOR A.Y. 2010 - 11 AS WELL AS AY 2012 - 13 ARE ALSO SET ASIDE AND HE IS DIRECTED TO READJUDICATE THE ISSUE IN THE LIGHT OF OUR DIRECTION IN PARAGRAPH NOS. 4 TO 6 ABVOE. THEREFORE, THE DEPARTMENT S APPEAL IS ALSO RESTORED TO THE FILE OF AO . ITA NO. 4936/D/ 2013 5 8. IN THE RESULT, THE DEPARTMENT S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON 23/02/2015 SD/ - SD/ - ( GEORGE GEORGE K ) J UDICIAL MEMBER ( S.V. ME HROTRA ) ACCOUNTANT MEMBER DATED: 23/02/2015 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER ASSISTANT REGISTRAR