Gujarat State Electricity Corporation Ltd., Baroda V. The ACIT.,TDS, Circle, Baroda

ITA 542/AHD/2013

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6362 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-07-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 01-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Non-deduction of tax; TDS
• Section: 201(1); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NOS. 542 & 543/AHD/2013 (ASSESSMENT YEARS : 2007-08 & 2008-09) GUJARAT STATE ELECTRICITY CORPORATION LTD., SARDAR PATEL VIDYUT BHAVAN, RACE COURSE CIRCLE, BARODA. VS. ASSTT. COMMISSIONER OF INCOME TAX, TDS CIRCLE, BARODA. [PAN NO. AAACG 6864 F] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI M. K. PATEL, A.R. RESPONDENT BY : SHRI VINOD TANWANI, SR. D.R. DATE OF HEARING 09.08.2019 DATE OF PRONOUNCEMENT 16.10.2019 O R D E R PER MS. MADHUMITA ROY - JM: BOTH THE APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)- III, BARODA BOTH DATED 31.12.2012 UNDER SECTION 154 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT) WHEREBY AND WHEREUNDER TH E DEMAND ORDER PASSED BY THE ACIT, TDS CIRCLE, BARODA ON ACCOUNT OF INTEREST U/S 201(1A) OF THE ACT HAVE BEEN CONFIRMED FOR ASSESSMENT YEARS 2007-08 & 2008-09. SINCE BOTH THE APPEALS RELATE TO THE SAME ASSESSEE, THE SAME ARE HEARD ANALOGOUSLY AND ARE BEING DISPOSED OF BY A COMMON O RDER. ITA NOS. 542 & 543/AHD/2013 GUJARAT STATE ELECTRICITY CORPORATION LTD. VS. ACIT ASST.YEARS 2007-08 & 2008-09 - 2 - ITA NO.542/AHD/2013 FOR A.Y. 2007-08: 2. THE BRIEF FACTS LEADING TO THIS CASE IS THIS THA T BY AND UNDER AN ORDER ISSUED U/S 154 OF THE ACT DATED 07.01.2011 THE DEMA ND OF RS.4817.82 LACS U/S 201(1) AND RS.1638.05 LACS U/S 201(1A) AGGREGATING TO RS.6455.87 LACS FOR THE NON-DEDUCTION OF TAX AT SOURCE ON PAYMENT OF INTERE ST OF RS.22817.12 LACS TO GUJARAT URJA VIKAS NIGAM LIMITED (GUVNL) HAS BEEN D ETERMINED. THE ASSESSEE, THEREAFTER, BY AND UNDER A LETTER DATED 0 4.03.2011 FILED A RECTIFICATION APPLICATION UNDER SECTION 154 OF THE ACT FOR THE YE AR UNDER CONSIDERATION STATING THAT THE PAYEE COMPANY HAS FILED ITS INCOME TAX RETURN ON 31.10.2007 WHERE IT HAS PAID THE SELF ASSESSMENT TAX DUE ON IT S TOTAL INCOME AND THEREFORE, THERE WAS NO JUSTIFICATION TO RECOVER THE TAX AND I NTEREST THEREON U/S 201(1) AND 201(1A) OF THE ACT. THE LEARNED AO WAS, HOWEVER, OF THE OPINION THAT SINCE THE APPELLANT HAS PREFERRED AN APPEAL AGAINST THE S AID ORDER NO RECTIFICATION WAS NECESSARY AT THAT STAGE. AS PER THE LEARNED AO INTE REST OF RS.1638.05 LACS IS COMPENSATORY MEASURE AND IS MANDATORY AND AUTOMATIC IN NATURE. THE ASSESSEES CASE BEFORE US IS THIS THAT IF THE INTER EST IS CREDITED OR PAID TO ANY COMPANY IN WHICH ALL THE SHARES ARE HELD BY THE GOV ERNMENT OR RESERVE BANK OF INDIA OR A CORPORATION OWNED BY THAT COMPANY, NO TAX IS TO BE DEDUCTED AT SOURCE. HOWEVER, SUCH PLEA OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE AND PRAYER FOR RECTIFICATION HAS BEEN DISALLOWED, WHICH WAS FURTHER CONFIRMED IN APPEAL. 3. AT THE TIME OF HEARING OF THE INSTANT APPEAL THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT BY AND UNDER AN ORDER DATED 27.03.2019 PASSED IN ITA NO.2969 & 2970/AHD/2011 FO R THE A.Y. 2007-08 & 2008-09 IN ASSESSEES OWN CASE, THE CO-ORDINATE BEN CH HAS BEEN PLEASED TO HOLD THAT THE OBLIGATION TO DEDUCT TAX DEDUCTED AT SOURCE U/S 194A(3) OF THE ACT TOWARDS INTEREST PAYMENT BY THE ASSESSEE HAS BEEN O BLITERATED IN VIEW OF THE ITA NOS. 542 & 543/AHD/2013 GUJARAT STATE ELECTRICITY CORPORATION LTD. VS. ACIT ASST.YEARS 2007-08 & 2008-09 - 3 - NOTIFICATION BEING NO. S.O.3489 [NO. 170 (F. NO.12/ 164/68-ITCC/ITJ0.] DATED 22.10.1970. SINCE THE ASSESSEE HAS NOT MADE LIABLE TO DEDUCT TAX AT SOURCE U/S 194A(3) OF THE ACT TOWARDS INTEREST PAYMENT MADE TO GUVNL DEMAND U/S 201(1) & 201(1A) IS THEREFORE NOT SUSTAINABLE. THE COPY OF THE SAID ORDER PASSED BY THE SAID BENCH HAS ALSO BEEN SUBMITTED BE FORE US. 4. HEARD THE RESPECTIVE PARTIES, PERUSED THE RELEVA NT MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY CONSIDERED THE ORDER PASSED BY THE CO-ORDINATE BENCH. THE RELEVANT PORTION OF THE SAID ORDER AS RE LIED UPON BY THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE AS FOLLOWS: 3. WHEN THE MATTER WAS CALLED FOR HEARING THE LD. AR FOR THE ASSESSEE POINTED OUT AT THE OUTSET THAT ASSESSEE HAS CREDITE D/PAID INTEREST ON LOAN/BONDS PAYABLE TO A GOVERNMENT COMPANY M/S. GUJ ARAT URJA VIKAS NIGAM LTD. (GUVNL). A DISPUTE HAS BEEN RAISED BY THE REVE NUE THAT INTEREST PAYABLE TO THE GOVERNMENT COMPANY NOTED ABOVE IS ALSO SUSCE PTIBLE TO INTEREST U/S. 201(1A) FOR DEFAULT COMMITTED IN NOT DEDUCTING TAX DEDUCTED AT SOURCE IN TERMS OF SEC. 194A OF THE ACT. THE LD. AR IN THIS R EGARD STRAIGHT AWAY SUBMITTED THAT THE LENDER TO WHOM THE INTEREST WAS PAYABLE NAMELY GUJARAT URJA VIKAS NIGAM LIMITED (GUVNL) IS A WHOLLY OWNED UNDERTAKING OF GOVERNMENT OF GUJARAT AND100% OF SHARE HOLDING OF G UJARAT URJA VIKAS NIGAM LIMITED (GUVNL) IS HELD BY GOVERNMENT OF GUJA RAT AS CERTIFIED BY THE LENDER COMPANY AS PER CONFIRMATION DATED 13.03.2019 WHICH CERTIFICATE ALBEIT WAS NOT FURNISHED BEFORE THE LOWER AUTHORITIES. THE LD. AUTHORISED REPRESENTATIVE POINTED THAT THE LENDER TO WHOM THE INTEREST IS PAYABLE BEING A GOVERNMENT COMPANY, THE ASSESSEE IS EXEMPTED U/S. 1 94A(3)(III)(F) OF THE ACT FROM ITS OBLIGATION TO DEDUCT TAXES AT SOURCE. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE FOR THIS PURPOSE RE FERRED TO NOTIFICATION S.O. 3489 [NO. 170 (F. NO. 12/164/68-ITCC/ITJ0.] DATED 2 2.10.1970. THE TEXT OF THE NOTIFICATION IS QUOTED HERE UNDER: (I) ANY CORPORATION ESTABLISHED BY A CENTRAL, STAT E OR PROVINCIAL ACT; (II) ANY COMPANY IN WHICH ALL THE SHARES ARE HELD ( WHETHER SINGLY OR TAKEN TOGETHER) BY THE GOVERNMENT OR THE RESERVE BA NK OF INDIA OR A CORPORATION OWNED BY THAT BANK; AND (III) ANY UNDER TAKING OR BODY, INCLUDING A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 (21 OF 1860), FINANCED WHOLLY BY THE GOVERNMEN T. 4. IN VIEW OF THE EXPRESS NOTIFICATION POINTED OUT ON BEHALF OF THE ASSESSEE, THE OBLIGATION TO DEDUCT TAX DEDUCTED AT SOURCE U/S. 194A(III) ITA NOS. 542 & 543/AHD/2013 GUJARAT STATE ELECTRICITY CORPORATION LTD. VS. ACIT ASST.YEARS 2007-08 & 2008-09 - 4 - TOWARDS INTEREST PAYMENTS HAS BEEN OBLITERATED. IN THIS VIEW OF THE MATTER, WE WILL FIND MERIT IN THE CASE OF THE ASSESSEE FOR NON -APPLICATION OF SEC. 201(A) AS THE ASSESSEE CANNOT BE TREATED AS ASSESSEE IN DEFAU LT FOR THE PURPOSES OF CHARGING OF INTEREST. TAKING INTO CONSIDERATION THE ORDER PASSED BY THE C O-ORDINATE BENCH ON THE SAME ISSUE, WE FIND SUBSTANCES IN THE SUBMISSIO N MADE BY THE LEARNED AR. IN OUR CONSIDERED VIEW SINCE ASSESSEE HAS NOT MADE LIABLE TO DEDUCT TDS U/S 194A(3) TOWARDS INTEREST PAID TO GUVNL, THE IMPUGNE D DEMAND HAS NO LEGS TO STAND UPON AND HENCE THE IMPUGNED ORDER IS QUASH ED. 5. IN THE RESULT, ASSESSEES APPEAL IN ITA NO.542/A HD/2013 FOR A.Y. 2007- 08 IS ALLOWED. ITA NO.543/AHD/2013 FOR A.Y 2008-09 : 6. IN THIS APPEAL GROUND IS IDENTICAL TO THAT OF TH E GROUND ALREADY BEEN DEALT WITH BY US IN ITA NO.542/AHD/2013 FOR A.Y. 2007-08 AND IN THE ABSENCE OF ANY CHANGED CIRCUMSTANCES THE SAME SHALL APPLY MUTA TIS MUTANDIS. HENCE, THIS APPEAL PREFERRED BY THE ASSESSEE IS ALSO ALLOWED. 7. IN THE COMBINED RESULT, ASSESSEES BOTH THE APPE ALS ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 16/10/2019 SD/- SD/- ( WASEEM AHMED) ( MS. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 16/10/2019 PRITIYADAV, SR.PS ITA NOS. 542 & 543/AHD/2013 GUJARAT STATE ELECTRICITY CORPORATION LTD. VS. ACIT ASST.YEARS 2007-08 & 2008-09 - 5 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-III, BARODA. 5. , ! ', #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 09.08.2019 (DICTATION PAGES 3) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21.08.2019 3. OTHER MEMBER. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 15.10.2019 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER