ITO (TDS) 2(3), MUMBAI V. MUNICIAPL CORPORATION OF GREATER MUMBAI, MUMBAI

ITA 5539/MUM/2013

• Counselvise Citation: 553919914 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-06-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 22-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR YOGESH KAMAT
• Assessee Lawyers: S M PRADHAN
• Keywords: Capital asset; Competent authority
• Section: 133A

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - B,BENCH , , BEFORE S/SH. JOGINDER S INGH,JUDICIAL MEMBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 5539 AND 5540 /MUM/2013, / ASSESSMENT YEAR - 2005 - 06 AND 20 06 - 07 INCOME TAX OFFICER - (TDS) - 2(3) ROOM NO.70 8 , 7TH FLOOR, SMT. K.G. MITTAL AYURVEDIC HOSPITAL BUILDING CHARNI ROAD, MUMB AI - 400 002. VS MUNICIPAL CORPORATION OF GREATER MUMBAI MUNICIPAL HEAD OFFICE OLD BUILDING, MAHAPALIKA MARG MUMBAI - 400 001 PAN: AAALM 0042 L ( / A PPELLANT ) ( / RESPONDENT ) /ASSESSEE BY :SHRI S.M. PRADHAN / REVENUE BY : DR. YOGESH KAMAT / DATE OF HEARING : 18 - 0 6 - 2015 / DATE OF PRON OUNCEMENT : 18 - 06 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT. 29.5 .20 13 OF CIT(A) - 14 THE ASSESSING OFFICER(AO), HAS RAISED FOLLOWING GROUNDS OF APPEAL FOR THE ABOVE REFERRED TWO ASSESSMENT YEARS : I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DECIDING THAT LIABILITY OF TDS, AS DECIDED BY THE AO IN ORDER PASSED U/S 201(1)/201(1A) OF THE INCOME TAX ACT, 1961, DOES NOT ATTRACT U/S 194LA OF THE I - T ACT, 1961 IN THE CESE OF ASSESSEE IF THE PAYMENTS ARE MADE THROUGH LAND ACQUISITION OFFICER (LA 0). II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN NOT APPRECIATING THE BASIC VIGOUR OF SECTION 194LA OF THE I - TACT, 1961 AS THE LAND ACQUISITION OFFICER (LAO) IA MERELY AN INTERMEDIARY I.E. FACILITATOR TO HELP THE ASSESSEE ACQUIRING THE LAND. III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE INTEREST U/S 201(1A) OF THE IT ACT, 1961 ON THE SHORT DEDUCTION OF TAX DETERMINED BY THE AO AS THE TAX DETERMINED HAS ALREADY BEE N DELETED BY HIM AND INTEREST DELETION IS CONSEQUENTIAL TO THE QUANTUM DELETION FOR WHICH FURTHER APPEAL HAS BEEN RECOMMENDED VIDE GROUND NO. I TO III. 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR MODIFY ANY GROUND WHICH MAY BE NECESSARY AT THE TIME OF THE HEARING OF THE CASE OR THEREAFTER. 3. THE ORDER OF THE CIT(A) BEING ERRONEOUS BE SET ASIDE AND A.O'S ORDER BE RESTORED. THE ASSESSEE IS A CORPORATION AND IS ENGAGED IN PROVIDING BASIC FACILITIES AND INFRASTRUCTURAL DEVELOPMENT IN THE C ITY OF MUMBAI AND ITS SUBURBS . A SURVEY OPERATION U/S. 133A OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 25.10,2005 FOR VERIFICATION OF COMPLIANCE OF PROVISIONS OF THE ACT IN RESPECT OF TAX DEDUCTION AT SOURCE. THEREAFTER , AO INITIATED PRO CEEDINGS U/S. 201 OF THE ACT. AFTER CONSIDERING VARIOUS ISSUES ARISING OUT OF SURVEY OPERATION AND THE ITA NO.5539 & 5540/MUM/2013 - MCGM 2 EXPLANATION FILED BY THE ASSESSEE HE PASSED ORDERS U/S. 201(1)/201(1A) OF THE ACT, HOLDING THE ASSESSEE TO BE AN ASSESSEE IN DEFAULT .AO RAISED DEMAND OF TAX AND INTEREST AT RS . 1.24 CR ORES ( 20 05 - 06) AND RS.4.23CR ORES ( 20 06 - 07). 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DEDUCTION OF TAX AS PER THE PROVISION OF S . 194LA OF THE ACT. DURING THE COURSE OF SURVEY OPERATION, THE AO NOTED THAT THE ASSESSEE HAD MADE PAY MENTS OF COMPENSATION TOWARDS LAND ACQUISITION. THE ASSESSEE WAS ISSUED A SHOWCAUSE NOTICE AS TO EXPLAIN AS TO WHETHER ANY TAX WAS DEDUCTED AND PAID TO CENTRAL GOVERNMENT TREASURY AS PER THE PROVISIONS OF S.194LA. AS THE ASSESSEE DID NOT FURNISH ANY INFORM ATION IN THAT REGARD DURING THE COURSE OF PROCEEDINGS ,SO,H E HELD THAT THE ASSESSEE WAS IN DEFAULT .A CCORDINGLY , HE COMPUTED THE TAX AND INTEREST LIABILITY. 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY ( FAA ). B EFORE HIM IT WAS ARGUED THAT THE LAND WAS ACQUIRED BY THE ASSESSEE , THAT THE PAYMENT WAS NEVER MADE BY IT DIRECTLY TO THE INDIVIDUAL LAND OWNERS, THAT PAYMENTS WERE MADE BY LAND ACQUISITION OFFICERS OF THE S TATE G OVT., THAT THERE WAS NO LIABILITY ON PART OF THE ASSESSEE , TO DEDUCT TAX AT SOURCE.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE , THE FAA HELD THAT THE AO SHOULD VERIFY THE FACT OF PAYMENT TO THE LAND OWNERS BY THE LAND ACQUISITION OFFICERS, THAT IF THE ASSESSEE HAD NOT MA DE ANY DIRECT PAYMENT OF COMPENSATION IT SHOULD NOT BE HELD THAT THE ASSESSEE IS IN DEFAULT.FINALLY, HE ALLOWED THE GROUND OF APPEAL , WITH REGARD TO COMPENSATION PAID FOR LAND ACQUISITION , FOR STATISTICAL PURPOSES. 4. DURING THE COURSE OF HEARING BEFORE US, DEPARTMENTAL RE PRESENTATIVE ( DR ) SUPPORTED THE ORDER OF THE AO. THE AUTHORISED REPRESENTATIVE ( AR ) RELIED UPON THE CASE OF M ARIAMMA & OTHER S (280 ITR 225) OF THE H ONBLE KERALA HIGH COURT AND STATED THAT ASSESSEE HAD NOT MADE ANY PAYMENT TO THE PERSONS FROM WHOM LAND H AD ACQUIRED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE AO HAD INVOKED THE PROVISIONS OF S.194LA OF THE ACT, THAT THE ASSESSEE HAD CLAIMED THAT IT NEVER PAID THE COMPENSATION DIRECTLY TO THE LAND OWNERS, THA T FAA HAD DIRECTED THE AO TO VERIFY THE FACTUAL POSITION OF THE PAYMENTS MADE TO THE LAND OWNERS I.E., WHETHER THE PAYMENT WAS MADE BY THE ASSESSEE OR THE LAND ACQUISITION OFFICERS. IN OUR OPINION HIS ORDER DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. W E FIND THAT IN THE CASE OF MARIAMM A AND O THERS (SUPRA) , THE H ONBLE COURT HAS HELD AS UNDER : - THE INCOME - TAX ACT IS A CENTRAL ACT. CHAPTER XVII OF THE INCOME - TAX ACT CASTS AN OBLIGATION ON THE AUTHORITIES CONCERNED TO DEDUCT TAX AT SOURCE. FOR DEDUCTING TAX AT SOURCE, NO SPECIAL OR SPECIFIC ORDER OF ANY COURT IS NECESSARY. ORIGINALLY WHERE COMPENSATION WAS PAID OUT ON ACCOUNT OF TRANSFER OF CAPITAL ASSETS, IT WAS NOT LIABLE FOR ANY TAX. BUT, THE INCOME - TAX ACT WAS AMENDED AND WITH EFFECT FROM JUNE 1, 1999, SECTI ON 194L WAS ADDED. THE INCOME - TAX ACT WAS AGAIN AMENDED BY THE FINANCE (NO. 2) ACT OF 2004. SECTION 194LA WAS INTRODUCED WITH EFFECT FROM OCTOBER 1, 2004. AS A RESULT, WHERE LAND IS COMPULSORILY ACQUIRED AND COMPENSATION IS PAID, IF THE AGGREGATE AMOUNT EX CEEDS RUPEES ONE HUNDRED THOUSAND AND THE LAND ACQUIRED IS NOT AGRICULTURAL LAND, A STATUTORY DUTY IS CAST UPON THE LAND ACQUISITION OFFICER TO DEDUCT TAX AT SOURCE ON THE AMOUNT OF COMPENSATION ON THE MARKET VALUE PAYABLE TO THE CLAIMANTS WITH EFFECT FROM OCTOBER 1, 2004. THE WORDING OF SECTIONS 194A , 194L AND 194LA IS VERY CLEAR. THE TAX IS TO BE DEDUCTED AT THE TIME OF PAYMENT OF THE AMOUNTS BY CASH OR DRAFT, ETC. SO EVEN IF THE LAND WAS ACQUIRED MUCH PRIOR TO THE INTRODUCTION OF SECTION 194L OR SECTION 194LA , THE LIABILITY TO ITA NO.5539 & 5540/MUM/2013 - MCGM 3 DEDUCT TAX ARISES ON THE DATE ON WHICH THE AMOUNTS ARE PAID OR DEPOSITED IN THE COURT TO BE PAID TO THE CLAIMANTS. INTEREST PAYABLE UNDER THE DECREE IS EXIGIBLE TO INCOME - TAX. IF ANY AMOUNT WAS PAID OR DEPOSITED BETWEEN JUNE 1, 19 99 AND JUNE 1, 2002, INCOME - TAX OUGHT TO HAVE BEEN DEDUCTED FOR THE LAND VALUE AND SOLATIUM AS PROVIDED UNDER SECTION 194L . THEREAFTER THE LIABILITY TO DEDUCT INCOME - TAX ON THE LAND VALUE ARISES ONLY IF THE AMOUNTS ARE PAID OR DEPOSITED ON OR AFTER OCTOBE R 1, 2004. SO, IF ANY AMOUNT IS PAID AFTER OCTOBER 1, 2004, INCOME - TAX AS PROVIDED UNDER SECTION 194LA IS TO BE DEDUCTED. SO, THE RELEVANT DATE FOR FIXING THE TAX LIABILITY IS THE DATE ON WHICH THE AMOUNT IS PAID TO THE CLAIMANT OR DEPOSITED IN THE COURT. FOR CALCULATING THE INCOME - TAX PAYABLE, THE INTEREST PORTION OF THE AMOUNT AND COMPENSATION OR ENHANCED COMPENSATION SHALL BE CALCULATED SEPARATELY. INCOME - TAX ON THE INTEREST IS TO BE DEDUCTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 194A AND THE INCO ME - TAX, IF ANY, DUE ON THE AMOUNT OF COMPENSATION IS TO BE DEDUCTED IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTION 194L OR 194LA WITH REFERENCE TO THE DATE OF DEPOSIT. IN SOME CASES LAND IS ACQUIRED EITHER FOR A PUBLIC COMPANY OR FOR LOCAL BODIES. IN SUCH CASES, THE COMPENSATION AMOUNT IS ALWAYS MADE AVAILABLE BY THE REQUISITIONING AUTHORITY. EVEN IF LAND IS ACQUIRED FOR A LOCAL AUTHORITY OR COMPANY AND NECESSARY FUNDS ARE MADE AVAILABLE TO THE LAND ACQUISITION OFFICER BY SUCH AUTHORITIES, THE LIAB ILITY TO PAY INCOME - TAX IS WITH THE LAND ACQUISITION OFFICER, WHO INITIATED PROCEEDINGS UNDER THE LAND ACQUISITION ACT AND ACTUALLY PAYS THE COMPENSATION AMOUNT AND INTEREST TO THE CLAIMANTS. IN EVERY CASE, WHETHER THE ACQUISITION IS FOR THE CENTRAL GOVERN MENT, STATE GOVERNMENT OR OTHER AGENCIES, IT IS THE DUTY OF THE LAND ACQUISITION OFFICER TO DEDUCT THE INCOME - TAX DUE TO THE INCOME - TAX DEPARTMENT FROM THE AMOUNT OF COMPENSATION AND INTEREST IN ACCORDANCE WITH THE PROVISIONS OF SECTION 194A OR 194LA , AS THE CASE MAY BE. OF COURSE, IF IN A PARTICULAR CASE THE CLAIMANT IS NOT LIABLE TO PAY INCOME - TAX OR IF HE IS ENTITLED TO PAY TAX AT A LOWER RATE, HE WILL HAVE TO OBTAIN NECESSARY TAX DEDUCTION CERTIFICATE FROM THE LAND ACQUISITION OFFICER AND CLAIM SUCH BE NEFIT BEFORE THE COMPETENT AUTHORITY UNDER THE INCOME - TAX ACT. IT IS A WELL - SETTLED POSITION OF LAW THAT WHENEVER ANY AUTHORITY DEDUCTS INCOME - TAX AT SOURCE, HE IS BOUND TO ISSUE A TAX DEDUCTION CERTIFICATE TO THE CLAIMANT. SO, THE CLAIMANT IS ENTITLED TO GET A CERTIFICATE OF TAX DEDUCTED AT SOURCE OR TAX PAID UNDER SUB - SECTION (1A) OF SECTION 192 BY THE LAND ACQUISITION OFFICER. UNDER RULE 31(1) OF THE INCOME - TAX RULES, 1962, A CERTIFICATE SHALL BE ISSUED WITHIN THE TIME FIXED UNDER THE RULES AND IN THE F ORM PRESCRIBED. IF THE COMPENSATION AND INTEREST DUE UNDER A DECREE IS TO BE DIVIDED AMONG A NUMBER OF CLAIMANTS, INCOME - TAX HAS TO BE DEDUCTED FROM THE SHARE FOUND DUE TO EACH CLAIMANT AND SEPARATE TAX DEDUCTION CERTIFICATES ISSUED TO EACH OF THEM. IN EVE RY CASE WHILE DEPOSITING MONEY DUE UNDER THE DECREE UNDER A LAND ACQUISITION REFERENCE THE LAND ACQUISITION OFFICER SHALL STATE BEFORE THE LAND ACQUISITION COURT AS TO WHAT AMOUNTS ARE LIABLE TO BE DEDUCTED AS INCOME - TAX. THE LAND ACQUISITION COURT SHALL A LLOW THE LAND ACQUISITION OFFICER TO DEDUCT THE INCOME - TAX DUE AND DEPOSIT ONLY THE BALANCE AMOUNT FOR PAYMENT TO THE CLAIMANT. IN CASE ANY DEDUCTION IS MADE BY WAY OF INCOME - TAX, THE LAND ACQUISITION OFFICER SHALL ISSUE TAX DEDUCTION CERTIFICATE DIRECTLY TO THE PARTY OR PRODUCE THE SAME BEFORE THE COURT TO BE GIVEN TO THE CLAIMANTS IN ACCORDANCE WITH THE RULES FRAMED UNDER THE INCOME - TAX ACT. R ESPECTFULLY FOLLOWING THE ABOVE , WE DECIDE THE EFFECTIVE GROUNDS OF APPEAL FOR BOTH THE ASSESSMENT YEARS AGAINST THE AO. AS A RESULT APPEALS FILED BY THE AO FOR THE AYS 2005 - 06 AND 20 06 - 07 STAND DISMISSED. . . . ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH , JUNE,2015. 18 , 2015 ITA NO.5539 & 5540/MUM/2013 - MCGM 4 SD/ - SD/ - ( / JOGINDER S INGH) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 18 .06.2015 . . . JV . SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.