M/s Madhya Pradesh Madhya Kshetra Vidyut Vitaran Co. Ltd., Bhopal V. The ACIT, (TDS), Bhopal

ITA 56/IND/2012

• Counselvise Citation: 5622714 RSA 2012
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 07-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESHAV SAXENA
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3); 201(1); 54; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : ADDCM6799G I.T.A.NO S . 54 TO 56/ IND/201 2 A.Y S . : 2005 - 06 TO 2007 - 08 MADHYA PRADESH MADHYA KSHETRA VIDYUT VITARAN COMPANY LIMITED, BHOPAL. VS ACIT,(TDS), BHOPAL APPELLANT RESPONDENT APPELLANT BY : SHRI MANOJ MUNSHI, ADV. RESPONDENT BY : SHRI KESHAV SAXENA, CIT DR DATE OF HEARING : 16 .04.2012 DATE OF PRONOUNCEMENT : 31.0 5 .201 2 O R D E R PER R. C. SHARMA, A.M. THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 235.10.2011, FOR THE ASSESSME NT YEARS 2005-06 TO 2007-08 IN THE MATTER OF ORDER PASSED U/ S 201 OF THE INCOME-TAX ACT, 1961. -: 2: - 2 2. VARIOUS GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE, BU T THE CRUX OF THE ISSUE REVOLVES AROUND LEVYING OF IN TEREST U/S 201(1A) OF THE INCOME-TAX ACT, 1961, ON THE AMOUNT OF TDS. LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE F IRST ISSUE IS COVERED BY JUDGMENTS OF I.T.A.T., JAIPUR, DELHI, JA BALPUR, CUTTACK, MUMBAI, MADRAS, WHEREAS SECOND ISSUE IS CO VERED BY JUDGMENTS OF GUJARAT HIGH COURT, DELHI HIGH COURT. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956, AND IS ENGAGED IN THE DISTRIBUTION OF POWER IN THE STATE OF MADHYA PRADESH. THE ASSESSEE IS PURCHASING POWER FROM THE GENERATIN G COMPANY NAMELY M/S. MADHYA PRADESH POWER GENERATING COMPANY LIMITED AND SELLING IT TO THE CONSUMERS. TH E POWER FROM THE GENERATION POINT TO THE ASSESSEE COMPANY I S TRANSMITTED THROUGH THE TRANSMISSION NETWORK OF TRA NSCO. THE ASSESSEE COMPANY HAS ENTERED INTO TRANSMISSION SERVICE AGREEMENT WITH MADHYA PRADESH POWER TRANSMISSION COMPANY ( TRANSCO) FOR TRANSMISSION OF POWER. M/S. TRANSCO IS GRANTED LICENSE TO PROVIDE TECHNICAL SE RVICE FOR -: 3: - 3 TRANSMISSION OF ELECTRICITY THROUGH INTRA-STATE TRA NSMISSION SYSTEM. IT OPERATES STATE LOAD DISPATCH CENTRE AS M ANDATED U/S 31(2) OF THE ELECTRICITY ACT, 2003. IT IS PROVI DING ALL TECHNICAL SERVICES FOR POWER TRANSMISSION. THE FEE FOR TECHNICAL SERVICE PROVIDED IS CHARGED UNDER THE HEAD WHEELING CHARGES FOR TRANSMISSION OF POWER AND SLDC CHARGES FOR PROV IDING THE TECHNICAL SERVICES FOR RUNNING STATE LOAD DISPATCH CENTRE (SLDC). THE ASSESSEE DID NOT DEDUCT TDS ON TRANSMIS SION CHARGES PAID TO TRANSCO, UNDER THE TRANSMISSION SER VICE AGREEMENT. THE ASSESSING OFFICER HELD THAT OUT OF T HE PAYMENTS MADE TO TRANSCO THE PAYMENTS MADE FOR WHEE LING CHARGES AND SLDC CHARGES WERE LIABLE TO DEDUCTION O F TDS U/S 195J. AFTER HEARING THE ASSESSEE ON THE MATTER HE P ASSED THE ORDER LEVYING INTEREST U/S 201(1A) OF RS. 2,03,60,7 10/- FOR ASSESSMENT YEAR 2005-06, RS. 2,76,77,354/- FOR ASSE SSMENT YEAR 2006-07, RS. 3,47,44,284/- FOR ASSESSMENT YEAR 2007-08. 4. BY THE IMPUGNED ORDER, THE CIT(A) CONFIRMED THE CHARGEABILITY OF INTEREST U/S 201(1A) AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. -: 4: - 4 5. AMONG VARIOUS CONTENTIONS, THE THRUST OF ARGUMENTS OF LD. AUTHORIZED REPRESENTATIVE, WAS THAT SINCE THE RECIPIENT OF INCOME HAD DULY PAID TAX ON ITS ENTIRE INCOME INCLU DING THE INCOME RECEIVED BY ASSESSEE, THERE WAS NO REASON TO DEDUCT TAX ON THE INCOME PAID BY ASSESSEE AND ASSESSING OF FICER WAS NOT JUSTIFIED IN CHARGING INTEREST U/S 201(1A). THE LD. AUTHORIZED REPRESENTATIVE PLACED ON RECORD THE ORD ER OF I.T.A.T., JAIPUR BENCH IN THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LIMITED ORDER DATED 30 TH APRIL, 2009, WHEREIN IT WAS ALLEGED BY LD. AUTHORIZED REPRESENTATIVE THAT UNDER SIMILAR FACTS, THE LEVY OF INTEREST WAS HELD TO BE NOT JUST IFIED BY THE HONOURABLE BENCH. 6. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF COORDINATE BENCH, WHICH APPEARS TO BE ON SIMILAR FA CTS AND IN RESPECT OF SIMILAR PAYMENT HAVING BEEN MADE ON WHIC H INTEREST WAS CHARGED FOR DELAY IN DEDUCTION/PAYMENT OF TDS. THE TRIBUNAL AFTER CONSIDERING ALL THE FACTS HELD T HAT NO INTEREST U/S 201(1A) IS LEVIABLE ON THE ASSESSEE. F OLLOWING WAS THE PRECISE OBSERVATION OF THE BENCH :- TAX DEDUCTION AT SOURCE - INTEREST UNDER -: 5: - 5 SECTION 201(LA) TAX NOT PAYABLE BY PAYEE--WHERE RVPV TO WHOM TRANSMISSION CHARGES WERE PAID BY ASSESSEE HAD NO TAX LIABILITY AND RVPN RECEIVED REFUND OF TAX, OUT OF PAYMENTS MADE BY OTHERS, THERE WAS, THEREFORE, NO LOSS OF REVENUE TO DEPARTMENT ACCOUNT OF NON-DEDUCTION OF TDS, NO INTEREST UNDER SECTION 201(LA) WAS, THEREFORE, LEVIABLE. THE PROVISION OF THE ACT IS A MEASURE TO COMPENSATE THE REVENUE FOR DELAY IN PAYMENT OF TAXES. IN THE PRESENT CASE, RVPN TO WHOM TRANSMISSION CHARGES ARE PAID ARE ASSESSED WITH THE SAME ASSESSING OFFICER WITH WHOM THE ASSESSEE IS ASSESSED WITH. RVPN HAS REGULARLY FILED ITS RETURN OF INCOME FOR ASSESSMENT YEARS 2005-06 TO 2008-09 DECLARING NIL INCOME AND HAVING SUBSTANTIAL CARRY FORWARD OF UNABSORBED DEPRECIATION. FOR ASSESSMENT YEARS 2005-06 AND 2006-07, RVPN IS ASSESSED UNDER SECTION 143(3) AT NIL INCOME WITH SUBSTANTIAL CARRY -: 6: - 6 FORWARD OF UNABSORBED DEPRECIATION. THUS, RVPN HAS NO TAX LIABILITY AND IT HAS BEEN ALLOWED THE REFUND OF TAX WHICH WAS DEDUCTED AT SOURCE ON SOME OTHER PAYMENTS BY SOME OTHER PARTIES. THUS, THERE IS NO LOSS OF REVENUE TO THE DEPARTMENT BY NOT DEDUCTING TAX AT SOURCE BY THE ASSESSEE ON THE TRANSMISSION PAYMENT. [PARA 11] IN THE PRESENT CASE, FROM THE COPY OF THE IT RETURN FOR ASSESSMENT YEARS 2005-06 TO 2008-09 AND COPY OF THE ASSESSMENT ORDER FOR ASSESSMENT YEARS 2005-06 AND 2006-07, IT IS NOTED THAT WHATEVER TAX WAS DEDUCTED AT SOURCE HAS BEEN CLAIMED/ALLOWED AS REFUND TO RVPN. THEREFORE, NO INTEREST UNDER SECTION 201(LA) FOR EARLIER YEARS IS LEVIABLE ON THE ASSESSEE. [PARA 11] CIRCULAR NO. 275/101/95IT(B), DT. 29-1-1997 CLARIFIES THAT WHERE THE DEDUCTEE ASSESSEE HAS PAID THE TAX, DEMAND UNDER SECTION 201 IS NOT VISUALISED BUT THIS WILL NOT ALTER THE LIABILITY OF INTEREST UNDER SECTION 201(LA) TILL THE DATE OF -: 7: - 7 PAYMENT OF TAXES BY THE DEDUCTEE ASSESSEE. THIS CIRCULAR SUPPORTS THE CASE OF THE ASSESSEE, INASMUCH AS THIS CIRCULAR VISUALISES THE LIABILITIES OF INTEREST TILL THE PAYMENT OF TAXES BY DEDUCTEE ASSESSEE. IF DEDUCTEE ASSESSEE HAS NO LIABILITY OF PAYMENT OF TAXES NO INTEREST LIABILITY UNDER SECTION 201(1A) IS VISUALISED. IN THE PRESENT CASE, THE DEDUCTEE ASSESSEE, I.E., RVPN HAS NO LIABILITY OF TAX AND, THEREFORE, THE LIABILITY OF INTEREST UNDER SECTION 201(LA) WOULD NOT ARISE SINCE NO TAX IS PAYABLE BY THE RVPN. [PARA 11.1]. IN VIEW OF ABOVE AND PARTICULARLY IN THE FACTS OF THE PRESENT CASE, NO INTEREST UNDER SECTION 201(LA) IS LEVIABLE ON THE ASSESSEE. HENCE, THIS GROUND IS ALLOWED. 7. FACTS OF THE INSTANT CASE ARE ALSO PARI MATERIA, WH EREIN INTEREST HAS BEEN LEVIED FOR NON DEDUCTION/DELAY IN DEPOSIT OF TDS, WHEREAS CONTENTION OF THE ASSESSEE ALL ALONG I S THAT RECIPIENT OF INCOME HAS NO LIABILITY OF TAXES AND A LL THE ASSESSMENTS OF TRANSCO-RECIPIENT OF INCOME HAVE BEE N MADE -: 8: - 8 U/S 143(3), AND NIL TAX LIABILITY WAS ASSESSED. A SSESSMENT ORDERS U/S 143(3) WHEREIN NIL INCOME TAX LIABILITY WAS ASSESSED FOR ASSESSMENT YEAR 2005-06 TO 2008-09 WER E ALSO PLACED ON RECORD. HIS FURTHER CONTENTION WAS THAT T HE LD. ASSESSING OFFICER FAILED TO APPRECIATE THAT IN THE PRESENT CASE THERE WAS NO LIABILITY TO PAY TAX ON THE DEDUCTEE A SSESSEE. EVEN OTHERWISE UNDER SECTION 201(1A), THE INTEREST IS PAYABLE FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID. THE LEGISLATURE HAS USED THE WORDS ACTUALLY PAID THEREFORE, WHERE THERE IS NO LIABILITY TO PAY ANY TAX, THERE SHALL BE NO ACTUAL PAYMENT, RESULTANTLY, NO INTEREST IS PAYABLE U/S 201(1A) OF THE ACT. THEREFORE, ONCE THE LEVYING OF INTEREST ON THE ASSE SSEE FOR DELAY IN DEDUCTION/ PAYMENT OF TAX IS NOT JUSTIFIED. IN T HIS REGARD, WE FOUND THAT THE CBDT HAS ISSUED A CIRCULAR NO. 275/2 01/95- IT(B) DATED JANUARY 219,1997, WHICH WAS RELIED UPON BY THE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BE VERAGES PRIVATE LIMITED VS. CIT, 293 ITR 226 (S.C.) THAT NO DEMAND VISUALIZED U/S 201(1) OF THE INCOME-TAX ACT, 1961, SHOULD BE ENFORCED AFTER THE TAX DEDUCTOR HAS SATISFIED THE O FFICE IN -: 9: - 9 CHARGE OF TDS THAT TAXED DUE HAVE BEEN PAID BY THE DEDUCTEE ASSESSEE. HOWEVER, THIS WILL NOT ALTER THE LIABILIT Y TO CHARGE INTEREST U/S 201(1A) OF THE ACT TILL THE DATE OF PA YMENT OF TAXES BY THE DEDUCTEE ASSESSEE OR THE LIABILITY FOR PENAL TY U/S 271C OF THE INCOME-TAX ACT. 8. IN VIEW OF THE ABOVE DISCUSSION, WE RESTORE THE MAT TER BACK TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH BY KEEPING IN VIEW THE DECISION OF COORDINATE BENCH AS WELL AS DECISION OF HON'BLE SUPREME COURT, DISCUSSED HEREIN ABOVE. THE ASSESSING OFFICER IS TO FIND OUT IF THE RECIPIE NT OF INCOME HAVE NO TAX LIABILITY AS PER ASSESSMENT FRAMED U/S 143(3), THEN NO INTEREST IS LEVIABLE ON THE ASSESSEE FOR NO N- DEDUCTION/DELAY IN DEPOSIT OF TDS. EVEN THOUGH THE LD. AUTHORIZED REPRESENTATIVE HAS ALSO ARGUED ON THE T ECHNICAL NATURE OF SERVICES FOR WHICH PAYMENT WAS MADE AND APPLICABILITY OF PROVISIONS OF SECTION 194-J/194-I OF INCOME- TAX ACT, 1961. SINCE WE HAVE DECIDED THE ISSUE ON T HE MAIN PLEA, WE ARE NOT DELIBERATING UPON THE OTHER ASPECT S. WE DIRECT ACCORDINGLY. -: 10: - 10 9. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLO WED FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 31 ST MAY, 2012. SD/ - SD/ - (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST MAY, 2012. CPU* 315