M/S RCA CORP. LTD.(STATE AIRCRAFT), Jaipur V. ITO, Jaipur

ITA 585/JPR/2010

• Counselvise Citation: 58523114 RSA 2010
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 26-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A K JAIN; P P PARIKH
• Section: 133A; 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.585,588 & 590/JP/2010 ASSESSMENT YEARS: 2006-07, 2007-08 & 2008-09 TAN: JPRC 00461 G M/S. RAJASTHAN CIVIL AVIATION CORPORATION LTD. VS. THE ITO (THE STATE AIRCRAFT), HANGER NO.1 TDS -3 SANGANER AIRPORT, SANGANER, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ITA NO.586, 587 & 589/JP/2010 ASSESSMENT YEARS: 2006-07, 2007-08 & 2008-09 TAN: JPRS 01373 D M/S. RAJASTHAN CIVIL AVIATION CORPORATION LTD. VS. THE ITO (THE STATE HELICOPTER), HANGER NO.1 TDS -3 SANGANER AIRPORT, SANGANER, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI P.P. PARIKH & SHRI A.K. J AIN DEPARTMENT BY : SHRI SANJAY KUMAR ORDER PER N.L. KALRA, AM:- THE ABOVE APPEALS HAVE BEEN FILED BY THE COMPANY NA MED AS RAJASTHAN CIVIL AVIATION CORPORATION LTD. THE FINAN CIAL YEARS INVOLVED IN THESE APPEALS ARE 2005-06, 2006-07 AND 2007-08. THE AO HAS PASSED THE 2 ORDERS FOR THE ORDERS FOR THE THREE FINANCIAL YEARS BY REFERRING THE NAME OF THE ASSESSEE AS UNDER:- 1. THE STATE AIRCRAFT NOW KNOWN AS RAJASTHAN CIVIL AVIATION CORPORATION LTD. 2. THE STATE HELICOPTER NOW KNOWN AS RAJASTHAN CIVI L AVIATION CORPORATION LTD. 2.1 THE GROUNDS OF APPEAL RAISED BY THE APPELLANT A RE SIMILAR IN ALL THESE APPEALS. FOR READY REFERENCE, WE ARE REPRODUCING TH E GROUNDS OF APPEAL IN THE CASE OF THE APPELLANT EARLIER KNOWN AS STATE AI RCRAFT FOR THE FINANCIAL YEAR 2005-06. 1. THAT THE ORDER PASSED BY THE LD. ITO ARE BAD IN LAW AS WELL AS IN FACTS AND LEARNED CIT (APPEALS) III HAS ALSO ERRED IN NOT G IVING RELIEF TO THE ASSESSEE ON THE VARIOUS ISSUES RAISED BY THE APPELLANT. 2. THAT LD. ASSESSING OFFICER HAS ERRED AND CIT (AP PEALS) - III HAS ALSO ERRED IN CONFIRMING THAT THE VERIFICATION EXERCISE CONDUCTED BY THE DEPARTMENT ON STATE GOVERNMENT DEPARTMENT IS NOT AGAINST THE CONSTITUTI ON AND PROVISIONS OF INCOME- TAX ACT, 1961. AS GOVERNMENT IS NOT ENGAGED IN ANY BUSINESS ACTIVITIES, NO OFFICER OF THE DEPARTMENT IS ENTITLED TO ENTER IN T HE PREMISES OF THE STATE GOVERNMENT FOR VERIFICATION AS PER LAW. 3. THAT THE LEARNED CIT APPEALS-ILL HAS ERRED IN NO T AGREEING TO THE SUBMISSION MADE BY THE APPELLANT THAT STATE GOVERNMENT CANT B E ASSESSEE IN DEFAULT. 4. THAT THE LEARNED ASSESSING OFFICER (TDS)-3 HAS E RRED AND LEARNED CIT (APPEAL)-3 HAS FURTHER ERRED IN LAW AS WELL AS IN F ACTS BY INITIATING PROCEEDINGS FOR M/S THE STATE HELICOPTER, A DIFFERENT ENTITY (GOVER NMENT OF RAJASTHAN) AND COMPLETING THE ASSESSMENT IN THE NAME OF THE STALE HELICOPTER NOW RAJASTHAN CIVIL AVIATION CORPORATION LTD., TAN JPRRO4511D (DA TE OF INCORPORATION IS 20TH DECEMBER, 2006) ITSELF IS ILLEGAL AND NEEDS TO BE Q UASHED AS THE ORDER CAN NOT 3 BE PASSED AGAINST THE DIFFERENT ENTITY OTHER THAN T HE ENTITY ON WHOM PROCEEDINGS WERE INITIATED. 5. THAT THE LD. ASSESSING OFFICER HAS ERRED AND CIT (APPEALS) III HAS FURTHER ERRED IN NOT AGREEING TO THE REQUEST OF APPELLANT T HAT EVEN IF SUCCESSION IS ACCEPTED THEN IN CASE OF SUCCESSION PROVISION OF SE CTION 170 OF IT ACT IS APPLICABLE WHICH HAS NOT BEEN APPLIED AND LEARNED A SSESSING OFFICER HAS ERRED IN INITIATING PROCEEDINGS ON THE APPELLANT WHICH NE EDS TO BE QUASHED. 6. THAT THE LD. ASSESSING OFFICER HAS ERRED AND CIT (APPEALS) III HAS FURTHER ERRED IN NOT GIVING RELIEF TO THE APPELLANT OF NOT GIVING REASONABLE TIME TO SUMMARIES AND EXPLAIN THE CORRECT POSITION OF THE F ACTS TO THE ASSESSING OFFICER MORE PARTICULARLY WHEN THOSE WERE NOT PERTAINING TO THE APPLICANT AND APPELLANT WAS ONLY ASSISTING IN GETTING DETAIL TO THE DEPARTM ENT FOR VERIFICATION EXERCISE. 7. THAT THE LDL. CIT (APPEALS) III HAS PASSED MEC HANICAL ORDER ON THE VARIOUS LEGAL ISSUES RAISED BY THE APPELLANT BY ONE STATEME NT THAT HE WAS IN AGREEMENT WITH THE REASONS GIVEN BY THE LD. ASSESSING OFFICER WHILE DISPOSING OFF THE APPLICATION U/S 154 FILED BY THE APPLICANT. THE APP LICATION U/S 154 OF INCOME TAX ACT WAS NOT ACCEPTED BY THE ASSESSING OFFICER WITH THE FOLLOWING REMARKS. BLDS VFRFJDR EGROIW.KZ ,OA FOPKJ.KH; RF; ;G GS FD FU/KKZFJRH US /KKJK 201 1@201 1, DS RGR FNUKAD 28-11-2008 DKS IKFJR VKN SKKSA DS FO:) EKUUH; VK;DJ VK;QDR VIHY R`RH; T;IQJ DS LE{K VIHY NK;J DJ NH GSA] BLF Y, MDR VKNSKKSA DS LACA/K ESA FDLH HKH IZDKJ DK LA'KKS/KU FD;K TKUK LAHKO UGHA GSA] D; KSAFD LHKH EQN~NKSA DKS FU/KKZFJRH US VIHY ESEKS ESA YS FY;K GSA] BLFY, NTZ DH X;H LELR VKIFRR;KA VI HY ESEKS ESA LEKFGR GKS PQDH GSA] FTUESA FDLH HKH IZDKJ DK LA'KKS/KU FD;K TKUK LAHKO UGHA GS A A 8. THAT THE LEARNED ASSESSING OFFICER (TDS)-3 HAS E RRED AND LEARNED CIT (APPEAL)-3 FURTHER ERRED IN LAW AS WELL AS IN FACTS BY PASSING THE ORDER U/S 201(1)/201(1A) OF THE INCOME-TAX ACT, 1961 FOR THE FINANCIAL YEAR 2005-06 AS IN THE RELEVANT FINANCIAL YEAR THE COMPANY WAS NOT IN EXISTENCE AND CERTIFICATE OF COMMENCEMENT OF BUSINESS WAS NOT ISSUED BY THE REGI STRAR OF THE COMPANY. 2.2 THE ASSESSEE IS AGGRIEVED AGAINST PASSING THE O RDER U/S 201 IN HANDS OF THE ASSESSEE IN RESPECT OF DEFAULT IN NOT DEDUCTING THE TDS BY THE DEPARTMENT OF GOVT. OF RAJASTHAN. THEREFORE, FIRSTL Y WE WILL TAKE UP THE ISSUE AS TO WHETHER THE AO WAS JUSTIFIED IN PASSING THE ORDER AGAINST THE 4 ASSESSEE. THE GROUNDS OF APPEAL WHICH HAVE BEEN RAI SED ABOVE SHOW VARIOUS ARGUMENTS AND THESE HAVE BEEN TAKEN BY THE ASSESSEE AGAINST PASSING OF THE ORDER AGAINST THE ASSESSEE. 2.3 THE GOVT. OF RAJASTHAN HAS GOT ONE DEPARTMENT N AMELY TOURISM AND CIVIL AVIATION. THE DEPARTMENT HAS TWO SEGMENTS NA MELY TOURISM AND AVIATION. IN THE AVIATION SEGMENT OF THE DEPARTMENT , THE GOVT. IS HAVING TWO SECTIONS NAMELY ONE FOR AIRCRAFT AND SECOND FOR HELICOPTER. THESE TWO DEPARTMENTS WERE HIRING HELICOPTER AND AIRCRAFT FOR USE OF THE GOVT. PURPOSES LIKE TRAVELLING OF GOVERNOR, CHIEF MINISTE R, STATE GUEST DIGNITARIES ETC. M/S. RAJASTHAN CIVIL AVIATION COR PORATION LTD. (IN SHORT RCACL) WAS INCORPORATED ON 20 TH DEC. 2006 AND A CERTIFICATE OF COMMENCEMENT OF BUSINESS WAS ISSUED BY THE REGISTRA R OF COMPANIES ON 16 TH APRIL, 2007. THE TWO SECTIONS OF THE DEPARTMENT OF GOVT. OF RAJASTHAN WERE MERGED AND ACTIVITIES OF THESE SECTIONS HAVE B EEN TRANSFERRED TO THE COMPANY FROM 01-04-2008. THE REVENUE DEPARTMENT CON DUCTED A SURVEY U/S 133A OF THE ACT ON 27-07-2008 TO VERIFY THE COMPLIA NCE WITH PROVISIONS OF TDS. FOR THE FINANCIAL YEARS FOR WHICH THE AO HAS P ASSED ORDER AGAINST THE ASSESSEE COMPANY , THE ASSESSEE COMPANY WAS NOT IN EXISTENCE DURING THOSE FINANCIAL YEARS. THE LD. COUNSEL FOR THE ASSESSEE S TATED THAT BOTH THE DEPARTMENTS OF GOVT. OF RAJASTHAN ARE STILL IN EXIS TENCE. OUR ATTENTION WAS 5 DRAWN TOWARDS LETTER DATED 14 TH SEPT. 2009 ISSUED BY ASSISTANT SECRETARY, GOVT. OF RAJASTHAN IN WHICH IT HAS BEEN MENTIONED T HAT THESE TWO DEPARTMENTS STILL EXIST. EVEN IF IT IS ACCEPTED THA T THE ASSESSEE HAS SUCCEEDED THE BUSINESS AFFAIRS OF THE STATE GOVT. DEPARTMENT EVEN THEN SECTION 170 SAYS THAT LIABILITY ARISING FOR THE PERIOD BEFORE S UCCESSION IS TO BE RAISED ONLY AGAINST THE PREDECESSOR. 2.4 THE LD. AR HAS DREW OUR ATTENTION TO THE APPLIC ATION U/S 154 DATED 29 TH DEC. 2008. IN SECTION 154 APPLICATION, IT WAS STATE D THAT TAN NO. WRITTEN BY THE AO IN HIS ORDER DOES NOT PERTAIN TO THE ASSESSE E. THE TRANSACTION FOR WHICH THE AO HAS RAISED DEMAND FOR NOT DEDUCTING TH E TAX AT SOURCE WERE NOT UNDERTAKEN BY THE ASSESSEE. THE AO HAS DISPOSED OFF THE APPLICATION U/S 154 VIDE ORDER DATED 11-02-2009. THE AO WHILE PASSI NG THE ORDER U/S 154 HAS MENTIONED THAT AUTHORIZATION U/S 133A OF THE AC T WAS ISSUED IN THE NAME OF STATE HELICOPTER , NOW KNOWN AS RAJASTHAN CIVIL AVIATION AND THEREFORE, THE ORDER HAS RIGHTLY BEEN PASSED IN THAT NAME. LET TER DATED 3-06-2008 ADDRESSED TO THE ACCOUNTANT OF TOURISM AND CIVIL, R AJASTHAN SECRETARIAT REQUIRED THAT THE DEPARTMENT FURNISH CERTAIN INFORM ATION. THE LD. AR THEREFORE, STATED THAT THE ORDER HAS BEEN PASSED AG AINST THE COMPANY FOR THE PERIOD DURING WHICH THE COMPANY WAS NOT IN EXISTENC E AND THEREFORE, THE ORDER IS VOID. 6 2.5 ON THE OTHER HAND, THE REVENUE CONTENDED THAT O RDER HAS RIGHTLY BEEN PASSED IN THE HANDS OF THE SUCCESSOR. THE REVENUE W AS INTIMATED DURING THE COURSE OF HEARING BY THE BENCH THAT TAN NO. MENTION ED IN THE ORDER IS DIFFERENT FROM THE TAN NO. OF THE COMPANY BUT STILL REVENUE CONTENDED THAT THE ORDER SHOULD BE CONSIDERED TO HAVE BEEN PASSED AGAINST M/S. RCACL. THE BENCH REQUIRED THE REVENUE TO ESTABLISH AS TO W HETHER THE NOTICE WAS ISSUED TO GOVT. OF RAJASTHAN OR TO THE ASSESSEE COM PANY. WE WERE INFORMED THAT PROCEEDINGS WERE TAKEN AGAINST THE ASSESSEE CO MPANY IN RESPECT OF DEFAULT COMMITTED BY ERSTWHILE DEPARTMENT. 2.6 WE HAVE HEARD BOTH THE PARTIES. THE GOVT. DEPAR TMENTS ARE STILL IN EXISTENCE. SUCH GOVT. DEPARTMENTS WERE PART OF THE GOVT. OF RAJASTHAN. FOR THE DEFAULT, IF ANY, COMMITTED BY THOSE DEPARTMENTS THEN THE ACTION IS TO BE TAKEN AGAINST THE GOVT. DEPARTMENT AND NOT AGAINST THE COMPANY. IN CASE A CONTRACT IS EXECUTED BETWEEN THE GOVT. DEPARTMENT A ND A PERSON THEN THE GOVT. DEPARTMENT IS ALSO OBLIGED TO DEDUCT THE TAX AT SOURCE ON THE PAYMENTS MADE IN ACCORDANCE WITH THE CONTRACT DURING THE FIN ANCIAL YEARS, FOR WHICH AO HAS PASSED THE ORDER. THE COMPANY WAS NOT IN EXI STENCE AND THE RELEVANT AGREEMENTS HAVE BEEN MADE BY THE PARTY WITH THE GOV T. DEPARTMENT. IF ONE CONSIDERS SECTION 170 OF THE ACT THEN LIABILITY OF THE PREDECESSOR CANNOT BE FASTENED ON THE SUCCESSOR. IN CASE THE PREDECESSOR CANNOT BE FOUND THEN THE 7 ACTION CAN BE TAKEN AGAINST THE SUCCESSOR. IN THE I NSTANT CASE, THE GOVT. DEPARTMENTS WHICH WERE PART OF THE GOVT. OF RAJASTH AN, CANNOT BE CONSIDERED AS NOT TRACEABLE. HENCE, WE FEEL THAT TH E AO WAS NOT JUSTIFIED IN PASSING THE ORDER AGAINST THE APPELLANT COMPANY. HO WEVER, THE AO WILL BE FREE TO TAKE ACTION AGAINST THE GOVT. DEPARTMENT FO R PERIOD DURING WHICH SUCH GOVT. DEPARTMENT HAS NOT COMPLIED WITH THE PRO VISIONS OF DEDUCTION OF TAX AT SOURCE. WE THEREFORE, FEEL THAT THE ORDER PA SSED BY THE AO ARE ABINITO VOID AND CANCELLED 3. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE A RE ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 24-06 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 24 /06/2011 *MISHRA COPY FORWARDED TO :- 1. M/S. RAJASTHAN CIVIL AVIATION CORP. LTD. (STATE AIR CRAFT) , JAIPUR 2. M/S. RAJASTHAN CIVIL AVIATION CORP. LTD. (STATE HEL ICOPTER), JAIPUR 3. THE ITO (TDS-3) , JAIPUR 4. THE LD. CIT 5. THE LD. CIT(A) 6. THE LD.DR 7. THE GUARD FILE (ITA NO.585/JP /10) BY ORDER A.R, ITAT, JAIPUR 8