ACIT 11(1), MUMBAI V. LAMHAS SATELLITE SERVICES LTD, NAVI MUMBAI

ITA 5966/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3277 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-08-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 08-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M MURLI
• Assessee Lawyers: SHAILESH N DOSHI
• Keywords: Question of law; Difference of opinion
• Section: 194C; 139

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -ABENCH MUMBAI BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMIT SHUKLA,JUDICIAL MEMBER . / I.T.A. NO.5966/MUM/2013 / ASSESSMENT YEAR: 2010-11 ASSTT. CIT-11(1) ROOM NO.439, AAYAKAR BHAVAN, MK ROAD MUMBAI-400 020. VS. M/S. LAMHAS SATELLITE SERVICES LTD. TRIBUNAL-161, TOWER NO.1, 6 TH FLOOR INTERNATIONAL IMFORTEK, P.A. VASHI, RAILWAY STATION COMPLEX VASHI, SECTOR-30,NAVI MUMBAI-400 705. PAN:AACCL 8423 B ( /APPELLANT ) ( / RESPONDENT ) . / C.O. NO.134/MUM/2015 ARISING OUT OF ./ I.T.A. NO.5966/MUM/2013 / ASSESSMENT YEAR: 2010-11 M/S. LAMHAS SATELLITE SERVICES LTD. MUMBAI-400 705. VS. ASSTT. CIT-11(1) MUMBAI-400 020. ( / CROSS OBJECTOR) ( / RESPONDENT) REVENUE BY: SHRI M. MURLI A SSESSEE BY: SHRI SHAILESH N. DOSHI / DATE OF HEARING:03.03.2016 / DATE OF PRONOUNCEMENT:16.03.2016 ,1961 254(1) ! ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) $'% &' PER RAJENDRA, AM - CHALLENGING THE ORDER DTD.16.07.2013 OF CIT(A)-3,MU MBAI,THE ASSESSING OFFICER(AO) AND THE ASSESSEE HAVE FILED APPEAL/CROSS OBJECTION(CO)F OR THE ABOVE MENTIONED AY. 2. ASSESSEE-COMPANY ENGAGED IN THE BUSINESS OF SATELLI TE SERVICE PROVIDER,FILED ITS RETURN OF INCOME ON 10.09.2010,DECLARING LOSS OF RS.2,14,48,9 13/-.THE AO COMPLETED THE ASSESSMENT ON 08.03.2013,U/S.143(3)OF THE ACT,DETERMINING THE INCOME OF THE ASSESSEE AT RS.2.20 CRORES. I TA/5966/MUM/2013: 3. EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE AD DITION OF RS.4.34 CRORES,MADE BY THE AO,U/S.40(A)(IA)OF THE ACT.DURING THE ASSESSMENT PR OCEEDINGS,THE AO FOUND THAT THERE WAS SHORT DEDUCTION OF TAX DEDUCTED AT SOURCE(TDS).THER EFORE, HE ASKED THE ASSESSEE TO SHOWCAUSE AS TO WHY SAME SHOULD NOT BE DISALLOWED B Y INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT.THE ASSESSEE VIDE ITS LETTER D T.26.11.12 MADE ELABORATE SUBMISSIONS.AFTER CONSIDERING THE SAME, ASSESSEE ITSELF HAD AGREED TH AT RATE OF TDS SHOULD HAVE BEEN @10%, THAT SHORT DEDUCTION OF TAX WAS ADMITTED BY THE ASS ESSEE, THAT IT WAS AWARE THAT TDS WAS TO BE DEDUCTED @10%/11.33% AND NOT AT2%/2.7%, THAT IT WAS AN INTENTIONAL/DELIBERATE ACT OF NOT COMPLYING WITH THE TDS PROVISIONS OF THE ACT.THE AO REFERRED TO THE PROVISIONS OF SECTION 40(A)(IA) AND MADE A DISALLOWANCE OF RS.4,34,58,461 /- AND ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, AS SESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA) AND CONTENDED THAT PROVISIONS OF SECTION 40(A)(IA) COULD NOT BE INVOKED IN CASE OF SHORT DE UCTION OF TDS. ASSESSEE RELIED UPON THE CASES OF 5966/13;C.O.-134/15-LAMHAS SATELLITE SERVICE 2 CHANDANBHOY AND JASSOBHOY(17TAXMANN158) AND S.K.TEK RIWAL(15TAXMAN289) AND SKYCELL COMMUNICATIONS LTD.(11TAXMANN496).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE FAA REFERRED TO THE CASE OF CINETEK TELEFILMS PVT. LTD.(ITA/7834/MUM/2010) AND HELD THAT THE PROVISIONS OF SECTION 40(A)(IA) COULD NOT BE AP PLIED IN THE CASE OF SHORT DEDUCTION OF TAX EVEN IF APPLICATION OF PROVISIONS OF SECTION 194J W ERE ESTABLISHED BEYOND DOUBT.FINALLY HE ALLOWED THE APPEAL OF THE ASSESSEE. 5. BEFORE US, THE AUTHORISED REPRESENTATIVE(AR)RELIED UPON THE CASES OF HINDUSTAN THOMPSON ASSOCIATES PVT. LTD. (ITA NO.746/MUM/2014 DT.19.2.2 016);SHRI ZUBIN J. GANDEVIA (ITA NO.3357/MUM/2014 DATED 1.2.2016);S.K. TEKRIWAL (361 ITR 432));PENTAGON SYSTEM & SERVICES P. LTD.(ITA NO.6879/MUM/2012 DATED 22.1.20 14);CINETEK TELEFILES P.LTD.(ITA NO.7834 & 7645/M/2010 DATED 7.6.2013);CHANDABHOY & JASSOBHOY(17 TAXMANN.COM 158) THREE STAR GRANITES (49 TAXMANN.COM 578);APOLLO TYR ES LTD. (ITA NO.74/COCH/2010) AND UE TRADE CORPN.(INDIA) LTD.(28 TAXMANN.COM 77).HE F URTHER STATED THAT PROVISIONS OF SECTION 194J WERE NOT APPLICABLE, THAT THE CONTRACT OF THE ASSESSEE WAS TO PROVIDE SATELLITE SERVICES, THAT FAA HAD FAILED TO CONSIDER THE PROVISIONS OF S ECTION 194 C OF THE ACT.THE DEPARTMENTAL REPRESENTATIVES (DR) STATED THAT MATTER COULD BE DE CIDED ON MERITS. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD MADE PAYMENT TO NINE PARTIES, THAT IT HAD DEDUCTED TAX @2%/2.7% UNDER SECTION 194C OF THE ACT, THAT THE AO WAS OF THE OPINION THA T TAX SHOULD HAVE BEEN DEDUCTED @ 10%/ 11.33% U/S. 194J OF THE ACT.AS FAR AS APPLICABILITY OF SECTION 40(A)(IA) OF THE ACT IS CONCERNED WITH REGARD TO SHORT DEDUCTION OF TDS, T HE LAW HAS REACHED FINALITY.THE HONBLE COURTS (HONBLE CALCUTTA HIGH COURT AND HONBLE MAD RAS HIGH COURT) HAVE HELD THAT PROVISIONS OF SECTION 40(A)(IA) CANNOT BE INVOKED W HERE THE ASSESSEE DEDUCTS TAX AT LOWER RATES.IN THE CASE OF S.K. TEKRIWAL (SUPRA)THE HOBB LE CALCUTTA HIGH COURT HAS HELD AS UNDER :- CONDITIONS LAID DOWN U/S. 40(A)(IA) OF ACT FOR MAK ING ADDITION WAS THAT TAX WAS DEDUCTIBLE AT SOURCE AND SUCH TAX HAS NOT BEEN DEDUCTED. IF BO TH CONDITIONS ARE SATISFIED THEN SUCH PAYMENT CAN BE DISALLOWED U/S. 40(A)(IA) OF ACT BUT WHERE TAX WAS DEDUCTED BY ASSESSEE, EVEN UNDER BONAFIDE WRONG IMPRESSION, UNDER WRONG PROVIS IONS OF TDS, PROVISIONS OF SECTION 40(A)(IA) OF ACT CANNOT BE INVOKED. HERE IN PRESENT CASE ,ASSESSEE HAS DEDUCTED TAX U/S. 194C(2) OF ACT AND NOT U/S. 194I OF ACT AND THERE I S NO ALLEGATION THAT TDS WAS NOT DEPOSITED WITH GOVERNMENT ACCOUNT. PROVISIONS OF SECTION 40(A )(IA) OF ACT HAS TWO LIMBS ONE IS WHERE, INTER ALIA, ASSESSEE HAD TO DEDUCT TAX AND SECOND W HERE AFTER DEDUCTING TAX, INTER ALIA, ASSESSEE HAD TO PAY INTO GOVERNMENT ACCOUNT. THERE IS NOTHING IN SAID SECTION TO TREAT, INTER ALIA, ASSESSEE AS DEFAULTER WHERE THERE IS A SHORTF ALL IN DEDUCTION. WITH REGARD TO SHORTFALL, IT CANNOT BE ASSUMED THAT THERE IS A DEFAULT AS DEDUCT ION WAS NOT AS REQUIRED BY OR UNDER ACT, BUT FACTS IS THAT THIS EXPRESSION, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCT ION HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION 3 (1) OF SECTION 139 .THIS SECTION 40(A)(IA) OF ACT REFERS ONLY TO DUTY TO DEDUCT TAX AND PAY TO GOVERNMENT ACCOUNT.IF THERE IS ANY SHORTFALL DUE TO ANY DIFFERENCE OF OPINION AS TO TAXABILITY OF ANY ITEM OR NATURE OF PAYMENTS FALLING UNDER VARIOUS TDS PROVISIONS, ASSESSEE CAN BE DECLARED TO BE AN A SSESSEE IN DEFAULT U/S. 201 OF ACT AND NO DISALLOWANCE CAN BE MADE BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF ACT. ACCORDINGLY, ORDER OF CIT (A) ALLOWING CLAIM OF ASSESSE WAS CONF IRMED AND THIS ISSUE OF REVENUES APPEAL WAS DISMISSED. NO SUBSTANTIAL QUESTION OF LAW WAS I NVOLVED IN THIS CASE. APPEAL WAS DISMISSED. RESPECTFULLY FOLLOWING THE ABOVE,WE DECIDE THE EFFE CTIVE GROUND OF APPEAL AGAINST THE AO. C.O. NO.134/MUM/2015: 7 .AS FAR AS GROUND RAISED IN CROSS OBJECTION(CO) IS CONCERNED WE WANT TO MENTION THAT THE ASSESSEE IS HESITANT ABOUT THE LAST FEW LINES OF TH E ORDER OF THE FAA.THE AR STATED THAT THE 5966/13;C.O.-134/15-LAMHAS SATELLITE SERVICE 3 FAA HAD HELD THAT PROVISIONS OF SECTION 194J WERE A PPLICABLE IN THE CASE UNDER CONSIDERATION. HE STATED THAT THE FAA HAD NOT DECIDED THE ISSUE RE GARDING APPLICABILITY OF PROVISIONS OF SECTION 194C AND HAD UNILATERALLY HELD THAT APPLICA TION OF THE PROVISIONS OF SECTION 194J WAS NOT IN DOUBT.IN OUR OPINION, THE ISSUE RAISED BY TH E ASSESSEE I.E. APPLICABILITY OF SECTION,194C VIS- A-VIS. 194J NEEDS TO BE ADJUDICATED AT THE LEV EL OF THE FAA.THEREFORE, PARTLY ALLOWING THE APPEAL OF THE ASSESSEE,WE ARE RESTORING BACK THE IS SUE TO THE FILE OF THE FAA.HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE A SSESSEE. AS A RESULT, APPEAL FILED BY AO IS DISMISSED AND CO FILED BY THE ASSESSEE IS PARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH, 2016. 16 , 2016 SD/- SD/- ( / AMIT SHUKLA ) ( / RAJENDRA ) ! '# / JUDICIAL MEMBER '# / ACCOUNTANT MEMBER MUMBAI, ' DATE: 16.03.2016 . . . .. . JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.