Gujarat Pipavav Port Limited, V. The Deputy Commissioner of Income Tax, TDS Circle, RAJKOT-GUJARAT

ITA 615/RJT/2012

• Counselvise Citation: 61524914 RSA 2012
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 09-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: PRIYANKA GADA CA S
• Section: 43B; 201(1); 11; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT BEFORE SHRI T K SHARMA, JM AND SHRI D K SRIVASTAVA, AM ITA NO S . 614 & 615 /RJ T/20 12 ASSESSMENT YEAR : 200 6 - 0 7 & 200 7 - 08 GUJARAT PIPAVAV PORT LIMITED, PORT PIPAVAV, POST BAG NO.45, POST UCCHAIYA VIA RAJULA, DIST AMRELI, GUAJRAT PAN : AAACG 6975 B V. DCIT, TDS CIRCLE, RAJKOT ITA NO S . 641 & 642 /RJT/2012 ASSESSMENT YEAR : 200 6 - 0 7 & 2007 - 08 ACIT, TDS CIRCLE, RAJKOT V. GUJARAT PIPAVAV PORT LIMITED DATE OF HEARING : 20 .0 6 .2013 DATE OF PRONOUNC EMENT : 23 .0 8 .2013 ASSESSEE BY: SHRI PRASHANT MAHESHWARI, AND MS. PRIYANKA GADA, CA S REVENUE BY: SHRI K C MATHEWS, SR. DR ORDER D. K. SRIVASTAVA : A PPEAL BEARING ITA NO. 614 /RJT/2012 FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A) - II , RAJKOT ON 03.09.2012 FOR ASSESSMENT YEAR 2006 - 07 WHILE THE OTHER APPEAL BEARING ITA NO. 615/RJT/2012 FILED BY THE ASSESSEE IS DIRECTED AGAINST ANOTHER ORDER PASSED BY THE CIT(A) - II, RAJKOT ON 03.09.2012 FOR ASSESSMENT YEAR 2007 - 08 ON IDENTICAL LINE S AS IN ASSESSMENT YEAR 2006 - 07. THE REVENUE IS IN CROSS APPEALS AGAINST BOTH THE AFORESAID ORDERS PASSED BY THE CIT(A) - II, RAJKOT. FACTS, ISSUES AND GROUNDS OF APPEAL IN BOTH THE APPEALS FILED BY THE ASSESSEE ARE IDENTICAL. SIMILAR IS THE POSITION IN BOTH THE APPEALS FILED BY THE REVENUE. IN THIS VIEW OF THE MATTER, THE PRESENT BUNCH OF APPEALS IS BEING DISPOSED OF BY A CONSOLIDATED ORDER. 2. IN ITA NO.614/RJT/2 012, THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: - THE GROUNDS STATED HERE UNDER ARE INDEPENDENT OF AND WITHOUT PREJUDICE TO ONE ANOTHER: GROUND I: TREATING PAYMENT OF WATERFRONT ROYALTY AMOUNTING TO RS.19,382,533 TO GUJARAT MARITIME BOARD (GMB) TO BE IN THE NATURE OF RENT AND LIABLE TO TAX DEDUCTION AT SOURCE (TDS) UNDER SECTION 194 - I OF THE ACT. 2 614,615, 641 & 642 - RJT - 2012 GUJARAT PIPAVAV PORT LIMITED 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - II, RAJKOT [CIT(A)] HAS ERRED IN CONFIRMING THE ORDER OF THE DEPUTY COMMISSIONER OF INCOME - TAX TDS CIRCLE, RAJKOT (T DS OFFICER) THAT WATERFRONT ROYALTY PAID BY THE APPELLANT TO GMB UNDER THE PIPAVAV CONCESSION AGREEMENT IS RENT AND THEREFORE SUBJECT TO TDS UNDER SECTION 194 - I OF INCOME - TAX ACT, 1961 (THE ACT). 1.2 THE APPELLANT PRAYS THAT IT CANNOT BE TREATED AS AS SESSEE IN DEFAULT UNDER SECTION 201 OF THE ACT IN RESPECT OF PAYMENTS MADE TO GMB. GROUND II: LEVY OF INTEREST UNDER SECTION 201 (1A) AT THE RATE OF 1.5 PERCENT FOR THE PERIOD FROM 1 JULY 2010 TO 25 MARCH 2011. 2.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE TDS OFFICER WHEREIN INTEREST AT 1.5 PERCENT PER MONTH IS CHARGED UNDER SECTION 201(1A) OF THE ACT FOR THE PERIOD 1 JULY 2010 TO 25 MARCH 2011 INSTEAD OF APPLICABLE INTERES T RATE OF 1 PERCENT PER MONTH. 2.2 THE APPELLANT PRAYS THAT THE LEVY OF INTEREST AT THE RATE OF 1.5 PERCENT FOR THE PERIOD FROM 1 ST JULY 2010 TO 25 MARCH 2011 IS ERRONEOUS, UNWARRANTED AND NEEDS TO BE DELETED. YOUR APPELLANT CRAVES LEAVE TO ADD TO OR AL TER, BY DELETION, SUBSTITUTION, OR OTHERWISE, ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL, AT OR BEFORE THE HEARING OF THIS APPEAL. 3. THE ASSESSEE HAS TAKEN THE FOLLOWING ADDITIONAL GROUND S OF APPEAL: - GROUND III: LEVY OF INTEREST UNDER SECTION 201(1A) FROM THE 1 ST DAY OF THE ASSESSMENT YEAR TILL THE DATE OF PASSING OF THE ORDER UNDER SECTION 201(1). 3.1 WITHOUT PREJUDICE TO GROUND I, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF TH E TDS OFFICER IN CHARGING INTEREST UNDER SECTION 3 614,615, 641 & 642 - RJT - 2012 GUJARAT PIPAVAV PORT LIMITED 201(1A) OF THE ACT FROM THE 1 ST DAY OF THE ASSESSMENT YEAR TILL 25 MARCH 2011 I.E. DATE OF ASSESSMENT ORDER INSTEAD OF DATE OF FILING RETURN OF INCOME BY GMB. 3.2 WITHOUT PREJUDICE TO GROUND 3.1, ON THE FAC TS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE TDS OFFICER WHEREIN INTEREST IS CHARGED UNDER SECTION 201(1A) OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE PAYEE GMB IS A TRUST AND ITS INC OME IS EXEMPT UNDER SECTION 11 OF THE ACT AS HELD BY THE SUPREME COURT IN THE CASE OF CIT VS. GUJARAT MARITIME BOARD [2008] 166 TAXMAN 58 (SC) AND THEREFORE THERE IS NO LOSS TO REVENUE. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, SUBSTITUTE AND/OR MO DIFY IN ANY MANNER WHATSOEVER ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL AT OR BEFORE THE HEARING OF THE APPEAL. 4 . THE ASSESSEE HAS REQUESTED FOR ADMISSION OF THE AFORESAID ADDITIONAL GROUNDS OF APPEAL ON THE GROUND THAT THE ISSUE RAISED IN THE ADDIT IONAL GROUNDS OF APPEAL IS PURELY LEGAL ISSUE AND THEREFORE IT SHOULD BE ADMITTED IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN NATIONAL THERMAL POWER CO. LTD. V. CIT [1998] 229 ITR 383 (SC). THE LD . DEPARTMENTAL REPRESENTATIVE COULD NOT SERIOUSL Y DISPUTE THE SUBMISSIONS MADE BY THE ASSESSEE IN THIS BEHALF. WE FIND THAT THE ISSUE RAISED BY THE ASSESSEE IN THE ADDITIONAL GROUNDS OF APPEAL IS PURELY LEGAL ISSUE . W E THEREFORE ADMIT THE M FOR ADJUDICATION. 5 . THE ITA NO.641/RJT/2012, THE REVENUE HAS T AKEN FOLLOWING GROUNDS OF APPEAL : - 1. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FACTS OF THE CASE IN DELETING THE ORDER U/S 201(1) OF THE I.T. ACT OF RS.32,62,080/ - AND INTEREST CHARGE UNDER SECTION 201(1A) OF THE I.T. ACT OF RS.21,04,042/ - FOR A.Y. 20 06 - 07 BY TREATING THE GMB HAS ALREADY PAID ALL THE TAXE S FOR THE CAPTIONED YEAR, THE SAME CANNOT BE AGAIN RECOVERED FROM THE APPELLANT OF THE A.O. 2. THE LD. CIT(A) ERRED IN NOT CONSIDERING THE FACT THAT THE ASSESSEE HAS NEITHER SUBMITTED THE COPY OF RE TURN OF INCOME OF GMB NOR ANY 4 614,615, 641 & 642 - RJT - 2012 GUJARAT PIPAVAV PORT LIMITED EVIDENCES WITH REGARD TO HIS CLAIM, IT HAS JUST SUFFICE THAT GMB HAS FILED ITS RETURN OF INCOME WITH THE INCOME - TAX DEPARTMENT WITHIN DUE DATE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAV E UPHELD THE ORDER OF THE ASSESSING OFFICER. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. 5. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EFFECT. 6 . AS STATED EARLIER, THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE AND THE REVENUE IN THEIR RESPECTIVE APPEALS RELATING TO ASSESSMENT YEAR 2007 - 08 ARE IDENTICAL WITH THOSE TAKEN BY THEM IN THEIR APPEALS RELATI NG TO ASSESSMENT YEAR 2006 - 07. IN THIS VIEW OF THE MATTER, THE GROUNDS OF APPEAL TAKEN BY THEM IN THEIR RESPECTIVE APPEALS FOR THE ASSESSMENT YEAR 2007 - 08 ARE NOT BEING REPRODUCED HERE. SINCE THE FACTS, ISSUES AND THE GROUNDS OF APPEAL ARE COMMON IN THE PR ESENT BUNCH OF APPEALS, THE Y ARE , FOR THE SAKE OF CONVENIENCE, BEING CULLED OUT FROM THE CASE RECORDS RELATING TO ASSESSMENT YEAR 2006 - 07. 7 . THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE COMPANIES ACT 1956 TO CARRY ON THE BUSINESS OF DEVELOPING, CONS TRUCTING, OPERATING AND MAINTAINING THE P ORT ON BUILD , OWN , OPERATE , TRANSFER (BOOT) BASIS. THE P ORT IS DESIGNED TO HANDLE BULK CONTAINER AND LIQUID CARGO AND TO PROVIDE ANCILLARY PORT SERVICES. IN FURTHERANCE OF ITS OBJECT S , THE ASSESSEE - COMP A NY ENTERED I NTO TWO AGREEMENTS WITH GUJARAT MARITIME BOARD (GMB) . F IRST AGREEMENT, KNOWN AS LEASE & POSSESSION AGREEMENT , WAS ENTERED INTO ON 30.09.1998 BY WHICH THE ASSESSEE WAS GRANTED THE RIGHT TO USE THE FORESHORE LAND AND THE WATERFRONT ABUTTING THERETO AGAINST MONTHLY LEASE RENT OF RS.29,61,000/ - . THE SECOND AGREEMENT, KNOWN AS CONCESSION AGREEMENT, WAS ALSO ENTERED INTO ON 30.09.1998 BY WHICH THE ASSESSEE WAS GRANTED THE RIGHT TO USE WATER - FRONT AGAINST PAYMENT OF CHARGES TO BE COMPUTED ON THE BASIS OF ACTUA L THROUGHPUTS ACHIEVED IN THE MONTH. IN THE PRESENT BUNCH OF APPEALS WE ARE CONCERNED WITH THE PAYMENTS MADE BY THE ASSESSEE IN PURSUANCE OF THE CONCESSION AGREEMENT. 5 614,615, 641 & 642 - RJT - 2012 GUJARAT PIPAVAV PORT LIMITED 8 . SURVEY OPERATIONS U/S 133(A) OF THE INCOME - TAX ACT WERE CARRIED OUT BY THE DCIT, TDS CIRCLE, RAJKOT ON 23.11.2006 DURING WHICH IT WAS NOTICED THAT THE ASSESSEE HAD PAID A SUM OF RS.1,93,82,533/ - TO GUJARAT MARITIME BOARD AS WHARFAGE CHARGES IN ASSESSMENT YEAR 2006 - 07. IT WAS ALSO NOTICED THAT THE ASSESSEE WAS REQUIRED TO DEDUCT THE TAX AT SOURCE OUT OF THE AFORESAID PAYMENTS ENTERED INTO THE BOOKS AS WHARFAGE CHARGES U/S 194 I OF THE INCOME - TAX ACT. IT WAS ALSO FOUND THAT THE ASSESSEE HAD DEDUCTED THE TAX AT SOURCE OUT OF WHARFAGE CHARGES U/S 194 J AND NOT U/S 194 I . IN THE COURSE OF PROCEEDI NGS BEFORE THE ASSESSING OFFICER, THE ASSESSEE EXPLAINED THAT THE AMOUNT PAID IN PURSUANCE OF CONCESSION AGREEMENT WAS NOT IN THE NATURE OF RENT AS DEFINED IN SECTION 194I AND THEREFORE THE ASSESSEE WAS NOT REQUIRED TO DEDUCT THE TAX AT SOURCE U/S 194 I. IT WAS FURTHER EXPLAINED THAT THE ASSESSEE HAD DEDUCTED THE TAX AT SOURCE OUT OF THE AFORESAID PAYMENTS ENTERED INTO BOOKS AS WHARFAGE CHARGES U/S 194 J B Y WAY OF ABUNDANT CAUTION ALTHOUGH THE ASSESSEE WAS NOT REQUIRED TO DEDUCT THE TAX AT SOURCE EVEN U/S 194 J . THE ASSESSING OFFICER HOWEVER HELD THAT THE PAYMENTS MADE BY THE ASSESSEE BY WAY OF WHARFAGE CHARGES TO GUJARAT MARITIME BOARD WERE IN THE NATURE OF RENT AS DEFINED IN SECTION 194I AND THEREFORE THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE U/S 194 I AND NOT U/S 194 J . SINCE THE ASSESSEE DID NOT DEDUCT THE TAX AT SOURCE OUT OF THE WHARFAGE CHARGES PAID TO GUJARAT MARITIME BOARD, THE ASSESSING OFFICER TREATED THE ASSESSEE IN DEFAULT U/S 201(1) AND ACCORDINGLY CALLED UPON THE ASSESSEE TO PAY A SUM OF RS. 32,62,080/ - U/S 201(1) IN ADDITION TO INTEREST AMOUNTING TO RS.21,04,042/ - U/S 201(1A). SIMILAR ORDER WAS PASSED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2007 - 08. 9 . AGGRIEVED BY THE ORDER PASSED BY THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT(A) WHICH WAS DISPOSED OF BY THE LD CIT(A) ON 03.09.2012 WITH THE FOLLOWING OBSERVATIONS: - 6.0 I HAVE CONSIDERED THE FINDINGS GIVEN BY THE ASSESSING OFFICER IN THE ORDER. I HAVE ALSO GONE THROUGH THE WRITTEN SUBMISSIONS FILED BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS. EVIDENTLY, IT IS SEEN FROM THE ORDER OF THE ASSESSING OFFICER THAT HE HAS HELD THE WATER FRONT ROYALTY CHARGES AS RENT PRIMARILY AS THE APPELLANT ITSELF HAS SHOWN THE 6 614,615, 641 & 642 - RJT - 2012 GUJARAT PIPAVAV PORT LIMITED SAME IN THE LEDGER AS WHARFAGE PAID TO THE GMB. ON THE CONTRARY, THE APPELLANT HAS TRIED TO NEGATE THIS DECISION OF THE ASSESSING OFFICER BY REFERRING TO INADVERTENT MISTAKE IN SHOWING IT AS WHARFAGE CHARGES INSTEAD OF WATER FRONT ROYALTY CHARGES. IT IS TRUE THAT ONE SHOULD NO T GO BY THE NOMENCLATURE GIVEN TO PARTICULAR HEAD OF PAYMENT FOR SUBJECTING SUCH PAYMENT FOR TAX DEDUCTION BECAUSE IN CIRCULAR NO.715 DTD 08 TH AUGUST, 1995, IT HAS BEEN CLARIFIED BY THE BOARD THAT THE INCIDENTS OF DEDUCTION OF TAX AT SOURCE DO NOT DEPEND U PON THE NOMENCLATURE, BUT ON THE CONTENTS OF THE AGREEMENT AS MENTIONED IN CLAUSE - (I) OF EXPLANATION TO SEC. 194I. HOWEVER, IT IS NOT UNDERSTOOD WHEN THE APPELLANT CLAIMS THAT IT IS NOT LIABLE FOR TAX DEDUCTION U/S 194J EVEN, THEN WHY IT HAS DEDUCTED TAX O N CONSERVATIVE BASIS. A PRUDENT BUSINESSMAN WILL NEVER LIKE TO PART AWAY WITH HIS MONEY WHEN HE IS NOT OBLIGED TO DO SO. THE APPELLANTS CLAIM THAT WATER FRONT CHARGES HAVE BEEN CALCULATED ON THE BASIS OF THROUGHPUTS ACHIEVED BY THE APPELLANT UNLIKE RENT W HICH IS A FIXED AMOUNT PER MONTH IS ALSO NOT ACCEPTABLE IN VIEW OF THE FACTS THAT SOME OR OTHER METHOD WILL HAVE TO BE ADOPTED FOR CALCULATING THE PAYMENT. THUS, HERE WHAT IS IMPORTANT IS THE NATURE OF PAYMENT AND NOT THE METHOD OF PAYMENT. FROM THE CONTEN TS OF THE AGREEMENT, IT IS EVIDENT THAT THE APPELLANT WAS LIABLE TO PAY A MONTHLY WATER FRONT ROYALTY PER TON OF CARGO HANDLED AT THE LEASED PREMISES. THUS, HERE ALSO A PERIOD OF ONE MONTH HAS BEEN FIXED FOR CALCULATING SUCH ROYALTY. THE CASE OF THE APPELL ANT DEFINITELY FALLS IN THE CATEGORY OF RENT ONLY AS HAS BEEN HELD BY THE ASSESSING OFFICER AS THE APPELLANT HAS BECOME ENTITLED TO USE THE LEASED PREMISES BY ENTERING INTO A SEPARATE AGREEMENT ON REGULAR BASIS. HERE, THE EARMARKED AREA HAS BEEN LEASED OUT FOR A SPECIFIED RATE AND SPECIFIED PERIOD ON REGULAR BASIS, THOUGH THE BASIS IS DEPENDENT ON VOLUME AND NATURE OF HANDLING OF THE CARGO DURING THE MONTH. RENT MEANS ANY PAYMENTS, BY WHATEVER NAME CALLED, UNDER ANY LEASE OR ANY OTHER AGREEMENT OR ARR ANGEMENT FOR THE USE OF ANY LAND ETC. THE MEANING OF RENT IN SEC. 194I IS WIDE IN ITS AMBIT AND SCOPE. DURING THE COURSE OF PROCEEDINGS, THE APPELLANT HAS HARPED ON THE ARGUMENT OF INADVERTENT MISTAKE IN RECORDING THE PAYMENT UNDER THE 7 614,615, 641 & 642 - RJT - 2012 GUJARAT PIPAVAV PORT LIMITED HEAD WHARFAGE CHA RGES BUT HAS NOT EXPLAINED AS TO WHY IT HAS DEDUCTED TAX AT SOURCE EVEN U/S 194J WHILE CLAIMING THAT THE PAYMENT UNDER CONSIDERATION WAS NOT LIABLE FOR TDS UNDER EITHER OF THE PROVISIONS I.E. 194I OR 194J. THUS, THE GROUND TAKEN BY THE APPELLANT BY CHALLE NGING THE ACTION OF THE ASSESSING OFFICER WHO TREATED THE WATER FRONT ROYALTY PAYMENT IN THE NATURE OF RENT IS REJECTED. 7.0 NOW COMING TO THE SECOND GROUND WITH REGARD TO THE FACT THAT THE GMB HAS ALREADY PAID ALL THE TAXES FOR THE CAPTIONED YEAR, THE SA ME CANNOT BE AGAIN RECOVERED FROM THE APPELLANT. IN VIEW OF THE DECISIONS RELIED UPON BY THE APPELLANT IN ITS SUBMISSION DATED 8 TH AUGUST, 2012 AS FILED IN THIS OFFICE ON 13 TH AUGUST, 2012, THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE SUBMISSIONS OF THE APPELLANT DATED 7 TH MARCH, 2011 AND TAKE ACTION ACCORDINGLY. THIS GROUND OF APPEAL IS THUS ALLOWED. 8.0 IN THE LAST GROUND OF APPEAL, THE APPELLANT HAS CHALLENGED THE LEVY OF INTEREST U/S 201(1A) @ 1.5% AS AGAINST APPLICABLE RATE OF 1% PER MONTH FOR THE PERIOD 1 ST JULY, 2010 TO 25 TH MARCH, 2011 INSPITE OF APPLICABLE RATE OF 1% PER MONTH. I HAVE PERUSED THE RELEVANT SECTION WHICH HAS BEEN AMENDED WITH EFFECT FROM 01.07.2010 VIDE FINANCE ACT, 2010 AND IT IS NOTICED THAT THE ASSESSING OFFICER HAS LEVIED THE INTEREST BY APPLYING THE CORRECT RATE AS PER LAW. AS THE APPELLANT HAS FAILED TO SHOW AS TO WHO THE ACTION OF THE ASSESSING OFFICER IS WRONG, THE APPEAL ON THIS GROUND IS DISMISSED. 10 . AGGRIEVED BY THE ORDER PASSED BY THE LD CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. IN SUPPORT OF APPEALS, THE LD AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE INVITED OUR ATTENTION TO VARIOUS CLAUSES OF THE CONCESSIONAL AGREEMENT TO SUPPORT HIS PLEA THAT THE IMPUGNED PAYMENTS WERE MADE BY THE ASSESSEE TO GUJ ARAT MARITIME BOARD FOR AVAILING SERVICES AT THE WATER - FRONT AND THEREFORE TAX WAS REQUIRED TO BE DEDUCTED AT SOURCE OUT OF THE AFORESAID PAYMENTS U/S 194 J AND NOT U/S 194 I . HIS SECOND SUBMISSION WAS THAT THE SERVICES OBTAINED BY THE ASSESSEE FROM GUJARAT MARITIME BOARD UNDER THE CONCESSION AGREEMENT W ERE NOT IN THE NATURE OF CREATING ANY LEASE , SUB - LEASE, 8 614,615, 641 & 642 - RJT - 2012 GUJARAT PIPAVAV PORT LIMITED OR TENANCY OF PROPERTY IN FAVOUR OF THE ASSESSEE AND THEREFORE SECTION 194 I WAS NOT APPLICABLE TO THE ASSESSEE. HIS THIRD SUBMISSION WAS THAT GUJARAT MAR ITIME BOARD WAS A TRUST AND THEREFORE ITS INCOME WAS EXEMPT U/S 11 - 13 OF THE INCOME - TAX ACT WITH THE RESULT THAT NON - DEDUCTION OF TAX AT SOURCE BY THE ASSESSEE OUT OF THE AFORESAID PAYMENT S MADE TO GUJARAT MARITIME BOARD WOULD NOT CAUSE ANY LOSS OR PREJUDI CE TO THE REVENUE . IN THIS CONNECTION, HE REFERRED TO SEVERAL JUDGMENTS , E.G., JUDGMENT OF THE HONBLE SUPREME COURT IN HINDUSTAN COCA COLA BEVERAGE (P.) LTD. V. CIT, 293 ITR 226 (SC); CIT V TRANS BHARAT AVIATION (P) LTD., 320 ITR 671; CIT V. CHENNAI METRO POLITAN WATER SUPPLY & SEWERAGE BOARD, 246 CTR (MAD) 402; RAMAKRISHNA VEDANTHA MATH V. ITO, 18 ITR (TRIB) 603 (KOLKATA) AND ITO V. EMRALD CONSTRUCTION CO. (P) LTD., 116 TTJ (JD) 904. 11. IN REPLY, THE LD . DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER P ASSED BY THE ASSESSING OFFICER. HE ALSO RELIED UPON VARIOUS CLAUSES OF THE CONCESSION AGREEMENT AND SUBMITTED THAT THE ASSESSEE ITSELF HA S SHOWN THE IMPUGNED PAYMENTS AS WHARFAGE CHARGES IN THE BOOKS OF ACCOUNTS WHICH OBVIOUSLY MEANS THAT THE PAYMENTS WERE MADE FOR US ING THE WHARF ON MONTHLY BASIS AND THEREFORE THE ASSESSING OFFICER AND THE LD CIT(A) HA VE RIGHTLY HELD THAT THE PROVISIONS OF SECTION 194 I WERE APPLICABLE TO THE ASSESSEE AND NOT SECTION 194 J . HIS SECOND SUBMISSION WAS THAT EXEMPTION WAS NOT AV AILABLE TO GUJARAT MARITIME BOARD U/S 10 OF THE INCOME - TAX ACT. ACCORDING TO HIM, GUJARAT MARITIME BOARD WAS REQUIRED TO FILE RETURN OF INCOME FOR CLAIMING EXEMPTION U/S 11 OF THE INCOME - TAX ACT AND THEREFORE THE ASSESSEE WAS REQUIRED TO PAY INTEREST TILL THE COMPLETION OF ASSESSMENT OF GUJARAT MARITIME BOARD. IN THIS CONNECTION HE RELIED UPON CIRCULAR NO.4/2002 DATED 16.07.2002 ISSUED BY THE BOARD. IN SUPPORT OF HIS SUBMISSIONS, HE RELIED UPON SEVERAL DECISION, E . G., CIT V. D. RATHINAM, 335 ITR 101 (MAD); CIT V. REEBOK INDIA CO., 291 ITR 455 (DELHI); J. C. BANSAL V. TRO, 123 ITD 245 (INDORE) AND ACIT V. AIR CANADA, 88 ITD 545 (DELHI). 12. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THEIR SUBMISSIONS. THERE IS NO DISPUTE THAT THE ASSESSEE HAS PA ID A SUM OF RS.1,93,82,533/ - TO GUJARAT MARITIME BOARD. THE AMOUNT SO PAID HAS BEEN SHOWN IN THE BOOKS BY THE ASSESSEE AS WHARFAGE CHARGES. THE ASSESSEE HAS 9 614,615, 641 & 642 - RJT - 2012 GUJARAT PIPAVAV PORT LIMITED DEDUCTED TAX U/S 194 J AT THE RATE OF 5.61%. IT IS ADMITTED THAT THE ASSESSEE HAS NOT DEDUCTED THE T AX AT SOURCE AS PER SECTION 194 I. THE CLAIM OF THE ASSESSEE IS THAT THE AMOUNT SO PAID BY THE ASSESSEE TO GUJARAT MARITIME BOARD IS NOT IN THE NATURE OF RENT WHILE THE CLAIM OF THE AO IS THAT IT IN THE NATURE OF RENT. 13. THE TERM RENT IS DEFINED IN EX PLANATION (I) TO SECTION 194 I AS ANY PAYMENT, BY WHATEVER NAME CALLED, UNDER ANY LEASE, SUB - LEASE, TENANCY OR ANY OTHER AGREEMENT FOR THE USE OF (EITHER SEPARATELY OR TOGETHER) ANY, INTER - ALIA, LAND; OR BUILDING OR LAND APPURTENANT TO A BUILDING. IT IS T HUS CLEAR THAT THE TERM RENT ALSO INCLUDES ANY PAYMENT MADE UNDER ANY AGREEMENT FOR THE USE OF , EITHER SEPARATELY OR TOGETHER , ANY LAND OR BUILDING. KEEPING IN VIEW THE AFORESAID DEFINITION OF RENT, W E HAVE PERUSED THE CONCESSION AGREEMENT DATED 30.09. 1998 EXECUTED BETWEEN THE ASSESSEE - COMPANY AND GUJARAT MARITIME BOARD AND ALSO THE LEASE & POSSESSION AGREEMENT DATED 30.09. 1998 BETWEEN THEM. CLAUSE 1 OF THE LEASE & POSSESSION AGREEMENT DEAL ING WITH L EASE OF PREMISES G RANT S THE RIGHT TO THE ASSESSEE TO USE THE FORESHORE LAND AND THE WATERFRONT ABUTTING THERETO ON PAYMENT OF MONTHLY LEASE RENT OF RS.29,61,000/ - . BY CLAUSE 11.3 OF THE CONCESSION AGREEMENT DATED 30.09.1998, THE ASSESSEE IS REQUIRED TO PAY THE LICENSOR A MONTHLY WATERFRONT ROYALTY PER TON OF CARGO HANDLED AT THE LEASED PREMISES. WATERFRONT ROYALTY IS DEFINED IN CLAUSE 2.1(49) OF THE CONCESSION AGREEMENT AS THE AMOUNT PAYABLE BY THE LICENSEE TO THE LICENSOR, PER TON OF CARGO HANDLED AT THE PORT, BASED ON THE ACTUAL CARGO THROUGHPUTS ACHIEV ED. IN THE BOOKS OF ACCOUNT, THE ASSESSEE HAS ENTERED THE IMPUGNED PAYMENT AS PAYMENT OF WHARFAGE CHARGES. WHARFAGE REPRESENTS THE MONEY PAID FOR LANDING GOODS UPON OR LOADING THEM FROM A WHARF. WHARF IS A STRUCTURE ON THE MARGIN OR SHORE OF NAVIGABLE WATERS, ALONGSIDE OF WHICH VESSELS CAN BE BROUGHT FOR THE SAKE OF BEING CONVENIENTLY LOADED OR UNLOADED, OR A SPACE OF GROUND, ARTIFICIALLY PREPARED, FOR THE RECEPTION OF MERCHANDISE FROM A SHIP OR VESSEL, SO AS TO PROMOTE THE DISCHARGE OF SUCH VESSEL . W ATER - FRONT MEANS LAND OR LAND WITH BUILDINGS FRONTING ON A BODY OF WATER. AFTER CAREFUL PERUSAL OF BOTH THE AGREEMENTS , NAMELY , THE LEASE & POSSESSION AGREEMENT AND THE CONCESSION AGREEMENT, WE ARE CONVINCED THAT THE IMPUGNED PAYMENT SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS AS WHARFAGE IS, IN SUBSTANCE, NOTHING BUT 10 614,615, 641 & 642 - RJT - 2012 GUJARAT PIPAVAV PORT LIMITED PAYMENT MADE FOR USING THE LAND TOGETHER WITH STRUCTURE ON THE MARGIN OR SHORE OF NAVIGABLE WATERS ALONGSIDE OF WHICH VESSELS WERE BROUGHT FOR THE SAKE OF BEING CONVENIENTLY LOADED OR UNLO ADED. WATERFRONTS ARE PART OF LAND AND THEREFORE ANY PAYMENT IN LIEU OF ITS USE WOULD SQUARELY FALL UNDER THE DEFINITION OF RENT AS GIVEN IN SECTION 194(I) OF THE INCOME - TAX ACT . IN OUR VIEW, THE LD CIT(A) HAS CORRECTLY APPRECIATED THE FACTUAL AND LEGAL AS PECTS OF THE CASE. HIS ORDER IN THIS BEHALF IS THEREFORE CONFIRMED. 14. APROPOS THE APPLICABILITY OF SECTION 194J TO THE IMPUGNED PAYMENTS, IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT IMPUGNED PAYMENTS WERE IN THE NATURE O F ROYALTY U/S 194J(C) OF THE INCOME - TAX ACT AND HENCE THE ASSESSEE WAS RIGHT IN DEDUCTING TAX AT SOURCE U/S 194J. AT THE TIME OF HEARING, T HE ATTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS INVITED TO THE DEFINITION OF ROYALTY AS GIVEN IN EXPLANATIO N (BA) TO SECTION 194J READ WITH EXPLANATION 2 TO CLAUSE (VI) OF SUB - SECTION (1) OF SECTION 9. HE WAS POINTEDLY ASKED TO STATE AS TO WHICH CLAUSE OF EXPLANATION 2 TO CLAUSE (VI) OF SECTION 9(1) WOULD BRING THE IMPUGNED PAYMENTS MADE BY THE ASSESSEE TO GMB WITHIN THE AMBIT OF ROYALTY . HE WAS POINT BLANK AT THIS STAGE. WE HAVE PERUSED THE DEFINITION OF ROYALTY AS GIVEN IN EXPLANATION 2 TO CLAUSE (VI) OF SECTION 9(1) AND FIND THAT THE SCOPE OF ROYALTY IS LIMITED TO CONSIDERATION PAID FOR TRANSFER OF CERTAIN RIGHTS IN RESPECT OF, E.G., PATENT, INVENTION, MODEL, DESIGN, SECRET FORMULA OR PROCESS OR TRADE MARK OR SIMILAR PROPERTY , ETC. THE IMPUGNED SUM PAID BY THE ASSESSEE DOES NOT FALL UNDER ANY OF THE CLAUSES OF EXPLANATION 2 TO CLAUSE (VI) OF SUB - SECTION (1) OF SECTION 9. AS STATED EARLIER, THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE ALSO COULD NOT ESTABLISH AS TO HOW THE IMPUGNED PAYMENTS MADE BY THE ASSESSEE FELL UNDER EXPLANATION 2 TO CLAUSE (VI) OF SUB - SECTION (1) OF SECTION 194J. IN THIS VIEW OF TH E MATTER, IT IS HELD THAT THERE WAS NO BASIS WITH THE ASSESSEE FOR DEDUCTING TAX AT SOURCE U/S 194J. THE LD. CIT(A) HAS RIGHTLY HELD THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE U/S 194I. RESULTANTLY, GROUND NO.1 TAKEN BY THE ASSESSEE IN BOTH THE APPEALS IS DISMISSED. 1 5 . OTHER GROUNDS OF APPEAL TAKEN BY THE ASSESSEE AND THE ISSUES RAISED IN THE APPEALS FILED BY THE REVENUE ARE INTER - LINKED. THEY ARE THEREFORE BEING 11 614,615, 641 & 642 - RJT - 2012 GUJARAT PIPAVAV PORT LIMITED DISPOSED OF TOGETHER. IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE ASSE SSEE WAS NOT LIABLE TO BE TREATED AS THE ASSESSEE IN DEFAULT U/S 201(1) AND WAS ALSO RESULTANTLY NOT LIABLE TO BE FASTENED WITH THE LIABILITY TOWARDS INTEREST U/S 201(1A) ON THE GROUND THAT THE INCOME OF THE PAYEE , I.E., GUJARAT MARITIME BOARD , WAS EXEMPT FROM TAX U/S 11 - 13 AND THEREFORE NO PREJUDICE OR LOSS WOULD BE CAUSED TO THE REVENUE IN THE EVENT OF NON /SHORT - DEDUCTION OF TAX AT SOURCE U/S 194 I OUT OF PAYMENTS MADE TO THEM. IN SUPPORT OF THE AFORESAID PROPOSITION, SEVERAL JUDGMENTS HAVE BEEN CITED ON B EHALF OF THE ASSESSEE. THE LD DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND , HAS RELIED ON CIRCULAR NO.4/2002 DATED 16.07.2002 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES AND SUBMITTED THAT SUCH A CONCESSION WAS AVAILABLE IN RESPECT OF PAYMENT TO THOSE IN STITUTIONS ONLY WHOSE INCOME WERE UNCONDITIONALLY EXEMPT U/S 10 AND WHO WERE ALSO NOT STATUTORILY REQUIRED TO FILE THE RETURN OF INCOME AS PER THE PROVISIONS OF SECTION 139. HE SUBMITTED THAT THE INCOME OF GUJARAT MARITIME BOARD WAS NEITHER EXEMP T U/S 10 O F THE INCOME - TAX ACT NOR WAS THE SAID BOARD EXEMPTED FROM FILING THE RETURN OF INCOME AS PER THE PROVISIONS OF SECTION 139. FOR THE SAKE OF CONVENIENCE, THE AFORESAID CIRCULAR IS REPRODUCED HEREWITH: - 1. SUBSEQUENT TO THE AMENDMENT TO SECTION 197A MADE B Y THE FINANCE ACT, 2002 WHEREBY A NEW SUB - SECTION (1B) HAS BEEN INSERTED WITH EFFECT FROM 1ST JUNE, 2002, REPRESENTATIONS HAVE BEEN RECEIVED SEEKING CLARIFICATION WHETHER THE PRESCRIBED SELF - DECLARATION UNDER THE SAID SECTION CAN BE SUBMITTED BY ENTITIES E XEMPT FROM TAX UNDER SECTION 10 EVEN IF THE PAYMENTS REFERRED TO IN SUB - SECTION (1A) TO BE MADE TO THEM EXCEED THE THRESHOLD LIMIT NOT SUBJECT TO TAX. 2. THIS MATTER HAS BEEN EXAMINED BY THE BOARD. IT HAS BEEN DECIDED THAT IN CASE OF THOSE FUNDS OR AUTHOR ITIES OR BOARDS OR BODIES, BY WHATEVER NAME CALLED, WHOSE INCOME IS UNCONDITIONALLY EXEMPT UNDER SECTION 10 OF THE INCOME - TAX ACT AND WHO ARE STATUTORILY NOT REQUIRED TO FILE RETURN OF INCOME AS PER SECTION 139 OF THE INCOME - TAX ACT, THERE WOULD BE NO REQU IREMENT FOR TAX DEDUCTION AT SOURCE SINCE THEIR INCOME IS ANYWAY EXEMPT UNDER THE INCOME - TAX ACT. THE INSTITUTIONS WHOSE INCOME IS 12 614,615, 641 & 642 - RJT - 2012 GUJARAT PIPAVAV PORT LIMITED UNCONDITIONALLY EXEMPT UNDER SECTION 10 AND WHO ARE STATUTORILY NOT REQUIRED TO FILE RETURN OF INCOME AS PER THE PROVISIONS O F SECTION 139 ARE : ( I ) LOCAL AUTHORITY, AS REFERRED TO IN THE EXPLANATION TO CLAUSE ( 20 ); ( II ) REGIMENTAL FUND OR NON - PUBLIC FUND ESTABLISHED BY THE ARMED FORCES OF THE UNION REFERRED TO IN CLAUSE ( 23AA ); ( III ) FUND, BY WHATEVER NAME CALLED, SET UP BY THE LIFE INSURANCE CORPORATION OF INDIA ON OR AFTER 1ST AUGUST, 1996, OR BY ANY OTHER INSURER REFERRED TO IN CLAUSE ( 23AAB ); ( IV ) AUTHORITY (WHETHER KNOWN AS THE KHADI AND VILLAGE INDUSTRIES BOARD OR BY ANY OTHER NAME) REFERRED TO IN CLAUSE ( 23BB ); ( V ) BODY OR AUTHORITY REFERRED TO IN CLAUSE ( 23BBA ); ( VI ) SAARC FUND FOR REGIONAL PROJECTS SET UP BY COLOMBO DECLARATION REFERRED TO IN CLAUSE ( 23BBC ); ( VII ) SECRETARIAT OF THE ASIAN ORGANISATION OF THE SUPREME AUDIT INSTITUTIONS REFERRED TO IN CLAUSE ( 23BBD ) TILL ASSESSMENT YEAR 2003 - 2004; ( VIII ) INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY REFERRED TO IN CLAUSE ( 23BBE ); ( IX ) PRIME MINISTERS NATIONAL RELIEF FUND REFERRED TO IN SUB - CLAUSE ( I ), PRIME MINISTERS FUND (PROMOTION OF FOLK ART) REFERRED TO IN SUB - CLAUSE ( II ), PRIME MINISTERS AID TO STUDENTS FUND REFERRED TO IN SUB - CLAUSE ( III ), NATIONAL FOUNDATION FOR COMMUNAL HARMONY REFERRED TO IN SUB - CLAUSE ( IIIA ), ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION REFERRED TO IN SUB - CLAUSE ( IIIAB ) AND A NY HOSPITAL OR OTHER INSTITUTION FOR THE RECEPTION AND TREATMENT OF PERSONS AS REFERRED TO IN SUB - CLAUSE ( IIIAC ) OF CLAUSE ( 23C ); ( X ) CREDIT GUARANTEE FUND TRUST FOR SMALL SCALE INDUSTRIES REFERRED TO IN CLAUSE ( 23EB ) TILL ASSESSMENT YEAR 2006 - 2007; ( XI ) PROVIDENT FUND TO WHICH THE PROVIDENT FUNDS ACT, 1925 (19 OF 1925) REFERRED TO IN SUB - CLAUSE ( I ), RECOGNISED PROVIDENT FUND REFERRED TO IN SUB - CLAUSE ( II ), APPROVED SUPERANNUATION FUNDS REFERRED TO IN SUB - 13 614,615, 641 & 642 - RJT - 2012 GUJARAT PIPAVAV PORT LIMITED CLAUSE ( III ), APPROVED GRATUITY FUND REFERRED TO IN SUB - CLAUSE ( IV ) AND FUNDS REFERRED TO IN SUB - CLAUSE ( V ) OF CLAUSE ( 25 ); ( XII ) EMPLOYEES STATE INSURANCE FUND REFERRED TO IN CLAUSE ( 25A ); ( XIII ) CORPORATIONS REFERRED TO IN CLAUSE ( 26BB ); ( XIV ) BOARDS REFERRED TO IN CLAUSE ( 29A ). 1 6 . WE HAVE CONSIDE RED THE SUBMISSIONS MADE BY BOTH THE PARTIES AND ALSO PERUSED THE AUTHORITIES REFERRED TO BY THEM. LD. DEPARTMENTAL REPRESENTATIVE IS RIGHT IN HIS SUBMISSION THAT THE INCOME OF THE PAYEE , I.E., GUJARAT MARITIME BOARD, IS NOT UNCONDITIONALLY EXEMPT FROM TAX U/S 10 . THE SAID BOARD IS ALSO NOT EXEMPTED FROM FILING RETURN U/S 139. THE FACT AS TO WHETHER THE IMPUGNED SUMS HA VE BEEN TAKEN INTO ACCOUNT BY THE PAYEE FOR COMPUTING ITS INCOME CANNOT BE ASCERTAINED TILL THE RETURN OF INCOME IS FILED BY THE PAYEE AND R EQUISITE EVIDENCE IN THIS BEHALF IS FURNISHED BY THE PAYER/DEDUCTOR BEFORE THE AO. IT IS THE CASE OF THE REVENUE IN ITS GROUNDS OF APPEAL THAT SUCH EVIDENCE WAS NOT FILED BY THE ASSESSEE. IN ORDER TO ADDRESS SUCH ISSUES AND ENSURE UNIFORMITY, SIMPLICITY AN D OBJECTIVITY IN MATTERS AS THOSE BEFORE US, THE TDS PROVISIONS HAVE SINCE BEEN RATIONALISED . A PROVISO (I.E., FIRST PROVISO) HAS BEEN INSERTED IN SUB - SECTION ( 1 ) OF SECTION 201 WITH EFFECT FROM 01.07.2012 ACCORDING TO WHICH ANY PERSON , WHO IS RE QUIRED TO DEDUCT TAX AT SOURCE OUT OF ANY SUM PAID TO A RESIDENT OR CREDITED TO HIS ACCOUNT BUT FAILS TO DEDUCT THE WHOLE OR ANY PART OF SUCH TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII OF THE INCOME - TAX ACT , SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAUL T IN RESPECT OF SUCH TAX IF SUCH RESIDENT PAYEE ( I ) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 139 ; ( II ) HAS TAKEN INTO ACCOUNT SUCH AMOUNT FOR COMPUTING INCOME IN SUCH RETURN OF INCOME; AND ( III ) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME, AND THE PERSON RESPONSIBLE FOR DEDUCTIN G TAX AT SOURCE FURNISHES A CERTIFICATE TO THIS EFFECT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED, WHICH, ACCORDING TO RULE 3 1ACB OF THE INCOME - TAX R ULES, SHALL BE FURNISHED IN FORM NO. 2 6 A . THE AFORESAID PROVISO RELAXES THE RIGOURS OF CONSEQUENC ES FLOWING FROM NON /SHORT - DEDUCTION OF TAX AT SOURCE IF THE CONDITIONS STIPULATED BY THE SAID PROVISO ARE FULFILLED. 14 614,615, 641 & 642 - RJT - 2012 GUJARAT PIPAVAV PORT LIMITED 1 7 . THERE IS NO DISPUTE THAT THE SAID PROVISO HAS BEEN INSERTED IN SUB - SECTION ( 1 ) OF SECTION 20 1 WITH EFFECT FROM 1.7.2012. AMENDMENTS O N EXACTLY SIMILAR LINES HAVE BEEN CARRIED OUT IN SECTION 20 6C OF THE INCOME - TAX ACT BY INSERTING A PROVISO TO SUB - SECTION ( 6A ) THEREOF WITH EFFECT FROM 1.7.2012. THE NEED FOR SUCH AMENDMENT HAS BEEN EXPLAINED IN THE EXPLANATORY NOTES TO THE FINANCE BILL 20 12 AS UNDER: E. RATIONALIZATION OF TAX DEDUCTION AT SOURCE (TDS) AND TAX COLLECTION AT SOURCE (TCS) PROVISIONS IN ORDER TO PROVIDE CLARITY REGARDING DISCHARGE OF TAX LIABILITY BY THE RESIDENT PAYEE ON PAYMENT OF ANY SUM RECEIVED BY HIM WITHOUT DEDUCTIO N OF TAX, IT IS PROPOSED TO AMEND SECTION 201 TO PROVIDE THAT THE PAYER WHO FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX ON THE PAYMENT MADE TO A RESIDENT PAYEE SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT PA YEE (I) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 139; (II) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOME IN SUCH RETURN OF INCOME; AND (III) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME, AND THE PAYER FURNIS HES A CERTIFICATE TO THIS EFFECT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED. THE DATE OF PAYMENT OF TAXES BY THE RESIDENT PAYEE SHALL BE DEEMED TO BE THE DATE ON WHICH RETURN HAS BEEN FURNISHED BY THE PAYEE. IT IS ALSO PROPOSED TO PROVIDE THAT WHERE THE PAYER FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX ON THE PAYMENT MADE TO A RESIDENT AND IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 201(1) ON ACCOUNT OF PAYMENT OF TAXES BY THE SUCH RESIDENT, THE INTEREST UNDER SECTION 201(1A)(I ) SHALL BE PAYABLE FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE OF FURNISHING OF RETURN OF INCOME BY SUCH RESIDENT PAYEE. 15 614,615, 641 & 642 - RJT - 2012 GUJARAT PIPAVAV PORT LIMITED AMENDMENTS ON SIMILAR LINES ARE ALSO PROPOSED TO BE MADE IN THE PROVISIONS OF SECTION 206C RELATING TO TCS FOR CLARIFYI NG THE DEEMED DATE OF DISCHARGE OF TAX LIABILITY BY THE BUYER OR LICENSEE OR LESSEE. THESE AMENDMENTS WILL TAKE EFFECT FROM 1ST JULY, 2012. 1 8 . FIRST PROVISO INSERTED IN SUB - SECTION ( 1 ) OF SECTION 20 1 SEEKS TO ACHIEVE THREE - FOLD OBJECTIVES. ONE, IT SEEK S TO (1) ENSURE THAT THERE IS NO LOSS TO THE REVENUE, I.E., (I) THE RESIDENT PAYEE HAS FURNISHED HIS RETURN OF INCOME U/S 139, (II) THE RESIDENT PAYEE HAS TAKEN INTO ACCOUNT SUCH SUM ON WHICH TAX WAS REQUIRED TO BE DEDUCTED AT SOURCE FOR COMPUTING INCOME I N SUCH RETURN OF INCOME, (III) THE RESIDENT PAYEE HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME, (IV) THE PAYER, I.E., THE PERSON RESPONSIBLE FOR DEDUCTING THE TAX AT SOURCE, HAS FURNISHED A CERTIFICATE IN FORM NO. 2 6 A CONFIRM ING THE AFORESAID; (2) RATIONALIZE THE PROVISIONS RELATING TO DEDUCTION OF TAX AT SOURCE; (3) PROVIDE RELIEF TO THE DEDUCTOR S OF TAX AT SOURCE FROM THE CONSEQUENCES OF NON/SHORT DEDUCTION OF TAX AT SOURCE AND TO THAT EXTENT IT IS A BENEFICIAL PROVISION. IN THE AFORESAID BACKGROUND, THE ISSUE THAT ARISES FOR CONSIDERATION IS WHETHER THE FIRST PROVISO TO SECTION 20 1 ( 1 ) IS APPLICABLE TO PENDING MATTERS ALSO NOTWITHSTANDING THE FACT THAT IT HAS BEEN MADE EFFECTIVE FROM 1.7.2012. 1 9 . IN CIT V. CHANDULAL VENICH AND, 209 ITR 7 (GUJ.), THE ISSUE BEFORE THE HONBLE JURISDICTIONAL HIGH COURT WAS WHETHER THE FIRST PROVISO INSERTED IN SECTION 43B WITH EFFECT FROM 1.4.1988, WHICH TOO WAS INTENDED TO BE A BENEFICIAL PROVISION, WOULD APPLY RETROSPECTIVELY. THE HONBLE HIG H COURT HAS HELD: ONCE IT IS HELD THAT THE PROVISO IS INSERTED AS A REMEDIAL AND CURATIVE MEASURE FOR REMOVING THE DIFFICULTIES FACED BY THE TAXPAYERS BECAUSE OF INADVERTENT MISTAKE OR OMISSION WHICH HAS CREPT IN IN DRAFTING SECTION 43B, IT WOULD BE JUST AND PROPER TO HOLD THAT IT WOULD RELATE BACK TO THE DATE WHEN SECTION 43B WAS INTRODUCED. THE AFORESAID JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT HAS BEEN APPROVED BY THE HONBLE SUPREME COURT IN ALLIED MOTORS (P.) LTD. V. CIT , 224 ITR 677 (SC). K EEPING IN VIEW THE FACT THAT THE FIRST PROVISO TO SUB - SECTION ( 1 ) OF SECTION 20 1 NOT ONLY SEEKS TO RATIONALIZE THE PROVISIONS RELATING TO DEDUCTION OF TAX AT SOURCE BUT IS ALSO BENEFICIAL IN NATURE IN THAT IT SEEKS TO PROVIDE RELIEF TO THE 16 614,615, 641 & 642 - RJT - 2012 GUJARAT PIPAVAV PORT LIMITED DEDUCTORS OF TAX AT SOURCE FROM THE CONSEQUENCES FLOWING FROM NON/SHORT DEDUCTION OF TAX AT SOURCE AFTER ENSURING THAT THE INTEREST OF THE REVENUE IS WELL PROTECTED, WE HAVE NO HESITATION TO HOLD THAT THE SAID PROVISO WOULD APPLY RETROSPECTIVELY AND THEREFORE TO BOTH THE ASSESSMENT YEARS UNDER APPEAL. ALL THE ISSUES UNDER APPEAL, EXCEPT THE ONE RAISED IN GROUND NO.1.1 TAKEN BY THE ASSESSEE IN BOTH THE APPEALS, HAVE NOT BEEN EXAMINED BY THE AO/CIT(A) IN THE LIGHT OF THE REQUIREMENTS OF FIRST PROVISO TO SECTION 201(1), WHICH , AS HELD BY US, IS RETROSPECTIVELY APPLICABLE. WE THEREFORE CONSIDER IT APPROPRIATE TO RESTORE THEM TO THE FILE OF THE AO FOR CONSIDERATION AND DECISION. WE DIRECT THE ASSESSEE TO APPEAR BEFORE THE ASSESSING OFFICER ALONG WITH RELEVANT DOCUMENTS AS STIPUL ATED BY THE FIRST PROVISO TO SUB - SECTION ( 1 ) OF SECTION 20 1 WITHIN TWO MONTHS OF THE DATE ON WHICH THIS ORDER IS PRONOUNCED UPON WHICH THE AO SHALL EXAMINE THE CLAIM OF THE ASSESSEE IN THE LIGHT OF THE SAID PROVISIONS AND PASS APPROPRIATE ORDER ACCORDINGLY IN CONFORMITY WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE SHALL NOT BE TREATED AS ASSESSEE IN DEFAULT IN CASE THE AO IS SATISFIED, AFTER DUE VERIFICATION, THAT THE CONDITIONS STIPULATED BY THE FIRST PROVISO TO SUB - SECTION (1) OF SECTION 201 HAVE BEEN FULFILLED BY THE ASSESSEE BUT IN THAT SITUATION ALSO T HE ASSESSEE SHALL BE LIABLE TO PAY INTEREST U/S 201(1A) AT THE PRESCRIBED RATE FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE U/S 194I TO THE DATE OF FURNISHING OF RETURN OF INCOME BY THE PAYEE. ALL GROUNDS OF APPEAL TAKEN BY THE ASSESSEE IN BOTH APPEALS , EXCEPT GROUND NO.1.1 TAKEN BY THE ASSESSEE IN BOTH THE APPEALS, AND THE ISSUES RAISED IN THE APPEALS FILED BY THE REVENUE THUS STAND RESTORED TO THE FILE OF THE AO FOR PASSING A FRESH ORDER AS PER DIRECTIONS EARLIER GIVEN BY US. 20 . IN VIEW OF THE FOREGOING , BOTH THE APPEALS FILED BY THE ASSESSEE SHALL BE TREATED AS PARTLY ALLOWED WHILE BOTH THE APPEALS FILED BY THE REVENUE SHALL BE TREATED AS ALLOWED FOR STATISTI CAL PURPOSES. ORDER PRONOUNCED ON 23 . 0 8 . 201 3 SD/ - SD/ - (T. K. SHARMA) ( D. K. SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT: 23 .0 8 .2013 B T 17 614,615, 641 & 642 - RJT - 2012 GUJARAT PIPAVAV PORT LIMITED COPY OF ORDER FORWARDED TO: - 1. APPELLANT GUJARAT PIPAVAV PORT LIMI TED, PORT PIPAVAV, POST BAG NO.45, POST UCCHAIYA VIA RAJULA, DIST AMRELI, GUAJRAT 2 . RESPONDENT - DCIT, TDS CIRCLE, RAJKOT 3 . CONCERNED CIT (TDS) , AHMEDABAD 4 . CIT(A) - II, RAJKOT 5 . DR, ITAT, RAJKOT 6 . GUARD FILE. BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT