Shri The Joint Secretary, Dehradun V. ACIT, Dehradun

ITA 627/DEL/2013

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 2748 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 23-05-2017
• Assessment Year: misc
• Appeal Filed On: 01-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bonafide belief; Non-deduction of tax; Reasonable cause
• Section: 133A; 194C; 201(1); 131; 139

Judgement Text

1 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 798 & 799/DEL/2013 (ASSESSMENT YEAR: 2009-10 AND 2010-11) DCIT TDS), 13A, SUBHASH ROAD, , DEHRADUN VS. THE JOINT SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, 2009, IHM CAMPUR, GARHI CANTT, DEHRADUN PAN: AAAA01473G (APPELLANT) (RESPONDENT) ITA NO. 626 & 627/DEL/2013 (ASSESSMENT YEAR: 2009-10 AND 2010-11) THE JOINT SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, 2009, IHM CAMPUR, GARHI CANTT, DEHRADUN PAN: AAAA01473G VS. ACIT, TDS, DEHRADUN (APPELLANT) (RESPONDENT) ITA NO. 1576/DEL/2015 (ASSESSMENT YEAR: 2010-11) THE JOINT SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, 2009, IHM CAMPUR, GARHI CANTT, DEHRADUN PAN: AAAA01473G VS. JCIT, TDS, DEHRADUN (APPELLANT) (RESPONDENT) 2 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, REVENUE BY : SHRI AMIT JAIN, SR. DR ASSESSEE BY: SHRI ASHWANI TANEJA, ADVOCATE SHRI SOMIL AGARWAL, ADV SHRI SAURABH GOYAL, CA DATE OF HEARING 25/07/2018 DATE OF PRONOUNCEMENT 15/10/2018 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THESE ARE THE FIVE APPEALS PERTAINING TO THE SAME A SSESSEE. IN FOUR APPEALS FOR TWO ASSESSMENT YEARS PREFERRED B Y ASSESSEE AND REVENUE ARE CONCERNING SHORT DEDUCTION OF TAX U/S 201(1) AND INTEREST U/S 201 (1A) OF THE INCOME TAX ACT INVOLVING SIMILAR ISSUES AND ONE APPEAL PREFERRED BY ASSESSE E AGAINST CONFIRMATION OF PENALTY U/S 271C OF THE ACT FOR AY 2010-11 . THESE APPEALS ARE ARGUED ISSUE WISE BY BOTH THE PAR TIES TOGETHER AND, HENCE, THESE ARE DISPOSED OF BY THIS COMMON OR DER. 2. ITA NO. 626 AND 627/DEL/2013 ARE FILED BY THE ASSES SEE AGAINST THE ORDER OF THE LD COMMISSIONER OF INCOME TAX ( C IT(A)) DATED 03.11.2012 FOR ASSESSMENT YEAR 2009-10 AND 2010-11 RESPECTIVELY , WHEREIN, HE HAS HELD THAT THE ASS ESSEE IS REQUIRED TO DEDUCT TAX AT SOURCE U/S 194C OF THE ACT ON PAYM ENT MADE TO DIFFERENT PARTIES. THE ASSESSEE CONTESTED BEFORE HI M THAT THE 3 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, ORDER PASSED BY THE LD ASSISTANT COMMISSIONER OF IN COME TAX (TDS) (ACIT(TDS)) , DEHRADUN PASSED U/S 201(1) READ WITH SECTION 201(1A) OF THE ACT ON 30.03.2011 IS NOT SUS TAINABLE. THE LD AO HAS ALSO FILED APPEALS FOR TWO ASSESSMENT Y EARS CONTESTING THE FINDING OF THE LD CIT (A) THAT THE ASSESSEE IS NOT REQUIRED TO DEDUCT TAX AT SOURCE OF PAYMENT MADE TO FOREIGN COM PANIES U/S 195 BUT U/S 194C OF THE ACT. THE LD AO FURTHER AGGR IEVED AGAINST THE FINDING OF THE LD CIT (A) THAT THE ASSESSEE IS NOT REQUIRED TO DEDUCT TAX AT SOURCE ON PAYMENT TO THE STATE TRADIN G CORPORATION OF INDIA LTD U/S 194C AS THE CONTRACT W AS FOR SUPPLY OF THE EQUIPMENT AND NOT FOR WORK. 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE IS E NGAGED IN ORGANIZING SAF WINTER GAMES, 2009( GAMES) IN UTT RAKHAND AND IS INVOLVED IN DEVELOPMENT OF INFRASTRUCTURE FACILI TIES SUCH AS STADIUMS, ICE SKATING RINK, DEVELOPMENT OF ICE SKII NG SLOPES, ANCILLARY SPORTS FACILITIES AND OTHER INFRASTRUCTUR E FOR GAMES. SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON 31.01.2 011 AND IT WAS NOTICED THAT ASSESSEE IS REQUIRED TO DEDUCT TAX AT SOURCES ON PAYMENT MADE TO VARIOUS PARTIES, WHICH HAS NOT BEEN DEDUCTED. SUMMONS U/S 131 OF THE ACT WAS ALSO ISSUED TO THE A CCOUNTS OFFICER OF THE ASSESSEE. THE LD AO NOTED THAT THE A SSESSEE HAS 4 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, MADE A PAYMENT TO FOREIGN PARTY IN FRANCE/ ITALY ON WHICH NO TAX IS DEDUCTED U/S 195 OF THE ACT. THE ASSESSEE HAS CO NTESTED THAT PAYMENT WAS MADE FOR THE PURCHASE OF EQUIPMENTS AND THEREFORE, NO TAX IS REQUIRED TO BE DEDUCTED. THE L D AO REJECTED THE CONTENTION OF THE ASSESSEE AND ON READING OF TH E CONTRACT HELD THAT THE PAYMENT IS COVERED U/S 9(1)(VII) OF T HE ACT AS FEES FOR TECHNICAL SERVICES. HENCE, PROVISION OF SECTION 195 OF THE ACT APPLIES AND THE ASSESSEE SHOULD HAVE DEDUCTED TAX A T SOURCE OF RS. 297045/- @10.5575%. HE FURTHER CHARGED INTEREST U/S 201(1A) OF THE ACT. 4. FURTHER, HE NOTED THAT THE ASSESSEE HAS MADE VARIOU S PAYMENTS TO OTHER PARTIES AND IT WAS NOTED BY HIM THESE PART IES ARE ENGAGED IN CONSTRUCTION WORK FOR GAMES AND TDS U /S 194C OF THE ACT SHOULD HAVE BEEN MADE ON PAYMENTS TO THE M. ASSESSEE EXPLAINED THAT THESE ARE GOVERNMENT DEPARTMENTS AND PAYMENTS ARE MADE TO THESE AGENCIES IN THE FORM OF GRANTS BA SED ON UTILIZATION OF FUNDS. HENCE, IT WAS CONTENDED THAT NO TAX WAS REQUIRED TO DEDUCT. THE LD AO REJECTED THE CONTENTI ON OF THE ASSESSEE HOLDING THAT PAYMENTS ARE MADE BY THE ASSE SSEE FOR CONSTRUCTION WORK OF VARIOUS INFRASTRUCTURE FACILIT IES. HE FURTHER HELD THAT GRANTS ARE NOT SHOWN THAT IT HAS BEEN TRA NSFERRED 5 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, WITHOUT ANY CONTROL ETC. HE FURTHER HELD THAT THE P AYMENTS MADE TO VARIOUS CONCERNS ARE SUBJECT TO TDS U/S 194C OF THE ACT. HE THEREFORE, HELD THAT TDS @2% SHOULD HAVE BEEN DEDUC TED AND WORKED OUT SHORT DEDUCTION OF RS. 2806886/- AND INT EREST THEREON OF RS. 1018645/-. 5. IN THE ABOVE PAYMENT, ASSESSEE HAS ALSO MADE PAYMEN T OF RS. 8.69 CRORES TO STATE TRADING CORPORATION INDIA LTD. , FOR WHICH ASSESSEE SUBMITTED THAT PAYMENT ARE FOR IMPORT OF E QUIPMENTS ALONG WITH INSTALLATION AND COMMISSIONING CHARGES A ND NO TAX IS REQUIRED TO BE DEDUCTED THEREON. AO ALSO REJECTED T HIS ARGUMENT HOLDING THAT ASSESSEE HAS IMPORTED MATERIAL/ EQUIPM ENT FROM OTHER THROUGH STC AND IT HAS ACTED AS AGENT OF THE ASSESSEE AND INCURRED VARIOUS INCIDENTAL EXPENSES SUCH AS DUTY, CLEARANCE CHARGES, FREIGHT AND OTHER EXPENSES , WHICH ARE C OVERED U/S 194 C OF THE ACT. 6. CONSEQUENTLY, ORDERS U/S 201(1) AND 201(1A) OF THE ACT WERE PASSED ON 30.03.2011 FOR AY 2009-10. IDENTICAL ARE THE FACTS FOR AY 2010-11. 7. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE THE LD C IT (A) FOR BOTH THE YEARS AND THE LD CIT (A) ALSO PASSED ORDERS IN BOTH THE CASES ON THE SAME DATE. 6 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, 8. THE LD CIT (A) WITH RESPECT TO THE PAYMENT TO FOREI GN PARTIES, HE CONSIDERED THE SUBMISSION OF THE ASSESSEE THAT ALON G WITH THE FOREIGN COMPANIES AND THE INDIAN COMPANY A CONSORTI UM WAS FORMED WHERE THE CLEAR RESPONSIBILITIES WERE LAID D OWN. THE FOREIGN COMPANY WAS TO SUPPLY THE EQUIPMENT FOR WHI CH SEPARATE INVOICES WERE RAISED THEREFORE, ACCORDING TO THE AS SESSEE IT IS PAYMENT FOR SALE OF GOODS, HENCE, CONTRACT FOR SALE AND NOT CONTRACT FOR WORK. THE ASSESSEE FURTHER STATED THAT CONSORTIUM IS AN ASSOCIATION OF PERSON AND FOREIGN PARTY HAS MERE LY SOLD GOODS TO THE ASSESSEE TAX WAS NOT REQUIRED TO BE DEDUCTED ON THAT. IN VIEW OF THIS, THE LD CIT (A) HELD THAT AS THE PAYME NT IS MADE TO A CONSORTIUM AND THE WHOLE PAYMENT WAS TO BE MADE FOR THE PURPOSE OF THE WORK, TAX IS REQUIRED TO BE DEDUCTED AT SOURCE ON THE PAYMENT MADE BUT SAME IS NOT COVERED BY THE PRO VISION OF SECTION 195 OF THE ACT, BUT COVERED U/S 194C OF THE ACT. HE ACCORDINGLY DIRECTED THE LD AO TO COMPUTE THE SHORT FALL. THE REVENUE IS AGGRIEVED WITH THIS FINDING AND HAS PREF ERRED APPEAL BEFORE US. THE ASSESSEE, IS ALSO AGGRIEVED WITH DIR ECTION OF THE LD CIT (A) TO COMPUTE TDS APPLYING THE PROVISIONS OF S ECTION 194C OF THE ACT HENCE, IT IS IN APPEAL. 7 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, 9. WITH RESPECT TO PAYMENT MADE TO OTHER PUBLIC SECTOR UNDERTAKINGS, ASSESSEE SUBMITTED THAT PAYMENTS HAV E BEEN MADE IN CONNECTION WITH VARIOUS WORKS RELATING TO C ONSTRUCTION OF THE INFRASTRUCTURE WORKS FOR THE WINTER GAMES AN D FUNDS WERE PROVIDED TO THESE ENTITIES AS GRANT WITHOUT CALLING FOR ANY TENDERS OR CERTIFICATE FOR UTILIZATION. IT WAS FURTHER STAT ED THAT THESE RECIPIENTS GOT THE WORK DONE BY ENGAGING THE SERVIC ES OF VARIOUS CONTRACTORS AND DEDUCTED TAX AT SOURCE ON THE PAYME NT MADE BY THEM TO THOSE CONTRACTORS. IT WAS FURTHER SUBMITTED THAT THERE WAS NO CONTRACT ENTERED INTO WITH THESE ENTITIES BY THE ASSESSEE AND NO BILLS HAVE BEEN RAISED BY THOSE PARTIES ON T HE ASSESSEE AND IT IS MERELY A DISBURSEMENT OF GRANT, WHICH DOE S NOT CONSTITUTE CONSIDERATION FOR ANY WORK-DEFINED U/S 1 94C OF THE ACT. LD CIT (A) REJECTED THIS CONTENTION OF THE ASS ESSEE AND HELD THAT ASSESSEE IS REQUIRED TO DEDUCT TAX ON THE PAYM ENT MADE TO THESE ENTITIES AS THE PAYMENT IS FOR THE CONSIDERAT ION FOR WORK ACTUALLY DONE BY THESE PARTIES. HE FURTHER HELD THA T THE CONTRACTOR ENGAGES THE SERVICES OF SUB-CONTRACTOR F OR GETTING WORK DONE AND DEDUCT TAX ON THE PAYMENT MADE TO SUB-CONT RACTOR, CANNOT ABSOLVE THE ORIGINAL PAYEE FROM TAX DEDUCTIO N ON PAYMENT MADE TO CONTRACTOR. HE THEREFORE, UPHELD THE APPLIC ABILITY OF 8 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, PROVISIONS OF SECTION 194C OF THE ACT. ASSESSEE AGG RIEVED HAS FILED APPEAL BEFORE US. 10. THE NEXT ISSUE WAS WITH RESPECT TO PAYMENT MADE TO STATE TRADING CORPORATION OF INDIA FOR SUPPLY OF MATERIAL . AS THE INVOICES RAISED BY STC SHOWED THAT THE PAYMENT HAS BEEN MADE FOR IMPORT OF EQUIPMENT ALONG WITH INCIDENTAL JOBS INCLUDING CUSTOM CLEARANCE, HANDLING CHARGES ETC, AO HELD THA T ON THE WHOLE PAYMENT TAX IS REQUIRED TO BE DEDUCTED U/S 19 4C OF THE ACT. ASSESSEE SUBMITTED BEFORE THE LD CIT (A) THAT STC HAS UNDERTAKEN TO IMPORT AND SUPPLY THE EQUIPMENT AS PE R THE REQUIREMENT OF THE ASSESSEE AND THE ASSESSEE HAS PU RCHASED THE MATERIAL ON WHICH NO TAX IS REQUIRED TO BE DEDUCTED , AS IT IS A CONTRACT FOR SALE OF GOODS. THE LD CIT (A) HELD THA T AS THE ASSESSING OFFICER HIMSELF HELD THAT TAX WAS REQUIRE D TO BE DEDUCTED WITH REFERENCE TO ONLY INCIDENTAL EXPENSES BUT COMPUTED THE TDS ON THE SUPPLY OF MATERIAL ALSO. IN VIEW OF THIS, HE HELD THAT NO TAX IS REQUIRED TO BE DEDUCTED ON T HIS SUM. THE REVENUE AGGRIEVED WITH THIS FINDING, HAS PREFERRED APPEAL BEFORE US. 11. THE LD AUTHORISED REPRESENTATIVE VEHEMENTLY SUBMITT ED THAT WHEN THE PAYMENTS HAVE BEEN MADE TO A FOREIGN PARTY FOR 9 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, PURCHASE OF THE GOODS, NO TAX IS REQUIRED TO BE DED UCTED. HE FURTHER REFERRED TO THE DECISION OF HON'BLE SUPREME COURT IN DIT VS. LINDE AG LINDE ENGINEERING DIVISION 73 TAXMANN. COM 212 (SC) AND SUBMITTED THAT PER CIRCULAR NO. 7 OF 2016 DATED 07.03.2016, NO TAX IS REQUIRED TO BE DEDUCTED AS T HE CONSORTIUM FULFILLS THE CONDITIONS AS LAID DOWN IN PARA 3 OF THAT CIRCULAR. IN VIEW OF THIS, HE SUBMITTED THAT THE LD CIT (A) HAS WRONGLY HELD THAT TAX IS REQUIRED TO BE DEDUCTED U/S 194C OF THE ACT. IN SHORT HIS ARGUMENT WAS THAT TAX IS NOT AT ALL REQUIRED TO BE DEDUCTED EITHER U/S 195 OR U/S 194C OF THE ACT. HE FURTHER R ELIED ON SEVERAL DECISIONS. HE FURTHER STATED THAT PROPERTY IN THE EQUIPMENT HAS PASSED OUTSIDE INDIA, WHICH IS EVIDEN T FROM THE FACT THAT CUSTOMS DUTY WAS PAID BY THE ASSESSEE ITS ELF AND ASSESSEE BECAME OWNER OF THE GOODS PRIOR TO ITS SHI PMENT IN INDIA. HENCE, NO INCOME ARISES TO THE RECIPIENT IN INDIA. 12. WITH RESPECT TO THE PAYMENT MADE TO OTHER PARTIES, HE STATED THAT ASSESSEE IS MERELY A PASS THROUGH ENTITY THAT HAS B EEN GRANTED SUM FOR ORGANIZING THE SOUTH ASIAN WINTER GAMES AND IT DID NOT ENTER INTO ANY CONTRACT WITH THE PARTIES TO WHOM PA YMENTS HAVE BEEN MADE. HE FURTHER STATED THAT ALL THE RECIPIENT OF THE SUM HAS IN TURN GIVEN CONTRACTS TO THE VARIOUS SUB CONT RACTORS AND 10 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, THEY HAVE ALREADY DEDUCTED TAX AT SOURCE ON PAYMENT S MADE BY THEM TO SUCH SUB CONTRACTORS. HE FURTHER VEHEMENTLY RELIED ON PAPER BOOK PAGE NO. 34 WHICH IS A COPY OF LETTER DA TED 14.03.2011 AND STATED THAT PAYMENTS WERE MADE AS GR ANT TO THESE PARTIES AND THOSE PARTIES HAVE SENT THEIR UTI LIZATION CERTIFICATE FOR THE AMOUNT UTILIZED DURING THE FINA NCIAL YEAR. THESE EXECUTING AGENCIES RAISE NO BILLS; NO PAYMENT S WERE ALSO MADE ACCORDING TO WORKS COMPLETED BUT IT IS ADVANCE S. HE FURTHER STATED THAT ONLY LUMP SUM GRANT WAS ISSUED FOR GETTING THE WORK DONE AND UTILIZATION RECEIVED. HE THEREFOR E, STATED THAT LIABILITY OF TDS DOES NOT ARISE IN THESE CASES. 13. HE ALSO SUBMITTED THAT ALL THESE CONCERNED AGENCIES HAVE ALREADY INCLUDED THE ABOVE AMOUNT IN THEIR INCOME AND ALREA DY PAID TAXES ON THESE INCOMES. HE THEREFORE, STATED THAT I F IN SUCH A SITUATION, IF TAX IS RECOVERED FROM THE ASSESSEE, I T WOULD BE AN EXERCISE IN FUTILITY AS ON THE ONE HAND THE ASSESSE E IS REQUIRED TO PAY THE TAX AND ON THE OTHER HAND, THE PAYEE WOULD BE REQUIRED TO CLAIM THE REFUND. HE VEHEMENTLY RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN HINDUSTAN COCA COLA BE VERAGES PVT. LTD VS. CIT 293 ITR 226 FOR THIS PROPOSITION. HE FURTHER 11 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, RELIED UPON HIS SUBMISSIONS MADE AT PAGE NO. 1 TO 1 5 OF THE PAPER BOOK ALSO. 14. THE LD DEPARTMENTAL REPRESENTATIVE (DR) VEHEMENTLY SUPPORTED THE ORDER OF THE LD AO AND SUBMITTED THAT WITH RESP ECT TO THE PAYMENT TO THE FOREIGN PARTY STATED TO BE MADE TOWA RDS PURCHASE OF GOODS IS IN FACT PAYMENT MADE TO AN INDIAN PARTY WHICH IS AN AOP FOR THE COMPLETE WORK AND NOT ONLY FOR SALE O F GOODS, THEN PAYMENTS MADE SUCH CONSORTIUM SHOULD HAVE BEEN SUBJ ECTED TO TDS. AOP CIRCULAR IS FOR AO OF AOP TO DECIDE HOW IT IS TO BE TAXED; IT HAS NO RELEVANCE AS FAR AS THE LIABILITY OF ASSESSEE FOR TDS IS CONCERNED. WITH RESPECT TO THE OTHER PAYMENT , HE SUBMITTED THAT ASSESSEE IS THE PARTY WHO GOT THE WO RK EXECUTED AND MADE THE PAYMENT. THEREFORE, PROVISIONS OF SECT ION 194C OF THE ACT ARE CLEARLY APPLICABLE TO THE FACTS OF THE CASE. HE SUBMITTED THAT EVEN IF THE RECIPIENTS HAS DEDUCTED TAX ON THE WORKS CONTRACT EXECUTED BY SUB-CONTRACTORS CANNOT A BSOLVE THE ASSESSEE FROM ITS DUTY TO DEDUCT TAX AT SOURCE ON P AYMENT MADE TO THEM. HE FURTHER STATED THAT IN CASE OF STC THE TAX SHOULD HAVE BEEN DEDUCTED BY THE ASSESSEE ON TOTAL SUM INC LUDING THE PAYMENT FOR PURCHASE OF GOODS AS STC HAS INCURRED S EVERAL 12 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, EXPENDITURE ON BEHALF OF ASSESSEE, WHICH AMOUNTS TO CARRYING ON OF THE WORK AS PER PROVISIONS OF SECTION 194C OF TH E ACT. 15. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE BRIEF FACT S OF THE CASE ARE THAT ASSESSEE IS A BODY REGISTERED UNDER THE SOCIET IES REGISTRATION ACT SET UP FOR ORGANIZING THE SOUTH AS IAN WINTER GAMES 2009. IT IS IMPLEMENTING AGENCY FOR THE GAMES . THE LD AO HAS CONDUCTED SURVEY U/S 133A OF THE ACT AND FOUND THAT ON SEVERAL PAYMENTS ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE AND THEREFORE, THE ORDERS U/S 201(1) AND 201(1A) OF THE ACT WERE PASSED. LD CIT (A) GRANTED PART RELIEF. VARIOUS ISS UES ARISING IN THE APPEAL ARE DEALT WITH HEREINAFTER. 16. ON PAYMENT MADE TO FOREIGN COMPANIES, WHO ARE MEMBE RS OF THE CONSORTIUM AOP WHO WON THE BID, THE LD AO HELD THAT TAX IS REQUIRED TO BE DEDUCTED U/S 195 OF THE ACT AND THE LD CIT (A) HELD THAT THESE ARE THE PAYMENT MADE TO AN AOP AND THEREFORE, TAX IS REQUIRED TO BE DEDUCTED U/S 194C OF THE ACT. THE ASSESSEE HAS ENTERED INTO A CONSORTIUM AGREEMENT WITH TWO FO REIGN COMPANIES AND ONE INDIAN COMPANY FOR RENDERING SERV ICES WITH RESPECT TO CONSTRUCTION OF WATER STORAGE AND INSTAL LATION OF SKI LIFT AND COMPREHENSIVE MAINTENANCE FOR THREE YEARS. THE ASSESSEE 13 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, HAS STATED THAT THE CONSORTIUM HAS DEMARCATED DUTIE S WITH RESPECT TO EACH OF THE PARTIES. THE FOREIGN PARTIES WERE ONLY TO SUPPLY VARIOUS EQUIPMENTS AND INDIAN PARTY WAS TO I NSTALL THOSE EQUIPMENTS. THE ASSESSEE SUBMITTED THE AGREEMENT OF THE CONSORTIUM, WHICH IS PLACED AT PAGE NO. 48 OF THE P APER BOOK. ACCORDING TO THE AGREEMENT, SCOPE OF THE SERVICES B Y THE VARIOUS PARTIES IS DESCRIBED IN APPENDIX A. ON READING OF T HE SCOPE OF SERVICES, IT IS APPARENT THAT SNOW STAR SPA WAS TO SUPPLY VARIOUS EQUIPMENTS AND THE SCOPE OF SERVICES OF POMAGAMSKY SA WAS TO SUPPLY VARIOUS EQUIPMENTS AND WARRANTY FOR EQUIPMEN TS. THE INDIAN PARTY SPACEAGE POWER LTD WAS TO INSTALL AND PERFORM THE CIVIL WORK. THE PAYMENT WAS ALSO SPECIFIED SEPARATE LY AS PER CLAUSE 7 OF THE AGREEMENT. EACH OF THE PARTY WAS AL SO RESPONSIBLE FOR THE WORK CARRIED OUT BY THEM. THE SERVICES ARE ALSO SPECIFIED IN CLAUSE 1 OF THE AGREEMENT. THE RESPONSIBILITY IS ALSO MENTIONED AT PAGE NO 78 TO 80 OF THEIR AGREEMENT. IN SUCH A C ONTRACT, IT WAS AN ISSUE WHETHER THE CONSORTIUM CONSTITUTES AND ASS OCIATION OF PERSON I.E. A SEPARATE ENTITY FOR CHARGING OF THE T AX OR WHETHER EACH OF THE MEMBERS IS LIABLE ON THEIR INDIVIDUAL S HARE OF THE CONTRACT. THIS ASPECT HAS BEEN CLARIFIED BY THE CBD T BY ISSUING CIRCULAR NO. 7/ 2016 DATED 07.03.2016 WHEREIN, PARA NO. 3 IT 14 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, HAS LAID DOWN CERTAIN CONDITIONS AND ON FULFILLING SUCH CONDITIONS THE CONSORTIUM WILL NOT BE TREATED AS AN AOP. IN TH E PRESENT CASE ALL THE MEMBERS ARE INDEPENDENTLY RESPONSIBLE FOR E XECUTING THEIR WORK. THE FOREIGN PARTIES ARE REQUIRED TO SUPPLY TH E EQUIPMENTS ONLY ALONG WITH THE WARRANTY. FURTHER, THE PAYMENTS HAVE BEEN MADE DIRECTLY TO THOSE PARTIES AND NATURALLY, EACH OF THEM INDIVIDUALLY CHARGED TO TAX ON THEIR PROFITS OR L OSSES. IT IS APPARENT THAT THE COMMON MANAGEMENT IS ONLY FOR ADMINISTRATIVE CONVENIENCE. ASSESSEE HAS ALSO MADE PAYMENT DIRECTLY TO THE FOREIGN EQUIPMENT SUPPLIERS. IT I S NOT SHOWN TO US THAT ANY OF THE CONDITIONS STATED IN THAT CIRCULAR ARE NOT FULFILLED. IN VIEW OF THIS, WE HOLD THAT ASSESSEE HAS MADE PAY MENT TO THE FOREIGN PARTIES INDEPENDENTLY, DIRECTLY AND IT SHAL L BE CHARGEABLE TO TAX IN THEIR OWN HANDS. NOW THE ISSUE ARISES IS THAT WHETHER PAYMENT MADE TO THEM IS SUBJECT TO DEDUCTION OF TAX U/S 195 IN THE HANDS OF THOSE PARTIES OR NOT. THE ASSESSEE HAS SHOWN BILLS RAISED BY THOSE PARTIES PLACED AT PAGE NO. 99 TO 10 0 OF PAPER BOOK. THE CUSTOM DUTY HAS ALSO BEEN PAID BY THE ASS ESSEE. THE BILLS HAVE ALSO BEEN RAISED BY THOSE PARTIES ON THE ASSESSEE ITSELF. THE PAYMENTS ARE ALSO MADE AS ADVANCES THROUGH LETT ER OFF CREDITS. ON LOOKING AT THE VARIOUS BILLS, IT IS FOU ND THAT GOODS 15 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, HAVE BEEN SHIPPED BY THOSE PARTIES FROM OUTSIDE IND IA. IT IS NOT SHOWN BY THE REVENUE THAT TITLE OF THE GOODS HAS PASSED IN INDIA. CONTRARY TO THAT, IT IS CONSISTENTLY CLAIMED BY THE ASSESSEE THAT TITLE IN THE GOODS HAS PASSED OUTSIDE INDIA. F URTHER THOUGH LD AO HAS HELD THAT TAX IS REQUIRED TO BE DEDUCTED T SOURCES ON SUCH PAYMENTS BUT IT IS NOT SHOWN THAT HOW THE INCO ME OF FOREIGN PARTIES WHO SUPPLIED EQUIPMENTS ARE CHARGE ABLE TO TAX IN INDIA. IN VIEW OF THIS, IT IS APPARENT THAT TITLE I N THE GOODS HAVE PASSED FROM THE SUPPLIERS TO THE ASSESSEE OUTSIDE I NDIA AT THE PORT OF SHIPMENT. IN VIEW OF THIS, IT IS NOT CONTRO VERTED THAT NO INCOME HAS ACCRUED TO THOSE PARTIES IN INDIA IN TER MS OF PROVISIONS OF SECTION 5 AND SECTION 9 OF THE ACT, T HEREFORE, PROVISIONS OF SECTION 195 DOES NOT APPLY TO THESE P AYMENTS. IN VIEW OF THIS, WE HOLD THAT ASSESSEE WAS NOT REQUIRE D TO DEDUCT TAX AT SOURCE EITHER U/S 194C OR SECTION 195 OF THE ACT ON PAYMENTS MADE TO SNOWSTAR SPA ITALY AND POMAGALSKY SA. IN VIEW OF THIS GROUND NO. 1 TO 3 OF THE APPEAL OF THE ASSESSEE ARE ALLOWED. 17. COMING TO THE ISSUE OF VARIOUS PAYMENTS MADE BY THE ASSESSEE TO VARIOUS PARTIES WHICH ARE PUBLIC SECTOR UNDERTAKING SUCH AS 16 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, I. UTTRANCHAL JAL SANSTHAN, II. UTTRANCHAL POWER CORPORATION LTD, III. UTTAR PRADESH NIRMAN NIGAM LTD, IV. WINTER GEMS FEDERATION OF INDIA, V. GHARWAL MANDAL VIKASH NIGAM LTD. THE ASSESSEE HAS MADE THESE PAYMENTS AS AN ADVANCE TO THE PARTIES FOR CARRYING OUT VARIOUS WORKS WITH RESPECT TO THE WINTER GAMES 2009. THESE PAYMENTS ARE REQUIRED TO BE TESTE D U/S 194C OF THE ACT AND WHETHER TAX IS REQUIRED TO BE DEDUCT ED AT SOURCE ON SUCH PAYMENTS. ACCORDING TO THE PROVISIONS OF SE CTION 194C OF THE ACT, TAX IS REQUIRED TO BE DEDUCTED UNDER FOLLO WING CIRCUMSTANCES:- I. TAX IS REQUIRED TO BE DEDUCTED BY THE PERSON WHO IS RESPONSIBLE FOR PAYMENT TO ANY RESIDENT. II. SUCH PAYMENT HAS TO BE FOR THE SUM FOR CARRYING OUT ANY WORK AS DEFINED UNDER EXPLANATION (IV) OF THE ACT. III. THE PAYMENT HAS TO BE IN PURSUANCE WITH THE CONTRAC T BETWEEN THE CONTRACTOR AND SPECIFIED PERSON. SPECIF IED PERSON HAS BEEN DEFINED UNDER EXPLANATION (I) OF TH E SECTION. 17 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, IV. THE TAX IS REQUIRED TO BE DEDUCTED AT THE EARLIEST POINT OF TIME OF CREDIT TO THE ACCOUNT OF CONTRACTOR OR THE PAYMENT. V. THE PROVISIONS SPECIFY THE PRESCRIBED PERCENTAGE OF TAX DEDUCTION. VI. IT IS DEDUCTION OF TAX ON GROSS SUMS PAID UNLESS OT HERWISE SPECIFIED U/S 194C (3) OF THE ACT. 18. ON PLAIN READING OF THE ABOVE SECTION IT IS CLEAR T HAT ASSESSEE IS A SPECIFIED PERSON COVERED UNDER EXPLANATION (I)(G) B EING A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT 186 0. THEREFORE, THE LIABILITY FOR DEDUCTION OF TAX RESTS ON THE ASS ESSEE. 19. FURTHER, ALL THE PARTIES TO WHOM PAYMENT HAVE BEEN MADE ARE RESIDENTS AND THEREFORE, THEY ARE THE RECIPIENTS AN D RECEIPTS BY THEM IS SUBJECT TO DEDUCTION OF TAX AT SOURCE. 20. THE ASSESSEE HAS MADE PAYMENT TO ALL THE PARTIES, T O SOME OF THEM AS ADVANCE AND TO SOME OF THEM ON VARIOUS LETT ERS ISSUED BY THE ASSESSEE. THEREFORE, THE FACT OF THE PAYMENT IS ALSO PROVED. 21. THE PAYMENT TO THE VARIOUS PARTIES HAS BEEN MADE ON ACCOUNT OF CARRYING ON OF CERTAIN WORK BY THEM. THE ASSESSEE I S ALSO SPECIFICALLY FORM FOR THE OBJECT OF PREPARATION FOR AND HOLDING THE SOUTH ASIAN FEDERATION WINTER GAMES IN FEBRUARY 200 9 ALLOTTED TO INDIAN OLYMPIC ASSOCIATION. THE FUNCTIONS OF THE ASSESSEE ARE 18 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, TO COLLECT FUNDS THROUGH GRANTS FOR FURTHERANCE OF THE AIMS AND OBJECTIVES OF THE SOCIETY. ASSESSEE HAS STATED THAT GRANTS ARE RECEIVED BY THE ASSESSEE AND IN TURN, IT ARE DISBUR SED TO THE VARIOUS RECIPIENTS WHO WERE APPOINTED AS EXECUTING AGENCIES TO GET THE WORK DONE THROUGH CONTRACTORS. FURTHER, THO SE AGENCIES HAVE ALSO SUBMITTED THEIR UTILIZATION CERTIFICATE F OR THE AMOUNT UTILIZED BY THEM. BASED ON THE ABOVE FACT IT IS APP ARENT THAT ASSESSEE IS AN IMPLEMENTING AGENCY ON BEHALF OF IND IAN OLYMPIC ASSOCIATION FOR PREPARATION OF THESE GAMES. NO DOUB T, THE ASSESSEE HAS RECEIVED THE FUNDS AS SPONSORSHIP AND GRANTS BUT THE RESPONSIBILITY IS ON THE ASSESSEE TO EXECUTE TH E ENTIRE INFRASTRUCTURE FOR THE GAMES. THOUGH THE CONTRACTOR MAY BE IDENTIFIED AND ENGAGED BY THE OTHER ORGANIZATION, H OWEVER, THE IMPLEMENTATION AND UTILIZATION IS THE SOLE RESPONSI BILITY OF THE ASSESSEE. OTHERWISE, THERE IS NO OTHER REASON FOR T HE FORMATION OF THE ABOVE SOCIETY. THE SOCIETY ITSELF WAS REGISTERE D ON 06.02.2008. FURTHER, THE PAYMENTS TO ABOVE COMPA NIES/ PSU HAVE BEEN MADE BY THE ASSESSEE. THEREFORE, IT IS CL EAR THAT ASSESSEE IS THE PERSON RESPONSIBLE FOR PAYMENTS OF SUMS TO THOSE PSUS. IN VIEW OF THIS IT IS APPARENT THAT THE CONTR ACT IS BETWEEN THE RECIPIENT OF THE INCOME AND THE ASSESSEE. HENCE , ACCORDING TO 19 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, US THE ASSESSEE IS RESPONSIBLE FOR TDS U/S 194C O F THE ACT ON PAYMENT MADE TO THESE PARTIES. 22. MERELY BECAUSE THE ASSESSEE IS PROVIDED GRANT FOR O NWARD DISTRIBUTION TO THESE PARTIES DOES NOT EXCLUDE THE ASSESSEE FROM THE LIABILITY FOR DEDUCTION OF TAX AT SOURCE U/S 19 4 C OF THE ACT, AS THE ASSESSEE IS RESPONSIBLE FOR MAKING PAYMENTS TO THESE PARTIES AND IN FACT, UNDENIABLY ASSESSEE HAS MADE T HE PAYMENTS AND OBTAINED UTILIZATION CERTIFICATES. 23. FURTHERMORE, IT CANNOT BE A REASON FOR NON-DEDUCTIO N OF TAX AT SOURCE THAT RECIPIENT OF THE INCOME HAVE ONWARD DIS TRIBUTED THE WORK TO THE SUB CONTRACTORS AND RECIPIENT OF THE IN COME HAVE IN TURN DEDUCTED THE TAX AT SOURCE ON PAYMENT MADE BY THEM TO THOSE SUB- CONTRACTORS. ACCORDING TO THE PROVISION OF 194C OF THE ACT EVEN, THE CONTRACTOR IS ALSO REQUIRED TO DEDUCT TAX AT SOURCE ON PAYMENT MADE TO THEIR SUB CONTRACTORS. 24. IN VIEW OF THIS WE HOLD THAT PAYMENT MADE TO THE AB OVE PARTIES ARE SUBJECT TO TAX DEDUCTION AT SOURCE U/S 194C OF THE ACT AND ASSESSEE IS LIABLE TO DEDUCT TAX AT SOURCE U/S 194C OF THE ACT. THEREFORE, TO THIS EXTENT WE UPHOLD THE ORDER OF LOWER AUTHORITIES. 20 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, 25. NEXT CLINCHING, ALTERNATIVE ARGUMENT MADE BY THE AS SESSEE IS THAT ALL THE RECIPIENT OF THE INCOME HAS ALREADY CO NFIRMED THAT THEY HAVE RECEIVED THE GRANT. SUCH CERTIFICATES ARE PLACED IN THE PAPER BOOK FROM PAGE NO. 126 TO 179 OF THE PAPER BO OK. WE HAVE PERUSED THE SAME. THE ARGUMENT OF THE ASSESSEE IS T HAT IF TAX IS RECOVERED FROM THE ASSESSEE IT BECOMES REFUNDABLE I N THE HANDS OF THE RECIPIENT. TO MITIGATE SUCH AN IMPACT THE PR OVISO HAS BEEN ADDED U/S 201 OF THE ACT W.E.F. 01.07.2012 WHICH PR OVIDES THAT ANY PERSON WHO FAILS TO DEDUCT TAX IN ACCORDANCE WI TH CHAPTER XVII OF THE ACT, SHALL NOT BE DEEMED TO BE AN ASS ESSEE IN DEFAULT ON FULFILLMENT OF CERTAIN CONDITION. THE ABOVE AMEN DMENT IS ON SIMILAR LINE AS ARGUED BY THE APPELLANT. THOUGH THE ABOVE AMENDMENT HAS COME IN TO EFFECT FROM /7/2012 BUT HONOURABLE DELHI HIGH COURT HAS HELD IN ANSAL LAND MARK TOWNSHIPS LIMITED IN 161 /2015 HELD THAT 11. THE FIRST PROVISO TO SECTION 210 (1) OF THE AC T HAS BEEN INSERTED TO BENEFIT THE ASSESSEE. IT ALSO STATES TH AT WHERE A PERSON FAILS TO DEDUCT TAX AT SOURCE ON THE SUM PAI D TO A RESIDENT OR ON THE SUM CREDITED TO THE ACCOUNT OF A RESIDENT SUCH PERSON SHALL NOT BE DEEMED TO BE AN ASSESSEE I N DEFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT HAS FURNISHED 21 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, HIS RETURN OF INCOME UNDER SECTION 139 OF THE ACT. NO DOUBT, THERE IS A MANDATORY REQUIREMENT UNDER SECTION 201 TO DEDUCT TAX AT SOURCE UNDER CERTAIN CONTINGENCIES, B UT THE INTENTION OF THE LEGISLATURE IS NOT TO TREAT THE AS SESSEE AS A PERSON IN DEFAULT SUBJECT TO THE FULFILLMENT OF THE CONDITIONS AS STIPULATED IN THE FIRST PROVISO TO SECTION 201(1 ). THE INSERTION OF THE SECOND PROVISO TO SECTION 40(A) (I A) ALSO REQUIRES TO BE VIEWED IN THE SAME MANNER. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF HO NOURABLE DELHI HIGH COURT WE SET ASIDE THE ORDER U/S 201 OF THE AC T WITH A DIRECTION THAT ASSESSEE MAY SUBMIT THE REQUISITE PR ESCRIBED DETAIL IN SPECIFIED MANNER BEFORE THE LD ASSESSING OFFICER AND THEN LD AO MAY DECIDE THE ISSUE AND, IF FOUND IN AC CORDANCE WITH THE LAW, SHALL NOT TREAT THE ASSESSEE IN DEFAULT U/ S 201 OF THE ACT. WITH RESPECT TO THE INTEREST U/S 201(1A) OF THE ACT SIMILAR PROVISO IS ALSO ADDED AND AO MAY WORK OUT, BASED ON THE DET AILS FURNISHED BY THE ASSESSEE, APPROPRIATE INTEREST IN ACCORDANCE WITH LAW. IN VIEW OF THIS GROUND NO. 4 AND 5 OF THE APPEAL IS ALLOWED ACCORDINGLY. 26. WITH RESPECT TO THE PAYMENT OF THE STATE TRADING CO RPORATION (STC), IT IS APPARENT THAT THE EQUIPMENT HAVE BEEN PURCHASED BY 22 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, THE ASSESSEE AS IDENTIFIED BY IT THROUGH STC. THE S TC HAS INCURRED CERTAIN EXPENDITURE WITH RESPECT TO IMPORT OF THOSE GOODS. THE ASSESSEE HAS PLACED CORRESPONDENCE AT PA GE NO. 122 AND 123 OF THE PAPER BOOK. ACCORDING TO THAT CORRES PONDENCE, THE STATE TRADING CORPORATION HAS FACILITATED IMP ORT OF CERTAIN EQUIPMENT FOR THE ASSESSEE AND FOR CLEARANCE OF THE EQUIPMENT HAS INCURRED CERTAIN EXPENDITURE. THE LD CIT (A) HA S HELD THAT NO TAX IS REQUIRED TO BE DEDUCTED ON THE ABOVE SUM. ON CAREFUL CONSIDERATION OF THE ORDERS OF THE LOWER AUTHORITIE S, THE STC HAD UNDERTAKEN TO IMPORT AND SUPPLY THE EQUIPMENT AS PE R THE REQUIREMENT OF THE ASSESSEE. FOR THE PURPOSE OF IMP ORT OF THESE GOODS, THE STC INCURRED CERTAIN EXPENDITURE SUCH AS INSTALLATION COMMISSIONING CHARGES, HANDLING CHARGES, INSURANCE, AND OTHER PAYMENTS. IN THIS CASE, IT IS NOT THE CLAIM OF THE ASSESSEE THAT STC HAS SUPPLIED THE GOODS. IN FACT, STC HAS ARRANG ED FOR THE IMPORT OF THE GOODS AS PER REQUIREMENT OF THE ASSES SEE. IN VIEW OF THIS, IT IS APPARENT THAT ASSESSEE HAS GIVEN WORK T O THE STC FOR IMPORT OF THE MATERIAL. HENCE, ACCORDING TO US IT I S APPARENT THAT SUCH PAYMENT FALLS UNDER THE PROVISIONS OF SECTION 194C(3) OF THE ACT AND TAX IS REQUIRED TO BE DEDUCTED ON THE BASIS OF THE INVOICE VALUE STATED THEREIN. THE INVOICES ARE NOT PLACE BE FORE US. HENCE, 23 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, WE SET ASIDE THIS MATTER BACK TO THE FILE OF THE LD ASSESSING OFFICER WITH A DIRECTION TO ASSESSEE TO PRODUCE THE BILLS OF STC ETC BEFORE LD AO WHO WILL EXAMINE THEM. IF THE INVOICE VALUE SHOWS THE VALUE OF THE MATERIAL SEPARATELY THEN ASSESSEE IS REQUIRED TO DEDUCT TAX AT SOURCE ONLY ON THE INVOICE VALUE EXCL UDING THE VALUE OF MATERIAL. FINDINGS GIVEN BY US WITH RESPEC T TO THE PAYMENT TO THE PSU WITH RESPECT TO PROVISO TO SECTI ON 201 SHALL ALSO APPLY MUTATIS MUTANDIS TO THIS PAYMENT ALSO. A CCORDINGLY, THE GROUND NO. 2 OF THE APPEAL OF THE REVENUE IS SE T ASIDE TO THE FILE OF THE LD AO. 27. IN THE RESULT THE APPEAL OF THE ASSESSEE AND THE RE VENUE FOR AY 2009-10 AND 2010-11 ON THE ISSUE OF DEMANDS RAISED ON THE ASSESSEE BY ORDER U/S 201(1) AND 201(1A) OF THE ACT FOR BOTH THE YEARS ARE DISPOSED OFF WITH ABOVE DIRECTION. 28. NOW WE COME TO THE APPEAL OF THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), DEHRADUN DATED 24.12.2014 PASSED FOR AY 2010-11 WHEREIN, THE PENALTY U/S 271C OF THE ACT OF RS. 115 2461/- LEVIED BY THE JCIT, TDS, DEHRADUN VIDE ORDER DATED 25.03.2 013 IS CONFIRMED. 29. THE ASSESSEE SUBMITS THAT IT HAS A BONAFIDE BELIEF THAT PAYMENT MADE IS NOT SUBJECT TO TDS WITH RESPECT TO THE PSU AND STC. IT 24 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, WAS STATED THAT THERE WAS A REASONABLE CAUSE FOR NO N-DEDUCTION OF TAX AT SOURCE. HENCE, NO PENALTY CAN BE LEVIED. 30. THE LD DR SUPPORTED THE ORDERS OF THE LOWER AUTHORI TIES. 31. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. ON LOOKING TO THE FACTS OF THE CASE AS DISCUSSED BY US IN APPEAL OF THE ASSESSEE A ND REVENUE IN 201(1) AND 201(1A) PROCEEDINGS ABOVE, WE FIND THAT THE BELIEF OF THE ASSESSEE IS BONAFIDE AND FAILURE TO DEDUCT TAX AT SOURCE U/S 194C OF THE ACT IS FOR A REASONABLE CAUSE. THE LD A SSESSING OFFICER COULD NOT SHOW ANY CONTEMPTUOUS CONDUCT ON PART OF THE ASSESSEE FOR NON-DEDUCTION OF TAX AT SOURCE. THERE COULD ALSO NOT BE ANY REASON FOR NON-DEDUCTION AS ASSESSEE HAS MAD E MOST OF THE PAYMENTS TO THE PUBLIC SECTOR UNDERTAKING. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. BANK OF NOVA S COTIA IN 380 ITR 550 HAS APPROVED THE DECISION OF THE HON'BLE DE LHI HIGH COURT WHEREIN, IT HAS BEEN HELD THAT IT IS NECESSAR Y TO ESTABLISH CONTUMACIOUS CONDUCT ON THE PART OF THE ASSESSEE FOR FAILURE TO DEDUCT TAX AT SOURCE FOR LEVY OF PENALTY U/S 271C O F THE ACT. IN THE PRESENT CASE, ALL THE RECIPIENTS HAVE ALSO FURN ISHED A CERTIFICATE THAT THEY HAVE RECEIVED THE PAYMENT. IN VIEW OF THIS, WE REVERSE THE ORDER OF THE LD CIT (A) CONFIRMING T HE LEVY OF THE 25 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, PENALTY OF RS. 1152461/- U/S 271C OF THE ACT IN ABS ENCE OF ANY FINDING TO SHOW CONTUMACIOUS CONDUCT ON THE PART OF THE ASSESSEE. LD OA ID DIRECTED TO DELETE THE PENALTY-L EVIED U/S 271C OF THE ACT. ACCORDINGLY, APPEAL OF THE ASSESSEE IN ITA NO. 1576/DEL/2015 FOR AY 2010-11 IS ALLOWED. 32. ACCORDINGLY, ITA NO. 626 AND 627/DEL/2013 FILED BY THE ASSESSEE ARE PARTLY ALLOWED AND ITA NO. 798 AND 799/DEL/2013 FILED BY THE AO ARE PARTLY ALLOWED. ITA NO. 1576/DEL/2015 FO R AY 2010- 11 FILED BY THE ASSESSEE IS ALLOWED. HENCE, ALL FIV E APPEALS ARE DISPOSED OFF. ORDER PRONOUNCED IN THE OPEN COURT ON 15/10/2018. SD/- SD/- (AMIT SHUKLA) (PRASHAN T MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:15/10/2018 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI 26 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES, DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/ PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 27 626-627-798-799-DEL-2013 AND 1576-DEL-2015-THE JOIN T SECRETARY ORGANIZING COMMITTEE FOR WINTER GAMES,