DCIT, Circle-5(2), New Delhi V. Caparo Power Ltd, New Delhi

ITA 6401/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7585 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 05-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: TDS
• Section: 40(a)(ia); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. KUL BHARAT, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 6401/DEL/2018 : ASSTT. YEAR : 2014-15 DCIT, CIRCLE-5(2), NEW DELHI VS CAPARO POWER LTD., 101-104, 1 ST FLOOR, NAURANG HOUSE, 21, K.G. MARG, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AA DCB8619C ASSESSEE BY : SH. VED JAIN, CA REVENUE BY : MS. NIDHI SRIVASTAVA, CIT DR DATE OF HEAR ING: 24 . 0 8 .20 2 1 DATE OF PRONOUNCEMENT: 24 .0 8 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE A GAINST THE ORDER OF LD. CIT(A)-2, NEW DELHI DATED 27.06.20 18. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENU E: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT (A) IS LEGALLY JUS TIFIED IN DELETING THE DISALLOWANCE OF RS.3,45,00,000/- MA DE ON ACCOUNT OF NON-DEDUCTION OF TDS WHICH IS IN VIOLATION OF SECTION 40(A)(IA) READ WITH SECTION 19 4-IA OF THE INCOME TAX ACT, 1961 BY THE AO. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED ITS RETURN OF INCOME ON 30.11.2014 DECLARING AN INCOME OF RS.3,26,12,830/-. THE ASSESSEE COMPANY IS A JOINT V ENTURE ITA NO.6401/DEL/2018 CAPARO POWER LTD. 2 COMPANY FORMED BY CAPARO VEHICLE PRODUCTS INDIA LTD . AND WARTSILLA. DURING THE ASSESSMENT PROCEEDINGS, THE A SSESSEE HAS ADVANCED AN AMOUNT OF RS.3,45,00,000/- TO M/S CAPAR O VEHICLE FOR PURCHASE OF LAND. THE AO MADE ADDITION OF THIS AMOUNT PAID BY THE ASSESSEE AS NO TDS U/S 194IA OF THE INCOME T AX ACT, 1961 HAS BEEN DEDUCTED. 4. THE EXACT PORTION OF THE ORDER OF THE AO IS REPR ODUCED AS UNDER: 4.8 IN VIEW OF THE ABOVE FACTS, THE PAYMENT FOR LA ND ADVANCE ON WHICH TDS HAS NOT BEEN DEDUCTED U/S 194IA CANNOT BE ALLOWED. HENCE, RS.3,45,00,000/- IS ADDED BACK TO THE INCOME OF THE ASSESSEE U/S 56(2)(VIIB) OF THE ACT. 5. SECTION 194IA READS AS UNDER: AFTER SECTION 194-I OF THE INCOME-TAX ACT, THE FOL LOWING SECTION SHALL BE INSERTED WITH EFFECT FROM THE 1ST DAY OF J UNE, 2013, NAMELY: 194-IA. PAYMENT ON TRANSFER OF CERTAIN IMMOVABLE P ROPERTY OTHER THAN AGRICULTURAL LAND. (1) ANY PERSON, BEING A TR ANSFEREE, RESPONSIBLE FOR PAYING (OTHER THAN THE PERSON REFER RED TO IN SECTION 194LA) TO A RESIDENT TRANSFEROR ANY SUM BY WAY OF C ONSIDERATION FOR TRANSFER OF ANY IMMOVABLE PROPERTY (OTHER THAN AGRI CULTURAL LAND), SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACC OUNT OF THE TRANSFEROR OR AT THE TIME OF PAYMENT OF SUCH SUM IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVE R IS EARLIER, DEDUCT AN AMOUNT EQUAL TO ONE PER CENT OF SUCH SUM AS INCOME-TAX THEREON. ITA NO.6401/DEL/2018 CAPARO POWER LTD. 3 (2) NO DEDUCTION UNDER SUB-SECTION (1) SHALL BE MAD E WHERE THE CONSIDERATION FOR THE TRANSFER OF AN IMMOVABLE PROP ERTY IS LESS THAN FIFTY LAKH RUPEES. (3) THE PROVISIONS OF SECTION 203A SHALL NOT APPLY TO A PERSON REQUIRED TO DEDUCT TAX IN ACCORDANCE WITH THE PROVI SIONS OF THIS SECTION. EXPLANATION. FOR THE PURPOSES OF THIS SECTION, ( A ) 'AGRICULTURAL LAND' MEANS AGRICULTURAL LAND IN INDI A, NOT BEING A LAND SITUATE IN ANY AREA REFERRED TO IN ITE MS (A ) AND (B) OF SUB-CLAUSE (III) OF CLAUSE (14) OF SECTI ON 2; ( B ) 'IMMOVABLE PROPERTY' MEANS ANY LAND (OTHER THAN AGRICULTURAL LAND) OR ANY BUILDING OR PART OF A BUI LDING. 6. FURTHER, SECTION 40(A)(IA) READS AS UNDER: SECTION 40(A)(IA) (IA) THIRTY PER CENT OF ANY SUM PAYABLE TO A RESIDE NT, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 : PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCT ED DURING THE PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139, THIRTY PER CENT OF SUCH SUM SHALL B E ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS Y EAR IN WHICH SUCH TAX HAS BEEN PAID : PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVI SIONS OF CHAPTER XVII-B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN A SSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB-SECTION (1) OF SECTION 201, ITA NO.6401/DEL/2018 CAPARO POWER LTD. 4 THEN, FOR THE PURPOSE OF THIS SUB-CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE 38 [ RESIDENT ] PAYEE REFERRED TO IN THE SAID PROVISO. EXPLANATION.FOR THE PURPOSES OF THIS SUB-CLAUSE, (I) COMMISSION OR BROKERAGE SHALL HAVE THE SAME M EANING AS IN CLAUSE (I) OF THE EXPLANATION TO SECTION 194H; (II) FEES FOR TECHNICAL SERVICES SHALL HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUB-SECTION (1) OF SECTION 9; (III) PROFESSIONAL SERVICES SHALL HAVE THE SAME M EANING AS IN CLAUSE (A) OF THE EXPLANATION TO SECTION 194J; (IV) WORK SHALL HAVE THE SAME MEANING AS IN EXPLA NATION III TO SECTION 194C; (V) RENT SHALL HAVE THE SAME MEANING AS IN CLAUS E (I) TO THE EXPLANATION TO SECTION 194-I; (VI) ROYALTY SHALL HAVE THE SAME MEANING AS IN EX PLANATION 2 TO CLAUSE (VI) OF SUB-SECTION (1) OF SECTION 9; 7. IN NUTSHELL, THE AO DISALLOWED AN AMOUNT OF RS.3 .45 CRORES PAID AS ADVANCE FOR PURCHASE OF PROPERTY BY THE ASS ESSEE FOR NOT DEDUCTING TDS U/S 194IA AND ADDED THIS AMOUNT T O THE INCOME OF THE ASSESSEE U/S 56(2)(VIIB) WHILE AT THE SAME TIME REFERRING TO THE PROVISIONS OF SECTION 40(A)(IA). 8. SUCH ACTION OF THE AO CANNOT BE UPHELD AS THE PR OVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE ONLY TO THE EXP ENDITURE CLAIMED WHILE COMPUTING INCOME UNDER THE HEAD PROF IT AND GAINS OF BUSINESS OR PROFESSION OF THE INCOME TAX ACT, 1961. IN THIS CASE, THIS AMOUNT HAS NOT BEEN CLAIMED AS EXPE NDITURE BEING THE AMOUNT PAID AS ADVANCE FOR ACQUISITION OF A CAPITAL ITA NO.6401/DEL/2018 CAPARO POWER LTD. 5 ASSET. FURTHER, WE ALSO FIND THAT THE PROVISION OF SECTION 56(2)(VIIB) WOULD NOT BE ATTRACTED EVEN REMOTELY IN THIS CASE. THE ORDER OF THE LD. CIT (A) IS AFFIRMED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/08/2021. SD/- SD/- (KUL BHARAT) ( DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 24/08/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR