M/s ICICI Bank Limited, Lucknow V. DCIT - (TDS), Lucknow

ITA 668/LKW/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3326 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-05-2013
• Assessment Year: misc
• Appeal Filed On: 11-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RANU BISWAS
• Section: 201(1); 10

Judgement Text

I TA NO. 668 /LKW / 201 1 ASSESSMENT YEAR: 2008 - 09 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW A BENCH, LUCKNOW BEFORE SHRI SUNIL K YADAV (JUDICIAL MEMBER), AND SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) ITA NO 668 /L KW / 2011 ASSESSMENT YEAR: 2008 - 09 ICICI BANK LTD ..APPELLANT BRANCH GOMTI NAGAR, LUCKNOW - 226010 [PAN:AAACI1195H] VS. DEPUTY COMMISSIONER OF INCOME TAX TDS RANGE, LUCKNOW RESPONDENT APPEARANCES: NONE , FOR THE APPELLANT RANU BISWAS , FOR THE RESPONDENT DATE OF HEARING : MAY 30 , 2013 DATE OF PRONOUNCEME NT : JUNE 06 , 2013 O R D E R PER PRAMOD KUMAR : 1. BY WAY OF THIS APPEAL THE ASSESSEE TAX DEDUCTOR HAS CHALLENGED CORRECTNESS OF LEARNED CIT (A)S ORDER DATED 7 TH SEPTEMBER 2011, IN THE MATTER OF ASCERTAINMENT TAX WITHHOLDING AND INTEREST LIABI LITY U/S 201(1) AND U/S 201 (1A) OF THE INCOME TAX ACT 1961, ON THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. LOWER AUTHORITIES ERRED ON FACTS AND IN LAW IN HOLDING I TA NO. 668 /LKW / 201 1 ASSESSMENT YEAR: 2008 - 09 PAGE 2 OF 7 THE APPELLANT LIABLE FOR NOT DEDUCTING TAX AT SOURCED WHILE MAKING PAYMENT OF INTEREST TO INDIAN OF MANAGEMENT, LUCKNOW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. LOWER AUTHORITIES ERRED ON FACTS AND IN LAW IN HOLDING THE APPELLANT LIABLE FOR NOT DEDUCTING TAX AT SOURCE WHILE MAKING PAYMENT OF INTEREST TO INDIAN INSTITUTE OF MANAGEMENT, LUCKNOW WHICH HAD BEEN CONFERRED EXEMPTION U/S 10 (23C) (IV) OF THE INCOME TAX ACT, 1961 READ WITH RULE 2C OF THE INCOME TAX RULES, 1962 BY THE HON'BLE CHIEF COMMISSIONER OF INCOME TAX, LUCKNOW . 2. NONE APPEARED FOR THE ASSESSEE BUT LEARNED DEPARTMENTAL REPRESENTATIVE POINTS OUT THAT THE AFORESAID ISSUES ARE SQUARELY COVERED AGAINST THE ASSESSEE BY THIS TRIBUNALS ORDER IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007 - 08. WE HAVE CAREFULLY P ERUSED THE SAID ORDER. 3. WE FIND THAT ON IDENTICAL SET OF FACTS AND FOR IMMEDIATELY PRECEDING YEAR ON ASSESSEES OWN CASE, A CO - ORDINATE BENCH OF THIS TRIBUNAL, SPEAKING THROUGH ONE OF US I.E. LEARNED JUDICIAL MEMBER, HAS INTER ALIA INDEED OBSERVED AS F OLLOWS: - HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT THE ASSESSING OFFICER HAS HELD THE ASSESSEE TO BE IN DEFAULT WITH REGARD TO THE PAYMENTS MADE TO THE DIFFERENT AGENCIES FOR NON - DEDUCTION OF TAX AT SOURCE. BUT THE LD. CIT(A) HAS EXAMINED EACH AND EVERY ASPECT AND PASSED A DETAILED ORDER. WHEREVER THE ASSESSEE HAS FILED CERTIFICATE AND PROOF OF EXEMPTION OF THE RECIPIENTS, THE LD. CIT(A) ALLOWED RELIEF TO THE ASSESSEE, BUT WITH REGARD TO THE PAYMENTS MADE TO THE INDIAN INSTITUTE OF MANAGEMENT, LUCKNOW; THE LD. CIT(A) HAS CATEGORICALLY HELD THAT THE CIRCULAR RELIED UPON BY THE ASSESSEE IS NOT APPLICABLE TO THE IIMS, THEREFORE, THE IIM IS NOT COVERED UNDE R SECTION 10(23C(III) OF THE ACT. RELYING UPON THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF AGGARWAL CHAMBER OF COMMERCE LTD. V. GANPAT RAI HIRA LAL (SUPRA), THE LD. CIT(A) HAS ADJUDICATED THE ISSUE AND DIRECTED THE ASSESSING OFFICER TO EXCLUDE A LL THE PAYMENTS EXCEPT THE PAYMENTS MADE TO THE INDIAN INSTITUTE OF MANAGEMENT AND RECOMPUTE SHORT I TA NO. 668 /LKW / 201 1 ASSESSMENT YEAR: 2008 - 09 PAGE 3 OF 7 DEDUCTION OF TAX UNDER SECTION 194A OF THE ACT AS WELL AS INTEREST LIABILITY OF THE ASSESSEE. SINCE THE LD. CIT(A) HAS PROPERLY ADJUDICATED THE ISSUE IN THE LIGHT OF THE RELEVANT PROVISIONS OF THE ACT AND WE FIND NO INFIRMITY THEREIN, WE CONFIRM THE SAME. 4. THE MATTER WAS ORIGINALLY TAKEN AS HEARD AS COVERED BY THE AFORESAID DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE. HOWEVER, DURING THE COURSE OF FINA LIZING THE ORDER, IT WAS NOTICED THAT WHILE THERE IS INDEED A CASE OF SHORT DEDUCTION OF TAX AT SOURCE, THE ATTENTION OF THE BENCH WAS NOT INVITED TO THE FACT THAT A MERE NON DEDUCTION OF TAX AT SOURCE OR SHORT DEDUCTION OF TAX AT SOURCE, BY ITSELF, DOES N OT LEAD TO A VALID DEMAND UNDER SECTION 201(1) AND 201(1A). IT IS SO FOR THE REASON THAT IN THE LIGHT OF HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT LTD VS CIT (293 ITR 226), IT WOULD APPEAR THAT THE TAXES CANNOT BE R ECOVERED FROM THE PAYEE UNDER SECTION 201 IN A SITUATION IN WHICH RECIPIENT OF INCOME HAS PAID TAXES ON INCOME EMBEDDED IN THE PAYMENTS FROM WHICH EITHER THE APPLICABLE WITHHOLDING TAXES WERE NOT DEDUCTED EITHER IN PART OR IN FULL. THE MATTER WAS, ACCORDI NGLY, REFIXED FOR CLARIFICATIONS IN THIS REGARD. LEARNED DEPARTMENTAL REPRESENTATIVE WAS ASKED TO ADDRESS US IN THE LIGHT OF HONBLE SUPREME COURTS DECISION IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES (SUPRA) AS ALSO IN THE LIGHT OF HONBLE JURISDICTIONA L HIGH COURTS JUDGMENT IN THE CASE OF JAGRAN PRAKASHAN LTD VS DCIT [ (2012) 21 TAXMANN.COM 489 ALL] WHICH ALSO DEALS WITH IMPORTANT FACETS OF THIS ISSUE. 5. WE HAVE HEARD MRS BISWAS ON THE ABOVE LEGAL ISSUES, AND HAVE ONCE AGAIN CONSIDERED FACTS OF THE C ASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 6. WE FIND THAT IT IS A SETTLED LEGAL POSITION NOW THAT ONCE RECIPIENTS HAVE PAID TAX ON INCOME EMBEDDED IN THESE PAYMENTS, AND I TA NO. 668 /LKW / 201 1 ASSESSMENT YEAR: 2008 - 09 PAGE 4 OF 7 IN THE LIGHT OF HONBLE SUPREME COURTS DECISION IN THE CASE OF HINDUSTAN C OCA COLA BEVERAGES PVT LTD VS CIT ( SUPRA ), THE TAXES CANNOT ONCE AGAIN BE RECOVERED FROM THE TAX DEDUCTOR. HONBLE JURISDICTIONAL HIGH COURT, IN THE CASE OF JAGRAN PRAKASHAN LTD VS DCIT [ (2012) 21 TAXMANN.COM 489 ALL] ALSO HAS, INTER ALIA , OBSERVED AS FO LLOWS: ..IT IS CLEAR THAT DEDUCTOR CANNOT BE TREATED AN ASSESSEE IN DEFAULT TILL IT IS FOUND THAT ASSESSEE HAS ALSO FAILED TO PAY SUCH TAX DIRECTLY. IN THE PRESENT CASE, THE INCOME TAX AUTHORITIES HAD NOT ADVERTED TO THE EXPLANATION TO SECTION 191 NOR H AD APPLIED THEIR MIND AS TO WHETHER THE ASSESSEE HAS ALSO FAILED TO PAY SUCH TAX DIRECTLY. THUS, TO DECLARE A DEDUCTOR, WHO FAILED TO DEDUCT THE TAX AT SOURCE AS AN ASSESSEE IN DEFAULT, CONDITION PRECEDENT IS THAT ASSESSEE HAS ALSO FAILED TO PAY TAX DIRECT LY. THE FACT THAT ASSESSEE HAS FAILED TO PAY TAX DIRECTLY IS THUS, FOUNDATIONAL AND JURISDICTIONAL FACT AND ONLY AFTER FINDING THAT ASSESSEE HAS FAILED TO PAY TAX DIRECTLY, DEDUCTOR CAN BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX.. 7. I T IS THUS CLEAR THAT THE ONUS IS ON THE REVENUE TO DEMONSTRATE THAT THE TAXES HAVE NOT BEEN RECOVERED FROM THE PERSON WHO HAD THE PRIMARILY LIABILITY TO PAY TAX, AND IT IS ONLY WHEN THE PRIMARY LIABILITY IS NOT DISCHARGED THAT VICARIOUS RECOVERY LIABILITY CAN BE INVOKED. ONCE ALL THE DETAILS OF THE PERSONS TO WHOM PAYMENTS HAVE BEEN MADE ARE ON RECORD, IT IS FOR THE ASSESSING OFFICER, WHO HAS ALL THE POWERS TO REQUISITION THE INFORMATION FROM SUCH PAYERS AND FROM THE INCOME TAX AUTHORITIES, TO ASCERTAIN WHE THER OR NOT TAXES HAVE BEEN PAID BY THE PERSONS IN RECEIPT OF THE AMOUNTS FROM WHICH TAXES HAVE NOT BEEN WITHHELD. AS A RESULT OF THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN JAGRAN PRAKASHANS CASE (SUPRA), THERE IS A PARADIGM SHIFT IN THE MANNER IN WH ICH RECOVERY PROVISIONS UNDER SECTION 201(1) CAN BE INVOKED. AS OBSERVED BY THEIR LORDSHIPS, THE PROVISIONS OF SECTION 201(1) CANNOT BE INVOKED AND THE TAX DEDUCTOR CANNOT BE TREATED AN ASSESSEE IN DEFAULT TILL IT IS FOUND THAT ASSESSEE HAS ALSO FAILED T O PAY SUCH TAX DIRECTLY. ONCE THIS FINDING ABOUT THE NON PAYMENT OF I TA NO. 668 /LKW / 201 1 ASSESSMENT YEAR: 2008 - 09 PAGE 5 OF 7 TAXES BY THE RECIPIENT IS HELD TO A CONDITION PRECEDENT TO INVOKING SECTION 201(1), THE ONUS IS ON THE ASSESSING OFFICER TO DEMONSTRATE THAT THE CONDITION IS SATISFIED. NO DOUBT THE ASSE SSEE HAS TO SUBMIT ALL SUCH INFORMATION ABOUT THE RECIPIENT AS HE IS OBLIGED TO MAINTAIN UNDER THE LAW, ONCE THIS INFORMATION IS SUBMITTED, IT IS FOR THE ASSESSING OFFICER TO ASCERTAIN WHETHER OR NOT THE TAXES HAVE BEEN PAID BY THE RECIPIENT OF INCOME. TH IS APPROACH, IN OUR HUMBLE UNDERSTANDING, IS IN CONSONANCE WITH THE LAW LAID DOWN BY HONBLE ALLAHABAD HIGH COURT. 8. IT IS ALSO IMPORTANT TO BEAR IN MIND THAT THE LAPSE ON ACCOUNT OF NON DEDUCTION OF TAX AT SOURCE IS TO BE VISITED WITH THREE DIFFERENT CO NSEQUENCES PENAL PROVISIONS, INTEREST PROVISIONS AND RECOVERY PROVISIONS. THE PENAL PROVISIONS IN RESPECT OF SUCH A LAPSE ARE SET OUT IN SECTION 271 C. SO FAR AS PENAL PROVISIONS ARE CONCERNED, THE PENALTY IS FOR LAPSE ON THE PART OF THE ASSESSEE AND I T HAS NOTHING TO DO WITH WHETHER OR NOT THE TAXES WERE ULTIMATELY RECOVERED THROUGH OTHER MEANS. THE PROVISIONS REGARDING INTEREST IN DELAY IN DEPOSITING THE TAXES ARE SET OUT IN SECTION 201(1A). THESE PROVISIONS PROVIDE THAT FOR ANY DELAY IN RECOVERY OF SUCH TAXES IS TO BE COMPENSATED BY THE LEVY OF INTEREST. AS FAR AS RECOVERY PROVISIONS ARE CONCERNED, THESE PROVISIONS ARE SET OUT IN SECTION 201(1) WHICH SEEKS TO MAKE GOOD ANY LOSS TO REVENUE ON ACCOUNT OF LAPSE BY THE ASSESSEE TAX DEDUCTOR. HOWEVER, THE QUESTION OF MAKING GOOD THE LOSS OF REVENUE ARISES ONLY WHEN THERE IS INDEED A LOSS OF REVENUE AND THE LOSS OF REVENUE CAN BE THERE ONLY WHEN RECIPIENT OF INCOME HAS NOT PAID TAX. THEREFORE, RECOVERY PROVISIONS UNDER SECTION 201(1) CAN BE INVOKED ONLY WHE N LOSS TO REVENUE IS ESTABLISHED, AND THAT CAN ONLY BE ESTABLISHED WHEN IT IS DEMONSTRATED THAT THE RECIPIENT OF INCOME HAS NOT PAID DUE TAXES THEREON. IN THE ABSENCE OF THE STATUTORY POWERS TO REQUISITION ANY INFORMATION FROM THE RECIPIENT OF INCOME, THE ASSESSEE IS INDEED NOT I TA NO. 668 /LKW / 201 1 ASSESSMENT YEAR: 2008 - 09 PAGE 6 OF 7 ALWAYS ABLE TO OBTAIN THE SAME. THE PROVISIONS TO MAKE GOOD THE SHORTFALL IN COLLECTION OF TAXES MAY THUS END UP BEING INVOKED EVEN WHEN THERE IS NO SHORTFALL IN FACT. ON THE OTHER HAND, ONCE ASSESSEE FURNISHES THE REQUISITE BASIC INFORMATION, THE ASSESSING OFFICER CAN VERY WELL ASCERTAIN THE RELATED FACTS ABOUT PAYMENT OF TAXES ON INCOME OF THE RECIPIENT DIRECTLY FROM THE RECIPIENTS OF INCOME. IT IS NOT THE REVENUES CASE BEFORE US THAT, ON THE FACTS OF THIS CASE, SUCH AN EXERCISE BY THE ASSESSING OFFICER IS NOT POSSIBLE. IT DOES PUT AN ADDITIONAL BURDEN ON THE ASSESSING OFFICER BEFORE HE CAN INVOKE SECTION 201(1) BUT THATS HOW HONBLE HIGH COURT HAS VISUALIZED THE SCHEME OF ACT AND THATS HOW, THEREFORE, IT MEETS THE END OF JUSTIC E. 9. AS FAR AS LEVY OF INTEREST UNDER SECTION 201(1A) IS CONCERNED, THIS INTEREST IS ADMITTEDLY A COMPENSATORY INTEREST IN NATURE AND IT SEEKS TO COMPENSATE THE REVENUE FOR DELAY IN REALIZATION OF TAXES. HONBLE BOMBAY HIGH COURT, IN THE CASE OF BENNET T COLEMAN & CO LTD VS ITO (157 ITR 812) HAS HELD SO. THEREFORE, LEVY OF INTEREST UNDER SECTION 201(1A) IS APPLICABLE WHETHER OR NOT THE ASSESSEE WAS AT FAULT. HOWEVER, SINCE IT IS ONLY COMPENSATORY IN NATURE IT IS APPLICABLE FOR THE PERIOD OF THE DATE ON W HICH TAX WAS REQUIRED TO BE DEDUCTED TILL THE DATE WHEN TAX WAS EVENTUALLY PAID. HOWEVER, IN A CASE IN WHICH THE RECIPIENT OF INCOME HAD NO TAX LIABILITY EMBEDDED IN SUCH PAYMENTS, THERE WILL OBVIOUSLY BE NO QUESTION OF DELAY IN REALIZATION OF TAXES AND TH E PROVISIONS OF SECTION 201(1A) WILL NOT COME INTO PLAY AT ALL. THE COMPUTATION OF INTEREST IS TO BE REDONE IN THE LIGHT OF THIS LEGAL POSITION. 10. THE MATTER THUS STANDS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH THE LAW AND IN THE LIGHT OF OUR OBSERVATIONS ABOVE. WHILE DOING SO, THE ASSESSING OFFICER WILL GIVE A DUE AND FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE AND I TA NO. 668 /LKW / 201 1 ASSESSMENT YEAR: 2008 - 09 PAGE 7 OF 7 DISPOSE OF THE MATTER BY WAY OF A SPEAKING ORDER. WE DIRECT SO. AS WE DO SO, WE ARE ALIVE TO THE FACT THAT THIS DECISION IS AT VARIANCE WITH DECISION IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, BUT THEN, IN THE NAME OF CONSISTENCY, IT CANNOT BE OPEN TO US TO PERPETUATE AN ERROR AND ACT CONTRARY TO THE LAW LAID DOWN BY HON BLE SUPREME COURT AND BY HONBLE JURISDICTIONAL HIGH COURT PARTICULARLY NOW THAT WE HAVE TAKEN NOTE OF THESE DECISIONS. THESE DECISIONS HAD ESCAPED OUR ATTENTION EARLIER, NO DID THE LEARNED COUNSEL FOR THE ASSESSEE, WHO HAD APPEARED IN THAT YEAR, INVITE OUR ATTENTION TO THE SAME. WE, THEREFORE, HAVE NO HESITATION IN DEVIATING FROM THE STAND TAKEN IN THE IMMEDIATELY PRECEDING YEAR IN ASSESSEES OWN CASE. 11. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE . PRON OUNCED IN THE OPEN COURT TODAY ON 6 TH DAY OF JUNE, 2013. SD/XX SD/XX (SUNIL K YADAV ) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER LUCKNOW; 6 TH DAY OF JUNE 2013 . COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER , LUCKNOW 4 . DEPARTMENTAL REPRESENTATIVE, BENCH, LUCKNOW 5 . GUARD FILE TRUE COPY BY ORDER ETC. ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCHES, LUCKNOW