Project Director, National Highways Authority of India, V. ACIT (TDS), Jabalpur

ITA 67/JAB/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4879 (ITAT-JABALPUR)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 11-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Recovery proceedings; Depreciation; Retrospective amendment; Competent authority; Unabsorbed depreciation
• Section: 143(3); 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JABALPUR BENCH, JABALPUR BEFORE SHRI JOGINDER SINGH(JM) AND SHRI R.C. SHARM A (AM) I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:20 09-2010 NATIONAL HIGHWAY AUTHORITY OF INDIA, THROUGH PROJECT DIRECTOR PROJECT IMPLEMENTATION UNIT, NARASINGHPUR SHRI RAMDAS BHAWAN, NEAR BARGI COLONY, NARSINGHPUR. VS. ACIT (TDS), JABALPUR PAN/GIR NO. : JBPPO 1781D APPELLANT ) .. RESPONDENT ) APPELLANT BY : INTERVENOR BY SHRI AJAY MISHRA SHRI SUMIT NEMA RESPONDENT BY : SHRI ABHISHEK SHUKLA, SR. DR DATE OF HEARING : 10/9/20 13 DATE OF PRONOUNCEMENT : 12/9/2013 O R D E R PER R.C.SHARMA, AM: THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD CIT(A) DATED 12.4.2012 FOR THE ASSESSMENT YEAR 2009 -2010, IN THE MATTER OF ORDER PASSED U/S.201(1)/201(1A) OF THE I.T.ACT, 1961. 2 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 2. AT THE OUTSET, IT IS PERTINENT TO MENTION HERE T HAT A WRIT PETITION WAS FILED BY M/S SSANGYONG ENGG. & CONSTRUCTION CO LTD. , BEFORE THE HONBLE M.P.HIGH COURT AGAINST THE RECOVERY PROCEEDINGS INI TIATED BY THE DEPARTMENT FOR SHORT DEDUCTION OF TAX BY THE ASSESS EE NATIONAL HIGHWAY AUTHORITY OF INDIA (IN SHORT NHAI). THE HONBLE M.P.HIGH COURT VIDE ITS ORDER DATED 7.8.2013 DIRECTED THIS TRIBUNAL TO DECI DE THE APPEALS OF THE ASSESSEE EXPEDITIOUSLY AS FAR AS POSSIBLE WITHIN A PERIOD OF THREE MONTHS FROM THE DATE OF COMMUNICATION OF THE ORDER. WHILE DISPOSING OFF THE WRIT PETITION, THE HONBLE HIGH COURT HAS ALSO GRANTED P ERMISSION TO M/S SSANGYONG ENGG. & CONSTRUCTION CO LTD., TO MOVE APP LICATIONS SEEKING INTERVENTION AND ALSO FOR STAY OF RECOVERY OF PAYME NT BEFORE THE TRIBUNAL. IN COMPLIANCE WITH THE DIRECTION GIVEN BY THE HONB LE HIGH COURT IN ITS ORDER DATED 7.8.2013, WE HAVE TAKEN THE APPEALS OF THE ASSESSEE AND ARE GOING TO DECIDE THE ISSUE ON MERITS AS UNDER; INTER VENTION IS ALSO ALLOWED TO M/S. SSANGYONG ENGG. & CONSTRUCTION CO LTD., SOUTH KOREA. 3. FROM THE RECORD, WE FIND THAT THE ACIT (TDS) VI DE HIS ORDERS U/S 201(1) AND 201(1A) IN RESPECT OF SEVEN QUARTERS FAL LING IN THE FINANCIAL YEAR 2008-09 RELEVANT TO A. YR. 2009-2010 HAS HELD THE A SSESSEE, AS PERSON 3 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 RESPONSIBLE FOR MAKING PAYMENTS TO FOREIGN CONTRAC TOR DEDUCTING TAX AT SOURCE AND FILING RETURN U/S 206 OF THE ACT. ON VER IFICATION, IT WAS NOTICED THAT THE ASSESSEE HAD MADE PAYMENT OF CONTRACT WORT H RS.19,61,36,514/- AND RS.56,18,92,676/- FROM 01/04/2008 TO 30/06/2008 F. Y. 2008-09 TO M/S SSANGYONG ENGG. & CONSTRUCTION CO LTD., SOUTH K OREA. THE ACIT (TDS) HELD THESE PAYMENTS WERE MADE WITHOUT PROPER DEDUCT ION OF TAX AT SOURCE. ON BEING ASKED TO EXPLAIN THE REASONS, IT WAS STATE D ON BEHALF OF THE ASSESSEE THAT THE PAYMENTS WERE MADE WITH LOWER DED UCTION OF TAX AT SOURCE AS A CONSEQUENCE OF THE ORDER ISSUED U/S 195 /197 BY THEIR AO, NEW DELHI. THE ASSESSEE ALSO FURNISHED COPIES OF THESE ORDERS. THE ACIT (TDS) ON GOING THROUGH THE DETAILS OF PAYMENTS MADE BY TH E ASSESSEE FOUND THAT A SUM OF RS.19,61,36,513/- REPRESENTED PAYMENTS MAD E FROM 10/04/2008 TO 24/06/2008. THE ACIT (TDS) HAS STATED IN HIS ORD ER THAT AT THE TIME OF MAKING SUCH PAYMENT OR CREDITING SUCH PAYMENT, THER E WAS NO CERTIFICATE AVAILABLE. THE ORDERS HAD BEEN PASSED ON 05/03/2011 FOR M/S SSANGYONG ENGG. CONST. CO. THE ACIT (TDS) FOUND THAT FOR THIS COMPANY FOR ALL THESE PAYMENTS THE ASSESSEE HAD DEDUCTED TAX @ 2.27% ON C ONTRACT PAYMENT, WHICH WAS LOWER THAN THE RATE PRESCRIBED UNDER THE ACT. IN REPLY TO A QUERY ON WHY LOWER TDS WAS DEDUCTED, THE COUNSEL OF THE A SSESSEE SUBMITTED THAT TDS WAS MADE ON REQUEST OF THE PAYEE, DEDUCTOR HAD ACTED 4 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 BONAFIDELY, DEDUCTOR DID NOT HAVE AN IDEA THAT IT W AS REQUIRED TO DEDUCT TAX AT FULL RATE AND RETURN OF DEDUCTEE HAS ALREADY BEE N PROCESSED U/S 143(1). THE ACIT (TDS) DID NOT AGREE WITH THESE CONTENTIONS . IN VIEW OF SECTION 197, HE WAS OF THE OPINION THAT IF THE LOGIC AND RE ASONING ADVANCED BY THE LD. COUNSEL WERE GIVEN EFFECT, THE WHOLE SCHEME OF DEDUCTION OF TAX AT SOURCE WOULD BE RENDERED NUGATORY AND REDUNDANT, FO R ALL ASSESSEE LIABLE TO DEDUCT TAX AT SOURCE WOULD TAKE THE PLEA OF TAXE S HAVING BEEN PAID BY THE PAYEES THEMSELVES. THAT, THE RETURN OF INCOME W AS PROCESSED U/S 143(1) ONLY AND THE PAYEE HAD NOT FULFILLED THE CON DITIONS LAID DOWN IN CIRCULAR NO. 275 DATED 29/01/0997. HE ALSO HELD THA T THE ISSUANCE OF ORDER ON 30/06/2008 FOR LOWER DEDUCTION OF TAX AT SOURCE WAS ONLY PROSPECTIVE AND NO BENEFIT OF IT COULD HAVE BEEN ALLOWED TO THE ASSESSEE FOR THE PAYMENTS MADE PRIOR TO THE DATE OF ISSUANCE OF THE CERTIFICATES AND THAT CERTIFICATE ISSUED U/S 197(1) OF THE ACT IS EFFECTI VE ONLY PROSPECTIVELY AND NOT RETROSPECTIVELY. THE ACIT (TDS) HELD THAT WHEN THE AMOUNT WAS PAID, DEFAULT HAD ALREADY BEEN COMMITTED AS IT WAS BEFORE THE ISSUE OF CERTIFICATE, WHICH DOES NOT HAVE RETROSPECTIVE EFFE CT. HE ALSO HELD THAT IF THE CONTENTIONS OF THE COUNSEL ARE ACCEPTED, IT WOULD M EAN THAT THE PAYER IS AT LIBERTY TO DETERMINE FOR HIMSELF WHETHER THE COMPAN Y TO WHOM HE IS MAKING THE PAYMENT WOULD HAVE TAXABLE INCOME OR NOT AND THEN MAY 5 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 DECIDE NOT TO DEDUCT THE TAX AT SOURCE AND CLAIM TH AT THIS DEFIANCE OF SPECIFIC PROVISIONS OF SECTION 197(3) AND (2) WAS B ONAFIDE AND IN GOOD FAITH. HE ALSO HELD THAT BEING UNAWARE OF THE LAW I S NO EXCUSE AS THE ASSESSEE IS A REGULAR ASSESSEE AND WAS WELL AWARE O F THE LEGAL PROVISIONS. AFTER REFERRING TO CIRCULAR NO. 774 DATED 17/03/199 9, THE AO HELD THE DEDUCTOR TO BE AN ASSESSEE IN DEFAULT @ 42.23% FOR SHORT DEDUCTION OF R.31,03,54,504/- FOR A. YR. 2009-10 AND LEVIED INTE REST U/S 201(1A) @1% OF RS 10,86,24,076/- (A. YR. 2009-10). AGAINST THI S ORDER OF ACIT (TDS), THE ASSESSEE APPROACHED TO LD CIT(A). 4. BEFORE THE LD CIT(A), IT WAS CONTENDED THAT THE LEVY OF TAX @ 42.23% IS CONTRARY TO THE CERTIFICATE OF LOWER RATE OF TAX ISSUED TO THE PAYEES AND THE SAID LEVY ALSO OVERLOOKS THE FACT THAT THERE IS NO TAXABLE INCOME OF THE PAYEE IN ANY OF THE ASSESSMENT YEAR PRIOR TO, DURIN G OR EVEN AFTER THE YEAR INVOLVED DEMONSTRATED BY THE ASSESSMENT ORDERS FOR A. YR. 09-10 IN THE CASE OF M/S SSANGYONG ENGG. & CONSTRUCTION CO LTD . SUBMITTING FURTHER, THAT THE MANDATE OF THE APEX COURT HAS BEEN VIOLATE D WHEREIN, IT HAS BEEN CATEGORICALLY HELD TIME AND AGAIN THAT THE PROVISIO NS RELATING TO TDS APPLY, ONLY IF THERE IS ANY SUM CHARGEABLE TO TAX UNDER TH E ACT AND THAT THE DEPARTMENT HAS NEVER CANCELLED THE CERTIFICATES GRA NTED TO THE PETITIONER 6 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 AND THEREFORE, THE SAID CERTIFICATES WERE VALID FOR THE PERIODS SPECIFIED THEREIN. ANOTHER FACT THAT IS RELEVANT IN THIS CONT EXT IS THE FACT THAT THE PAYEE M/S SSANGYONG ENGG. & CONSTRUCTION CO LTD., HAS BEEN INCURRING LOSSES YEAR AFTER YEAR AND FOR TWO YEARS I.E. 2007- 08 & 08-09. IT HAS BEEN DULY ASSESSED AT A LOSS; THE PETITIONER HAD NO SUM CHARGEABLE TO TAX UNDER THE PROVISION OF THE I. T. ACT. RELYING ON THE SUPR EME COURT IN THE CASE OF TRANSMISSION CORPORATION OF A. P. LTD. VS CIT (1999 ), 239 ITR 587, IT WAS STATED THAT TDS REPRESENTS TENTATIVE DEDUCTION, THI S TENTATIVE DEDUCTION IS SUBJECT TO A FINAL ASSESSMENT. IT IS FURTHER SUBMIT TED THAT SECTION 197 PROVIDES THAT THE CERTIFICATE SHALL BE ISSUED BY TH E AO, IF HE IS SATISFIED THAT THE CIRCUMSTANCES OF THE CASE JUSTIFY A LOWER OR NI L DEDUCTION OF TAX AT SOURCE. IT IS FURTHER SUBMITTED THAT THE SAID CERTI FICATES WERE NEVER CANCELLED AT ANY POINT OF TIME, SECTION 197(2) STAT ES THAT THE CERTIFICATE SHALL HAVE VALIDITY FOR THE FINANCIAL YEAR MENTIONE D THEREIN. PAYMENTS WERE MADE DURING THE VALIDITY OF THE CERTIFICATE. THE AC TION OF THE ASSESSEE NHAI WAS, THUS, IN COMPLIANCE OF THE DIRECTIONS ISSUED T HROUGH THE CERTIFICATE ISSUED BY THE AO. THE PAYMENT HAVING BEEN MADE IN A CCORDANCE WITH THE CERTIFICATE IN FORCE, THERE SHOULD BE NO OCCASION T O WARRANT A CONCLUSION THAT NHAI WAS IN DEFAULT IN TERMS OF SECTION 201 FO R THE PENDING APPLICATION. IN VIEW OF THE FACT THAT THERE WERE NO CHANGE IN THE FACTS AND 7 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 CIRCUMSTANCES, THAT FOR SIMILAR PAYMENTS A CERTIFIC ATE HAD BEEN GRANTED EARLIER AND OR THE UNPAID AMOUNTS ALSO, A CERTIFICA TE FOR 0.75% WITHHOLDING HAD BEEN GRANTED, THERE WAS NO OCCASION OR NEED NOT TO ISSUE THE CERTIFICATE. TRUE COPIES OF THE CERTIFICATE ISSU ED U/S 197 FORM F. Y. 2006-07 TO F. Y. 2009-10 AND CLARIFICATIONS ISSUED IN 2008-09 WERE SUBMITTED BEFORE THE LOWER AUTHORITIES. 5. IT WAS FURTHER CONTENDED BEFORE LD CIT(A) THAT I N THE INSTANT CASE, THE APPLICATIONS WERE DISPOSED OF BY AO AUTHORIZING THE REIMBURSEMENT BY DEDUCTION OF TAX AT SOURCE @ 0.75% & 1%. THE CERTIF ICATE CANNOT BE INVALIDATED ON THE GROUND THAT IT WAS ISSUED SUBSEQ UENT TO THE PASSING OF THE ACCOUNTING ENTRIES BY THE PAYER. IT WAS FURTHER ELABORATED THAT IT IS NOT MANDATORY U/S 197(1) THAT THE CERTIFICATE SHOULD HA VE BEEN OBTAINED OR THE APPLICATION MADE BEFORE THE DATE OF CREDIT. AS IS R EQUIRED UNDER THE SECOND PROVISO TO SECTION 194C (3), A CERTIFICATE OBTAINED AFTER THE DATE OF CREDIT BUT IN ACCORDANCE WITH THE MANDATE OF THE PROVISION S OF LAW SHOULD CONSEQUENTLY BE REGARDED AS VALID, EFFECTIVE AND BI NDING. THE DIRECTIONS UNDER CERTIFICATE WOULD, THEREFORE, ENSURE TO THE B ENEFIT OF BOTH THE PAYER AS WELL AS PAYEE. AS A RESULT, THE CERTIFICATE OBT AINED U/S.197(1) WOULD 8 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 CONTINUE TO GOVERN THE TRANSACTION AND THE PAYMENTS SHOULD BE MADE IN ACCORDANCE WITH THE MANDATE OF THE CERTIFICATE. 6. IN THE IMPUGNED ORDER, LD CIT(A) UPHELD THE ORDE R OF THE ASSESSING OFFICER TO THE EFFECT THAT LD ACIT HAD CORRECTLY CO NSIDERED THE EFFECTIVENESS OF THE CERTIFICATE FROM THE DATE OF ITS ISSUE AND A PPLYING THE RATE OF 42.23% ON SHORT DEDUCTION OF TAX HOLDING THE ASSESSEE TO B E IN DEFAULT U/S.201(1) & 201(1A). AGAINST THE ABOVE ORDER OF LD CIT(A), ASS ESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS : 1. THAT, THE LD. CIT (APPEALS), JABALPUR HAS ERRED BOT H IN LAW AND IN FACTS IN HOLDING THAT THE CERTIFICATE ISSUED BY THE COMPE TENT AUTHORITY DATED 30.06.2008 WILL NOT HAVE RETROSPECTIVE IMPACT AND W ILL HAVE NO EFFECT ON THE PAYMENT MADE PRIOR TO 30.06.2008 AND BEING ISSU ED IN DEFIANCE OF PROVISION UNDER RULE 28AA THEREFORE RENDERED THE AP PELLANT ERRED IN DEDUCTING THE TAX AT SOURCE @ 2.12% AND @ 1% ON THE PAYMENT OF RS.19,61,56,513/- AND RS.56,18,92,676/- COVERING TH E PERIOD 10.04.2008 TO 24.06.2008 & 01.07.2008 TO 31.03.2009 RESPECTIVE LY. 2. THAT, THE LD. CIT (APPEALS), JABALPUR HAS ERRED BOTH IN LAW AND IN FACTS IN DISMISSING THE GROUND THAT, THE LEARNED AC1T (TD S), JABALPUR HAS EXCEEDED HIS JURISDICTION IN REJECTING THE ORDER PA SSED U/S. 197(1) HOLDING, THE SAME BEING ISSUED WRONGLY BY THE COMPETENT AUTH ORITY IN DEFIANCE OF PROVISIONS UNDER RULE 28AA ON THE GROUND THAT THE S AME BEING NOT COMMUNICATED TO THE PAYER AND HAS BEEN PASSED IN UT TER VIOLATION OF BOARD'S CIRCULAR NO. 774 DATED 17.03.1999 WI THOUT APPRECIATING THE SETTLED POSITION OF LAW IN THIS REGARD. 3. THAT, THE LD. CIT (APPEALS), JABALPUR HAS ERRED BOTH IN LAW AND IN FACTS IN NOT HOLDING THAT AN ORDER CANNOT HE INVA LIDATED AND CONTINUE TO HAVE EFFECT UNTIL WITHDRAWN OR CANCELLED BY A PROCE SS KNOWN TO LAW AND SUCH ORDER ONCE ISSUED, RULE 2SAA (5) MANDATED DEDU CTION OF TAX IN ACCORDANCE WITH THE CERTIFICATE SO ISSUED THEREFORE REMEDY NOT CONCERNED WITH THE VALIDITY OR OTHERWISE OF THE ORDER/CERTIFI CATE, 9 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 4. THAT, THE LD. CIT (APPEALS), JABALPUR HAS ERRED BOTH IN LAW AND IN FACTS IN NOT HOLDING THAT THE LEARNED ACIT (TDS), J ABALPUR GROSSLY ERRED IN TREATING THE VERY SAME ORDER PASSED U/S 197(1) AND REJECTING THE SAME BEING INVALID ON THE ONE HAND AND BEING PASSED ERRO NEOUSLY U/S 195(3) ON THE OTHER HAND THUS ERRONEOUSLY HELD THAT THE WHOLE OF THE PAYMENT OF RS. 75,80,29,189 LIABLE TO TDS 42.23%. 5. THAT, THE LD. CIT (APPEALS), JABALPUR HAS ERRED BOTH IN LAW AND IN FACTS IN HOLDING THAT, THE LEARNED ACIT (TDS), JABA LPUR HAS NOT COMMITTED ANY ERROR OF LAW OR FACTS IN IGNORING THE RETURN FI LED BY THE PAYEE/DEDUCTEE FOR A.Y. 2009-10, WHEREIN THE PAYEE HAS DISCLOSED I TS NET RESULT DECLARED IN THE RETURN IS LOSS AND THE WHOLE AMOUNT OF TDS W HICH HAS BEEN DEDUCTED BY THE APPELLANT NHAI HAS BEEN REFUNDED TO THE PAYEE/ DEDUCTEE M/S SANGYONG ENGINEERING CONSTRUCTION COMP ANY LTD. 6. THAT, THE LD. CAT (APPEALS), JABALPUR HAS ERRED BOTH IN LAW AND IN FACTS IN HOLDING THAT THE DETERMINATION OF SHORT DE DUCTION OF TDS AMOUNTING TO RS. 31, 03, 54, 504/- AND INTEREST U/S 20L(L) AMOUNTING TO RS. 10, 86, 24, 076/- IS NOT ERRONEOUS, ARBITRARY O R UNJUSTIFIED AND THEREFORE LD. ACIT (TDS), JABALPUR HAS NOT ERRED EI THER IN LAW OR FACTS IN IMPOSING INTEREST @L% U/S 201(1A) OF IT ACT IN THE IMPUGNED ORDER PASSED FOR THE YEAR IN QUESTION AMOUNTING TO RS. 10 , 86, 24, 076/- ON THE SHORT DEDUCTION OF TAX OF RS. 3, 61, 03, 54, 504/- ON THE PAYMENTS COVERING PERIOD OF 35 MONTHS FROM APRIL 2008 TO FEB 2011, MADE TO THE PAYEE/ DEDUCTEE M/S SSANGYONG ENGG. & CONSTN. CO. L TD., NEW DELHI DURING THE FY 2008-09. 7. THAT LD. C1T (A) HAS FURTHER ERRED IN NOT ALLOWING THE ALTERNATE PLEA TO THE EXTENT IT PLEADED BEFORE IT THEREFORE WITHOU T PREJUDICE TO ALLOWANCE OF AFORESAID ALTERNATE PLEA IN THE APPELLATE ORDER AS RAISED BEFORE LD C1T (A) AND WITHOUT PREJUDICE TO GROUNDS AFORESAID AT S R. NO, 1 TO 6 AND WITHOUT ADMITTING ANY DEFAULT, EVEN IF IT IS ASSUME D THAT CERTIFICATE DATED 30.06.2008 IS APPLICABLE PROTECTIVELY, EVEN THEN TH E DEFAULT SHOULD BE CONFINED ONLY TO 42.23% OF RS. 19,61,36,513/-WHICH WORKS OUT TO RS.8,28,28,449/- ONLY FROM WHICH TAX DEDUCTED OF R S.41,42,335/- IS TO BE FURTHER REDUCED AND THE INTEREST U/S 201(1A) COULD HAVE BEEN LEVIED ONLY ON THE AMOUNT OF RS.7,86,86,1I4/-(8,28,28,449/- LES S 41,42,335/~) AND THAT TOO ONLY TILL THE DATE OF PAYEE HAS FILED ITS RETURN FOR AY 2009-10. 8. THAT LD. CIT (APPEALS), JABALPUR HAS GROSSLY ERRED IN NOT ENTERTAINING THE ISSUES RAISED IN & PLEA PUT FORTH IN THE REJOINDER TO THE REMAND REPORT DATED /02/20I2. 9. THAT THE JUDICIAL PRONOUNCEMENTS RELIED UP ON BY THE APPELLANT BEFORE THE FIRST APPELLATE AUTHORITY EITHER NOT CON SIDERED OR EVEN NOT MENTIONED OR IF MENTIONED DID NOT COMMENTED UPON. 10 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 10. THAT THE FINDINGS IN THE ORDER IMPUGNED HAV E BEEN GIVEN IN REFERENCE TO THE FIRST APPELLATE ORDER DATED 11/10/ 2011 IN APPELLANT'S OWN CASE IN J/CIT(A)-I/ACIT (TDS)/456 TO 459 & 446 TO 4 55/2011-12 WITHOUT APPRECIATING THAT THE SUBMISSIONS & PLEA PUT FORTH IN THE CASE IN HAND IF NOT ENTIRELY DIFFERENT WERE NOT IDENTICAL EITHER AN D HAVING LITTLE SIMILARITY WITH THE SUBMISSION AND PLEA PUT FORTH IN THE AFORE SAID APPEALS EVEN THOUGH MOST OF THE ISSUES ARE IDENTICAL.: 7. VARIOUS GROUNDS HAVE BEEN TAKEN IN THE APPEALS B UT THE ISSUE REVOLVES AROUND TREATING THE ASSESSEE IN DEFAULT U/ S.201(1)/201(1A) OF THE I.T.ACT, 1961. 8. SHRI SUMIT NEMA, LD COUNSEL APPEARED ON BEHALF O F THE INTERVENOR AND CONTENDED THAT ACIT(TDS) WAS NOT JUSTIFIED IN H OLDING THAT CERTIFICATE ISSUED BY THE COMPETENT AUTHORITY DATED 30.6.2008 W ILL NOT HAVE RETROSPECTIVE IMPACT AND WILL HAVE NO EFFECT ON THE PAYMENT MADE PRIOR TO 30.6.2008 AND BEING ISSUED IN DEFIANCE OF PROVISION UNDER RULE 28AA, THEREFORE, RENDERED THE ASSESSEE IN DEFAULT IN DEDU CTING THE TAX AT SOURCE @ 2.12% AND @ 1% ON THE PAYMENT COVERING THE PERIOD 10.4.2008 TO 24.6.2008 AND 1.7.2008 TO 31.3.2009. HE FURTHER CO NTENDED THAT ACIT (TDS) HAS EXCEEDED HIS JURISDICTION IN REJECTING TH E ORDER PASSED UNDER SECTION 197(1) HOLDING THE SAME BEING ISSUED UNDER RULE 28AA ON THE GROUND THAT SAME BEING NOT COMMUNICATED TO THE PAYE R AND HAS BEEN PASSED IN UTTER VIOLATION OF BOARDS CIRCULAR NO.77 4 DATED 17.3.1999 WITHOUT APPRECIATING THE SETTLED POSITION OF LAW THAT AN OR DER CANNOT BE INVALIDATED AND CONTINUE TO HAVEN EFFECT UNTIL WITHDRAWN OR CAN CELLED BY A PROCESS 11 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 KNOWN TO LAW AND SUCH ORDER ONCE ISSUED, RULE 28AA( 5) MANDATED DEDUCTION OF TAX IN ACCORDANCE WITH THE CERTIFICATE SO ISSUED , THEREFORE, REMOTELY NOT CONCERNED WITH THE VALIDITY OR OTHERWI SE OF THE ORDER/CERTIFICATE. IT WAS ALSO CONTENDED THAT ACIT (TDS) GROSSLY ERRED IN TREATING THE VERY SAME ORDER PASSED U/S.197(1) AND REJECTING THE SAME BEING INVALID ON THE ONE HAND AND BEING PASSED ERRO NEOUSLY U/S.195(3) ON THE OTHER HAND, THUS, ERRONEOUSLY HELD THAT THE WHO LE OF THE PAYMENT WAS LIABLE TO TDS @ 42.23%. AS PER LD COUNSEL, THAT IN THE RETURN FILED FOR THE ASSESSMENT YEAR 2009-2010, THE PAYEE HAS DISCLOSED THE ENTIRE INCOME IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THE N ET RESULT DECLARED IN THE RETURN WAS LOSS AND THE WHOLE AMOUNT OF TDS WHICH W AS DEDUCTED BY THE ASSESSEE- NATIONAL HIGHWAY AUTHORITY OF INDIA (NHAI ) HAS BEEN REFUNDED TO THE PAYEE/DEDUCTEE M/S. SANG YONG ENGINEERING CONST RUCTION COMPANY LTD. 9. ON THE OTHER HAND, LD SR. DR SHRI ABHISHEK SUKLA RELIED ON THE ORDER PASSED BY THE LOWER AUTHORITIES AND CONTENDED THAT A CERTIFICATE ISSUED U/S.195/197 WAS OPERATING ONLY FROM THE DATE OF ISS UE AND NOT RETROSPECTIVE EFFECT. HE FURTHER CONTENDED THAT AC IT (TDS) HAD CORRECTLY CONSIDERED THE EFFECTIVENESS OF CERTIFICATE FROM TH E DATE OF ITS ISSUE AND 12 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 APPLYING THE RATE OF 42.23% ON THE SHORT DEDUCTION OF TAX AT SOURCE HOLDING THE ASSESSEE TO BE IN DEFAULT. AS PER LD SR.DR, C HARGING OF INTEREST U/S.201(1)/201(1A) IS CONSEQUENTIAL AND MANDATORY U NDER THE INCOME TAX ACT AND, THEREFORE, LD CIT(A) HAS CORRECTLY UPHELD THE ACTION OF THE AO TO CHARGE INTEREST AS PER THE PROVISIONS OF THE ACT. 10. RIVAL CONTENTIONS HAVE BEEN CONSIDERED AND RECO RDS PERUSED. WE HAVE ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENT S CITED BY LD A.R. & LD D.R BEFORE US IN THE CONTEXT OF FACTUAL MATRIX OF T HE CASE. WE HAVE ALSO PERUSED THE CERTIFICATE FOR DEDUCTION OF TAX AT LOW ER RATE ISSUED U/S.195 OF THE ACT DATED 23.7.2008. AS PER THIS CERTIFICATE, ASSESSEE WAS TO DEDUCT TDS AT 1% FROM THE GROSS AMOUNTS PAYABLE TO M/S SSAN GYONG ENGINEERING AND CONSTRUCTION COMPANY LTD., DURING FINANCIAL YEA R 2008-09. IT WAS FURTHER CLARIFIED THAT 1% TDS IS INCLUSIVE OF SURCH ARGE AND EDUCATION CESS. WE HAVE ALSO PERUSED THE CERTIFICATE ISSUED U/S.197 DATED 15.12.2010, WHEREIN, IT WAS CLARIFIED THAT CERTIFICATE WAS ISSU ED FOR FINANCIAL YEAR 2008- 09 AND VALID FOR PAYMENTS MADE FROM 1.4.2008 TO 31. 3.2009 IN RESPECT OF FOUR CONTRACTS AWARDED BY THE ASSESSEE TO M/S SSANG YONG ENGINEERING AND CONSTRUCTION COMPANY LTD. WE HAVE ALSO VERIFIED TH E ASSESSMENT ORDER FRAMED IN THE CASE OF M/S SSANGYONG ENGINEERING AND CONSTRUCTION 13 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 COMPANY LTD., U/S.143(3) FOR THE ASSESSMENT YEARS 2 007-08, 2008-09 & 2009-2010, WHEREIN, INCOME WAS ASSESSED AT LOSS AND TAX DEDUCTED AT SOURCE WAS REFUNDED TO M/S SSANGYONG ENGINEERING AND CONSTRUCTION COMPANY LTD., WITH INTEREST. IN THE INSTANT CASE, ASSESSEE IS A PROJECT IMPLEMENTATION UNIT OF NHAI. THE ASSESSEE I.E. NAT IONAL HIGHWAY AUTHORITY OF INDIA HAD ENTERED INTO CONTRACTS FOR DEVELOPM ENT OF NATIONAL HIGHWAY WITH M/S SSANGYONG ENGINEERING AND CONSTRUCTION CO MPANY LTD. THE DEDUCTEE M/S SSANGYONG ENGINEERING AND CONSTRUCTION COMPANY LTD., WITH AN INTENTION TO RECEIVE PAYMENT FROM NHAI AFTER HAV ING IT BEING SUBJECTED TO PROVISION OF TDS AS PROVIDED U/S 195 AT A MARGIN AL RATES OBTAINED ORDERS U/S 197(1) FROM ITS ASSESSING OFFICER, ITO (TDS), W ARD 2 (1), INTERNATIONAL TAXATION, NEW DELHI. THE ORDER WAS PASSED U/S.197( 1) AND ENTITLED THE DEDUCTEE TO RECEIVE PAYMENT FROM THE ASSESSEE AFTER BEING SUBJECTED TO TDS PROVISIONS U/S.195(1) AT A MARGINAL RATES @ 2.1 % FOR F.Y.2006-07, 2.112% FOR F.Y.2007-08 AND 1% FOR F.Y. 2008-09. TH E ORDERS GRANTED U/S 197(2) BEING OPERATED FOR VARIOUS F.Y. ARE DETAILED HEREIN BELOW: ORDER DATE PERIOD RATE OF TAX 26.09.06 FY 2006-07 2.1% 22.05.07 FY 2007-08 2.112% 30.06.08 FY 2008 - 09 1% 14 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 04.05.09 FY 2009- 10 0.75% 11.05.10 FY 2010-11 0,75% 11. FOR THE YEAR IN QUESTION, THE ASSESSEE WAS SUBJ ECTED TO PROVISIONS U/S 201(1) AND 201(1A) IN RESPECT OF PAYMENT MADE T O M/S SSANGYONG ENGG. & CONSTRUCTION CO LTD., BY DEEMING THE ASSES SEE IN DEFAULT. AGGRIEVED THE ASSESSEE HAS PREFERRED THE APPEAL BE FORE LD CIT(A), WHO CONFIRMED THE ORDER OF THE AO. THE DEDUCTEE/PAYEE IN THE INSTANT CASE HAD APPLIED FOR CERTIFICATE U/S.197(1) FOR LOWER DE DUCTION OF TAX IN RESPECT OF PAYMENT CREDITED/MADE VIDE APPLICATION DATED 10. 6.2008 IN FORM-13. IN RESPONSE TO WHICH CERTIFICATE OF LOWER DEDUCTION WA S ISSUED VIDE ORDER DATED 30.6.2008 MENTIONING THEREIN PERIOD OF VALIDI TY OF THE ORDER AS ASSESSMENT YEAR 2009-2010. THE ACIT(TDS) HAS QUEST IONED THE APPLICABILITY OF THE AFORESAID ORDER DATED 30.6.200 8 IN RESPECT OF PAYMENT MADE PRIOR TO DATE OF ORDER I.E. 30.6.2008 AND FURT HER HELD THAT THE ORDER U/S.197(1) HAD TO BE GIVEN EFFECT FROM THE DATE OF RECEIPT ONLY. SECTION 197(2) PROVIDES THAT WHERE ANY SUCH CERTIFICATE IS ISSUED THE PERSON RESPONSIBLE FOR PAYING SUCH UNTIL SUCH CERTIFICATE IS CANCELLED BY THE AO DEDUCT INCOME TAX AT THE RATE SPECIFIED IN SUCH CER TIFICATE OR DEDUCT NO TAX AS THE CASE MAY BE. ONCE THE CERTIFICATE ISSUED TH E PERSON RESPONSIBLE FOR 15 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 MAKING PAYMENT SHALL BE REQUIRED TO DEDUCT THE TAX AT THE RATE SPECIFIED IN THE CERTIFICATE IN RESPECT OF PAYMENT TO BE MADE OR HAS ALREADY BEEN MADE AS THE CASE MAY BE FOR THE PERIOD AS MENTIONED IN T HE CERTIFICATE. SECTION 197 AND RULE CORRESPONDING THERETO NOWHERE SUGGEST THAT THE CERTIFICATE AS ISSUED U/S.197(1) WOULD HAVE NO APPLICATION IN RESP ECT OF PAYMENTS WHICH HAVE BEEN MADE PRIOR TO ISSUANCE OF SUCH CERTIFICAT E. 12. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE H AD MADE CERTAIN PAYMENTS TO THE DEDUCTEE IN PURSUANCE TO FOUR CONTR ACTS AWARDED BY IT TO THE DEDUCTEE M/S SSANGYONG ENGG. & CONSTRUCTION CO L TD., AND WITHHELD TAX AT LOWER RATE ON THE PAYMENTS COVERING THE PERI OD 1.4.2008 TO 31.3.2009 BY VIRTUE OF CERTIFICATE FOR LOWER DEDUCT ION OF TAX U/S.197(1) DATED 30.6.2008. SUBSEQUENT TO A SHOW CAUSE NOTICE U/S.200(3) , PROCEEDINGS U/S.201(1)/(1A) HAD BEEN INITIATED DEEM ING THE ASSESSEE IN DEFAULT WITH RESPECT TO SHORT DEDUCTION OF TAX ON T HE PAYMENTS MADE PRIOR TO ISSUE OF AFORESAID CERTIFICATE AND ALSO IN RESPE CT OF WHOLE OF THE PAYMENTS MADE DURING THE FINANCIAL YEAR 2008-09 ON THE ALLEGATION OF CERTAIN DISCREPANCIES IN THE SAID CERTIFICATE. THE THRUST OF ARGUMENTS OF LD A.R. WAS THAT THE RECIPIENT OF INCOME M/S SSANGYON G ENGG. & CONSTRUCTION CO LTD., WAS NOT LIABLE TO TAX AND THE RETURN OF INCOME IN THE RELEVANT 16 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 ASSESSMENT YEAR DULY INCORPORATING THE AMOUNT RECEI VED FROM THE ASSESSEE DISCLOSED THE NET LOSS AND EVEN THE TAX ALREADY DED UCTED AT SOURCE WERE REFUNDED BY THE DEPARTMENT WITH INTEREST. ACCORDIN GLY, IT WAS PLEADED THAT ASSESSMENT OF THE RECIPIENT IS HAVING A DIRECT BEAR ING AND NEXUS TO INVOKE THE PROVISIONS OF SECTION 201(1)/201(1A) OF THE I.T .ACT, 1961. WITH RESPECT TO VALIDITY OF CERTIFICATE ISSUED U/S. 197, RELIANC E WAS PLACED ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF JAIP UR UDYOG LTGD VS CIT, 155 ITR 476. 13. AMONGST VARIOUS CONTENTIONS, THE THRUST OF ARGU MENTS OF LD A.R. WAS THAT SINCE THE RECIPIENT OF THE INCOME HAS DULY INC ORPORATED THE INCOME RECEIVED FROM THE ASSESSEE, WHICH WAS NOT TAXABLE A S PER THE ASSESSMENT FRAMED U/S.143(3), THERE WAS NO REASON TO HELD THE ASSESSEE IN DEFAULT U/S.201(1)& 201(1A) OF I.T.ACT, IN RESPECT OF INCOM E PAID BY THE ASSESSEE TO M/S SSANGYONG ENGINEERING AND CONSTRUCTION COMP ANY LTD. LD A.R. ALSO PLACED ON RECORD THE DECISION OF ITAT JAIPUR B ENCH IN THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LIMITED ORDER DATED 30 TH APRIL, 2009, WHEREIN, ASSESSEE WAS HELD TO BE NOT IN DEFAULT U/201(1)/201 (1A), WHERE THE INCOME OF THE RECIPIENT WAS NOT FOUND TO BE TAXABLE. IN T HE CASE DECIDED BY THE JAIPUR BENCH, SIMILAR PAYMENTS HAVE BEEN MADE ON W HICH INTEREST WAS 17 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 CHARGED FOR DELAY IN DEDUCTION/PAYMENT OF TDS. THE TRIBUNAL AFTER CONSIDERING ALL THE FACTS HELD THAT NO INTEREST U/S .201(1A) IS LEVIABLE ON THE ASSESSEE. FOLLOWING WAS THE PRECISE OBSERVATION OF THE BENCH: TAX DEDUCTION AT SOURCE INTEREST UNDER S ECTION 201(IA) TAX NOT PAYABLE BY PAYEE-WHERE RVPV TO WHOM TRANSMISSION C HARGES WERE PAID BY ASSESSEE HAD NO TAX LIABILITY AND. RVPN RECEIVED REFUND OF TAX, OUT OF PAYMENTS MADE BY OTHERS, THERE WAS, THEREFORE, NO L OSS OF REVENUE TO DEPARTMENT ACCOUNT OF NON-DEDUCTION OF TDS, NO INTE REST UNDER SECTION 201 (IA) W AS, THEREFORE, LEVIABLE. THE PROVISION OF THE ACT IS A MEASURE TO COMPENSATE THE REVENUE FOR DELAY IN PAYMENT OF TAXES. IN THE PRESENT CASE, RVPN TO W HOM TRANSMISSION CHARGES ARE PAID ARE ASSESSED, WITH THE SAME ASSESS ING OFFICER WITH WHOM THE ASSESSEE IS ASSESSED WITH RVPN HAS REGULARLY FILED, ITS RETURN OF INCOME FOR ASSESSMENT YEARS 20O5-06 TO 2008-09 DECL ARING NIL INCOME AND HAVING SUBSTANTIAL CARRY FORWARD, OF UNABSORBED DEPRECIATION. FOR ASSESSMENT YEARS 2005-06 AND 2006-07, RVPN IS AS SESSED UNDER SECTION 143(3) AT NIL INCOME WITH SUBSTANTI AL CARRY FORWARD OF UNABSORBED, DEPRECIATION. THUS, RVPN HAS NO TAX LIABILITY AND IT HAS BEEN ALLOWED THE REFUND OF TAX WHICH WAS DEDUCTED, AT SOURCE ON SOME OTHER PAYMENTS BY SOME OTHER PARTIES. THUS, TH ERE IS NO LOSS OF REVENUE TO THE DEPARTMENT BY NOT DEDUCTING TAX AT S OURCE BY THE ASSESSEE ON THE TRANSMISSION PAYMENT [PARA 11] IN THE PRESEN T CASE, FROM THE COPY OF THE IT RETURN FOR ASSESSMENT YEARS 2005-06 TO 20 08-09 AND COPY OF THE ASSESSMENT ORDER FOR ASSESSMENT YEARS 2005-06 AND 2006-07, IT IS NOTED THAT WHATEVER TAX WAS DEDUCTED AT SOURCE HAS BEEN C LAIMED/ALLOWED, AS REFUND TO RVPN. THEREFORE, NO INTEREST UNDER SECTIO N 201(1A) FOR EARLIER YEARS IS LEVIABLE ON THE ASSESSEE. [PARA 11] CIRCUL AR NO. 275/101/95IT(B), DT 29-1-1997 CLARIFIES THAT WHERE THE DEDUCTEE ASSE SSEE HAS PAID THE TAX, DEMAND UNDER SECTION 201 IS NOT VISUALIZED BUT THIS WILL NOT ALTER THE LIABILITY OF INTEREST UNDER SECTION 201 (1A) TILL T HE DATE OF PAYMENT OF TAXES, BY THE DEDUCTEE ASSESSEE. THIS CIRCULAR SUPPORTS THE CASE OF THE ASSESSES, INASMUCH AS THIS ' CIRCULAR VISUALISES THE LIABILITIES OF INTEREST TILL THE PAYMENT OF TAXES, BY DEDUCTEE ASSESSEE. IF DEDU CTEE ASSESSEE HAS NO LIABILITY OF PAYMENT OF TAXES NO INTEREST LIABILITY UNDER SECTION 201(1A) IS VISUALISED. IN THE PRESENT CASE, THE DEDUC TEE ASSESSEE, I.E., RVPN HAS NO LIABILITY OF TAX AND, THEREFORE, THE LIABILI TY OF INTEREST UNDER SECTION 2O1(IA) WOULD NOT ARISE SINCE NO TAX IS PAYABLE BY THE RVPN, [PARA 11.1]. IN VIEW OF ABOVE AND PARTICULARLY IN THE FAC TS OF THE PRESENT, CASE, NO INTEREST UNDER SECTION 201 (IA) IS LEVIABL E ON THE, ASSESSEE. HENCE, THIS GROUND IS ALLOWED.' 18 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 14. AFTER CONSIDERING THE ABOVE DECISION ON SIMILAR FACTS, THE COORDINATE BENCH OF ITAT INDORE IN THE CASE OF MADHYA PRADESH MADHYA KSHETRA VIDYUT VITARAN COMPANY LIMITED VS. ACIT(2012) 20 TT J 594 HAVE HELD AS UNDER: 7. FACTS OF THE INSTANT CASE ARE ALSO PARI MATERIA , WHEREIN INTEREST HAS BEEN LEVIED FOR NON DEDUCTION/DELAY IN DEPOSIT OF T DS, WHEREAS CONTENTION OF THE ASSESSEE ALL ALONG IS THAT RECIPIENT OF INCO ME HAS NO LIABILITY OF TAXES AND ALL THE ASSESSMENTS OF TRANSCO-RECIPIENT OF INCOME HAVE BEEN MADE U/S 143(3), AND 'NIL' TAX LIABILITY WAS ASSESS ED. ASSESSMENT ORDERS U/S 143(3) WHEREIN NIL INCOME TAX LIABILITY WAS ASS ESSED FOR ASSESSMENT YEAR 2005-06 TO 2008-09 WERE ALSO PLACED ON RECORD. HIS FURTHER CONTENTION WAS THAT THE ID, ASSESSING OFFICER FAILE D TO APPRECIATE THAT IN THE PRESENT CASE THERE WAS NO LIABILITY TO PAY TAX ON THE DEDUCTEE ASSESSEE. EVEN OTHERWISE UNDER SECTION 201(1A), THE INTEREST IS PAYABLE 'FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID'. THE LEGISLATURE HAS USED THE WORDS 'ACTUALLY PAID' THEREFORE, WHERE THERE IS NO LIABIL ITY TO PAY ANY TAX, THERE SHALL BE NO ACTUAL PAYMENT, RESULTANTLY, NO INTEREST IS PAYABLE U/S 2 01(1A) OF THE ACT. THEREFORE, ONCE THE LEVYING OF INTEREST ON THE ASSESSEE FOR DELAY IN DEDUCTION/ PAYMENT OF TAX IS NOT JUSTIFIED . IN THIS REGARD, WE FOUND THAT THE CBDT HAS ISSUED A CIRCULAR NO.- 275/ 201/95-IT(B) DATED JANUARY 21,1997, WHICH WAS RELIED UPON BY THE SUPRE ME COURT, IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PRIVATE LIMIT ED VS. CIT, 293 1TR 226 (S.C.) THAT 'NO DEMAND VISUALIZED U/S 201(1) OF THE INCOME-TAX ACT, 1961, SHOULD BE ENFORCED AFTER THE TAX DEDUCTOR HAS SATISFIED THE OFFICE IN CHARGE OF TDS THAT TAXED DUE HAVE BEEN PAID BY THE DEDUCTEE ASSESSEE. HOWEVER, THIS WILL NOT ALTER THE LIABILITY TO CHARG E INTEREST U/S 201(1A) OF THE ACT TILL THE DATE OF PAYMENT OF TAXES BY THE DE DUCTEE ASSESSEE OR THE LIABILITY FOR PENALTY U/S 271C OF THE INCOME-TAX AC T.' 8. IN VIEW OF THE ABOVE DISCUSSION, WE RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH BY KEEPING IN VIEW THE DECISION OF COORDINATE BENCH AS WELL AS DECISION OF HON'BLE SUPREME COUR T, DISCUSSED HEREINABOVE. THE ASSESSING OFFICER IS TO FIND OUT I F THE RECIPIENT OF INCOME HAVE NO TAX LIABILITY AS PER ASSESSMENT FRAMED U/S 143(3), THEN NO INTEREST IS LEVIABLE ON THE ASSESSEE FOR NON-' DEDUCTION/DELAY IN DEPOSIT, OF TDS. EVEN THOUGH THE ID. AUTHORIZED REPRESENTATIVE HAS ALSO ARGUED ON THE TECHNICAL NATURE OF SER VICES FOR WHICH PAYMENT WAS MADE AND APPLICABILITY OF PROV ISIONS OF SECTION 194- J/194-1 OF INCOME-TAX ACT, 1961. SINCE WE HAVE DEC IDED THE ISSUE ON THE MAIN PLEA, WE ARE NOT DELIBERATING UPON THE OTHER A SPECTS. WE DIRECT ACCORDINGLY. 19 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 15. THE HONBLE SUPREME COURT HAS DEALT THE ISSUE O F ASSESSEES LIABILITY UNDER SECTION 201(1A) IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE P. LTD VS CIT, 293 ITR 226(SC) AND HELD THAT SINCE THE DED UCTEE HAS ALREADY PAID TAX ON THEIR INCOME, RECOVERY OF SHORT AMOUNT OF TD S FROM THE DEDUCTOR AMOUNTS TO DOUBLE TAXATION OF THE SAME INCOME. HOW EVER, INTEREST FOR DELAY IN DEPOSIT OF TAX WAS HELD TO BE LEVIABLE FRO M THE DATE TAX WAS DUE TO BE DEDUCTED TILL THE DATE OF ACTUAL PAYMENT OF TAX BY THE DEDUCTEE. 16. IN THE INSTANT CASE BEFORE US, WE FOUND THAT AS SESSMENT IN THE CASE OF TO M/S SSANGYONG ENGINEERING AND CONSTRUCTION COMPANY LTD., FOR THE ASSESSMENT YEAR 2009-2010 WAS COMPLETED U/S.143(3) VIDE ORDER DATED 30.3.2011, WHEREIN, THE INCOME WAS DETERMINED AT A LOSS OF RS.56,62,17,630/-. THUS, IT IS CLEAR THAT RECIPIEN T OF INCOME FROM THE ASSESSEE WAS NOT REQUIRED TO PAY ANY TAX OF ITS LOS SES FOR THE ASSESSMENT YEAR 2009-2010, AS PER THE ASSESSMENT FRAMED U/S.14 3(3). ONCE IT IS HELD THAT THERE IS NO TAX LIABILITY ON THE RECIPIENT OF INCOME I.E. TO M/S SSANGYONG ENGINEERING AND CONSTRUCTION COMPANY LTD. , IN RESPECT OF ITS ENTIRE INCOME INCLUDING THE INCOME PAID BY THE ASSE SSEE, THERE IS NO REASON TO TREAT THE ASSESSEE IN DEFAULT U/S.201(1) OF THE ACT IN RESPECT OF PAYMENT MADE TO M/S SSANGYONG ENGINEERING AND CONSTRUCTION COMPANY LTD. SINCE IT IS FINALLY HELD THAT INCOME OF M/S SSANGYONG ENG INEERING AND 20 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 CONSTRUCTION COMPANY LTD., WAS NOT LIABLE TO TAX, T HERE IS NO REASON FOR PAYMENT OF TAX BY M/S SSANGYONG ENGINEERING AND CON STRUCTION COMPANY LTD. INTEREST UNDER SECTION 201(1A) IS BEING CHARG ED FOR DELAY IN PAYMENT OF TAX AND SAME IS CONSEQUENTIAL IN NATURE. AS PER THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BE VERAGE P. LTD(SUPRA), INTEREST UNDER SECTION 201(1A) IS PAYABLE FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS ACT UALLY PAID. IT MEANS EVEN IF THE ASSESSEE IS NOT FOUND TO BE IN DEFAULT U/S.201(1), ITS LIABILITY U/S.201(1A) WILL BE THERE AND INTEREST WILL BE PAYA BLE FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID. HOWEVER, IN A SITUATION, WHERE DEDUCTEE IS NOT REQUIRED TO PAY ANY TAX ON ITS INCOME, THERE IS NO REASON TO HOLD THE D EDUCTOR IN DEFAULT U/S.201(1A) SINCE DEDUCTEE IS NOT REQUIRED TO PAY A NY TAX ON ITS INCOME WHICH IS, IN FACT, IS A LOSS. IN THE INSTANT CASE BEFORE US, SINCE THE DEDUCTEE M/S SSANGYONG ENGINEERING AND CONSTRUCTION COMPANY LTD., IS BEING ASSESSED AT LOSS, NO TAX IS PAYABLE BY THE DEDUCTEE . ACCORDINGLY, NO OCCASION WILL ARISE FOR CHARGING INTEREST FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS ACT UALLY PAID. DIRECTION OF CHARGING OF INTEREST U/S.201(1A) IN THE INSTANT CAS E WILL NOT SERVE ANY PURPOSE INSOFAR AS THE RECIPIENT OF INCOME WAS HELD TO BE NOT LIABLE TO PAY 21 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 ANY TAX ON ITS INCOME AS PER ASSESSMENT FRAMED U/S. 143(3). THEREFORE, ANY PAYMENT OF TDS BY THE ASSESSEE IN RESPECT OF PA YMENT MADE TO DEDUCTEE M/S SSANGYONG ENGINEERING AND CONSTRUCTION COMPANY LTD WILL ENTITLE THE DEDUCTEE TO GET BACK SUCH TDS WITH INTE REST AT THE TIME OF FRAMING ASSESSMENT U/S.143(3) OF THE ACT. THUS, IT IS NOT A FIT CASE FOR HOLDING THE ASSESSEE DEDUCTOR IN DEFAULT U/S.201(1) NOR FOR INTEREST U/S.201(1A) OF THE ACT. 17. IN VIEW OF ABOVE DISCUSSION, RESPECTFULLY FOLLO WING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE P. LTD(SUPRA) AND ALSO THE DECISION OF COORDINATE BEN CH IN THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LTD(SUPRA) AND MADHYA PRADESH M ADHYA KSHETRA VIDYUT VITARAN COMPANY LIMITED(SUPRA), WE DO NOT FI ND ANY REASON TO UPHOLD THE ACTION OF LOWER AUTHORITIES FOR HOLDING THAT THE ASSESSEE IN DEFAULT U/S.201(1) AND 201(1A) OF THE ACT. 18. IN THE RESULT, APPEALS FILED BY ASSESSEE ARE AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH SEPTEMBER, 2013. SD/- SD/- (JOGINDER SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCO UNTANT MEMBER JABALPUR DATED 12 / 9/2013 22 I.T.A. NOS.67 TO 73/JAB/2013 ASSESSMENT YEAR:2009-2010 B.K.PARIDA, SR. PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , , / DR, ITAT, JABALPUR 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SR.PRIVATE SECRETARY,ITAT CAMP AT JABALPUR