M/s. D.D. Township Limited, New Delhi V. ITO, New Delhi

ITA 6802/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3109 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 16-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Competent authority
• Section: 201(1); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES B : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA.NO.6802/DEL./2014 ASSESSMENT YEAR 2009-2010 D.D. TOWNSHIP LIMITED, NEW DELHI. C/O. SHRI MANU MONGA, ADVOCATE, 133 LAWYERS CHAMBERS, DELHI HIGH COURT, SHER SHAH ROAD, NEW DELHI 110 003. PAN AACCD3034G VS. THE INCOME TAX OFFICER WARD 49(4) NEW DELHI. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI MANU MONGA, ADVOCATE FOR REVENUE : MS. ASHIMA NEB, SR. D.R. DATE OF HEARING : 05.12.2017 DATE OF PRONOUNCEMENT : 08.12.2017 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-IX, NEW DELHI, DATED 31 ST OCTOBER, 2014 FOR THE A.Y. 2009-2010, CHALLENGING THE CHARGI NG OF INTEREST OF RS.28,92,314 UNDER SECTION 201(1A) OF T HE I.T. ACT, 1961. 2 ITA.NO.6802/DEL./2014 D.D. TOWNSHIP LTD., NEW DELHI. 2. THE A.O. OBSERVED THAT ASSESSEE PAID INTEREST T O M/S. INDIABULLS FINANCIAL SERVICES LTD., AND S.E. INVEST MENT LTD., DURING F.Y. 2008-2009 WITHOUT MAKING ANY TDS AS PER SECTION 201(1) READ WITH SECTION 194A OF THE I.T. ACT, 1961 . THE A.O. ALSO REJECTED THE STATEMENT OF THE ASSESSEE THAT TD S IS NOT MADE AS THE AMOUNT INVOLVED IS ONLY SURRENDER OF INTERES T TO THESE CONCERNS. BASED ON THE JUDICIAL PRONOUNCEMENTS IN T HE CASE OF CIT-XVII VS. DEWAN CHAND 178 TAXMAN 173 (DEL.) (HC) AND HINDUSTAN COCA COLA BEVERAGES P. LTD., VS. CIT 293 ITR 226 (SC), ASSESSEE ARGUED THAT ONCE PAYEE HAD PAID THE TAX ON THE AMOUNT RECEIVED BY THEM, THEN THE ASSESSEE CANNOT B E TREATED AS ASSESSEE-IN-DEFAULT UNDER SECTION 201(1) OF THE I.T. ACT. THE ASSESSEE ON THIS ARGUMENT TRIED TO ESTABLISH THAT S INCE ADVANCE TAX HAS BEEN PAID BY THE PAYEE, NO INTEREST IS LEVI ABLE UNDER SECTION 201(1A) OF THE I.T. ACT. THE A.O. REJECTED THE CONTENTION OF THE ASSESSEE. THE A.O. NOTED THAT AS THE ASSESSE E FAILED TO DEDUCT TDS BUT SURRENDER THE EXPENDITURE ON ACCOUNT OF INTEREST PAID TO THESE CONCERNS IN ITS TAXABLE INCO ME, INTEREST LIABILITY UNDER SECTION 201(1A) IS CALCULATED AS PE R THE DETAILS 3 ITA.NO.6802/DEL./2014 D.D. TOWNSHIP LTD., NEW DELHI. MENTIONED IN PAGE-4 OF THE ASSESSMENT ORDER UP TO T HE DATE OF FILING OF THE RETURN FILED BY THE SAID TWO COMPANIE S. THE A.O. ACCORDINGLY, CALCULATED THE INTEREST LIABILITY PAYA BLE BY ASSESSEE UNDER SECTION 201(1A) AMOUNTING TO RS.28,92,314. 3. THE ASSESSEE CHALLENGED THE LEVY OF INTEREST BE FORE LD. CIT(A) AND IT WAS SUBMITTED THAT ON PLAIN READI NG OF SECTION 201(1A) IS FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID AND CON SEQUENTLY NO INTEREST BEYOND THE DATE OF ACTUAL PAYMENT OF THE T AX CAN BE CLAIMED BY THE DEPARTMENT. THE TAX COULD BE RECOVERED FROM THE ASSESSEE ONLY ONCE. IF THAT BE SO, INTEREST MUST ST OP ACCRUING, THE MOVEMENT THE AMOUNT OF TAX IS PAID TO THE REVEN UE DEPARTMENT. IT IS IMMATERIAL WHETHER THE TAX IS PAI D BY THE DEDUCTEE OR THE ASSESSEE WHO HAD MADE THE DEDUCTION . WHAT IS SIGNIFICANT IS THAT THE INTEREST WHICH IS COMPENSAT ORY IN NATURE IS PAID TO THE REVENUE DEPARTMENT TILL THE DATE THE AMOUNT OF TAX IS ACTUALLY DEPOSITED. THE LD. CIT(A), HOWEVER, CONFIRMED THE 4 ITA.NO.6802/DEL./2014 D.D. TOWNSHIP LTD., NEW DELHI. LEVY OF INTEREST AND DISMISSED THIS GROUND OF APPEA L OF ASSESSEE. HIS FINDINGS IN PARA 5.3 OF THE ORDER IS REPRODUCED AS UNDER: 5.3. THE REASON GIVEN BY AO AND SUBMISSION OF TH E APPELLANT ARE CONSIDERED. THE PROVISIONS OF TDS ARE MADE TO ARREST ANY LEAKAGE OF REVENUE. IF THE TAX IS COL LECTED BY THE DEDUCTOR AND DEPOSITED IN THE GOVERNMENT ACCOUN T, THE TAX COMES TO REVENUE OF THE STATE. IF THE DEDUCTOR DOES NOT MAKE THE DEPOSIT IN TIME, THE REVENUE IS LOST FOR T HE TIME GAP AND INTEREST U/S 201(1A) IS CHARGED TO RECOVER THE LOSS OF INTEREST FOR THE PERIOD OF DELAY AS A COMPENSATO RY MEASURE. THE ARGUMENT THAT ADVANCE TAX HAS BEEN PAI D BY THE DEDUCTEE DOES NOT SERVE THE PURPOSE OF TDS PROV ISIONS AND THE APPELLANT CANNOT TAKE A PLEA NOT TO MAKE TD S WHICH IS MANDATORY. THE APPELLANT FAILED TO PRODUCE ANY LETTER FROM THE COMPETENT AUTHORITY THAT THE APPELL ANT NEED NOT MAKE ANY TDS AS THE PAYEE HAS PAID ADVANCE TAX INCLUDING THE PARTICULAR TRANSACTION IN THE RET URN OF INCOME. AS MENTIONED BY AO, THE JUDICIAL PRONOUNCEM ENTS 5 ITA.NO.6802/DEL./2014 D.D. TOWNSHIP LTD., NEW DELHI. CITED BY THE APPELLANT DO NOT TAKE AWAY THE MANDATO RY NATURE OF TDS PROVISION AND CONSEQUENTIAL LEVY OF I NTEREST ON FAILURE TO DO SO. IN VIEW OF THIS, THE AO HAS RI GHTLY COMPUTED THE INTEREST LEVIABLE FOR THE DELAY PERIOD WHICH REQUIRES NO INTERFERENCE. HENCE, THE GROUND OF APPE AL IS DISMISSED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE NEED NOT TO MAKE ANY TDS AS THE PAYEE HAS PAID THE TAX WHICH HAVE MENTIONED IN THEIR BOOKS OF ACCOUNT. HE HAS FURTHER SUBMITTED THAT MATTER MAY BE REMANDED TO TH E A.O. FOR RE-CALCULATING THE INTEREST AGAINST THE TAXES HAVE BEEN PAID BY THE RECIPIENT. HE HAS FURTHER SUBMITTED THAT ASSESS EE HAS LOST DETAILS. THEREFORE, ASSESSEE CANNOT FILE THE DETAIL S AS TO ON WHICH DATE TAX HAVE BEEN PAID BY THE RECIPIENT. HE HAS SU BMITTED THAT THIS CAN BE VERIFIED FROM THE RECORD OF THE A.O. 5. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORD ERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT EVEN IF RE CIPIENT HAVE PAID THE TAX BUT INTEREST IS MANDATORY IN NATURE UN DER SECTION 6 ITA.NO.6802/DEL./2014 D.D. TOWNSHIP LTD., NEW DELHI. 201(1A) OF THE I.T. ACT, 1961, WHICH HAVE BEEN CORR ECTLY CHARGED BY THE DEPARTMENT. THE LD. D.R. RELIED UPON THE FOL LOWING DECISIONS. 5.1. IN THE CASE OF CIT VS. RATHI GUM INDUSTRIES ( 1995) 213 ITR 98 (RAJ.), THE HONBLE RAJASTHAN HIGH COURT HELD AS UNDER : SECTION 201 OF THE INCOME TAX ACT, 1961, PROVIDES NOT ONLY FOR COLLECTION OF TAX WHICH HAS NOT BEEN DEDUC TED BUT FOR LEVY AND CHARGE OF INTEREST ALSO. SUB-SECTI ON (1A) OF THE SAID SECTION PROVIDES FOR LIABILITY TO PAY SIMPLE INTEREST AT THE RATE OF 12 PER CENT PER ANNU M ON THE AMOUNT OF TAX FROM THE DATE ON WHICH THE TAX WA S DEDUCTIBLE TILL THE DATE THE TAX WAS ACTUALLY PAID. THE PROVISIONS FOR PAYMENT OF INTEREST ARE MANDATORY AN D AUTOMATIC AND INTEREST HAS TO BE PAID FROM THE DATE ON WHICH THE TAX WAS DEDUCTIBLE TILL THE DATE ON WHICH THE TAX IS ACTUALLY PAID. IF THE TAX HAS ALREADY BEEN P AID BY THE RECIPIENT ON SUCH INCOME THE INCOME TAX DEPARTMENT MAY NOT BE JUSTIFIED TO RECOVER THE SAID AMOUNT OF TAX, BUT SO FAR AS THE LIABILITY OF INTER EST IS CONCERNED, THAT CANNOT BE CONSIDERED TO BE NON- 7 ITA.NO.6802/DEL./2014 D.D. TOWNSHIP LTD., NEW DELHI. EXISTENT ON ACCOUNT OF DEPOSIT OF TAX BY THE RECIPI ENT AT A SUBSEQUENT OR LATER STAGE. 5.2. IN THE CASE OF CIT VS. DHANALAKSHMY WEAVING W ORKS (2000) 245 ITR 13 (HC) (KERALA), THE HONBLE KERALA HIGH COURT HELD AS UNDER : HELD : THAT THE LEVY OF INTEREST IS A COMPENSATORY MEASURE FOR WITHHOLDING TAX WHICH OUGHT TO HAVE GON E TO THE EXCHEQUER, SECTION 201(A) OF THE INCOME TAX ACT, 1961, MAKES IT CLEAR THAT THE LEVY OF INTEREST IS MANDATORY. IT IS TRUE THAT USE OF THE EXPRESSION S HALL IS NOT ALWAYS DETERMINATIVE OF THE FACT WHETHER A PROVISION IS DIRECTORY OR MANDATORY IN NATURE, BUT THE CONTEXT IN WHICH EXPRESSION SHALL IS USED IN SECT ION 201(A) MAKES IT CLEAR THAT THE LEVY IS MANDATORY. T HE PURPOSE OF THE LEVY IS TO CLAIM COMPENSATION ON THE AMOUNT WHICH OUGHT TO HAVE BEEN DEDUCTED AND DEPOSITED AND HAS NOT BEEN DONE. THE ULTIMATE LIABILITY FOR TAX BEING NOT THERE (SINCE THE FIRM W HICH RECEIVED THE INTEREST FROM THE ASSESSEE HAD PAID TA X ON SUCH INTEREST) DID NOT DILUTE THE REQUIREMENTS F OR THE NON-COMPLIANCE OF WHICH INTEREST IS LEVIED UNDER SECTION 201(1 A). 8 ITA.NO.6802/DEL./2014 D.D. TOWNSHIP LTD., NEW DELHI. 5.3. IN THE CASE OF CIT VS. PREM NATH MOTORS (PVT. ) LTD., (2002) 253 ITR 705 (DEL.) (HC), THE HONBLE DELHI H IGH COURT HELD AS UNDER: DURING THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEARS 1967-68 TO 1971-72, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD NOT PROPERLY DEDUCTED TAX AT SOURCE AS REQUIRED TO BE DONE UNDER SECTION 192 OF THE ACT AND THE SAME HAD NOT BEEN DEPOSITED WITH THE GOVERNMENT. HE NOTICED THAT TWO OF THE EMPLOYEES OF THE COMPANY HAD BEEN PAID COMMISSION AND PERQUISITES APART FROM SALARIES. THE ASSESSEE DID NOT FURNISH THE QUANTUM OF COMMISSION AND PERQUISITES ENJOYED BY THOSE EMPLOYEES IN THE ANNUAL RETURN AND TAX HAD NOT BEEN DEDUCTED AT SOURCE AS WAS REQUIRED UNDER SECTION 192 OF THE ACT ON THE QUANTUM OF COMMISSION AND PERQUISITES. ACCORDINGLY, VARIOUS AMOUNTS WERE LEVIED AS INTERES T UNDER SECTION 201(1A). THE TRIBUNAL CANCELLED THE LEVY. ON A REFERENCES : HELD, THAT THE LEVY OF INTEREST WAS JUSTIFIED. 5.4. THE LD. D.R. SUBMITTED THAT SINCE ASSESSEE FA ILED TO PRODUCE ANY MATERIAL BEFORE THE AUTHORITIES BELOW A S WELL AS 9 ITA.NO.6802/DEL./2014 D.D. TOWNSHIP LTD., NEW DELHI. BEFORE THE TRIBUNAL WITH REGARD TO PAYMENT OF TAXES BY THE RECIPIENT, THEREFORE, MATTER CANNOT BE REMANDED TO THE A.O. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. THE A SSESSEE CONTENDED BEFORE THE AUTHORITIES BELOW THAT ONCE TA X IS PAID BY BOTH THESE COMPANIES WHICH IS RECORDED IN THEIR BOO KS OF ACCOUNT, THEREFORE, ASSESSEE CANNOT BE HELD TO BE I N DEFAULT FOR PAYMENT OF THE TAX. THEREFORE, NO INTEREST IS CHARG EABLE. THE ASSESSEE FURTHER ADMITTED THAT ASSESSEE HAS NOT DED UCTED THE TDS ON ACCOUNT OF INTEREST PAID TO THESE TWO COMPAN IES. THE A.O. HAS GIVEN DETAILS AT PAGE-4 OF THE ORDER IN WH ICH THE AMOUNT OF INTEREST PAID AND TAXED UNDER SECTION 201 (1) ON INTEREST PAID AND THEN INTEREST LIABILITY IS CALCUL ATED. NO INFIRMITY HAVE BEEN POINTED OUT IN THE ORDER OF THE A.O. FOR CALCULATING THE INTEREST LIABILITY PAYABLE BY THE A SSESSEE UNDER SECTION 201(1A) OF THE I.T. ACT. THE ASSESSEE ALSO FAILED TO PRODUCE ANY ORDER FROM THE COMPETENT AUTHORITY THAT ASSESSEE NEED NOT TO MAKE ANY TDS AS THE PAYEE HAS PAID THE ADVANCE 10 ITA.NO.6802/DEL./2014 D.D. TOWNSHIP LTD., NEW DELHI. TAX INCLUDING THE IMPUGNED TRANSACTIONS IN THE RETU RN OF INCOME. IT IS WELL SETTLED LAW THAT CHARGING OF INT EREST IS MANDATORY UNDER SECTION 201(1A) OF THE I.T. ACT. TH E PROVISION FOR PAYMENT OF INTEREST ARE MANDATORY AND AUTOMATIC AND INTEREST HAS TO BE PAID FROM THE DATE ON WHICH THE TAX WAS CHARGEABLE TILL THE DATE ON WHICH TAX IS ACTUALLY P AID. EVEN IF RECIPIENT HAS PAID THE TAX, FOR THE SHORT FALL, THE INTEREST SHALL HAVE TO BE PAID BY THE ASSESSEE. THE DECISIONS RELI ED UPON BY THE LD. D.R. CLEARLY SUPPORT THE FINDINGS OF THE AU THORITIES BELOW THAT INTEREST IN QUESTION IS CHARGEABLE. THE ASSESS EE HAS FAILED TO PRODUCE ANY DETAILS BEFORE THE AUTHORITIES BELOW AS WELL AS BEFORE THE TRIBUNAL TO POINT OUT ANY ERROR IN THE C OMPUTATION OF TAX LIABILITY UNDER SECTION 201(1A) BY THE A.O. THE REFORE, IN THE ABSENCE OF ANY EVIDENCE ON RECORD, IN OUR VIEW, THE MATTER NEED NOT BE REMANDED TO THE A.O. FOR FRESH CALCULATION O F INTEREST. THE ASSESSEE MISERABLY FAILED TO MAKES OUT ANY CASE FOR INTERFERENCE. THE APPEAL OF ASSESSEE HAS NO MERIT. THE SAME IS ACCORDINGLY, DISMISSED. 11 ITA.NO.6802/DEL./2014 D.D. TOWNSHIP LTD., NEW DELHI. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRASHANT MAHARISHI) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 08 TH DECEMBER, 2017 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT B BENCH, DELHI 6. GUARD FILE. //BY ORDER// ASST. REGISTRAR : ITAT DELHI BENCHES DELHI.