ADIT, Dehradun V. M/s. Express Drilling Systems LLC, Dehradun

ITA 751/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86578 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 06-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Difference of opinion
• Section: 234B; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, A.M. AND SHRI GEORGE GEORGE K, J . M . ITA NO. 751 /DEL/201 3 ASSESSMENT YEAR : 200 9 - 10 ADIT, INTERNATIONAL TAXATION VS. EXPRESS DRILLING SYSTEMS LLC 13 A, SUBHASH ROAD C/O NANGIA & CO. AAYAKAR BHAWAN 75/7, RAJPUR ROAD DEHRADUN DEHRADUN 248 001 PAN: AABCE 6891 R (APPELLANT) (RESPONDENT) APPELLANT BY : - SHRI SANJEEV KUMAR, CIT, DR RESPONDENT BY : - SH. AMIT ARORA, C.A. O R D E R PER J.SUDHAKAR REDDY, AM THIS APPEAL IS FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE LD.CIT(APPEALS) - II, DEHRADUN DT. 21.11.2012 PERTAINING TO THE AY 2009 - 10 . 2. FACTS IN BRIEF : - THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A NON RESIDENT COMPANY WHICH IS ENGAGED IN THE BUSINESS OF PROVIDING SERVICES AND FACILITIES IN CONNECTION WITH EXPLORATION AND PRODUCTION OF MINERAL OILS WORLD WIDE. IT HAS ENTERED INTO AGREEMENT WITH ONGC TOGETHER WITH MEC LTD. AND SHIV - V ANI OIL AND GAS EXPLORATION SERVICES LTD. F OR RENDERING SERVICES ON A TURNKEY BASIS FOR CBM DEVELOPMENT IN CENTRAL PAR BATPUR JHARIA, JHARKHAND AND PILOT W ELLS, IN JH ARIA, BOKARO AND NORTH KARANPURA BLOCKS. IT FILED ITS RETURN OF INCOME ELECTRONICALLY ON 3 0 .9.2009 DECLARING LOSS OF RS.12,91,33,127/ - . THE ASSESSMENT WAS COMPLETED DETERMINING TOTAL INCOME AT RS.32,15,98,116/ - , BY DISALLOWING AN AMOUNT OF RS.44,97,41,4 05/ - U/S 40 A (IA) OF THE ACT, ON THE GROUND THAT TAX SHOULD ITA 751/DEL/2013 AY: 2009 - 10 EXPRESS DRILLING SYSTEMS LLC, DEHRADUN 2 HAVE BEEN DEDUCTED AT SOURCE U/S 194J OF THE ACT INSTEAD OF S.194C DONE BY THE ASSESSEE. IN OTHER WORDS, THE DISALLOWANCE WAS MADE ON THE GROUND THAT THERE WAS SHORT DEDUCTION OF TAX AT SOURCE DUE TO WRONG APPLICATION OF THE PROVISIONS OF THE ACT. THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE FIRST APPELLATE AUTHORITY ALLOWED THE APPEAL OF THE ASSESSEE. 3. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS. 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.30,31,06,928/ - WITHOUT EXAMINING THAT THE TDS MADE IS NOT AT THE CORRECT RATE AS PER CHAPTER XVII B AND HOLDING THAT THE ASSESSEE WAS ELIGIBLE FOR THE DEDUCTION AS PER THE PROVISO TO S.40(A)(IA). 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.30,31,06,928/ - WITHOUT EXAMINING THAT THE PAYMENTS WERE FTS WHEREIN TAX U/S 194J SHOULD HAVE BEEN DEDUCTED AT THE RATE SPECIFIED UNDER CHAPTER XVII OF THE IT ACT. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN HOLDING THAT INTEREST U/S 234B WAS NOT CHARGEABLE IN THIS CASE BY RELYING UPON THE DECISION OF HON BLE UTTARAKHAND HIGH COURT IN THE CASE OF MAERSK 334 ITR 79 WHERE AS THE DEPARTMENT HAS CONTESTED THE ISSUE AND HAS FILED SLP BEFORE THE APEX COURT AGAINST IN THE CASE OF JACOBS CIVIL INCORPORATED/MITSUBISHI INVOLVING SIMILAR ISSUE. 4. THE APPELLANT PRAYS FOR LEAVE TO ADD, AMEND, MODI FY OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OR BEFORE THE HEARING OF THE APPEAL. 4 . WE HAVE HEARD SH.SANJEEV KUMAR, LD.CIT, D.R. ON BEHALF OF THE REVENUE AND SHRI AMIT ARORA, THE LD.COUNSEL FOR THE ASSESSEE. 5 . ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ON PERUSAL OF ORDERS OF LOWER AUTHORITIES, MATERIAL ON RECORD AND CASE LAWS CITED, WE HOLD AS FOLLOWS. 6. W E FIND THAT DELETION OF DISALLOWANCE IS CHALLENGED BEFORE US ON THE GROUND THAT TDS IS NOT MADE AT THE CORRECT RATE AS PER THE S.1 94J . THIS ISSUE IS NO MORE RES INTEGRA. THIS BENCH OF THE TRIBUNAL IN ITS ORDER IN ITA NO.2 429/DEL/2011 FOR AY 2008 - 09 IN THE CASE OF M/S . SOLUTIONS INFORSYSTEMS PVT.LTD. VIDE ORDER DT. 12.12.2013, AT PARA 9 HAS HELD AS FOLLOWS. ITA 751/DEL/2013 AY: 2009 - 10 EXPRESS DRILLING SYSTEMS LLC, DEHRADUN 3 9. IN GROU ND NO.2 THE ISSUE IS WHETHER DEDUCTION U/S 40(A)(IA) CAN BE MADE WHEN TAX HAS BEEN DEDUCTED AT SOURCE U/S 194C INSTEAD OF 194J. THIS BENCH OF THE TRIBUNAL IN THE CASE OF HERO MOTORCORP FOLLOWED THE DECISION OF HON BLE CALCUTTA HIGH COURT AND HELD AS FOLLOWS. THE HON BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. S.K. TEKRIWAL (ITA NO. 183 OF 2012 HAS HELD AS FOLLOWS: WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT HAS TWO LIMBS ONE IS WHERE, INTER ALIA, ASSESSEE HAS TO DEDUCT TAX AND THE SECOND WHERE AFTER DEDUCTING TAX, INTER ALIA, THE ASSESSEE HAS TO PAY INTO GOVERNMENT ACCOUNT. THERE IS NOTHING IN THE SAID SECTION TO TREAT, INTER ALIA, THE ASSESSEE AS DEFAULTER WHERE THERE IS A SHORT FALL IN DEDUCTION. WITH REGARD TO THE SHORT FA LL, IT CANNOT BE ASSUMED THAT THERE IS A DEFAULT AS THE DEDUCTION IS NOT AS REQUIRED BY OR UNDER THE ACT, BUT THE FACTS IS THAT THIS EXPRESSION, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTI ON HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB SECTION(1) OF SECTION 139. THIS SECTION 40(A)(IA) OF THE ACT REFERS ONLY TO THE DUTY TO DEDUCT TAX AND PAY TO GOVERNMENT ACCOUNT. IF THERE IS ANY SHORTFALL DUE TO ANY DIFFERENCE OF OPINION A S TO THE TAXABILITY OF ANY ITEM OR THE NATURE OF PAYMENTS FALLING UNDER VARIOUS TDS PROVISIONS, THE ASSESSEE CAN BE DECLARED TO BE AN ASSESSEE IN DEFAULT U/S 201 OF THE ACT AND NO DISALLOWANCE CAN BE MADE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) ALLOWING THE CLAIM OF ASSESSEE AND THIS ISSUE OF REVENUE S APPEAL IS DISMISSED. WE FIND NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS CASE AND THEREFORE, WE REFUSE TO ADMIT THE APPEAL. ACCORDIN GLY, THE APPEAL IS DISMISSED. THE ASSESSEE FURTHER RELIED ON THE FOLLOWING DECISIONS: DCIT V. CHANDABHOY & JOSSOBHOY (ITA NO. 20/MUM/2010(MUM.) UE TRADE CORPORATION (INDIA) LTD. V. DCIT 28 TAXMANN.COM 77 (DEL.) AND OTHER CASES. AS THIS IS NOT A CASE O F NON - DEDUCTION OF TAX BUT A CASE WHERE TAX HAS BEEN DEDUCTED AT A LOWER RATE THAT TOO UNDER THE BONA FIDE BELIEF THAT DEDUCTION WAS PROPERLY MADE, WE ACCEPT THE CONTENTION OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HON BLE CALCUTTA ITA 751/DEL/2013 AY: 2009 - 10 EXPRESS DRILLING SYSTEMS LLC, DEHRADUN 4 HIGH COURT IN THE CASE OF S.K.TEKRISAL (SUPRA) THIS GROUND IS ALLOWED DELETING THE DISALLOWANCE MADE U/S 40(A)(IA). 9.1. RESPECTFULLY FOLLOWING WE ALLOW GROUND NO.2. 6.1. RESPECTFULLY FOLLOWING THE SAME WE UPHOLD THE ORDER OF THE FIRST APPELLATE AUTHO RITY AND DISMISS THIS GROUND OF THE REVENUE . 7. GROUND NO.3 IS ON LEVY OF INTEREST U/S 234B OF THE ACT . 7.1. THE LD. AR ARGUED THAT THE ISSUE RAISED IN TH IS GROUND IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE FOLLOWING DECISIONS , BESIDES THE DE CISION OF HON BLE UTTRAKHAND HIGH COURT IN THE CASE OF DIT VS. MAERSK CO. LTD. (2011) 334 ITR 79 (UTTARA.)(FB) . DIT VS. JACOBS CIVIL INCORPORATION & ANR. (2011) 330 ITR 578 (DEL.) DIT VS. NGC NETWORK ASIA LLC (2009) 313 ITR 187 (BOM) 7.2. THE LD. DR HAS PLACED RELIANCE ON THE ASSESSMENT ORDER. 7.3. NEITHER THE AO, NOR THE LD. CIT(A) HA VE NARRATED THE FACTS OF THE CASE UNDER WHICH THE ASSESSEE HAS BEEN FOUND LIABLE BY THE AO TO PAY INTEREST U/S 234B OF THE ACT. THE LD. CIT(A) HAS GIVEN RELIEF BY DELET ING THE INTEREST CHARGED U/S 234B ON THE BASIS THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE , BY THE DECISION OF HON BLE UTTRAKHAND HIGH COURT IN THE CASE OF DIT VS. MAERSK CO. LTD. (SUPRA). NOTHING HAS BEEN ARGUED ON BEHALF OF THE REVENUE THAT THE DECISION FOLLOWED BY THE LD. CIT(A) DOES NOT COVER THE ISSUE ON HAND. T HE REVENUE SUBMITS THAT IT HAS PREFERRED SLP AGAINST THE SAID DECISION OF HON BLE UTTRAKHAND HIGH COURT IN THE CASE OF DIT VS. MAERSK CO. LTD. (SUPRA). THE RATIO LAID DOWN BY THE HO N BLE UTTARAKHAND HIGH COURT IN THE CASE OF MAERSK CO. LTD. IS THAT , WHEN A DUTY WAS C A ST ON THE PAYER TO DEDUCT TAX AT SOURCE, ON FAILURE OF THE PAYERS TO DO SO, NO INTEREST U/S 234B COULD BE IMPOSED ON THE ASSESSEE. I N ABSENCE OF ANY STAY GRANTED BY THE HON BLE SUPREME COURT IN THE SPECIAL LEAVE PETITION , THE LD. CIT (A) WAS BOUND TO FOLLOW THE SAME. WE THUS DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE FIRST APPELLATE AUTHORITY . THE GROUNDS ARE REJECTED. ITA 751/DEL/2013 AY: 2009 - 10 EXPRESS DRILLING SYSTEMS LLC, DEHRADUN 5 8. IN THE RESULT THE APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH JANUARY, 2015 . SD/ - SD/ - (GEORGE GEORGE K) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 09 TH JANUARY, 2015 *MANGA COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR