The Chief Executive Officer, Shimla V. ITO (TDS), Shimla

ITA 761/CHANDI/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4531 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 25-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Section: 194C; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 761, 762, 763 & 764/CHD/2012 ASSESSMENT YEAR : 2009-10 TO 2012 13 THE CHIEF EXECUTIVE OFFICER VS. I.T.O. (TDS) HP BUS STAND MANAGEMENT SHIMLA AND DEVELOPMENT AUTHORITY MAIN BUS STAND SHIMLA (APPELLANT) (RESPONDENT) APPELLANT BY SHRI RAJESH KUMAR RESPONDENT BY: SHRI J.S. NAGAR DATE OF HEARING 4.12.2013 DATE OF PRONOUNCEMENT 31 /12/2013 O R D E R PER T.R.SOOD, A.M THESE APPEALS ARE DIRECTED AGAINST THE ORDER DATED 9.5.2012 OF CIT(A), SHIMLA. 2 IN THESE APPEALS THE ASSESSEE HAS RAISED FOLLOWIN G GROUNDS: 1 THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFI ED UPHOLDING AND SUSTAINING THE APPLICATION OF PROVISION OF SECTION 194J OF THE INCOME TAX, 1961 BY THE LD. ITO (TDS) TO THE APPELLANT THEREBY HOLDING THAT THE PROVISIONS OF SECTION 194C OF THE INCOME TAX ACT AR E NOT APPLICABLE. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFI ED IN HOLDING THAT THE INTEREST U/S 201(1A) OF THE INCOME TAX ACT, 1961 IS LEVIABLE TILL THE FILING OF INCOME TAX RETURN BY THE DEDUCTEE AND NOT TILL T HE FINANCIAL YEAR END. 3 IN ADDITION TO ABOVE THE ASSESSEE HAS ALSO TAKEN AN ADDITIONAL GROUND WHICH READS AS UNDER: 2 ADDITIONAL GROUND - THAT THE PROVISION OF SECTION 194J OR 194C ARE NOT APPLICABLE TO PAYMENTS MADE BY THE ASS ESSEE TO HRTC AS BEING IN THE NATURE THE REIMBURSEMENT OF EXPENSES A ND THEREFORE THE ORDER PASSED BY THE LD. ITO(TDS) IS BAD IN LAW. 4 ADDITIONAL GROUND THE LD. COUNSEL OF THE ASSESS EE SUBMITTED THAT THIS BEING A LEGAL ISSUE, THEREFORE, THIS GROUND SHOULD BE ADMITTED IN VIEW OF THE DECISION OF HON'B LE SUPREME COURT IN CASE OF NATIONAL THERMAL POWER CO. LTD. V S. CIT, 229 ITR 383 (S.C). 5 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE OP POSED THE SUBMISSIONS. 6 AFTER HEARING BOTH THE PARTIES WE ARE OF THE OPIN ION THAT THE ISSUE RAISED IN THE ADDITIONAL GROUND IS OF LEG AL NATURE AND ALL THE RELEVANT FACTS IN RESPECT OF THE ISSUE ARE ALREADY ON RECORD, THEREFORE, WE ADMIT THIS GROUND. 7 BRIEF FACTS OF THE CASE ARE THAT A SURVEY WAS CON DUCTED IN THE PREMISES OF THE ASSESSEE AND IT WAS NOTICED THA T THE ASSESSEE WAS MAKING HUGE PAYMENTS TO HIMACHAL PRADE SH ROAD TRANSPORT CO. LTD. (IN SHORT HRTC) ON PERIODIC AL BASIS. NO TAX WAS BEING DEDUCTED ON THE SAME. ON ENQUIRY IT WAS EXPLAINED THAT HRTC WAS PROVIDING MAN POWER AND INF RASTRUCTURE BECAUSE THE ASSESSEE DOES NOT HAVE ITS OWN INFRASTR UCTURE. FOR THIS THE ASSESSEE WAS REIMBURSING THE EXPENDITU RE INCURRED BY HRTC. THE ASSESSING OFFICER WAS NOT SATISFIED W ITH THE SAME AND OBSERVED THAT THE ASSESSEE WAS BASICALLY P AYING SERVICE CHARGES TO HRTC, THEREFORE, THE ASSESSEE W AS REQUIRED TO DEDUCT TAX U/S 194J. ACCORDINGLY HE C ALCULATED THE AMOUNT OF TAX TO BE DEDUCTED IN VARIOUS QUARTERS AN D HELD THE ASSESSEE TO BE IN DEFAULT U/S 201 & 201(1A). 3 8 ON APPEAL IT WAS MAINLY SUBMITTED THAT ITO HAS CH ARGED INTEREST U/S 201(1A) TILL THE DATE OF SERVICE WHERE AS SUCH INTEREST SHOULD HAVE BEEN CHARGED TILL DATE OF PAYM ENT OF TAXES BY THE PAYEE IN VIEW OF THE DECISION OF HON'BLE SUP REME COURT IN CASE OF HINDUSTAN COCA COLA BEVERAGE P. LTD.V CI T, 293 ITR 226 (S.C). IT WAS FURTHER SUBMITTED THAT SINCE HRTC IS REGULARLY ASSESSED TO TAX WITH CIRCLE 1, SHIMLA AND IS DULY S HOWING THE PAYMENT, THEREFORE, THE TAXES HAS BEEN PAID BY HRT C AND THE ASSESSEE WAS NOT REQUIRED TO DEDUCT ANY TAX. IN AN Y CASE THE HRTC WAS RUNNING IN LOSSES, THEREFORE, THERE IS A P RESUMPTION THAT HRTC HAS PAID THE TAXES. IT WAS ALSO SUBMITTE D THAT THE PAYMENT MADE BY THE ASSESSEE TO HRTC CANNOT BE CATE GORIZED AS PAYMENT FOR PROFESSIONAL SERVICES. 9 THE LD. CIT(A) CONSIDERED THE VARIOUS SUBMISSIONS AND DID NOT FIND FORCE IN THE SAME AND DISMISSED THE AP PEAL OF THE ASSESSEE. 10 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE RAISE D TWO FOLD CONTENTIONS. FIRSTLY IT WAS CONTENDED THAT THE ASS ESSEE AUTHORITY WAS CONSTITUTED BY THE GOVERNMENT ORDER D ATED 30.3.2000. HE REFERRED TO THE PARTS OF THE NOTIFIC ATION IN THE PAPER FOR CONSTITUTING THIS AUTHORITY THAT HOW A SE PARATE AUTHORITY WAS REQUIRED TO LOOK AFTER THE MANAGEMENT OF THE VARIOUS BUS STANDS AND HOW SEPARATE MANAGEMENT WAS APPOINTED FOR THE SAME. HE FURTHER SUBMITTED THAT BEFORE THIS MANAGEMENT OF VARIOUS BUS STANDS WERE BEING LOOKED AFTER BY THE HRTC. WHEN THE ASSESSEE AUTHORITY CAME INTO EX ISTENCE IT WAS DECIDED IN ITS MEETING ON 28.3.2002 TO PAY CERT AIN AMOUNT OF EXPENDITURE BY WAY OF REIMBURSEMENT TO HRTC BECA USE EVEN 4 AFTER CONSTITUTION OF THE AUTHORITY, THE STAFF OF T HE HRTC AS WELL AS SOME OTHER SERVICES WERE OBTAINED FROM HRTC FOR THE MANAGEMENT OF THE BUS STANDS. IN THIS REGARD HE REF ERRED TO PAGES NO. 21 TO 23 OF PAPER BOOK. THEREFORE, WHAT T HE ASSESSEE AUTHORITY HAS DONE ONLY REIMBURSED THE EXP ENDITURE INCURRED BY HRTC AND THE SAME DOES NOT ATTRACT TDS AND IN THIS REGARD HE RELIED ON THE FOLLOWING DECISIONS: 1. BANGALORE ELECTRICITY CO. LTD. VS. INCOME TAX O FFICER ITAT BANGALORE A BENCH(2012)149TTJ(BANG)102 2. BAYER MATERIAL SCIENCE (P) LTD. VS. ADDL. CIT(MU MBAI) ITAT MUMBAI A BENCH (2012)148TTJ(MUMBAI)581 3. SHARMA KAJARIA & CO. VS. DCIT ITAT KOLKATA A BEN CH (2012) 145 TTJ(KOL)1 4. THE KARNAVATI COOP. BANK LTD. VS. DEPUTY COMMISS IONER OF INCOME TAX ITAT AHMEDABAD D BENCH (2012)144TTJ(AHD )769 5. ICICI BANK LTD. VS. DCIT ITAT LUCKNOW A BENCH (2012)156 TTJ(LUCKNOW) 569 11 SECONDLY SINCE THE PAYEE I.E. HRTC HAS ALREADY P AID THE TAXES BECAUSE THEY HAVE ALREADY SHOWN THESE RECEIPT S IN THE BOOKS OF ACCOUNT AND THAT MEANS THAT THE PAYEE HAD ALREADY PAID THE TAXES AND THE ASSESSEE CANNOT BE CALLED UP ON TO PAY THE TAXES AND AT BEST THE ASSESSEE CAN BE ASKED TO PAY THE INTEREST. FOR THIS PROPOSITION, THE LD. COUNSEL OF THE ASSESSEE RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN CASE OF HINDUSTAN COCA COLA BEVERAGE P. LTD.V CIT (SUPRA). 12 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE ST RONGLY SUPPORTED THE ORDER OF ASSESSING OFFICER. 13 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THE ASSESSEE AUTHORITY CAME INTO EXISTENCE W.E.F. 1.4.2 000. MAIN 5 FUNCTION OF THE AUTHORITY WAS TO LOOK AFTER THE MAN AGEMENT OF VARIOUS BUS STANDS. BEFORE ESTABLISHING THIS AUTHO RITY THE BUS STANDS WERE BEING MANAGED BY HP ROAD TRANSPORT CORP ORATION. THE ASSESSEE AUTHORITY DID NOT HAVE FULL TIME STAFF AND INFRASTRUCTURE TO MANAGE THE BUS STANDS AND SINCE T HE BUS STANDS ARE BEING MAINLY USED BY THE HRTC IT WAS DEC IDED TO REIMBURSE HRTC ON CERTAIN BASIS IN THE MEETING OF T HE AUTHORITY HELD ON 28.3.2002 AS UNDER: 1 HEAD OFFICE 1 G.M. (O.P) FULL SALARY + ALLOWANCES 2 FA & CAO -DO- 3 DM (ADMN) -DO- 4 DDM (LEGAL) 25% THE ACTUAL EXPENDITURE ON TELEPHONE, CARS AND SALAR Y OF DRIVERS ATTACHED WITH THE GM(O.)P, FA & CAO AND DM(ADMN) WI LL BE DEBITED TO THE AUTHORITY: ALL DIVISIONS 1 SALARY OF DM 10% 2 SALARY OF DC/A.C (F&A) 10% 3 SALARY OF TWO SR. ASSISTANT 100% 4 JR. ENGINEER 50% FROM THE ABOVE IT BECOMES CLEAR THAT THE AUTHORITY HAD SOME FULL TIME STAFF FOR WHICH IT WAS PAYING ITSELF. HEL P OF HRTC WAS TAKEN IN THE FORUM OF STAFF AND CERTAIN OTHER FACIL ITIES AT PREPDEFINED PERCENTAGE OF SALARY WAS REIMBURSED E.G . SALARIES OF VARIOUS DIVISIONAL MANAGER/REGIONAL MANAGER WAS TO BE REIMBURSED @ 10%. SIMILARLY IN CASE OF JUNIOR ENG INEER 50% OF THE SALARY WAS TO BE REIMBURSED. THEREFORE, THE ASSESSEE AUTHORITY WAS BASICALLY NOT HAVING INFRASTRUCTURE A ND TAKING HELP OF HRTC AND WAS REIMBURSING THE EXPENDITURE TO THE HRTC. THE PROVISIONS OF TDS I.E. SECTION 194J ARE NOT APPLICABLE IF IT S ONLY A CASE OF REIMBURSEMENT OF EXPENDITURE. THE REASON FOR THE SAME IS VERY CLEAR. FOR EXAMPLE IF HRTC IS GIVING SALARY TO ITS DIVISIONAL MANAGER, IT WILL DE DUCT FULL TAX AND PAY THE SAME ACCORDINGLY. IF THE ASSESSEE AUTH ORITY DEDUCT THE TAX ON ACCOUNT OF SALARY TO DIVISIONAL MANAGER THEN THAT WOULD AMOUNT TO DOUBLE DEDUCTION OF TAXES OF T HE SALARY OF 6 DIVISIONAL MANAGER WHICH IS NOT POSSIBLE. THE ASSE SSEE IS NOT PAYING LUMP SUM CHARGES TO THE HRTC WHICH CAN BE CO NSTRUED AS SERVICE CHARGES. IT IS ONLY THE REIMBURSEMENT O F PRE DETERMINED RATES. SAME VIEW HAS BEEN TAKEN BY OTHER BENCHES OF THE TRIBUNAL IN FOLLOWING CASES: 1. BANGALORE ELECTRICITY CO. LTD. VS. INCOME TAX O FFICER ITAT BANGALORE A BENCH(2012)149TTJ(BANG)102 2. BAYER MATERIAL SCIENCE (P) LTD. VS. ADDL. CIT(MU MBAI) ITAT MUMBAI A BENCH (2012)148TTJ(MUMBAI)581 3. SHARMA KAJARIA & CO. VS. DCIT ITAT KOLKATA A BEN CH (2012) 145 TTJ(KOL)1 4. THE KARNAVATI COOP. BANK LTD. VS. DEPUTY COMMISS IONER OF INCOME TAX ITAT AHMEDABAD D BENCH (2012)144TTJ(AHD )769 ` 5. ICICI BANK LTD. VS. DCIT ITAT LUCKNOW A BENCH (2012)156 TTJ(LUCKNOW) 569 THEREFORE, WE ARE OF THE OPINION THAT NO TAX WAS R EQUIRED TO BE DEDUCTED U/S 194J. ACCORDINGLY WE SET ASIDE THE O RDER OF THE LD. CIT(A) AND HOLD THAT NO TAX IS DEDUCTIBLE BY TH E ASSESSEE AUTHORITY. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 31/12/2013 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31/12/2013 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR