M/s. Kribhco Shyam Fertilizers Ltd., Shahjahanpur V. Income Tax Officer (TDS), Bareilly

ITA 79/LKW/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6021 (ITAT-LUCKNOW)
• Duration Of Justice: 5 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 15-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PERTAIN TO ASSESSMENT YEAR
• Keywords: Tax effect
• Section: 194C; 201(1)

Judgement Text

I.T.A. NO.79 & 80/LKW/2013 I.T.A. NO.723 & 724/LKW/2015 ASSESSMENT YEAR:20 08 - 09 & 2009 - 10 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER I.T.A.NOS.79 & 80/LKW/2013 ASSESSMENT YEAR:2008-09 & 2009-10 & I.T.A.NOS.723 & 724/LKW/2015 ASSESSMENT YEAR:2008-09 & 2009-10 M/S KRIBHCO SHYAM FERTILIZERS LTD. V& PO PIPROLA, SHAHJAHANPUR. PAN:AACCK 6999 B VS. INCOME TAX OFFICER (TDS), BAREILLY. (APPELLANT) (RESPONDENT) O R D E R PER PARTHA SARATHI CHAUDHURY: THESE APPEALS PREFERRED BY THE ASSESSEE PERTAIN TO ASSESSMENT YEAR 2008-09 AND 2009-10. 2. THESE APPEALS WERE ORIGINALLY DISPOSED OF IN ITS FIRST ROUND BY THE I.T.A.T. VIDE COMMON ORDER DATED 25/06/2013. AT TH E TIME OF HEARING LEARNED A. R. OF THE ASSESSEE INVITED OUR ATTENTION THAT IN THE FIRST ROUND OF APPEAL THE I.T.A.T. HAD INADVERTENTLY OMITTED TO D ECIDE GROUNDS OF APPEAL NO. 11 & 12 OF THE GROUNDS OF APPEAL. THEREAFTER, MISC. APPLICATIONS NO.153 AND 154/LKW/2015 WERE PREFERRED BY THE ASSESSEE WHI CH WERE ALLOWED BY THE I.T.A.T. RECALLING THE ORDER TO THE EXTENT OF T HESE TWO GROUNDS I.E. GROUND NO. 11 & 12 WHICH WERE NOT ADJUDICATED UPON IN THE ORDER PASSED DATED 25/06/2013. THE GROUND NO. 11 & 12 ARE: APPELLANT BY SHRI R. B. SHUKLA, ADVOCATE SHRI ASHISH RAJ SHUKLA, ADVOCATE RESPONDENT BY SHRI RAJESH TIWARI, D.R. DATE OF HEARING 24/07/2018 DATE OF PRONOUNCEMENT 27 / 07 /201 8 I.T.A. NO.79 & 80/LKW/2013 I.T.A. NO.723 & 724/LKW/2015 ASSESSMENT YEAR:20 08 - 09 & 2009 - 10 2 GROUND NO. 11 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN HOLDING THE ENTIRE AMOUNT PAID / CREDITED AS PER FORM 16A ISSUED TO BIHAR STATE WARE HOUSING CORPORATION AS RENT & THUS HOLDING THAT SUCH ENTIRE AMOUNT IS SUBJECTED TO TDS U/S 194I IGNORING THE FACT THAT AM OUNT PAID/CREDITED TO BIHAR STATE WAREHOUSING CORPORATIO N INCLUDED RAKE HANDLING CHARGES & HANDLING & TRANSPORTATION C HARGES WHICH COULD BE SUBJECTED TO TDS U/S 194C AND NOT UN DER SECTION 194I. GROUND NO. 12: ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW LD. CIT(A) ERRED IN HOLDING THAT THE REN T SO PAID TO BIHAR STATE WAREHOUSING CORPORATION WAS SUBJECT TO TDS U/S 194I AT THE RATE UNDER THAT SECTION IGNORING THE FA CT THAT THERE WAS AN ORDER U/S 197 ISSUED BY THE ACIT(TDS), PATNA FOR DEDUCTION OF TAX AT A LOWER RATES INSTEAD OF RATES PRESCRIBED U/S 194C & 194I RESPECTIVELY. 3. THE FACTS COMING OUT FROM THE RECORD ARE THAT TH E ASSESSEE HAD PAID TO BIHAR STATE WAREHOUSING CORPORATION, PATNA TOWAR DS RENT, RAKE HANDLING AND TRANSPORTATION CHARGES. IT HAD DEDUCTED TAX IN ACCORDANCE WITH CERTIFICATE OF TDS DATED 01/08/2007 ISSUED BY DY.CI T, CIRCLE-2 (THE ASSESSING OFFICER OF BIHAR STATE WAREHOUSING CORPOR ATION, PATNA) FOR THE FINANCIAL YEAR 2007-08 U/S 197 OF THE ACT AND BY AC IT (TDS, PATNA) FOR THE FINANCIAL YEAR 2008-09 DATED 27/10/2008. THAT AS P ER INSTRUCTION NO. 7/2009 DATED 22/12/2009 THE POWER TO ISSUE CERTIFIC ATE U/S 197 OF THE ACT CAN BE EXERCISED BY TDS CIRCLE AFTER LETTER DATED 0 6/10/2008 WAS ISSUED BY CBDT TO THIS EFFECT. PRIOR TO THIS DATE THE CONCER NED ASSESSING OFFICER USED TO ISSUE SUCH CERTIFICATES UNDER SECTION 197 OF THE ACT. IT IS DUE TO SUCH CHANGE IN THE JURISDICTION OF THE OFFICERS TO ISSUE CERTIFICATE U/S 197 OF THE ACT THAT THE CERTIFICATE DATED 01/08/2007 WAS ISSUE D BY THE DCIT, CIRCLE02 (THE ASSESSING OFFICER OF BIHAR STATE WAREHOUSING C ORPORATION, PANTA) AND THE CERTIFICATE DATED 27/10/2008 WAS ISSUED BY THE ACIT (TDS). THAT IN EFFECT U/S 197 OF THE ACT CERTIFICATES WERE ISSUED BY THE REVENUE AUTHORITIES TO THE ASSESSEE DIRECTING THE RATE AT WHICH THE TDS WERE TO BE DEDUCTED. IN I.T.A. NO.79 & 80/LKW/2013 I.T.A. NO.723 & 724/LKW/2015 ASSESSMENT YEAR:20 08 - 09 & 2009 - 10 3 FINANCIAL YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR 2007-08 THE DCIT, PATNA HAD ISSUED A GENERAL CERTIFICATE OF LOW TDS DATED 2 9/06/2006 ON THE APPLICATION MADE BY BIHAR STATE WAREHOUSING CORPORA TION U/S 197(1) OF THE ACT FOR DEDUCTION OF TDS @5% IN CASE OF PAYMENT OF RENT U/S 194I AND @0.5% IN CASE OF PAYMENT BY WAY OF CONTRACTS. THER E IS NO DISPUTE FOR THIS YEAR. THE DEPARTMENT HAS ACCEPTED THE TDS DEDUCTE D FOR THE ASSESSMENT YEAR 2007-08. THE ONLY ISSUE HAS CROPPED UP FOR AS SESSMENT YEAR 2008-09 AND 2009-10 ON THE BASIS OF CERTIFICATE ISSUED TO T HE ASSESSEE, THE TAX WAS DEDUCTED FROM THE PAYMENTS TO BIHAR STATE WAREHOUSI NG CORPORATION TOWARDS RENT OF WAREHOUSE U/S 194I AND TOWARDS CONT RACT RECEIPT ON ACCOUNT OF HANDLING AND TRANSPORTATION CHARGES AND RAKE HANDLING CHARGES U/S 194C OF THE ACT AS UNDER: NATURE OF PAYMENTS: F.Y. 2007-08/ A.Y. 2008-09 AMOUNT TDS AS PER CERTIFICATE OF DY. CITCIR. 2, PATNA SECTION WAREHOUSING CHARGES 37007 1906 1941 HANDLING & TRANSPORT CHARGES 4185092 86216 194C RAKE HANDLING CHARGES 136456 702 194C TOTAL. 4358555 88824 F.Y. 2008-09/ A.Y. 2009-10: TDS AS PER CERTIFICATE OF ACIT (TDS), PATNA SECTION WAREHOUSING CHARGES: 1443398 134376 1941 HANDLING & TRANSPORT CHARGES. 1472065 7580 194C RAKE HANDLING CHARGES. 990954 10620 194C TOTAL. 3906417 152576 THE DEDUCTEE I.E. BIHAR STATE WAREHOUSING CORPORATI ON HAS PAID ALL THE TAXES IN RESPECT OF PAYMENTS RECEIVED FROM THIS ASS ESSEE AS PER ITS ASSESSMENT ORDER DATED 12/12/2011 ANNEXED AT PAGE 4 OF THE PAPER BOOK. THUS THERE WAS NO TAX DEFAULT U/S 201(1) OF THE ACT SINCE IT WAS DIRECTLY PAID BY THE DEDUCTEE. I.T.A. NO.79 & 80/LKW/2013 I.T.A. NO.723 & 724/LKW/2015 ASSESSMENT YEAR:20 08 - 09 & 2009 - 10 4 DESPITE THE CERTIFICATE U/S 197(1) OF THE ACT AND T HE FACT THAT THE DEDUCTEE HAD PAID ALL TAXES AS PER ITS RETURN OF INCOME (COP Y OF ASSESSMENT ORDER ANNEXED AS A-8 IN THE PAPER BOOK) AND ALSO DESPITE THE FACT THAT SPECIFIC RATES OF DEDUCTION MENTIONED IN THAT CERTIFICATE, T HE INCOME TAX OFFICER (TDS) HELD THE ASSESSEE IN DEFAULT FOR TAX U/S 201( 1) IN REGARD TO SHORT DEDUCTION OF TAX ON THE ENTIRE PAYMENTS MADE TO BIH AR STATE WAREHOUSING CORPORATION ON THE PRESUMED LIABILITY U/S 194I OF T HE ACT AND CHARGED CONSEQUENTIAL INTEREST. SINCE ACCORDING TO THE ITO (TDS) ALL THE PAYMENTS INCLUDING HANDLING AND TRANSPORT CHARGES AND RAKE H ANDLING CHARGES ON ACCOUNT OF RENT LIABLE FOR TDS DEDUCTION U/S 194I R EGARDLESS OF ITS TREATMENT AS CONTRACT RECEIPTS LIABLE TO TDS U/S 194C AS PER CERTIFICATE U/S 197 OF THE ACT. THE ITO (TDS) WORKED OUT THE LIABILITIES AND MADE THE ADDITIONS AND AGAINST THOSE ADDITIONS THE ASSESSEE WENT IN APPEAL BEFORE LEARNED CIT(A). 4. LEARNED A. R. OF THE ASSESSEE SUBMITTED THAT WIT HOUT GOING INTO MERITS OF THE CASE WITH REFERENCE TO TDS AS PER CER TIFICATE U/S 197 OF THE ACT OR THE NATURE OF PAYMENTS LIABLE TO TDS U/S 194C OF THE ACT, THE LEARNED CIT(A) SUMMARILY REJECTED THE APPEAL AND HAD UPHEL D THE VERSION OF INCOME TAX OFFICER (TDS), BAREILLY REGARDING THE AP PLICABILITY OF SECTION 194I FOR ALL THE PAYMENTS MADE. AT THE OF HEARING BEFOR E US, LEARNED A. R. VEHEMENTLY ARGUED THAT ONCE AS PER THE STATUTE I.E. SECTION 197 OF THE ACT, CERTIFICATE HAS BEEN ISSUED THEN THEY ARE LIABLE TO DEDUCT THE TDS ONLY AS PER THAT CERTIFICATE AND NOT ON ANY HIGHER RATE. T HE GRIEVANCE OF THE ASSESSEE IS THAT LEARNED CIT(A) HAS NOT DEALT WITH THE ISSUE OF CERTIFICATE U/S 197 NOR ON MERITS WHERE THE CERTIFICATE ALREADY ISS UED STATES THAT ONLY WAREHOUSING CHARGES TDS TO BE DEDUCTED U/S 194I WHE REAS FOR HANDLING AND TRANSPORT CHARGES THE TDS TO BE DEDUCTED IS ON THE BASIS OF SECTION 194C OF THE ACT. THE LEARNED CIT(A) WAS ABSOLUTELY SILENT ON THESE ISSUES AND HAS SUMMARILY ACCEPTED THE VERSION OF THE ASSES SING OFFICER. I.T.A. NO.79 & 80/LKW/2013 I.T.A. NO.723 & 724/LKW/2015 ASSESSMENT YEAR:20 08 - 09 & 2009 - 10 5 5. LEARNED D. R., ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE PERUSED THE CASE RECORDS, HEARD THE RIVA L SUBMISSIONS AND ANALYZED THE FACTS AND CIRCUMSTANCES OF THE CASE. THAT ON GENERAL READING OF PROVISIONS OF SECTION 197 OF THE ACT, IT AUTHORI ZES THE ASSESSING OFFICER TO PRESCRIBE DEDUCTION OF TDS AT ANY LOWER RATE PROVID ED THE FACTS AND CIRCUMSTANCES JUSTIFY SUCH DEDUCTION. CLAUSE (2) OF SECTION 197 OF THE ACT FURTHER STATES THAT WHEN SUCH CERTIFICATE IS GIVEN, THE PERSON RESPONSIBLE FOR PAYING THE INCOME SHALL, UNTIL SUCH CERTIFICATE IS CANCELLED BY THE ASSESSING OFFICER, DEDUCT INCOME TAX AT THE RATES SPECIFIED I N SUCH CERTIFICATE OR DEDUCT NO TAX, AS THE CASE MAY BE. IN THIS CASE OF THE AS SESSEE, WE FIND IN THE PAPER BOOK A CHART IS ANNEXED WHERE THE ASSESSEE HA S DEDUCTED THE RATES AS PROVIDED TO THEM BY THE CERTIFICATE ISSUED BY TH E REVENUE AUTHORITIES U/S 197 OF THE ACT. THE RELEVANT CERTIFICATE FOR ASSESS MENT YEAR 2008-09 AND 2009-10 ARE ANNEXED IN THE PAPER BOOK FILED BEFORE US AT PAGES 6 & 7. LEARNED D. R. DID NOT BRING OUT ANY FACTS WHEREBY I T CAN BE SHOWN OR DEMONSTRATED THAT AFTER ISSUANCE OF CERTIFICATE U/S 197 THE DEPARTMENT HAS AGAIN CANCELLED IT. IN ABSENCE OF SUCH ACTION, THE RATES PRESCRIBED IN THE CERTIFICATE ISSUED U/S 197 OF THE ACT, THE DEDUCTOR OR THE PERSON RESPONSIBLE FOR PAYING HAS TO APPLY THE RATES AS PER THAT CERTI FICATE AS PROVIDED U/S 197 CLAUSE (2) OF THE ACT. WE FURTHER FIND THE LEARNED CIT(A) IS ABSOLUTELY SILENT UPON THE APPLICABILITY OF SECTION 197 WHERE HE HAS NOT AT ALL ADJUDICATED ON MERITS WITH REGARD TO WHY IN ALL CASES OF DEDUCTION ONLY 194I WILL BE APPLICABLE. THE LEARNED CIT(A) HAS SUMMARILY ACCEP TED THE VERSION OF THE INCOME TAX OFFICER (TDS). IN OUR UNDERSTANDING THE FACTS ON RECORD CLEARLY DEMONSTRATE THAT THE ASSESSEE HAS DEDUCTED TDS AS P ER THE DIRECTION OF THE DEPARTMENT IN FORM OF SECTION 197 CERTIFICATE ISSUE D BY THE REVENUE AUTHORITIES. IT IS NOT DISPUTED BY THE DEPARTMENT. THE RELEVANT RETURNS HAVE ALREADY BEEN FILED. THERE IS NO DEFAULT IN PA YING OF TAXES AND I.T.A. NO.79 & 80/LKW/2013 I.T.A. NO.723 & 724/LKW/2015 ASSESSMENT YEAR:20 08 - 09 & 2009 - 10 6 THEREFORE, THERE IS NO LOSS TO THE REVENUE. EVEN TH E DEDUCTEE HAS FILED THEIR RETURNS AND THE TAX EFFECT CLEARLY COMPLIED WITH. READING PROVISIONS OF SECTION 197(1) AND (2) TOGETHER THE ACTION OF THE A SSESSING OFFICER IS UNJUSTIFIED AND THE ADDITION THEREOF ACQUIRES THE N ATURE OF BEING ARBITRARY, UNJUDICIOUS, PERVERSE AND BAD IN LAW THEREFORE, LIA BLE TO BE DELETED. IN VIEW OF THE MATTER, WE SET ASIDE THE ORDER OF LEARNED CI T(A) ON THESE ISSUES AND ALLOW THE APPEAL OF THE ASSESSEE. THESE APPEALS I. E. I.T.A. NO.79 AND 80 REGARDING GROUND NO. 11 & 12 PERTAINING TO ASSESSME NT YEARS 2008-09 AND 2009-10 ARE ALLOWED AND OTHER APPEALS I.E. I.T.A. N O.723 AND 724 FOR SAME ASSESSMENT YEARS AND ON SAME ISSUES, FACTS AND CIRC UMSTANCES THEREFORE, BECOMES INFRUCTUOUS. 7. IN THE RESULT, GROUNDS 11 & 12 OF THE APPEALS IN I.T.A. NO.78 & 79 FOR ASSESSMENT YEAR 2008-09 AND 2009-10 ARE ALLOWED AND APPEALS IN I.T.A. NO.723 & 724 BECOMES INFRUCTUOUS HENCE, DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 27/07 /2018) SD/. SD/. ( T. S. KAPOOR ) (PART HA SARATHI CHAUDHURY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:27/07/2018 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T.