Bangalore Metro Rail Corporation Ltd., Bangalore V. DCIT, Bangalore

ITA 868/BANG/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9512 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 08-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 09-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P RENUGADEVI
• Assessee Lawyers: SHREEHARI KUTSA
• Keywords: Period of limitation
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH B, BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K.GARODIA, ACCOUNANT MEMBER ITA NOS.868 TO 874(BANG) 2015 (ASSESSMENT YEARS : 2006-07 TO 2013-14) BANGALORE METRO RAIL CORPORATION LTD., 3 RD FLOOR, BMTC COMPLEX, K H ROAD, SHANTHINAGAR, BANGALORE -560 027 TAN NO.BLRB00878D APPELLANT VS THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-16(1), 4 TH FLOOR, HMT BHAVAN, BANGALORE RESPONDENT ASSESSEE BY : SHRI SHREEHARI KUTSA, CA REVENUE BY : SMT. P. RENUGADEVI, JCIT DATE OF HEARING : 28-06-2016 DATE OF PRONOUNCEMENT : 0 5-08-2016 O R D E R PER BENCH ALL THESE APPEALS ARE FILED BY THE ASSESSEE FOR TH E ASSESSMENT YEARS 2006-07 TO 2013-14. SINCE COMMON ISSUES ARE INVOLV ED IN ALL THESE APPEALS, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD ENTERED INTO AN AGREEMENT WITH M/S KARNATAKA INDUSTRIAL AREAS DEVEL OPMENT BOARD ( KIADB ) FOR THE PURPOSE OF ACQUISITION OF LAND FOR PHASE- I OF THE METRO RAIL PROJECT TOWARDS CONSTRUCTION OF PIERS/PORTALS VIA D UCT ACROSS THE PRECINTS OF BENGALURU REGION AND THE CHARGES PAYABLE TO KIADB W AS FIXED AS 21%. THE ASSESSEE HAD PAID AN AMOUNT OF RS.1,225.00 CRORES T O M/S KIADB DURING ITA NOS.868 TO 874(BANG)2015 2 THE SPAN OF SEVEN YEARS FOR WHICH THE APPEALS ARE B EING DECIDED BY US. SUBSEQUENTLY, THE RATE OF SERVICE CHARGES WAS REVIS ED TO 4% VIDE COPY OF ORDER DATED 21-06-2012 AND A HIGH POWERED COMMITTEE CONSTITUTED BY THE GOVERNMENT OF KARNATAKA HELD THAT 4% RATE OF SERVIC E CHARGES IS ON HIGHER SIDE AND THAT THE FINANCE DEPARTMENT SHOULD WORK OU T MODALITIES FOR MEETING THE ADMINISTRATIVE EXPENSES OF KIADB TOWARD S LAND ACQUISITION FOR THE ASSESSEE. UNDER THESE FACTS, THE AO PASSED THE ORDERS U/S 201(1A) FOR FOUR YEARS AND U/S 201(1) AND 201(1A) FOR THREE YEA RS. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD . CIT(A) AND IT WAS HELD BY THE LD. CIT(A) AS PER THE IMPUGNED ORDERS THAT THE ASSESSEE IS ELIGIBLE FOR PART RELIEF AND THE DEMAND FOR TDS SHOULD BE RESTR ICTED TO SERVICE CHARGES TO BE COMPUTED @T 4% INSTEAD OF 21% COMPUTED BY THE AO. 3. IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE B EFORE US THAT THE AGREEMENT BETWEEN THE ASSESSEE AND THE KIADB DATED 20-06-2005 IS AVAILABLE ON PAGE NO.1 TO 8 OF THE PAPER BOOK AND I N PARTICULAR, OUR ATTENTION WAS DRAWN TO CLAUSE-1(II) OF THE AGREEMEN T AVAILABLE ON PAGE-2 OF THE PAPER BOOK, AS PER WHICH THE ASSESSEE COMPANY W AS REQUIRED TO PAY ESTABLISHMENT CHARGES AT 10%, AUDIT CHARGES AT 1% A ND BOARDS SERVICE CHARGES AT 10% OVER THE TENTATIVE COST OF LAND. HE ALSO SUBMITTED THAT THE ORDER PASSED BY KARNATAKA GOVERNMENT ON 21-06-2012 REVISING THE RATE TO 4% BEING THE SERVICE CHARGE, ADMINISTRATION CHARGE, AUDIT CHARGE PAYABLE BY THE ASSESSEE TO KIADB AT AS AGAINST EARLIER 21% IS AVAILABLE ON PAGE 63-64 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT THE F INDING OF THE CIT(A) IS INCORRECT BECAUSE NO INCOME HAS ACCRUED IN THE HAND S OF THE DEDUCTEE, SO ITA NOS.868 TO 874(BANG)2015 3 NO TDS SHOULD BE DEDUCTED. HE ALSO SUBMITTED THAT R ELIANCE IS BEING PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS; I) E.D SASON & CO., LTD VS CIT 26 ITR 27(SC) II)SHOORJI VALLABHDAS & CO VS CIT 46 ITR 144(SC) III) CIT VS BIRLA GWALIOR PVT.LTD 89 ITR 266(SC) IV) CIT VS WEXCEL INDUSTRIES LTD., 358 ITR 295(SC) V) STATE BANK OF TRAVANCORE VS CIT 158 ITR 102(SC) VI) MORVI INDUSTRIES LTD., VS CIT 82 ITR 835 (SC) VII) GODHARA ELECTRICITY CO.LTD.,CIT 225 ITR 746 (S C) VIII) M/S P.G & W.SAWOO PV.LTD., VS ACIT IN CIVIL A PPEAL NO.4091 OF 2016 ARISING OUT OF SLP (CIVIL) NOS.6384 OF 2009 DA TED 19/04/2016. RELIANCE ON THESE JUDGMENTS WAS PLACED IN SUPPORT O F THIS CONTENTION THAT THE INCOME TAX IS A TAX ON INCOME AND INCOME H AS TO BE REAL INCOME ONLY AND NOT HYPOTHETICAL INCOME. 4. AT THIS JUNCTURE, THE BENCH WANTED TO KNOW ABOU T THE DETAILS OF PAYMENTS MADE BY THE ASSESSEE TO KIADB AND IN REPLY , IT WAS SUBMITTED THAT THESE DETAILS ARE AVAILABLE ON PAGE-9 OF THE P APER BOOK. FURTHER THE BENCH WANTED TO KNOW AS TO WHETHER THIS PAYMENT OF RS.1,225.00 CRORES PAID BY THE ASSESSEE COMPANY TO M/S KIADB DURING TH IS PERIOD OF SEVEN YEARS IS ON ACCOUNT OF COST OF LAND OR VARIOUS SERV ICE CHARGES OR BOTH AND IN REPLY, IT WAS SUBMITTED BY THE LD. AR OF THE ASSESS EE THAT SUCH BREAK-UP IS NOT READILY AVAILABLE. THEREAFTER, HE SUBMITTED THA T IN FACT, NO PART OF THIS AMOUNT WAS CONSIDERED AS INCOME BY KIADB AND THEREF ORE, THERE IS NO REQUIREMENT OF DEDUCTING TDS ON ANY PART OF THIS AM OUNT. HE ALSO DRAWN OUR ATTENTION TO PARA-15 OF THE WRITTEN SUBMISSION, WHEREIN IT HAS BEEN ITA NOS.868 TO 874(BANG)2015 4 SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT AS PER THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE C ASE OF CIT VS BHARAT HOTELS LIMITED IN ITA NO.393/2009 IT HAS BEEN HELD THAT WHERE NO TIME LIMIT IS PRESCRIBED FOR PASSING AN ORDER, THE SAME HAS TO BE PASSED WITHIN A REASONABLE TIME AND FOR THE PURPOSE OF ORDERS U/S 2 01 OF THE IT ACT, THE REASONABLE TIME SHOULD BE FOUR YEARS FROM THE END OF FINANCIAL YEAR IN QUESTION. SINCE ALL THESE ORDERS WERE PASSED IN THE MONTHS OF MARCH/APRIL, 2014 THEN AT LEAST FOR THE FINANCIAL YEARS ENDING B EFORE 31-03-2010, ALL THESE ORDERS OF THE AO SHOULD BE HELD TO BE TIME BA RRED. 5. AS AGAINST THIS, LD. DR OF THE REVENUE SUPPORTED THE ORDER OF THE LD. CIT(A). 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS. FIRST OF ALL, WE REPRODUCE THE FINDING OF THE LD.CIT(A) WHICH ARE CONTAINED IN PARA-4.3 AND 5 OF HIS ORDER.. 4.3 FROM THE CITED JUDICIAL DECISIONS, IT IS EVID ENT THAT INTEREST U/S 201(1A) IS TO BE LEVIED IF AN ASSESSEE DOES NOT DEDUCT THE WHOLE OR PART OF TAX. IN THE INSTANT CA SE, SINCE THE APPELLANT DID NOT DEDUCT ANY TAX FROM PAYMENTS MADE TO KIADB FOR SERVICES RENDERED BY IT TO THE APPELLA NT, IT IS HELD THAT THE AO WAS RIGHT IN LEVYING INTEREST U/S 201(1A) OF THE ACT, ON THE APPELLANT. HENCE APPEAL ON THIS GR OUNDS FAILS. 5. THE OTHER ISSUE IN THE APPEAL IS WHETHER THE AO WAS CORRECT IN HOLDING 21% AS THE RATE PAID BY THE APPE LLANT TO KIADB. IN THIS CONTEXT, IT IS NOTED THAT THE APPE LLANT HAD ITA NOS.868 TO 874(BANG)2015 5 ENTERED INTO AGREEMENT M/S KIADB ON 20-06-2005 WHIC H PROVIDED THAT A RATE OF 21% BE CHARGED BY KIADB ON THE APPELLANT FOR ACQUISITION AND HANDING OVER OF LAND. THE AGREEMENT GOT REVISED VIDE GOVT. ORDER DATED 21-06- 2012 WHEREBY A RATE OF 4% WAS AGREED UPON VIDE GOVT. ORD ER DATED 21-06-2012, THE AO IS DIRECTED TO ADOPT 4% AS RATE PAID/PAYABLE TO KIADB BY THE APPELLANT. 7. FROM THE ABOVE PARAS OF THE ORDER OF THE LD. CI T(A), IT COMES OUT THAT THE LD. CIT(A) HELD THAT INSTEAD OF FIXING THE LIABILITY OF TDS ON 21% TO BE CHARGED BY THE KIADB FROM THE ASSESSEE FOR VARI OUS SERVICES, THE LIABILITY SHOULD BE RESTRICTED TO 4% AS PER THE REVISION ORDE R PASSED BY THE GOVERNMENT OF KARNATAKA ON 21-06-2012. IT IS SEE N THAT THE AO HIMSELF HAS PASSED ORDER U/S 201(1A) ONLY IN RESPECT OF FIR ST FOUR YEARS I.E. ASSESSMENT YEARS 2006-07 AND 2008-09 TO 2010-11. H ENCE IT IS SEEN THAT FOR FINANCIAL YEARS ENDING ON OR BEFORE 31-03-2010, NO ORDER HAS BEEN PASSED BY THE AO U/S 201(1) OF THE IT ACT AND FOR T HESE YEARS, HE HAS PASSED ORDERS U/S 201(1A) ONLY. NOW, WE HAVE TO DECIDE A S TO WHETHER THESE ORDERS U/S 201(1A) ARE TIME BARRED OR NOT BECAUSE THESE WE RE PASSED AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEA RS. IN THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT RENDERED IN T HE CASE OF CIT VS BHARAT HOTELS LIMITED (SUPRA), IT WAS HELD THAT THE ORDER PASSED U/S 201(1) AND 201(1A) OF THE ACT ON 28.01.2008 FOR THE AY: 2002-0 3 IS BARRED BY LIMITATION AS THE PERIOD OF LIMITATION WOULD BE FOUR YEARS FRO M THE END OF THE FINANCIAL YEAR IN QUESTION. RESPECTFULLY FOLLOWING THIS JUDGM ENT, WE HOLD THAT IN THE PRESENT CASE ALSO, THE ORDERS PASSED AFTER THE END OF THE FINANCIAL YEAR IN ITA NOS.868 TO 874(BANG)2015 6 QUESTION IS TIME BARRED AND HENCE THE SAME IS QUASH ED. SUCH TIME BARRED ORDERS ARE FOUR I.E AY: 2006-07, 2008-09, 2009-10 A ND 2010-11. REMAINING THREE ORDERS FOR AY: 2011-12 TO 2013-14 A RE NOT TIME BARRED EVEN AS PER THIS JUDGMENT AS THESE ORDERS ARE PASSED IN THE MONTH OF MARCH & APRIL 2014.I.E BEFORE EXPIRY OF FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN QUESTION. ACCORDINGLY, WE QUASH THESE FOUR ORDERS AS TIME BARRED FOR AY: 2006-07, 2008-09, 2009-10 AND 2010-11. 8. REGARDING THE SECOND CONTENTION THAT NO INCOME HAS ACCRUED TO THE DEDUCTEE, WE ARE OF THE CONSIDERED OPINION THAT THE PAYMENT WAS MADE BY THE ASSESSEE TO KIADB AND SINCE THE PAYMENT OF RS.1 ,225.00 CRORES TO KIADB IS NOT SPECIFIED TO BE ON ACCOUNT OF LAND AC QUISITION ONLY, IT HAS TO BE HELD THAT SUCH PAYMENT BY THE ASSESSEE TO KIADB IS A COMBINED PAYMENT AND IT ALSO INCLUDED SERVICE CHARGES AND IN THAT SI TUATION, WHETHER THE INCOME IS ACCOUNTED FOR BY THE PAYEE I.E. KIADB IS NOT RELEVANT BECAUSE IT IS SETTLED PRINCIPLE OF LAW BY NOW THAT BOOK ENTRY IS NOT DECISIVE AND SINCE EVEN NOW, 4% SERVICE CHARGES IS PAYABLE AND PAYMENT WAS MADE BY THE ASSESSEE COMPANY TO KIADB FOR AN AMOUNT IN AN EXCESS OF THAT 4 %, THE ASSESSEE WAS REQUIRED TO DEDUCT TDS AND IF THE ASSESSEE OR THE D EDUCTEE FELT THAT NO TDS OR LOWER TDS WAS DEDUCTIBLE FOR ANY REASON, THEY SH OULD HAVE APPROACHED THE PAYEE I.E. KIADB TO GRANT A CERTIFICATE FOR NO DEDUCTION OF TDS OR LOW DEDUCTION OF TDS AND SINCE THIS WAS NOT DONE BY THE ASSESSEE OR THE PAYEE, THIS CONTENTION IS NOT ACCEPTABLE THAT NO TDS WAS D EDUCTIBLE BY THE ASSESSEE COMPANY. CONSIDERING ALL THESE FACTS AND IN VIEW OF OUR ABOVE DISCUSSION, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN ITA NOS.868 TO 874(BANG)2015 7 ANY OF THE YEARS OUT OF HIS ORDER FOR THREE YEARS B EING AY: 2011-12 TO 2013- 14. 8. IN THE RESULT, FOUR APPEALS OF THE ASSESSEE FOR AY: 2006-07 & 2008- 09 TO 2010-11 ARE ALLOWED AND REMAINING THREE APPEA LS FOR AY: 2011-12 TO 2013-14 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- SUNIL KUMAR YADAV ) ( A .K. GARODIA ) JUDICAL MEMBER ACCOUNTANT MEMBER BANGALORE: D A T E D : 05.08.2016 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER, AR, ITAT, BANGALORE ITA NOS.868 TO 874(BANG)2015 8 1. DATE OF DICTATION .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P. S. .. 4 DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE ORDER COMES BACK TO THE SR. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO . 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER DOES FOR X EROX & ENDORSEMENT . 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 11 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER. 12 THE DATE ON WHICH THE FILE GOES TO THE DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER 13 DATE OF DISPATCH OF ORDER