M/S BHAGWATI HOTESL & RESORTS LTD., Jaipur V. ITO, Jaipur

ITA 909/JPR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4903 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 10-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Keywords: Opportunity of being heard
• Section: 201(1)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI B.R. JAIN AND SHRI KUL BHARAT) ITA NO. 909/JP/2012 ASSESSMENT YEAR : 2005-06 PAN: AABCB 9972 G M/S. BHAGWATI HOTELS & RESORTS LTD. VS. THE ITO F-214, ROAD NO. 10, VKI AREA, JAIPUR TDS II, J AIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIJAY GOYAL DEPARTMENT BY: SHRI D.C. SHARMA DATE OF HEARING: 22-08-2013 DATE OF PRONOUNCEMENT: 22-08-2013 ORDER PER KUL BHARAT, JM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. LD. CIT(A) -III, JAIPUR DATED 11-10-2012 FOR THE ASSESSMENT YEAR 2 005-06 WHEREIN THE ASSESSEE HAS RAISED THE GROUNDS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING THE FINDING OF ITO, TDS-2, JAIPUR THAT THE ASSESSEE COMPANY WAS LIABLE TO DEDU CT THE TDS ON THE AMOUNT OF RS. 4,35,00,000/- PAID TO M/S SUZLON ENER GY LTD FOR SUPPLY OF WIND TURBINE GENERATOR AND RS. 23,00,000/- CREDI TED TO THE ACCOUNT OF SUZLON DEVELOPERS PRIVATE LIMITED TOWARDS ITS CO NTRIBUTION FOR INFRASTRUCTURE AND EVACUATION FACILITIES AND ERRED IN DETERMINING THE SHORT DEDUCTION OF TDS BY RS. 9,57,678/- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT (A) ERRED IN REJECTING THE ALTERNAT IVE PRAYER OF THE ASSESSEE STATING THAT THE PAYEE HAS INCLUDED THE EN TIRE RECEIPTS DURING THE RELEVANT AY FOR THE PURPOSE OF INCOME TAX, THER EFORE THE ALLEGED SHORT DEDUCTION OF TDS SHOULD NOT BE RECOVERED FROM THE ASSESSEE IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN TH E CASE OF HINDUSTAN COCA COLA BEVERAGES (P) LTD. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTION OF AO FOR CH ARGING INTEREST U/S 201(1A) OF I.T. ACT, AMOUNTING TO RS. 6,97,056/-. 2 4. THE ASSESSEE PRAYS FOR LEAVE TO ADD, TO AMEND, T O DELETE, OR MODIFY THE ALL OR ANY GROUNDS OF APPEAL ON OR BEFOR E THE HEARING OF APPEAL.. 2.1 THE FIRST GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN CONFIRMING THE FINDING OF ITO, TDS-2, JAIPUR THAT THE ASSESSEE COM PANY WAS LIABLE TO DEDUCT THE TDS ON THE AMOUNT OF RS. 4,35,00,000/- PAID TO M/S SUZLON ENER GY LTD FOR SUPPLY OF WIND TURBINE GENERATOR AND RS. 23,00,000/- CREDITED TO THE ACCOU NT OF SUZLON DEVELOPERS PRIVATE LIMITED TOWARDS ITS CONTRIBUTION FOR INFRASTRUCTURE AND EVA CUATION FACILITIES AND ERRED IN DETERMINING THE SHORT DEDUCTION OF TDS BY RS. 9,57,678/-. 2.2 BRIEFLY, THE FACTS STATED ARE THAT THE AO PASSE D THE ORDER U/S 201(1) AND 201(1A) OF THE ACT VIDE HIS ORDER DATED 16-03-2011 DETERMIN ING THE SHORT DEDUCTION OF TAX U/S 201(1) ALONGWITH INTEREST THEREON U/S 201(1A) BY HO LDING THAT THE ASSESSEE HAD PAID A SUM OF RS. 4.35 CRORES TO M/S. SUZLONG ENERGY LTD. FOR SUPPLY OF WIND POWER GENERATOR AND THE ASSESSEE WAS REQUIRED TO DEDUCT THE TAX. AG AINST THE ORDER OF THE ORDER OF THE AO ON THIS ISSUE, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DISMISSED THE APPEAL O F THE ASSESSEE. 2.3 BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 2.4 DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW FAILED TO APPRECIATE THE FACT TH AT THERE WERE TWO CONTRACTS WITH TWO DIFFERENT COMPANIES. THE CONTRACT OF SUPPLY WAS GIV EN TO M/S. SUZLON ENERGY LTD. FOR CARRYING OUT THE WORK OF ERECTION AND INSTALLATION WORK WAS GIVEN TO ANOTHER COMPANY NAMELY M/S. SUZLON DEVELOPERS (P) LTD. FOR A CONSID ERATION OF RS. 95.00 LACS WHICH INCLUDED RS. 23.00 LACS AGAINST SHARE IN POWER EVAC UATION CHARGES. HE SUBMITTED THAT THE NATURE OF EXPENDITURE OF RS. 23.00 LACS WAS REIMBUR SEMENT. THEREFORE, NO TAX WAS 3 REQUIRED TO BE DEDUCTED. THE LD. COUNSEL FOR THE AS SESSEE SUBMITTED THAT TDS WAS NOT REQUIRED TO BE DEDUCTED ON THE SUPPLY PORTION OF THE CONTRACT. IN SUPPORT OF THIS, THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION O F HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. KARNATAKA POWER TRA NSMISSION CORPORATION LTD., 208 TAXMAN 73 (KAR.). HE SUBMITTED THAT THE CIVIL WORK INCLUDING SUPPLY OF ELECTRICAL ITEMS, LABOUR FOR ERECTION OF TOWER AND WTGS, LABOUR FOR E LECTRICAL WORK INCLUDING CABLING, CONSTRUCTION OF ROAD ETC. WAS ASSIGNED AND COMPLETE D BY M/S. SUZLON DEVELOPERS (P) LTD. AND ON THIS AMOUNT, THE TDS WAS DEDUCTED. HE SUBMIT TED THAT THE WORK OF SUPPLY OF 1.25 MW WIND MILL POWER PLANT AND MACHINERY WAS GIVEN TO M/S. SUZLON ENERGY LTD. FOR A CONSIDERATION OF RS. 4.35 CRORES. THE WTG WAS REQU IRED TO BE SUPPLIED AS PER TECHNICAL SPECIFICATIONS MENTIONED IN ANNEXURE V TO THE SUPP LY ORDER. 2.5 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER OF THE AUTHORITIES BELOW. 2.6 WE HAVE HEAD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE LD. CIT(A) HAS CONFIRMED THE FINDI NGS OF THE AO ON THE BASIS THAT TERMS AND CONDITIONS OF THE CONTRACT INCLUDED THE HOLDING OF LAND IN FAVOUR OF THE ASSESSEE THROUGH SUB-LESE OF 19 YEARS FOR WIND TURBINE GENER ATOR(WTG) AT JAISALMER SITE. M/S. SUZLON ENERGY LTD. WILL SUPPLY DRAWING FOR THE FOUN DATION AND CIVIL WORK, INSTRUCTION FOR ASSEMBLY, ERECTION, INSTALLATION AND COMMISSIONING OF WTG. M/S. SUZLON ENERGY LTD. WILL ASSIST FOR TAKING INSURANCE POLICY AFTER COMMI SSIONING WTGS REQUIRED FOR FUNDING AGENCY. M/S. SUZLON ENERGY LTD. WILL ASSIST IN GETT ING CARBON CREDIT BENEFIT FOR THEIR WIND FARM AS AND WHEN APPLICABLE. M/S. SUZLON ENERGY LTD . WILL ARRANGE OPERATION AND MAINTENANCE FOR ASSESSEE'S WIND FARM FROM THE SERVI CE PROVIDERS. M/S. SUZLON ENERGY LTD. WILL GUARANTEE MINIMUM GENERATION OF POWER AT 2750000 KWH PER YEAR. UNDISPUTEDLY, THERE WERE TWO CONTRACTS WITH TWO DIF FERENT COMPANIES NAMELY M/S. SUZULO 4 ENERGY LTD. AND M/S. SUZULO DEVELOPERS (P) LTD. THE LD. COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO PAGE 1 OF THE ASSESSEE WHERE IN AN ORDER FOR SUPPLY OF 1 NO. SUZLON S 66 1.25 MW WIND TURBINE GENERATOR (WTG) WI TH A HUB-HEIGHT OF 65 METERS WITH LATTICE TOWER WAS TO BE INSTALLED AT JAISALMER . AS PER ANNEXURE 1 OF ASSESSEE'S LETTER DATED 13-06-2004, THE WIND TURBINE GENERATOR FOR SU PPLY OF SUZLON S 66 125 MW COMPRISES OF MAINLY HUB AND SET OF THREE BLADES, CO NTROLLER (MICROPROCESSORS) AND LATTICE TOWER MATERIAL SUITABLE FOR 65 METER HEIGHT AMOUNTING TO RS. 406.00 LACS. THE PACKING, HANDLING, LOADING, INSURANCE AND TRANSPORT ATION CHARGES FOR DELIVERY AT SITE OF THE MATERIALS ARE SHOWN AT RS. 14.00 LACS. THE SUPPLY O F ELECTRICAL ITEMS FOR ELECTRICAL WORK AS PER ANNEXURE III COMPRISING MAINLY OF TRANSFORM ER AND CABLES ARE SHOWN AT RS. 15.00 LACS. THE TOTAL EXPENDITURE TO BE INCURRED ON THE S UPPLY OF 1 NO. SUZULON S 66 1.25 MW WIND TURBINE GENERATOR IS AT RS. 435.00 LACS. FR OM THE SAID PRICE SCHEDULE OF WORK ORDER, IT IS EVIDENT THAT THE PAYMENT WAS MADE TOWA RDS SUPPLY OF MATERIAL. THEREFORE, THIS CANNOT BE TERMED AS PAYMENTS TOWARDS EXECUTING THE CONTRACT OF INSTALLATION. HENCE THE RATIO LAID DOWN BY THE HON'BLE KARNATAKA HIGH COUR T RENDERED IN THE CASE OF CIT VS. KARNATAKA POWER TRANSMISSION CORPORATION LTD., 208 TAXMAN 73 (KAR.). WOULD APPLY ON THE FACTS OF THE PRESENT CASE. RESPECTFULLY, FOLLOW ING THE DECISION OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. KARNATA KA POWER TRANSMISSION CORPORATION LTD., 208 TAXMAN 73 (KAR.)., WE FEEL THAT TAX WAS N OT REQUIRED TO BE DEDUCTED ON THIS AMOUNT OF RS. 435.00 LACS. THE ASSESSEE HAS GIVEN T HE CONTRACT IN RESPECT OF ERECTION AND INSTALLATION OF WTG TO ANOTHER COMPANY NAMELY M/S. SUZLON DEVELOPERS (P) LTD. AMOUNTING TO RS. 95.00 LACS. THE LD. COUNSEL FOR TH E ASSESSEE HAS DRAWN OUR ATTENTION TO PAGE 14 OF THE PAPER BOOK WHEREIN THE PRICE BREAK U P FOR THE SERVICE REQUIRED FOR THE ERECTION AND INSTALLATION OF WTG IS GIVEN. IN SUPPO RT OF THE CLAIM THAT PAYMENT WAS MADE 5 TO M/S. SUZLON DEVELOPERS (P) LTD., THE ASSESSEE H AS PLACED ON RECORD THE INVOICE ISSUED TO M/S. SUZLON DEVELOPERS (P) LTD. THE CONTENTION O F THE LD. AR IS THAT OUT OF RS. 95.0 LACS, RS. 23.00 LACS IS THE AMOUNT PAID FOR SHARE IN POWER EXCAVATION CHARGES. HE SUBMITTED THAT IT IS ONLY A REIMBURSEMENT. THEREFOR E, NO TAX WAS DEDUCTED ON THE AMOUNT. HOWEVER, ON REST OF THE OTHER PAYMENTS MADE TO M/S . SUZLON DEVELOPERS (P) LTD. , THE TAX HAS BEEN DEDUCTED. THIS SUBMISSION OF THE LD. A R IS NOT CONTROVERTED BY THE LD. DR. HENCE, AFTER CONSIDERING THE FACTS AND THE MATERIAL S AVAILABLE ON RECORD, WE RESTORE THIS ISSUE ONLY TO THE EXTENT OF PAYMENT OF RS. 23.00 L ACS FOR VERIFICATION TO THE FILE OF THE AO WHO WOULD DECIDE THIS ISSUE AFRESH AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS, THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 3.1 THE SECOND GROUND OF THE ASSESSEE IS THAT CIT ( A) ERRED IN REJECTING THE ALTERNATIVE PRAYER OF THE ASSESSEE STATING THAT THE PAYEE HAS I NCLUDED THE ENTIRE RECEIPTS DURING THE RELEVANT AY FOR THE PURPOSE OF INCOME TAX, THEREFORE THE ALL EGED SHORT DEDUCTION OF TDS SHOULD NOT BE RECOVERED FROM THE ASSESSEE IN VIEW OF THE DECIS ION OF HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES (P) LTD. 3.2 DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT EVEN OTHERWISE ALSO, THE ASSESSEE CANNOT BE HELD LIABLE FOR DEDUCTING TDS U/S 201 (1) TERMING THE ASSESSEE IN DEFAULT IN VIEW OF THE DECISION OF HON' BLE APEX COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES (P) LTD. VS. CIT, 293 ITR 226. HE SU BMITTED THAT COPY OF THE LEDGER ACCOUNT OF THE ASSESSEE IS AT PAGE 17 & 30 OF THE PAPER BOOK W HEREIN THE AMOUNT CHARGES FROM ASSESSEE IS SHOWN AS SALES / INCOME. THE COPY OF INCOME TAX RET URN AND ASSESSMENT ORDER OF BOTH THE COMPANIES ARE AT PAGE 24 TO 26 AND 27 TO 29 OF THE PAPER BOOK.. IT IS ALSO SUBMITTED THAT COPIES OF AUDITED FINANCIALS OF BOTH THE COMPANIES ARE PAGE 3 7 TO 102 OF THE PAPER BOOK. HE SUBMITTED THAT BOTH THE COMPANIES CONSIDERED THE RECEIPT FROM ASSE SSEE AS THEIR INCOME AND DUE TAX HAS BEEN 6 PAID ON THE SAME. THEREFORE, IN VIEW OF INSTRUCTIO N NO.275/201/95-IT(B) DATED 29-01-1997 AND THE JUDGEMENT OF HON'BLE APEX COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES LTD. VS. CIT (SUPRA), NO DEMAND CAN BE MADE U/S 201(1) OF THE AC T AND IT SHOULD BE RECOVERED FROM THE ASSESSEE. 3.3 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW. 3.4 WE HAVE HEAD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT BOTH THE AUTHORITIES BELOW ON THE SUBM ISSIONS OF THE ASSESSEE HAVE RECORDED THE FINDINGS THAT NO DETAILS WERE SUPPLIED BY THE A SSESSE. THE HON'BLE APEX COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES LTD. VS. CIT (SUPRA) HAS HELD THAT CIRCULAR NO. 275/201/95-IT(B) DATED 29-01-1997 ISSUED BY THE CEN TRAL BOARD OF DIRECT TAXES THAT INTEREST U/S 201(1A) SHOULD BE CHARGED UPTO THE DATE OF PAYMENT OF TDS BY THE ASSESSEE OR PAYMENT OF TAXES BY PAYEE COMPANY WHICHEVER IS EARLIER. SINCE WE HAV E DECIDED IN GROUND NO. 1 THAT THE AMOUNT PAID TOWARDS SUPPLY OF MATERIAL CANNOT BE SUBJECTE D TO TAX IN VIEW OF THE DECISION OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT V S. KARNATAKA POWER TRANSMISSION CORPORATION LTD. (SUPRA), THEN THIS GROUND REMAINS AS ACADEMIC. IN OUR CONSIDERED VIEW, THE AUTHORITIES BELOW OUGHT TO HAVE VERIFIED THE CL AIM OF THE ASSESSEE THAT TAX HAS BEEN DEDUCTED BY THE PAYEE COMPANY AND THE PAYEE COMPANY HAS DECLARED THE AMOUNT IN ITS RETURN OF INCOME AND TAX HAS BEEN DEDUCTED ON SUCH AMOUNT. THUS THE AO SHALL DECIDE THE ISSUE AFRESH IN VIEW OF THE DECISION HON'BLE AP EX COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES LTD. VS. CIT (SUPRA). WE HOLD ACCORDINGLY. 4.1 THE THIRD GROUND OF THE ASSESSEE IS THAT LD. CI T(A) ERRED IN CONFIRMING THE ACTION OF AO FOR CHARGING INTEREST U/S 201(1A) OF I.T. ACT, AMOU NTING TO RS. 6,97,056/-. 7 4.2 DURING THE COURSE OF HEARING, THE LD. COUNSEL F OR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS CONSEQUENTIAL IN NATURE. IN CASE THE SUBMISSIONS AN D ARGUMENTS OF THE IN GROUND NO. 1 AND 2 ARE ACCEPTED, THE INTEREST CHARGED U/S 201(1A) SHOULD A LSO BE REDUCED ACCORDINGLY. 4.3 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER OF THE AUTHORITIES BELOW. 4.4 WE HAVE HEAD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT HON'BLE APEX COURT IN THE CASE OF HIND USTAN COCA COLA BEVERAGES LTD. VS. CIT (SUPRA) CATEGORICALLY HELD THAT THE ASSESSEE WO ULD BE LIABLE FOR PAYMENT OF INTEREST ON SHORT DEDUCTION OF TAX FROM DUE DATE OF PAYMENT OF TAX AND TILL THE PAYMENT OF TAX IS MADE BY THE DEDUCTEE COMPANY. THUS THIS GROUND OF T HE ASSESSEE IS RESTORED TO THE FILE OF THE AO WHO WILL DECIDE THIS ISSUE AFRESH IN THE LIG HT OF THE DECISION OF HON'BLE APEX COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES LTD. VS. CIT (SUPRA) BUT BY GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 5.1 THE LAST GROUND OF THE ASSESSEE IS GENERAL IN N ATURE WHICH NEEDS NO ADJUDICATION. 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT IMMEDIATE LY AFTER CONCLUSION OF HEARING ON 22-08-2013 . SD/- SD/- (B.R. JAIN) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 22 ND AUG, 2013 *MISHRA COPY FORWARDED TO:- BY ORDER 1. M/S. BHAGWATI HOTELS & RESORTS LTD, JAIPUR 2. THE ITO, TDS -II, JAIPUR . 3. THE LD. CIT, (A) 4. THE LD. CIT 5. THE LD. DR 6. THE GUARD FILE (IT NO.909/JP/12 ) A.R. ITAT: JAIPUR 8 9