N C SHAW AND CO BEVERAGES PRIVATE LIMITED,KOLKATA V. ADDL. COMMISSIONER OF INCOME TAX (TDS), RANGE-2, KOLKATA, KOLKATA

SA 7/KOL/2024

AI Insights

The case involves N C Shaw and Co Beverages Private Limited, which appealed against the demands raised by the Assessing Officer under various sections of the Income Tax Act, 1961, concerning the assessment year 2015-16. The primary legal issue was whether the provisions of Section 194H, which pertains to the deduction of TDS on commission or brokerage, were applicable to the incentives given by the assessee, a liquor manufacturer, to its purchasing parties. The assessee argued that these incentives were not commissions and thus not subject to TDS, a position supported by various High Court decisions. The Department contended that these were indeed commissions, necessitating TDS deductions. The Tribunal decided to stay the recovery of the demands pending a detailed examination of the issues in an early hearing scheduled for November 12, 2024.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 36237 (ITAT-KOLKATA)
• Duration Of Justice: 7 day(s)
• Appeal Type: Others
• Pronouncement Date: 01-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 24-09-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS; Application of stay

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'ए' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘A’ BENCH, KOLKATA श्री संजय गगग, न्याधयक सदस्य एवं श्री संजय अवस्थी, लेखा सदस्य क े समक्ष Before SRI SANJAY GARG, JUDICIAL MEMBER & SRI SANJAY AWASTHI, ACCOUNTANT MEMBER S.A. Nos.: 7 & 8/KOL/2024 In I.T.A. Nos.: 1947 & 1925/KOL/2024 Assessment Year: 2015-16 N C Shaw and Co Beverages Private Limited………………………..Appellant [PAN: AABCN 8699N ] Vs. ACIT (TDS), Range-2, Kolkata................................................Respondent Appearances: Assessee represented by: Khirendra Mohan Gupta, AR. Department represented by: Subhendu Datta, CIT DR. Date of concluding the hearing : September 30th, 2024 Date of pronouncing the order : October 1st, 2024 ORDER Per Sanjay Garg, Judicial Member: The present are two Stay Applications for stay against the recovery of demand of the taxes/penalty. SA No. 7/KOL/2024 has been filed in ITA No. 1947/KOL/2024 in relation to the demand raised by the Assessing Officer (hereinafter referred to as ld. 'AO') u/s 271C of the Income Tax Act, 1961 (in short the 'Act'), whereas, SA No. 8/KOL/2024 has been filed in ITA No. 1925/KOL/2024 in relation to the demand raised by the AO u/s 201(1)/201(1A) of the Act. S.A. Nos.: 7 & 8/KOL/2024 In I.T.A. Nos.: 1947 & 1925/KOL/2024 Assessment Year: 2015-16 N C Shaw and Co Beverages Private Limited. Page 2 of 4 1.1. So far as the demand raised u/s 271C of the Act is concerned, the AO has imposed a penalty of Rs. 1,02,61,897/-, whereas, in respect of the demand raised u/s 201(1)/201(1A) of the Act is concerned, demand of Rs. 1,98,05,460/- has been raised. 2. The ld. Counsel for the assessee has submitted that the short issue involved in both the appeals is as to whether the provisions of Section 194H of the Act are applicable in this case. The ld. Counsel for the assessee has submitted that the assessee is a manufacturer of liquor. He has given certain incentives on sales to the purchasing parties. The assessee was of the bona fide belief that no TDS was liable to be deducted in respect of the said incentives given, whereas, the AO was of the view that the said incentives given were in fact commissions paid, where upon, the provisions of Section 194H of the Act were applicable and the assessee was required to deduct TDS on such commissions/payments. Ld. Counsel for the assessee has further submitted that the issue is squarely covered in favour of the assessee by different decisions of various High Courts of the country. He has further submitted that the Department is pressing hard for the recovery of the aforesaid demand of tax/penalty and if the Department succeeds in recovering the amount, the business of the assessee will be severely affected. The ld. Counsel for the assessee has further submitted that so far as the demand raised u/s 201(1)/201(1A) of the Act is concerned, the assessee has already deposited 20% of the disputed demand amounting to Rs. 39,61,092/- . However, he has submitted that the assessee so far has not deposited any amount towards the demand raised u/s 271C of the Act. He has further submitted that both the demands under different provisions of the Income Tax Act have been raised in relation to the same transactions. The ld. Counsel for the assessee has submitted that the recovery of the impugned demand in respect of both the demands, i.e. demand raised u/s 201(1)/201(1A) of the Act and the demand of penalty raised u/s 271C of the Act, may be stayed and the case may be fixed for early hearing. S.A. Nos.: 7 & 8/KOL/2024 In I.T.A. Nos.: 1947 & 1925/KOL/2024 Assessment Year: 2015-16 N C Shaw and Co Beverages Private Limited. Page 3 of 4 2.1. The ld. D/R on the other hand, has submitted that thought the assessee has deposited 20% of the demand raised u/s 201(1)/201(1A) of the Act, however, the assessee has not deposited any amount towards the demand raised u/s 271C of the Act. 2.2. The ld. Counsel for the assessee at this stage has agreed to deposit 20% of the demand raised u/s 271C of the Act also. 3. We find that the assessee has a prima facie case and balance of convenience also lies in favour of the assessee. Therefore, the impugned tax demand in respect of both the cases is stayed for the period of six months or till the disposal of the appeal whichever is earlier, subject to the condition that the assessee will deposit 20% of the demand raised u/s 271C of the Act within 30 days from the receipt of the copy of this order. Both the appeals are posted for early hearing on 12.11.2024. Copy of this order be also placed in main files. 4. In the result, SA Nos. 7 & 8/KOL/20124 stand allowed. Order pronounced in the open Court on 1st October, 2024. Sd/- Sd/- [Sanjay Awasthi] [Sanjay Garg] Accountant Member Judicial Member Dated: 01.10.2024 Bidhan (P.S.) S.A. Nos.: 7 & 8/KOL/2024 In I.T.A. Nos.: 1947 & 1925/KOL/2024 Assessment Year: 2015-16 N C Shaw and Co Beverages Private Limited. Page 4 of 4 Copy of the order forwarded to: 1. N C Shaw and Co Beverages Private Limited, P 45 Goragacha road, Kolkata, West Bengal, 700053. 2. ACIT (TDS), Range-2, Kolkata. 3. CIT(A)-27, Kolkata. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "