Income Tax Officer (TDS), Ward-3(6), Tirupathi v. M/s Southern Power Distribution Company of AP Limited,, Tirupathi

CO 49/HYD/2014 | 2008-2009
Pronouncement Date: 31-07-2015

Appeal Details

RSA Number 4922523 RSA 2014
Bench Hyderabad
Appeal Number CO 49/HYD/2014
Duration Of Justice 11 month(s) 3 day(s)
Appellant Income Tax Officer (TDS), Ward-3(6), Tirupathi
Respondent M/s Southern Power Distribution Company of AP Limited,, Tirupathi
Appeal Type Cross Objection
Pronouncement Date 31-07-2015
Appeal Filed By Assessee
Bench Allotted B
Tribunal Order Date 31-07-2015
Date Of Final Hearing 18-08-2015
Next Hearing Date 18-08-2015
Assessment Year 2008-2009
Appeal Filed On 28-08-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B HYDERABAD BEFORE SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY JUDICIAL MEMBER I.T.A. NOS. 1327 & 1328/HYD/2014 ASSESSMENT YEARS: 2008-09 & 2009-10 INCOME TAX OFFICER (TDS) WARD-3(6) TIRUPATI VS M/S. SOUTHERN POWER DISTRIBUTION CO. OF AP LTD. TIRUPATI [TAN: HYDS08188F] (APPELLANT) (RESPONDENT) C.O. NOS. 49 & 50/HYD/2014 (IN ITA NOS. 1327 & 1328/HYD/14) ASSESSMENT YEARS: 2008-09 & 2009-10 M/S. SOUTHERN POWER DISTRIBUTION CO. OF AP LTD. TIRUPATI [TAN: HYDS08188F] VS INCOME TAX OFFICER (TDS) WARD-3(6) TIRUPATI (CROSS-OBJECTOR) (RESPONDENT) FOR REVENUE : SHRI V. SRINIVAS CIT - DR FOR ASSESSEE : S HRI M. CHANDRAMOULESWARA RAO AR DATE OF HEARING : 2 3 - 0 7 - 201 5 DATE OF PRONOUNCEMENT : 31 - 07 - 2015 O R D E R PER BENCH : THESE ARE TWO APPEALS BY REVENUE AGAINST THE ORDER S OF THE COMMISSIONER OF INCOME TAX(APPEALS) VIJAYAWADA DAT ED 28-03-2014 I.T.A. NOS. 1327 & 1328/HYD/14 C.O. NOS. 49 & 50/HYD/14 M/S. SOUTHERN POWER DISTRIBUTION CO OF AP LTD. :- 2 -: AND TWO CROSS OBJECTIONS FILED BY ASSESSEE IN SUPPO RT OF THE ORDERS OF CIT(A). BOTH THE APPEALS OF THE DEPARTMENT HAVE BE EN FILED WITH 16 DAYS DELAY. HOWEVER AFTER PERUSING THE PETITION FOR CO NDONATION OF DELAY ACCOMPANIED BY THE AFFIDAVIT WE ARE SATISFIED WITH CAUSE FOR DELAY. HENCE CONDONING THE DELAY OF 16 DAYS IN BOTH THE A PPEALS OF THE DEPARTMENT WE ADMIT THE APPEALS FOR HEARING ON MER IT. 2. BRIEFLY STATED ASSESSEE IS A STATE GOVERNMENT U NDERTAKING ENGAGED IN THE BUSINESS OF DISTRIBUTION OF ELECTRIC ITY. ORIGINALLY ISSUE WAS RAISED WHETHER THE TRANSMISSION CHARGES PAID BY ASSESSEE WAS COVERED BY THE PROVISIONS OF TDS. THE REVENUE WAS OF THE OPINION THAT ASSESSEE SHOULD HAVE DEDUCTED THE TAX U/S. 194J @ 1 0% + SURCHARGE WHEREAS ASSESSEE CONTESTED THAT THERE IS NO NEED T O DEDUCT TAX. AS THINGS STAND NOW CO-ORDINATE BENCH IN THE CASE OF DCIT VS. CENTRAL POWER DISTRIBUTION COMPANY OF A.P. LTD. IN ITA NOS . 1796 TO 1798/HYD/2012 DT. 13-12-2013 HAS HELD THAT PROVISI ONS OF SECTION 194J AND 194-I ARE NOT APPLICABLE TO THE FACTS OF T HAT CASE AND TDS U/S. 194C ONLY COULD BE ATTRACTED. LD.CIT(A) TIRUPATI VIDE THE ORDERS DT. 25-06-2010 IN THE IMPUGNED ASSESSMENT YEARS HAS ALREADY HELD THAT ASSESSEE CANNOT BE HELD AS ASSESSEE IN DEFAULT A ND THE DEDUCTION @ 1.75% ON THE BASIS OF LESSER DEDUCTION CERTIFICATE ISSUED BY AO WOULD BE ADEQUATE TO MEET THE LIABILITY. IN SPITE OF THE AB OVE ORDERS THE ASSESSING OFFICER (AO) CONSIDERED LEVY OF INTEREST U/S. 201(1 A) AND ON THE TRANSMISSION CHARGES PAID AT TAX DEDUCTIBLE AT 11. 33% AND ON THE DELAY IN REMITTING TAX LEVIED INTEREST ACCORDINGLY. FOR A Y. 2008-09 INTEREST U/S. 201(1A) AT RS. 2 12 98 134/- AND AN AMOUNT OF RS. 2 54 29 035/- FOR THE AY. 2009-10 WERE CHARGED VIDE ORDERS DT. 30-03- 2012. WHEN THE MATTER WAS CONTESTED BEFORE THE LD.CIT(A) THE CIT( A) DELETED THE ENTIRE INTEREST HOLDING AS UNDER: I.T.A. NOS. 1327 & 1328/HYD/14 C.O. NOS. 49 & 50/HYD/14 M/S. SOUTHERN POWER DISTRIBUTION CO OF AP LTD. :- 3 -: '5.1 I HAVE CONSIDERED THE FACTS OF THE CASE THE O RDER OF THE ASSESSING OFFICER AS WELL AS THE SUBMISSIONS OF TH E APPELLANT. I FIND THAT THE ASSESSING OFFICER PASSED ORDER U/S. 201(1 A) OF THE ACT TOWARDS INTEREST ON TDS DUES WHICH WERE COMPUTED B Y HIM AT 11.33% AS PRINCIPLE TDS AMOUNT. I FIND THAT IN TH E CASE OF THE APPELLANT THE COMMISSIONER OF INCOME-TAX (APPEALS ) TIRUPATHI VIDE HIS ORDER NO. 517/DCIT.CIR-3(1)/TDS/VJY/CIT(A)/TPT /09-10 DATED 25.06.2010 HAS DELETED THE ENTIRE DEMAND BY HOLDIN G THAT TRANSMISSION CHARGES PAID TO M/S. APTRANSCO FOR TR ANSMISSION OF POWER THROUGH THEIR LINES WOULD ONLY BE IN THE CAT EGORY OF RENTALS BUT NOT WORK CONTRACT NOR ROYALTY. THE CIT(A) ALS O LAID EMPHASIS ON THE CERTIFICATE U/S. 197 OF THE ACT ISSUED BY VAL ID AUTHORITY TO THE APPELLANT FOR DEDUCTION OF TAX AT A LOWER RATE I.E 1.75%. THE ASSESSING OFFICER IGNORED ALL THE ABOVE FACTS AND COMPUTED INTEREST U/S. 201(1A) ON THE AMOUNT OF TDS COMPUTED AT 11.3 3% INSTEAD OF 2% U/S. 194C AND IN THE CASE OF THE APPELLANT @ 1. 75% SINCE THE APPELLANT BEARING A CERTIFICATE FOR LOWER DEDUCTIO N OF TAX U/S. 197 OF THE ACT. IN THIS REGARD I RELY UPON THE DECISION OF THE HON'BLE ITAT HYDERABAD BENCH-A IN THE CASE OF M/S. CENTRAL POWE R DISTRIBUTION COMPANY OF AP LIMITED WHEREIN IT WAS HELD THAT TRA NSMISSION CHARGES PAID TO M/S. APTRANSCO ARE AKIN TO TRANSPO RTATION OF ELECTRICITY AND TDS IS TO BE MADE U/S. 194C AT @2% . ACCORDINGLY I HOLD THAT THE ORDER IN QUESTION PASSED BY THE ASSE SSING OFFICER IS BAD IN LAW AND HENCE CANCELLED'. 3. AFTER CONSIDERING THE RIVAL CONTENTIONS AND THE ORDERS PLACED ON RECORD BY THE LD. COUNSEL WE ARE OF THE OPINION TH AT BOTH AO AND CIT(A) ARE NOT CORRECT IN CONSIDERING THE ISSUES. FIRST O F ALL THE GROUNDS RAISED BY REVENUE ARE MAINLY ON MERITS OF DEDUCTION U/S. 1 94J OR 194-I EVEN THOUGH MATTERS WERE CRYSTALLISED AND THOSE PROVISIO NS ARE NOT APPLICABLE TO THE FACTS OF ASSESSEE'S CASE. THERE WAS IN FACT AN ORDER OF LD.CIT(A) DIRECTING ACCEPT TO THE EXTENT OF 1.75% RATE OF TDS AS ASSESSEE HAS OBTAINED A CERTIFICATE FOR LESSER DEDUCTION U/S 197 OF THE ACT. HAVING ISSUED CERTIFICATE TO ASSESSEE ALLOWING IT TO DEDU CT TAX @ 1.75% WE ARE UNABLE TO UNDERSTAND HOW AO CAN DEMAND TAX DEDUCTIO N AT SOURCE @ 10% PLUS SURCHARGE. TO THAT EXTENT GROUNDS ARE INF RUCTUOUS. BE THAT AS IT MAY WE ARE ALSO NOT IN A POSITION TO APPROVE TH E CANCELLATION OF ENTIRE INTEREST LEVIED BY THE LD.CIT(A). AO HAS TO EXAMIN E WHETHER THERE IS ANY I.T.A. NOS. 1327 & 1328/HYD/14 C.O. NOS. 49 & 50/HYD/14 M/S. SOUTHERN POWER DISTRIBUTION CO OF AP LTD. :- 4 -: DEFAULT IN DEDUCTING TAX @ 1.75% BY ASSESSEE AND IN CASE THERE IS ANY DEFAULT OR DELAY IN REMITTING THE TAX INTEREST U/S. 201(1A) CERTAINLY INTEREST U/S 201(1A) IS ATTRACTED. IN VIEW OF THIS MODIFYING THE ORDER OF CIT(A) PARTIALLY WE DIRECT THE AO TO EXAMINE THE F ACTS AGAIN AND IN CASE THERE IS NO DEDUCTION OR DELAY IN REMITTING THE AMO UNTS AS PER THE PROVISIONS OF THE ACT INTEREST U/S. 201(1A) CAN BE CHARGED FOR THE IMPUGNED YEARS. AO IS HOWEVER DIRECTED THAT TAX D EDUCTIBLE SHOULD BE ARRIVED AT 1.75% AS PER THE DIRECTIONS OF CIT(A) C ONSEQUENT TO THE CERTIFICATE OF LOWER DEDUCTION GRANTED BY THE AO. IN VIEW OF THIS ORDER OF CIT(A) TO THE EXTENT OF DELETING ENTIRE INTEREST ST ANDS MODIFIED. AO IS DIRECTED TO RE-WORKOUT THE INTEREST IF ANY AFTER G IVING DUE OPPORTUNITY TO ASSESSEE. REVENUE'S APPEALS ARE PARTLY ALLOWED. 4. CROSS OBJECTIONS ARE INFACT SUPPORTING THE ORDER S OF CIT(A). IN VIEW OF THE ORDERS IN REVENUE APPEALS CROSS OBJECTIONS BECOME INFRUCTUOUS. ACCORDINGLY REVENUE'S APPEALS ARE PARTLY ALLOWED A ND CROSS OBJECTIONS ARE DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN OPEN COURT ON 31 ST JULY 2015 SD/- SD/- (SAKTIJIT DEY) (B. RAMAK OTAIAH) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD DATED 31 ST JULY 2015 TNMM I.T.A. NOS. 1327 & 1328/HYD/14 C.O. NOS. 49 & 50/HYD/14 M/S. SOUTHERN POWER DISTRIBUTION CO OF AP LTD. :- 5 -: COPY TO : 1. I NCOME TAX OFFICER (TDS) WARD - 3 ( 6 ) GROUND FLOOR AAYAKAR BHAVAN TIRUPATI. 2. M/S. SOUTHERN POWER DISTRIBUTION CO OF AP LTD. D. NO. 19-13-65/A KESAVAYANA KUNTA TIRUPATI. 3. CIT(APPEALS) VIJAYAWADA. 4. CIT(TDS) HYDERABAD. 5. D.R. ITAT HYDERABAD. 6. GUARD FILE.