The Dy. Commr. of Income Tax, TDS Circle,, RAJKOT-GUJARAT v. M/s Gujarat Pipavav Port Ltd.,, AMRELI

ITA 112/RJT/2017 | 2007-2008
Pronouncement Date: 28-11-2017 | Result: Dismissed

Appeal Details

RSA Number 11224914 RSA 2017
Bench Rajkot
Appeal Number ITA 112/RJT/2017
Duration Of Justice 7 month(s) 15 day(s)
Appellant The Dy. Commr. of Income Tax, TDS Circle,, RAJKOT-GUJARAT
Respondent M/s Gujarat Pipavav Port Ltd.,, AMRELI
Appeal Type Income Tax Appeal
Pronouncement Date 28-11-2017
Appeal Filed By Department
Tags covered
Order Result Dismissed
Bench Allotted SMC
Tribunal Order Date 28-11-2017
Assessment Year 2007-2008
Appeal Filed On 12-04-2017
Judgment Text
ITA NO. 112/RJT/2017 & CO 16/RJT/2017 DCIT VS. GUJARAT PIPAVAV PORT LTD ASSESSMENT YEAR: 2007-08 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT [CORAM: PRAMOD KUMAR AM AND RAJPAL YADAV JM] ITA NO. 112/RJT/2017 & CO NO. 16/RJT/2017 ASSESSMENT YEAR: 2007-08 THE DCIT ..................APPELLANT TDS CIRCLE RAJKOT VS. M/S. GUJARAT PIPAVAV PORT LTD. ........................ RESPONDENT & POST UCHHAIYA VIA RAJULA CROSS OBJECTOR AMRELI GUJARAT - 365560 [PAN : RKTG 00431 E] APPEARANCES BY: CP BHATIA FOR THE APPELLANT KIRAN NISAR FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 03.11.2017 DATE OF PRONOUNCING THE ORDER : 28.11.2017 O R D E R PER PRAMOD KUMAR AM: 1. THIS APPEAL FILED BY THE ASSESSING OFFICER AS A LSO THE CROSS OBJECTION FILED BY THE ASSESSEE CHALLENGE CORRECTNESS OF THE ORDER DA TED 27.02.2017 IN THE MATTER OF PENALTY UNDER SECTION 271C OF THE INCOME TAX ACT 1 961 FOR THE ASSESSMENT YEAR 2007-08. 2. GRIEVANCES RAISED BY THE ASSESSING OFFICER AS S ET OUT IN THE MEMORANDUM OF APPEAL ARE AS FOLLOWS:- 1. THE LD. CIT(A) IN FACTS AND CIRCUMSTANCES OF THE CASE ERRED IN DELETING THE PENALTY U/S. 271C OF THE I.T. ACT. 2. THE LD. CIT(A) IN FACTS AND CIRCUMSTANCES ERRED IN HOLDING THAT THE ASSESSEE DID DEDUCT TDS ALBEIT U/S. 194J INSTEAD OF 194-I WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE MANDATED TO DEDUCT TDS U NDER THE CORRECT PROVISIONS OF CHAPTER XVIIB OF THE I.T. ACT. 3. THE LD. CIT(A) IN FACTS AND CIRCUMSTANCES IN T HE CASE ERRED IN HOLDING THAT THE ISSUE WHETHER THE PAYMENT IS COVERED BY PROVISI ONS OF SECTION 194-I OF 194J IS NOT COMPLETELY FREE FROM DEBATE WITHOUT APPRECIA TING THE FACT THAT BOTH AT FIRST APPELLATE AND SECOND APPELLATE IT WAS CATEGORICALLY HELD THAT THE PAYMENT OF WHARF AGE CHARGES ATTRACTED WITHHOLDING PROVISIONS OF SECTION 194-I AS HOLD BY THE A.O. THUS THERE IS NO DISPUTE OF WHATSOEVER NAT URE AS AVERRED BY THE LD. CIT(A). ITA NO. 112/RJT/2017 & CO 16/RJT/2017 DCIT VS. GUJARAT PIPAVAV PORT LTD ASSESSMENT YEAR: 2007-08 PAGE 2 OF 4 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE E ASE THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) OUGHT TO HAVE DECIDED THE ISSUE UNDER REFERENCE IN THE LIGH T OF EVIDENCE OBTAINED BY HIM DURING THE APPELLATE PROCEEDINGS AFTER FOLLOWI NG THE DUE PROCEDURE OF LAW. 3. NOTWITHSTANDING RATHER ELABORATE GROUNDS OF APPE AL WHICH ARE PRIMARILY ARGUMENTS IN SUPPORT OF THE APPEAL THE SHORT GRIEV ANCE THAT WE ARE REQUIRED TO ADJUDICATE IN THIS APPEAL IS WHETHER OR NOT LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE LEVY OF PENALTY OF RS.22 73 763/- IMPOSED ON THE AS SESSEE FOR SHORT DEDUCTION OF TAX AT SOURCE IN RESPECT OF WHARFAGE CHARGES PAID TO GU JARAT MARITIME BOARD. 4. LEARNED REPRESENTATIVES FAIRLY AGREE THAT WHATEV ER WE DECIDE FOR THE ASSESSING OFFICERS APPEAL AND ASSESSEES CROSS-OBJECTION F OR THE ASSESSMENT YEAR 2006-07 WHICH WERE HEARD ALONGWITH THIS APPEAL WILL APPLY MUTATIS MUTANDIS TO THIS APPEAL AS WELL. 5. VIDE OUR ORDER OF EVEN DATE WE HAVE DISMISSED ASSESSING OFFICERS APPEAL AND ASSESSEES CROSS-OBJECTION FOR ASSESSMENT YEAR 2006 -07 BY OBSERVING AS FOLLOWS:- 4. THE ISSUE IN APPEAL LIES IN A NARROW COMPASS OF MATERIAL FACTS. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPING CONSTRUCTING OPERATING AND MAINTAINING THE PORT ON BUILD OWN OPERATE TRANSFER (BOOT) BASIS. THE PORT IS DESIGNED TO HANDLE BULK CONTAINER AND LIQUID CA RGO AND TO PROVIDE ANCILLARY PORT SERVICES. IT WAS IN THIS BACKDROP THAT THE ASS ESSEE ENTERED INTO AN AGREEMENT WITH GUJARAT MARITIME BOARD (GMB) UNDER W HICH THE ASSESSEE WAS GRANTED THE RIGHT TO USE WATERFRONT AGAINST PAYMENT OF CHARGES TO BE COMPUTED ON THE BASIS OF ACTUAL THROUGHPUTS ACHIEVED IN A MO NTH. TREATING THIS PAYMENT AS A ROYALTY THE ASSESSEE DEDUCTED TAX AT SOURCE UNDER SECTION 194J WHICH WAS 5.16% AT THE RELEVANT POINT OF TIME FROM THE P AYMENTS MADE TO GMB. THE ASSESSING OFFICER HOWEVER WAS OF THE VIEW THAT TH E ASSESSEE OUGHT TO HAVE TREATED THESE PAYMENTS AS RENT AND ACCORDINGLY DE DUCTED TAX AT SOURCE UNDER SECTION 194J WHICH WAS 22.44% AT THE MATERIAL POINT OF TIME. THE ASSESSING OFFICER RAISED A DEMAND UNDER SECTION 201 R.W.S. 1 94I FOR SHORT DEDUCTION OF TAX AT SOURCE. AS THIS ISSUE REGARDING SHORT DEDUC TION OF TAX AT SOURCE TRAVELLED IN APPEAL BEFORE A CO-ORDINATE BENCH OF THIS TRIBUN AL THE MATTER WAS REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATI ON IN THE LIGHT OF FIRST PROVISO TO SECTION 201(1) WHICH WAS HELD TO BE RETROSPECTIVE I N NATURE. IN EFFECT THUS AS LONG AS THERE WAS NO LOSS OF REVENUE BY SUCH SHORT DEDUCTION OF TAX AT SOURCE THE RECIPIENT HAS DULY FILED HIS RETURN OF INCOME U NDER SECTION 139(1) AND RECIPIENT HAS DULY INCLUDED THESE AMOUNTS IN HIS RE TURNED INCOME AND PAID DUE TAXES THEREON THE DEMAND UNDER SECTION 201(1) IS N OT TO BE RAISED. THE MATTER HOWEVER DID NOT REST THERE. THE ASSESSING OFFICER ALSO IMPOSED PENALTY UNDER SECTION 271C BY INTER ALIA OBSERVING AS FOLLOWS:- 11. CONSIDERING ALL THE RELEVANT FACTS AND DISCUS SION MADE IN THE FOREGOING PARA(S) IT IS CLEAR THAT THE ASSESSEE HAS COMMITTED DEFAULT OF NON DEDUCTION OF TAX AT SOURCE ON PROVISION FOR UND ER WHAREFAGE AT RS.32 62 080/-. THEREFORE THE ASSESSEE HAS DEFAUL TED IN COMPLYING WITH ITA NO. 112/RJT/2017 & CO 16/RJT/2017 DCIT VS. GUJARAT PIPAVAV PORT LTD ASSESSMENT YEAR: 2007-08 PAGE 3 OF 4 THE TDS PROVISIONS OF THE I.T. ACT AND HAS THUS REN DERED ITSELF LIABLE FOR LEVY OF PENALTY U/S 271C OF THE I.T. ACT. 12. THE TOTAL AMOUNT OF TAX THE ASSESSEE COMPANY HAS FAILED TO DEDUCT OR PAY TO GOVT. ACCOUNT WORKS OUT TO RS.32 62 080/- . AS PER PROVISIONS OF SECTION 271C OF THE IT ACT THE ASSESSEE COMPANY IS LIABLE TO PAY BY WAY OF PENALTY A SUM EQUAL TO THE AMOUNT OF TAX WHICH IT HAS FAILED TO DEDUCT OR PAY AS THE CASE MAY BE. ACCORDINGLY I AM SATIS FIED THAT IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271C OF THE I.T. ACT AND TH EREFORE I IMPOSE AND ORDER TO LEVY THE PENALTY OF RS.32 62 080/- I.E. EQ UAL TO THE AMOUNT OF TAX WHICH IT HAS FAILED TO DEDUCT OR PAY. ISSUE DEMAND NOTICE AND CHALLAN ACCORDINGLY I.T.N.S. 150 FORMS PART OF THIS ORDER. 5. AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO CANCELLED THE PENALTY IN QUESTION BY OBSERVING AS F OLLOWS:- 6. I HAVE DULY CONSIDERED THE ORDER U/S 271C SUB MISSION OF THE APPELLANT AND ALSO GONE THROUGH ORDER OF THE AO U/S 271(1)/201(1A) PENALTY ORDER IN QUESTION ORDERS OF CIT(APPEALS) A ND HONBLE ITAT. AFTER TAKING EVERYTHING INTO ACCOUNT I AM OF CONSIDERED O PINION THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY DUE TO FOLLOWING REASO NS: (A) THE APPELLANT DID DEDUCT TDS ALBEIT UNDER PROVI SIONS OF SECTION 194J INSTEAD OF 194I. THIS IN ITSELF SHOWS THAT THERE W AS NO MALAFIDE INTENTION OF THE APPELLANT I.E. IT HAD NO INTENTION NOT TO DEDUCT TDS. AND THE A.O. IN HIS ORDER U/S 201(1)/201(1A) PASSED ON 25/03/2011 HAS RIGHTLY OBSERVED THAT THE ASSESSEE HAS DULY DE DUCTED TDS AND DEPOSITED IN THE GOVERNMENT ACCOUNT AND THE INTENTI ON OF THE ASSESSEE IS NOT TO CONCEAL THE TDS AMOUNT AND HENCE THE PENALTY U/S 271C IS NO INITIATED. A NO OF VARIOUS COURTS ARE ALL IN FAVOUR OF THE APPELLANT ON THIS ISSUE. (B) EVEN OTHERWISE ALSO THE ISSUE WHETHER THE PAYME NT IS COVERED BY PROVISIONS OF SECTION 194I OR 194J IS NOT COMPLETEL Y FREE FROM DEBATE. AND THE APPELLANT HAS NOT CONCEALED ANY FACT. HENCE IN VIEW OF THE ABOVE FACTS AND LAW PENALTY LEVIED IS HEREBY CANCELLED. 6. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF T HE APPLICABLE LEGAL POSITION. 8. WE FIND THAT IT IS ONLY ELEMENTARY THAT AS PROV IDED IN SECTION 273B NO PENALTY UNDER SECTION 271C SHALL BE IMPOSABLE FOR A NY FAILURE REFERRED TO IN SECTION 271C AS LONG AS THE ASSESSEE CAN PROVE THAT THERE WAS A REASONABLE CAUSE FOR THE SAID FAILURE. IT IS IN THIS CONTEXT THAT ONE HAS TO EVALUATE STATED BONAFIDE BELIEF OF THE ASSESSEE THAT DEDUCTION AT S OURCE WAS REQUIRED TO BE MADE UNDER SECTION 194J. IN OUR CONSIDERED VIEW T HE APPLICATION OF SECTION 194I ON THE FACTS OF THIS CASE AT THE MINIMUM WAS NOT ENTIRELY FREE FROM DOUBT. AS A MATTER OF FACT THERE IS NO FINDING ON THIS AS PECT OF THE MATTER BY THE CO- ITA NO. 112/RJT/2017 & CO 16/RJT/2017 DCIT VS. GUJARAT PIPAVAV PORT LTD ASSESSMENT YEAR: 2007-08 PAGE 4 OF 4 ORDINATE BENCH IN QUANTUM PROCEEDINGS. IN ANY CASE WHEN ASSESSEE IS DEDUCTING TAX AT SOURCE UNDER ONE SECTION AND MAKIN G DUE DISCLOSURE OF HIS STAND AND THE RECIPIENT IS A PUBLIC BODY NO MALAF IDES CAN BE ATTRIBUTED TO SUCH SHORT TAX DEDUCTION EVEN IF THAT BE SO BY THE ASS ESSEE. IN OUR CONSIDERED VIEW THE WELL REASONED FINDINGS OF THE LEARNED CIT (A) ARE CORRECT JUDICIOUS AND DO NOT CALL FOR ANY INTERFERENCE. WE APPROVE THE S AME AND DECLINE TO INTERFERE IN THE MATTER. AS WE DO SO WE MAY ALSO MAKE IT CL EAR THAT THE GROUNDS OF APPEAL RAISED BEFORE US TO A CERTAIN EXTENT DEAL WITH IRRELEVANT FACTORS AND DO NOT CALL FOR OUR SPECIFIC COMMENTS. SUFFICE TO SAY THAT IN OUR CONSIDERED VIEW RELIEF GRANTED BY THE CIT(A) IS JUSTIFIED AND MEETS OUR APPROVAL. 9. THE REVENUES APPEAL IS THUS DISMISSED. 10. LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS THE CROSS-OBJECTION AND THE CROSS-OBJECTION IS AS SUCH DISMISSED FOR WANT OF PROSECUTION. 6. WE SEE NO REASON TO TAKE ANY OTHER VIEW OF THE M ATTER THAN THE VIEW SO TAKEN BY US FOR ASSESSMENT YEAR 2006-07. RESPECTFULLY FO LLOWING THE SAME WE DISMISS THE ASSESSING OFFICERS APPEAL AS ALSO ASSESSEES CROS S-OBJECTION FOR THIS ASSESSMENT YEAR AS WELL. 7. IN THE RESULT THE APPEAL AS ALSO THE CROSS-OBJ ECTION ARE DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 28 TH DAY OF NOVEMBER 2017 SD/- SD/- RAJPAL YADAV PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD THE 28 TH DAY OF NOVEMBER 2017 **AM**BT COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT 1. DATE OF DICTATION: ..27.11.2017- - 6 PAGES MANU SCRIPTS OF HONBLE AM ARE ATTACHED. ORDER PREPARED ACCORDINGLY...... ... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: ....28.11.2017....... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: 28.11.2017....... . 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 28.11.2017.. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : 28.11.2017.. 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: ..