Natioanl Termal Power Corporation Ltd, Angul v. ITO, Dhenkanal

ITA 128/CTK/2008 | 2003-2004
Pronouncement Date: 21-01-2011

Appeal Details

RSA Number 12822114 RSA 2008
Bench Cuttack
Appeal Number ITA 128/CTK/2008
Duration Of Justice 2 year(s) 8 month(s) 23 day(s)
Appellant Natioanl Termal Power Corporation Ltd, Angul
Respondent ITO, Dhenkanal
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 21-01-2011
Assessment Year 2003-2004
Appeal Filed On 28-04-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK () BEFORE . . HONBLE SHRI K.K.GUPTA ACCOUNTANT MEMBER. /AND . . . S HRI K.S.S.PRASAD RAO JUDICIAL MEMBER / I.T.A.NO. 128/CTK/2008 / ASSESSMENT YEAR 2003 - 04 NTPC TSTPP KANIHA TALCHER. - - - VERSUS - ITO WARD I DHENKANAL. ( /APPELLANT ) ( / RESPONDENT ) / I.T.A.NO. 130/CTK/2008 / ASSESSMENT YEAR 2003 - 04 ACIT (TDS ) BHUBANESWAR - - - VERSUS - NTPC TSTPP KANIHA TALCHER. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE ASSESSEE: / SHRI A.K.PANDA AR / FOR THE DEPARTMENT : / SHRI S.K.DASH DR / ORDER . . SHRI K.K.GUPTA ACCOUNTANT MEMBER. THE APPEAL BY THE ASSESSEE AND THE REVENUE ARE BEFORE US ON IDENTICAL ISSUE WHICH HAD BEEN CONSIDERED BY THE HIGH POWERE D COMMITTEE ON DISPUTES THE ASSESSEE BEING A PUBLIC SECTOR UNDERTAKING. 2. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE BASIS OF A MISC. PETITION HAD PRAYED ON RECORD THAT THE HIGH POWERED COMMITTEE ON DISPUTES HA D ALLOWED THE ASSESSEES APPEAL TO BE PER SU E D BEFORE THE TRIBUNAL BUT AT THE SAME TIME IT DECLINED THE DEPARTMENT TO PURSUE THE SAME BY OBSERVING THAT THE PERMISSION TO THE ASSESSEE HAD ALREADY BEEN GRANTED. HAVING NOTED THE SAME WE PROCEED WITH THE HEARING OF THE APPEALS. I .T.A.NO. 128 AND 130/CTK/2008 CROSS APPEALS 2 3. THE ASSESSEE HAS APPE ALED AGAINST THE ORDER OF THE LEARNED CIT(A) CONFIRMING THE DEMAND OF SHORT DEDUCTION OF TAX WITH INTEREST ON THE BASIS OF CONTRACT PAYMENTS MADE BY THE ASSESSEE BEYOND FOUR YEARS THE SHORT DEDUCTION PERTAINING TO THE FY 2002 - 03 IN THE FY 2007 - 08 U/SS.201( 1) AND 201(1A) . 4. THE LEARNED COUNSEL FOR THE ASSESSEE INITIATING ARGUMENT S SUBMITTED THAT HONBLE HIGH POWERED COMMITTEE ON DISPUTES WAS APPROACHED BY THE ASSESSEE AS WELL AS THE REVENUE WHEN THE ASSESSEE STATED BEFORE THEM THAT THE NOTICE OF DEMAND F OR SHORT DEDUCTION OF TDS WAS ISSUED AFTER A PERIOD OF MORE THAN FOUR YEARS FROM THE DATE OF PAYMENTS MADE TO THE CONTRACTO RS THE MUMBAI BENCH OF ITAT HAD HELD IN THE CASE OF CENTURY TEXTILES AND INDUSTRIES LTD (13 SOT 507) THAT THE NOTICES ISSUED UNDER SE CTION 201(1 ) AND 201(1A) READ WITH SECTION 195 OF THE INCOME - TAX ACT 1961 FOR FAILURE TO DEDUCT TAX AT SOURCE BEYOND THE PERIOD OF 4 YEARS WERE BARRED BY LIMITATION AND THEREFORE ASSESSING OFFICERS ORDER WAS VOID AB INITIO . THE REVENUES CONTENTION AS NOT ED BY THE HIGH POWERED COMMITTEE WAS THAT NO TIME LIMIT HA D BEEN PRESCRIBED UNDER THE ACT FOR PASSING ORDER U/S.201 THEREFORE WAS CONSIDERED BY THE TRIBUNAL IN GIVING CONFLICTING DECISIONS. THE APPROVAL THEREFORE WAS GRANTED BY THE HONBLE HIGH POWERED CO MMITTEE FOR DISMISSAL OF THE DEPARTMENT APPEAL TO BE PURSUED BEFORE THE TRIBUNAL . THIS INDICATES A CONTROVERSY GENERATED BY THE REVENUE IN THE CASE OF THE ASSESSEE. HE PERUSED THE GROUNDS RAISED BY THE DEPARTMENT BEFORE THE TRIBUNAL WHERE THEY HAVE AGITATE D THE ACTION OF THE LEARNED CIT(A) IN HOLDING THAT THE TDS PROVISION U/S.194C IS APPLICABLE AND NOT SECTION 19 4J IN RESPECT OF PAYMENT OF 8.30 CRORES CLAIMED AS DIRECT COST OF WORK UNDERTAKEN BY M/S.IRCON. THEY HAVE SUPPORTED THEIR CONTENTION BY RELYING O N CBDT CIRCULARS NO.715 I .T.A.NO. 128 AND 130/CTK/2008 CROSS APPEALS 3 DT.8.8.95 AND NO.720 DT.30.8.1995 WHICH PERTAINS TO TWO DIFFEREN T SECTIONS I.E. 194C AND 194J THEREFORE COULD NOT BE ATTRIBUTABLE TO A SINGLE PAYMENT. 5. THE BRIEF FACTS ARE THAT THE ASSESSING OFFICER NOTED THAT IN THE ANNUAL RET URN FILED BY THE ASSESSEE IN FORM 26/C THE PAYMENTS MADE WERE SUBJECTED TO TAX @ 1.18% WHEN FILING OF THE ANNUAL RETURN THE TDS WAS MARKED AS PAID FOR FEES FOR PROFESSIONAL AND TECHNICAL SERVICES U/S.194J. THE RATE OF TAX ON SUCH PAYMENT OUGHT TO HAVE BE EN 5.2 5 % WHICH DIFFEREN CE HE CALCULATED AND ISSUED NOTICE OF DEMAND AND WAS APPEALED AGAINST BEFORE THE FIRST APPELLATE AUTHORITY. THE FIRST APPELLATE AUTHORITY TOOK COGNIZANCE OF THE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE - APPELLANT WHICH INTER ALIA ALSO INDICATED THAT SUCH DEMAND COULD NOT MADE AFTER A LAPSE OF FOUR YEARS OF FILING OF THE ANNUAL RETURN. THE LEARNED CIT(A) PERUSED THE CONTRACT ENTERED INTO BY THE ASSESSEE AND THE LOA N AMELY M/S.IRCON WHO HAD IN THE IMPUGNED FINANCIAL YEAR UNDERTAKEN THE C ONTRACT WORK OF MORE THAN 27 CRORES WAS SUBJECTED TO PAYMENT AS SUPERVISION CHARGES AMOUNTING TO 8.30 CRORES WHICH AMOUNT AS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE WAS ON ACCOUNT OF REIMBURSEMENT OF VARIOUS EXPENSES INCURRED BY THE CONTRACTO R THEREFORE COULD NEITHER BE CALLED SUPERVISORY CHARGES WHEN IT WAS ERRONEOUSLY MENTIONED IN THE ANNUAL RETURN OF FEES PAID AGAINST PROFESSIONAL AND TECHNICAL SERVICES WHICH THE LEARNED ASSESSING OFFICER OBSERVED IN HIS ORDER CREATING DEMAND. THE AMOUNT CONTINUED TO BE PAID TO THE CONTRACTOR AS PER THE TERMS OF LAWFUL REIMBURSING TO M/S. IRCON ON BEHALF OF THE ASSESSEE THEREFORE INCLUDED A LUMP SUM PAYMENT OF FEES SPREAD OVER A PERIOD THE CONTRACT CANNOT BE IDENTIFIED EITHER BY THE ASSESSING OFFICER OR THE LEARNED CIT(A) WHICH HAS CREATED CONFUSION IN THE MIND OF THE ASSESSING OFFICER WHETHER COULD BE TAKEN AS PART OF SUB - CONTRACT SUBJECTED TO 1.18% VIS - A - VIS 5.25% U/S.194J . THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE VERY I .T.A.NO. 128 AND 130/CTK/2008 CROSS APPEALS 4 REASON THAT THE LEA RNED CIT(A) DID NOT APPRECIATE THE FINE TUN ING OF THE PAYMENT AGAINST THE AGREEMENT IS AGITATED BY THE REVENUE BEFORE THE TRIBUNAL THAT A SINGLE PAYMENT COULD NOT BE COVERED BY TWO CIRCULARS OF CBDT FOR A SINGLE ATTORNEY HOLDER . 6. WE HAVE HEARD THE RIVAL PARTIES AT LENGTH AND IT HAS NOT BEEN ESTABLISHED BEYOND DOUBT THAT TDS HAS BEEN SHORT DEDUCTED WHICH THE LEARNED COUNSEL INSIST OUGHT NOT TO HAVE TAKEN UP FOR CREATING DEMAND AFTER A LAPSE OF FOUR YEA RS THE FACTS HAVE NOT BEEN DELIBERATED UPON BY THE AUTH ORITIES BELOW IN ITS RIGHT EARNEST TO THE EXTENT THAT SHORT DEDUCTION HAS TO BE ESTABLISHED BEFORE HOLDING THAT A SHORT DEDUCTION OCCURRED FOUR YEARS AGO. THE LEARNED COUNSEL HAS SUBMITTED THAT THE RUNNING BILLS INCLUDED THE SUPERVISOR PAYMENT ALSO THEREFO RE COULD NOT BE SINGLED OUT IN THIS PARTICULAR FINANCIAL YEAR THEREFORE NEVER OCCURRED IN A PERIOD LESS THAN FOUR YEARS MAY ONLY BE CONSIDERED AFTER VERIFYING THE FACTS THAT THE SCOPE FOR DEDUCTION CONTINUED IN THE FY AND WAS NOT SINGLED OUT IN THE IMPUGNE D YEAR OR TO BE AGITATED ON THE LEGAL ISSUE WHICH THE HIGH POWERED COMMITTEE HAS RIGHTLY NOTED WAS CONFLICTING IN SO FAR AS THE TRIBUNAL MUMBAI BENCH HAD ALREADY ESTABLISHED THAT SUCH ASSESSMENTS ARE VOID - AB - INITIO . THE LEARNED DR HAS VERY CANDIDLY ACCEPT ED THE PROPOSITION THAT THE GROUNDS OF APPEAL RAISED BY THE REVENUE BEFORE THE TRIBUNAL SPEAK VOLUMES ABOUT THE FACTS NOT HAVING BEEN CLARIFIED EITHER BY THE ASSESSING OFFICER OR BY THE LEARNED CIT(A) THEREFORE REQUIRES RECONSIDERATION ON THE BASIS OF FIN DING OF FACTS WHETHER THE TOTAL CONTRACT OF 27 CRORES ENDED IN ISOLATING SUPERVISORY CHARGES TO BE PAID AFTER THE CONTRACT WORK OR DURING THE COURSE OF CARRYING OUT THE CONTRACT BY THE POWER OF ATTORNEY HOLDER NAMELY M/S.IRCON AND WHETHER COULD BE SUBJECTED TO BOTH SECTIONS NAMELY 194C AND 194J FO R DEDUCTION AS A SUB - CONTRACT @1% WAS ONLY TO BE CONSIDERED BY THE LEARNED ASSESSING OFFICER. I .T.A.NO. 128 AND 130/CTK/2008 CROSS APPEALS 5 THE ASSESSING OFFICER HAS TO IDENTIFY THE AMOUNTS TO BE TAXED UNDER THE PROVISIONS OF SECTION 194J WHICH THE ASSESSEE TECHNICALLY DENIES HOLDING THE AMOUNT AS REI MBURSEMENT PAID TO THE POWER OF ATTORNEY HOLDER AND NOT THE CONTRACTOR. WITHOUT GOING IN TO THE ISSUE OF CREATING A DEMAND AFTER LAPSE OF FOUR YEARS AS WAS NOTED BY THE HIGH POWERED COMMITTEE RELYING ON THE DECISION OF MUMBAI BENCH ITAT IN THE CASE OF CEN TURY TEXTILES AND INDUSTRIES LTD (13 SOT 507) AND ANOTHER CASE MANGALORE REFINERY AND PETROCHEMICALS LTD V. DCIT [311 ITR (AT) 91 (MUMBAI)] WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED CIT(A) HAVING DELIBERATED ON THE ISSUE HAD ONLY CONFUSED THE REVENUE TO HOLD T HE PAYMENTS UNDER TWO DIFFERENT SECTIONS WHICH LOSES ITS CHARACTER NOT APPRECIATED EITHER BY THE ASSESSING OFFICER OR BY THE LEARNED CIT(A) AND ESTABLISHES THAT THE APPEAL FILED BY THE DEPARTMENT IS BOUND TO BE DISMISSED AS ALSO NOT APPROVED BY THE HIGH POWERED COMMITTEE ON DISPUTES . SO FAR AS THE APPEAL OF THE ASSESSEE IS CONCERNED FOR THE REASONS DISCUSSED ABOVE WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO VERIFY AS INDICATED ABOVE AND PASS THE ORDER AFRESH WITHIN A PERIOD OF THREE MONTHS HENCE IN ACCORDANCE WITH LAW AND ALSO BY CONSIDERING THE ASSESSEES CONTENTION OF CREATING A DEMAND AFTER A LAPSE OF FOUR YEARS ON EXAMINING THE FACTS ON RECORD. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED WHEREAS THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER IS PRO NOUNCED IN OPEN COURT ON DT. 21 ST JANUARY 2011 S D/ - S D/ - ( . . . ) ( K.S.S.PRASAD RAO) JUDICIAL MEMBER (. . ) (K.K.GUPTA) ACCOUNTANT MEMBER. () DATE: 21 ST JANU ARY 2011 ( ) ( H.K.PADHEE ) SE NIOR.PRIVATE SECRETARY. I .T.A.NO. 128 AND 130/CTK/2008 CROSS APPEALS 6 - COPY OF THE ORDER FORWARDED TO: 1. / THE A SSESSEE : NTPC TSTPP KANIHA TALCHER. 2 / THE DEPARTMENT : ITO WARD I DHENKANAL/ ACIT (TDS) BHUBANESWAR 3. / THE CIT 4. ()/ THE CIT(A) 5. / DR CUTTACK BENCH 6. GUARD FILE . / TRUE COPY / BY ORDER [ ] SENIOR PRIVATE SECRETARY