M/s. Solidaire India Limited, CHENNAI v. ITO, CHENNAI

ITA 1330/CHNY/2011 | 1993-1994
Pronouncement Date: 16-12-2011 | Result: Dismissed

Appeal Details

RSA Number 133021714 RSA 2011
Assessee PAN AAACS5019G
Bench Chennai
Appeal Number ITA 1330/CHNY/2011
Duration Of Justice 4 month(s) 28 day(s)
Appellant M/s. Solidaire India Limited, CHENNAI
Respondent ITO, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 16-12-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 16-12-2011
Date Of Final Hearing 09-11-2011
Next Hearing Date 09-11-2011
Assessment Year 1993-1994
Appeal Filed On 19-07-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH CHENNAI [BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI N.S. SAINI ACCOUNTANT MEMBER] I.T.A.NOS.1329 TO 1332/MDS/2011 ASSESSMENT YEARS : 1992-93 1993-94 1994-95 & 19 95-96 M/S SOLIDAIRE INDIA LTD REGD. OFF.NO.12 3 RD FLOOR 1 ST MAIN ROAD GANDHI NAGAR ADYAR CHENNAI 600 020 VS THE INCOME TAX OFFICER TDS WARD II(4) CHENNAI [PAN - AAACS5019G ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.SRIDHAR ADVOCATE RESPONDENT BY : SHRI A.C.JOSEPH SR.AR DATE OF HEARING : 09-11-2011 DATE OF PRONOUNCEMENT : 16-11-2011 O R D E R PER BENCH: THIS IS A BUNCH OF FOUR APPEALS FILED BY THE SAME ASSESSEE FOR ASSESSMENT YEARS 1992-93 TO 1995-96 WHICH EMANATE F ROM SEPARATE ORDERS OF THE LD. CIT(A) IV CHENNAI BUT DATED 25 .5.2011. FOR THE SAKE OF CONVENIENCE AND BREVITY WE PROCEED TO DECI DE THEM BY A COMMON ORDER. ITA 1329 TO 1332/11 :- 2 -: 2. TO SUMMARIZE THE FACTS THE ASSESSEE COMPANY M/ S SOLIDAIRE INDIA LTD. HAS DEDUCTED TAX ON DIFFERENT DATES FRO M 1.10.1991 TO 1.4.1994 FROM VARIOUS HEADS OF INCOME LIKE DIVIDEND INTEREST DEBENTURES ETC. THE ASSESSEE-COMPANY FAILED TO RE MIT THE TDS AMOUNTS INTO THE GOVERNMENT ACCOUNT WITHIN THE DUE DATES WHICH FACT LED TO CHARGING OF INTEREST U/S 201(1A) OF THE ACT. BEFORE PASSING ORDERS U/S 201(1A) THE ASSESSING OFFICER SHOW CAUS ED THE ASSESSEE STATING AS TO WHY INTEREST U/S 201(1A) MAY NOT BE C HARGED AND PENALTY U/S 221 SHOULD NOT BE LEVIED FOR FAILURE TO REMIT T HE TDS AMOUNT WITHIN THE DUE DATES. ON RECEIPT OF SUCH SHOW CAUSE NOTICE THE ASSESSEE- COMPANY RUSHED BEFORE THE CCIT AND MADE REQUEST FOR PAYMENT OF TDS AMOUNT IN INSTALMENTS AND PAID THE SAME INTO GO VERNMENT ACCOUNT AS PER THE DIRECTIONS/SCHEME OF INSTALMENT GIVEN BY THE CCIT. SUBSEQUENTLY THE ASSESSING OFFICER[ITO (TDS)] PASS ED ORDER U/S 201(1A) FOR PAYMENT OF INTEREST ON 8.8.1996. AGAIN ST THIS ORDER THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) WH O DID NOT OBLIGE THE ASSESSEE ON THE REASONING THAT CHARGING OF INTE REST IS NOT COMPENSATORY IN NATURE BUT DID NOT SATISFY THE ASS ESSEE-COMPANY PREFERRED APPEAL BEFORE THE ITAT WHO HAS SET ASIDE THE ORDERS OF THE LD. CIT(A) AND REMITTED BACK THE MATTER TO ITO(TDS) WITH A DIRECTION TO CONSIDER THE APPLICATION OF SECTION 194A(3)(III) (A) & (B). THE CONTENTION OF THE ASSESSEE BEFORE THE ITO(TDS) WAS THAT THIS SECTION ITA 1329 TO 1332/11 :- 3 -: APPLIES TO THE ASSESSEE WHO IS EXEMPTED FROM THE TA X DEDUCTION FROM INTEREST PAYMENTS MADE TO ANY BANKING COMPANY TO WH ICH THE BANKING REGULATION ACT APPLIES OR ANY CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING OR ANY FINANCIAL CORPORATION ES TABLISHED UNDER A CENTRAL STATE OR PROVINCIAL ACT. ACCORDING TO T HE ASSESSEE THIS ACTION HAS TO BE CONSIDERED BEFORE DEDUCTING TAX FR OM INTEREST PAID OR PAYABLE. THE ASSESSEE HAD DEDUCTED THE TAX AND KEP T THE TDS AMOUNT WITH IT FOR YEARS TOGETHER WITHOUT REMITTING IT TO THE GOVERNMENT ACCOUNT AND ONLY AFTER ISSUANCE OF NOTIC E BY ITO TDS WARD(4) ON 30.9.1994 THE ASSESSEE STARTED REMITTIN G THE TAX IN VARIOUS INSTALMENTS. AS PER THE ASSESSING OFFICER ONCE THE TDS IS DEDUCTED RIGHTLY OR WRONGLY THE ASSESSEE IS BOUND TO REMIT THE SAME IN GOVERNMENT ACCOUNT WITHIN THE DUE DATE ALLOWED I N THE ACT. PROVISIONS OF SECTION 194A(3)(III) WAS NOT FOUND AP PLICABLE TO THIS CASE BECAUSE THE ASSESSEE-COMPANY HAS DEDUCTED TAX AND K EPT IT WITH ITSELF ALTHOUGH THE PAYEE IS A BANKING OR FINANCE COMPANY IN WHICH CASE TDS IS EXEMPT. WE ALSO OBSERVE THAT EXEMPTION CLAU SE DOES NOT APPLY TO THE ASSESSEE-COMPANY WHEN IT HAS DEDUCTED TAX AT SOURCE AND KEPT IT FOR LONG WITH ITSELF. ACCORDINGLY THE ASSESSING OFFICER HAS LEVIED INTEREST U/S 201(1A) AGAIN AND DIRECTED THE ASSESSE E TO PAY THIS INTEREST. BEFORE THE LD. CIT(A) SIMILAR ARGUMENT WAS RAKED UP BUT TO NO AVAIL. NOW THE ASSESSEE HAS COME BEFORE US IN S ECOND APPEAL. ITA 1329 TO 1332/11 :- 4 -: 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE P ERUSED THE ENTIRE MATERIAL AVAILABLE ON RECORD. THE ONLY ISSU E INVOLVED IN THESE APPEALS IS AS TO WHETHER WHEN THE ASSESSEE HAS DEDU CTED TAX AT SOURCE AND HAS FAILED TO DEPOSIT THE SAME IN THE GO VERNMENT TREASURY AS PER LAW THE PROVISIONS OF SECTION 201(1A) WILL APPLY OR NOT. THE LD.AR TOOK THE SIMILAR LINE OF ARGUMENT BEFORE US A S WAS TAKEN BEFORE THE AUTHORITIES BELOW. THE ASSESSING OFFICER HAS FO UND IN THE CIRCUMSTANCES OF THE CASE THAT THE ASSESSEE-COMPANY DOES NOT FALL UNDER THE EXEMPTION PROVIDED IN CLAUSE (A)&(B) OF S ECTION 194A(3)(III) EVEN IF THE PAYEE IS A BANKING OR FINANCE COMPANY . DESPITE THE FACT THAT LEGALLY THE ASSESSEE MAY NOT HAVE DEDUCTED TDS BUT IN FACT IT HAS DEDUCTED THE SAME AND HAS NOT DEPOSITED IT IN T HE GOVERNMENT ACCOUNT. THE CHARGING OF INTEREST U/S 201(1A) HAS BEEN HELD TO BE MANDATORY BEING NOT COMPENSATORY IN NATURE. THE AS SESSEE IS MERELY A CUSTODIAN OF TDS AMOUNT AFTER DEDUCTION AND CANNO T USE IT IN ANY OTHER WAY EXCEPT FOR DEPOSITING THE SAME IN GOVERNM ENT ACCOUNT. SO THE INTEREST IS LEVIABLE IRRESPECTIVE OF OTHER FACT AND THE ASSESSEE CANNOT DERIVE ILLEGAL BENEFIT. THE ASSESSEE HAD AN OPTION NOT TO DEDUCT TAX BUT ONCE DEDUCTED AND NOT PAID ALL RELEVANT P ROVISIONS SHALL APPLY. RESTORING THE ISSUE WOULD NOT SERVE ANY PUR POSE. IN THE RECENT ITA 1329 TO 1332/11 :- 5 -: JUDGMENT OF HON'BLE APEX COURT WHILE DECIDING THE C ASE OF ELI LILLY AND CO. INDIA PVT. LTD 312 ITR 225 HAS CLEARLY HELD T HAT LEVY OF INTEREST U/S 201(1A) IS MANDATORY AND IS NOT COMPENSATORY IN NATURE AND THE PERIOD OF DEFAULT STARTS FROM THE DATE OF DEDUCTIBI LITY TILL THE DATE OF ACTUAL PAYMENT BASED ON THE PRINCIPLE OF VICARIOUS LIABILITY. IT WAS ALSO HELD THAT THE ABSENCE OF LIABILITY FOR TAX WILL NOT DILUTE THE DEFAULT. THIS LIABILITY BEING ABSOLUTE ADMITS NO EXCUSES AND BON AFIDES. ACCORDINGLY WE DO NOT FIND ANY MERIT IN THE APPEALS FILED BY TH E ASSESSEE. NO FRUITFUL PURPOSE WILL BE SERVED BY REMITTING THE IS SUE BACK TO THE FILE OF THE LD. CIT(A). ALTHOUGH THE ASSESSEE HAS RAISED A S MANY AS TEN GROUNDS OUT OF WHICH 1 AND 10 ARE PURELY GENERAL I N NATURE AND THE REMAINING GROUNDS TALK ABOUT IN EFFECT ONE ISSUE WHICH WE HAVE ALREADY DECIDED. 4. IN THE RESULT ALL THE APPEALS STAND DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 16-12-2011. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER ( HARI OM MARATHA ) JUDICIAL MEMBER DATED: 16 TH DECEMBER 2011 RD COPY TO: APPELLANT /RESPONDENT/CIT(A)/CIT/DR