I.T.O.(TDS)-6, Jhansi v. The New India Assurance Co.Ltd., Jhansi

ITA 211/AGR/2010 | 2001-2002
Pronouncement Date: 15-07-2011 | Result: Allowed

Appeal Details

RSA Number 21120314 RSA 2010
Assessee PAN AAACN4165C
Bench Agra
Appeal Number ITA 211/AGR/2010
Duration Of Justice 1 year(s) 1 month(s) 17 day(s)
Appellant I.T.O.(TDS)-6, Jhansi
Respondent The New India Assurance Co.Ltd., Jhansi
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 15-07-2011
Date Of Final Hearing 05-07-2011
Next Hearing Date 05-07-2011
Assessment Year 2001-2002
Appeal Filed On 28-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI P.K. BANSAL ACCOUNTANT MEMBER AND SHRI H.S. SIDHU JUDICIAL MEMBER ITA NOS.208 209 210 211 212 & 213/AGR/2010 ASST. YEARS: 1998-99 1999-2000 2000-01 2001-02 2002-03 & 2003-04 RESPECTIVELY INCOME TAX OFFICER (TDS)-6 VS. THE NEW INDIA ASS URANCE CO. JHANSI. LIMITED DIVISIONAL OFFICE KACHAHARI CHAURAHA JHANSI. (PAN : AAACN 4165 C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINOD KUMAR JR. D.R. RESPONDENT BY : SHRI RAJESH MALHOTRA C.A. ORDER PER BENCH : THESE APPEALS HAVE BEEN FILED BY THE REVENUE AGAINS T THE COMMON ORDERS DATED 21.01.2010 PASSED BY THE LD. CIT(A)-II AGRA FOR THE ASSESSMENT YEARS 1998-99 1999-2000 2000-01 2001-02 2002-03 & 200 3-04 RESPECTIVELY. SINCE ALL THESE APPEALS FILED BY THE REVENUE INVOLVE COMM ON ISSUES THEREFORE ALL THESE APPEALS ARE DISPOSED OF BY THIS CONSOLIDATED ORDER. 2 2. THE ONLY ISSUE INVOLVED IN THESE APPEALS FILED B Y THE REVENUE IS WHETHER THE NEW INDIA ASSURANCE CO. LTD. WAS RESPONSIBLE FOR TH E DEDUCTION OF TAX AT SOURCE OUT OF THE PAYMENT OF INTEREST ON COMPENSATION PAID TO THE CLAIMANTS UNDER THE MOTOR VEHICLE ACT UNDER SECTION 194A OF THE INCOME TAX ACT 1961 (THE ACT HEREINAFTER). THE ASSESSING OFFICER NOTED FROM THE LIST OF PERSONS TO WHOM THE NEW INDIA ASSURANCE COMPANY LIMITED JHANSI HAS PAI D THE INTEREST UNDER THE MOTOR VEHICLE ACT DURING THE PERIOD 01.04.1997 TO 3 1.03.2003 THAT NEW INDIA ASSURANCE COMPANY LIMITED HAS NOT DEDUCTED THE TAX AS PER THE PROVISIONS OF SECTION 194A OF THE ACT. HE ACCORDINGLY ISSUED NOT ICE DATED 14.09.2004 REQUIRING THE INSURANCE COMPANY TO EXPLAIN AS TO WHEY THE DEM AND MAY NOT BE RAISED AGAINST IT AND INTEREST UNDER SECTION 201(1A) MAY N OT BE LEVIED. THE ASSESSEE CLAIMED THAT SINCE THE INTEREST ON COMPENSATION HAS BEEN PAID AS PER THE AWARD MADE UNDER THE MOTOR VEHICLE ACT THEREFORE THE AS SESSEE IS NOT ENTITLED TO DEDUCT THE TDS. IT IS BOUND TO PAY THE INTEREST AS HAS BE EN DIRECTED BY THE TRIBUNAL. THE ASSESSING OFFICER DID NOT AGREE AND HELD THAT THE A SSESSEE FAILED TO DEDUCT THE TAX ON PAYMENT OF INTEREST ON COMPENSATION PAID UNDER T HE MOTOR VEHICLE ACT FROM 01.04.1997 TO 31.03.2003 AND ACCORDINGLY TREATED TH E DIVISIONAL MANAGER OF THE NEW INDIA ASSURANCE COMPANY LIMITED JHANSI TO BE A N ASSESSEE IN DEFAULT. THE INTEREST UNDER SECTION 201(1A) WAS ALSO LEVIED AND ACCORDINGLY DEMANDS WERE RAISED FOR EACH OF THE FINANCIAL YEAR 1997-98 1998 -99 1999-2000 2000-01 3 2001-02 & 2002-03. THE ASSESSEE WENT IN APPEAL BEF ORE THE CIT(A). THE CIT(A) CANCELLED THE ORDER OF THE ASSESSING OFFICER RELYIN G ON THE DECISION OF THIS TRIBUNAL IN ITA NOS.317 TO 321/AGR/2003 DATED 24.01.2006. 3. BEFORE US THE LD. DEPARTMENTAL REPRESENTATIVE R EFERRED TO THE PROVISIONS OF SECTION 194A OF THE ACT AND CONTENDED THAT READING OF SECTION 194A(1) CLEARLY INDICATES THAT ANY PERSON NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY AND WHO IS RESPONSIBLE FOR DISTRIBUTION OF INTEREST WHI CH IS NOT BY WAY OF INTEREST ON SECURITIES IS UNDER AN OBLIGATION TO DEDUCT INCOME TAX THEREON AT THE RATES IN FORCE. SECTION 194A(3) OF THE ACT PROVIDES FOR EXCEPTIONS IN THE SENSE THE OBLIGATION TO SO DEDUCT IS RELIEVED IN SUCH A SITUATION. CLAUSE (IX ) OF SECTION 194A(3) WAS INSERTED BY THE FINANCE ACT 2003 W.E.F. JUNE 1 2003 WHERE A RELAXATION IS MADE IN FAVOUR OF THE INSURANCE COMPANY WHO MAY HAVE OCCASION TO MAKE PAYMENT OF INTEREST TO THE CLAIMANTS AND IF SUCH PAYMENT OF INTEREST FOR A PERIOD OF ONE YEAR DOES NOT EXCEED ` 50 000/- UNDER SUCH CASE THE INSURANCE COMPANY IS NOT UNDER AN OBLIGATION TO DEDUCT TAX. THE SUBJECT MATTER OF NO N-COMPLIANCE OF THE PROVISIONS IN THIS CASE IS FOR THE PERIOD PRIOR TO JUNE 1 200 3. THEREFORE THE ASSESSEE WAS UNDER AN OBLIGATION TO DEDUCT THE TAX AT SOURCE ON PAYMENT OF INTEREST IN TERMS OF SECTION 194/194A(3). RELIANCE WAS PLACED IN THIS R EGARD ON THE FOLLOWING DECISIONS :- 4 1) DIVISIONAL MANAGER NEW INDIA ASSURANCE COMPANY LIMITED VS. ITO AND ANOTHER 275 ITR 227 (KARNATAKA). 2) NEW INDIA ASSURANCE CO. LTD. VS. MANI AND OTHERS 270 ITR 394 (MADRAS). 3) CIT VS. UNITED INSURANCE CO. LTD. 325 ITR 231 ( KARNATAKA) 4) BIKRAM SINGH & OTHERS VS. LAND ACQUISITION COLLE CTOR & OTHERS 224 ITR 551 (SC) 5) M. KUMARAN & OTHERS VS. STATE OF KERALA & ANOTHE R 239 ITR 848 (KERALA). 4. IT WAS ALSO CONTENDED THAT THE DECISION OF AGRA BENCH OF THIS TRIBUNAL IN ITA NOS.317 TO 321/AGR/2003 DATED 24.01.2006 HAS SI MPLY FOLLOWED THE DECISION OF OTHER TRIBUNAL IN THE CASE OF ORIENTAL INSURANCE COMPANY LIMITED VS. ITO IN ITA NOS.276 & 280/AGRA/2003 VIDE ORDER DATED 31.01. 2005. THE TRIBUNAL HAS ALSO FOLLOWED ANOTHER DECISION OF THE TRIBUNAL DATE D 27.09.2004. THE TRIBUNAL HAS NOT DISCUSSED THE SAID DECISIONS OF THE HONBLE HIG H COURTS ON THE SAME VERY ISSUE. THE HIGH COURTS ARE SUPERIOR TO THE TRIBUNA L AND THE TRIBUNAL IS BOUND TO FOLLOW THE DECISION OF THE HONBLE HIGH COURTS. 5. THE LD. AUTHORISED REPRESENTATIVE ON THE OTHER HAND CONTENDED THAT THE CASE OF THE ASSESSEE IS DULY COVERED BY THE DECISIO N OF THE TRIBUNAL. WHEN A QUERY WAS RAISED BY THE BENCH WHETHER THE TRIBUNAL HAS CO NSIDERED THE DECISIONS OF THE HONBLE HIGH COURTS WHICH WAS DIRECTLY AVAILABLE H E WAS UNABLE TO REPLY. 5 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDERS OF THE TAX AUTHORIT IES BELOW. IT IS A FACT THAT IN THIS CASE THE ASSESSEE HAS PAID THE COMPENSATION TO THE VICTIMS OF MOTOR VEHICLE ACCIDENTS IN PURSUANCE OF THE AWARD GIVEN BY THE MO TOR ACCIDENT CLAIM TRIBUNAL. THE AWARD CONSISTS OF COMPENSATION AS WELL AS INTER EST. THE QUESTION BEFORE US RELATES ONLY TO THE NON-DEDUCTION OF TDS ON THE INT EREST. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE IS BOUND TO DEDUC T THE TDS AND ACCORDINGLY HE HELD THAT THE ASSESSEE IS DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 201 OF THE ACT AND IMPOSED TAX ALSO UNDER SECTION 201(1A). THE LD. CIT(A) DELETED THE DEMAND BY CANCELLING THE ORDER PASSED UNDER SECTION 194A/201/201(1A) OF THE ACT FOLLOWING THE ORDER OF THE I.T.A.T. AGRA BENCH DAT ED 24.01.2006. WE HAVE GONE THROUGH THE ORDER OF THIS TRIBUNAL DATED 24.01.2006 . WE NOTED THAT THE TRIBUNAL HAS SIMPLY FOLLOWED ANOTHER ORDER DATED 31.01.2005 WHICH HAS FOLLOWED THE DELHI BENCH DECISION DATED 27.09.2004. THE COPY OF THE D ECISION OF THE TRIBUNAL DATED 27.09.2004 WAS ALSO PLACED ON RECORD. WE NOTED THA T IN THAT DECISION THE TRIBUNAL HAS CATEGORICALLY HELD THAT SINCE THE ASSESSEE COMP ANY PAID THE DECRETAL AMOUNT THROUGH THE COURT THE ASSESSEE COMPANY HAS NO DISC RETION WHATSOEVER TO DEDUCT TDS ON THE AMOUNT OF DECREE PAYABLE TO THE CLAIMANT S AND ACCORDINGLY SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND ALLOWED THE APPEAL OF THE ASSESSEE. WE ALSO NOTED THAT THERE ARE DIRECT DECISIONS ON THE SAME I SSUE OF HONBLE MADRAS HIGH 6 COURT AS WELL AS OF HONBLE KARNATAKA HIGH COURT WH ICH HAVE TAKEN THE CONTRARY VIEW. THE DECISION OF MADRAS HIGH COURT IS THAT OF NEW INDIA ASSURANCE COMPANY LIMITED VS. MANI AND OTHERS 270 ITR 394. THIS DECISION IS DATED 07.07.2004 BUT WAS NOT AVAILABLE BEFORE THE D BEN CH OF THE DELHI TRIBUNAL WHILE DECIDING SIMILAR ISSUE AND THEREFORE THE D BENC H OF DELHI TRIBUNAL HAS NOT CONSIDERED THIS DECISION. THIS DECISION HAS TAKEN A VIEW NOT IN FAVOUR OF THE ASSURANCE COMPANY. THE FACTS OF THIS DECISION ARE SIMILAR TO THE FACTS OF THE CASE OF THE ASSESSEE. SIMILARLY ON THE OTHER DECISION IN THE CASE OF THE DIVISIONAL MANAGER NEW INDIA ASSURANCE COMPANY LIMITED VS. IT O AND ANOTHER 275 ITR 227 (KARNATAKA) THE HONBLE KARNATAKA HIGH COURT H AS ALSO TAKEN A VIEW THAT THE NEW INDIA ASSURANCE COMPANY LIMITED WAS RESPONSIBLE TO DEDUCT THE TAX AT SOURCE ON THE DISTRIBUTION OF THE INTEREST ON THE C OMPENSATION UNDER SECTION 194A OF THE ACT. THIS DECISION IS DATED 28.01.2005. TH EREFORE WE UNDERSTAND THAT THIS DECISION WAS NOT AVAILABLE BEFORE THE D BENCH OF THE DELHI TRIBUNAL WHEN THEY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND THE Y HAVE NOT DISCUSSED THIS DECISION. SUBSEQUENTLY WE NOTED THAT THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. UNITED INSURANCE CO. LTD. 325 ITR 231 HAS TAKEN A VIEW CONTRARY TO THE ASSESSEE. THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE BEFORE US AND THE FACTS INVOLVED IN THIS DECISION ARE ALSO SIMILAR. IN THIS CASE THE HONBLE HIGH COURT TOOK THE VIEW THAT THE INSURANCE COMPANY IS L IABLE TO DEDUCT TAX AT SOURCE 7 UNDER SECTION 194A OF THE ACT. THIS DECISION IS DA TED 21 ST OCTOBER 2008. THIS DECISION IS THEREFORE WAS ALSO NOT AVAILABLE BEFO RE THE TRIBUNAL WHEN THE D BENCH OF DELHI TRIBUNAL TOOK THE VIEW IN FAVOUR OF THE ASSESSEE. WE NOTED THAT THE AGRA BENCH OF THIS TRIBUNAL SIMPLY FOLLOWED THE DEC ISION OF DELHI BENCH DATED 27.09.2004 AND HAS NOT DISCUSSED THESE CASE LAWS OF THE HONBLE HIGH COURTS. THE LD. AUTHORISED REPRESENTATIVE DID NOT BRING TO OUR KNOWLEDGE ANY OTHER DECISION OF THE HIGH COURT WHICH MAY HAVE TAKEN A VIEW IN FA VOUR OF THE ASSESSEE. WE NOTED THAT THE HIGH COURT DECISIONS HAVE ALSO NOT B EEN DISCUSSED BY THE CIT(A). THE CIT(A) SIMPLY FOLLOWED THE DECISION OF THE AGRA BENCH OF THIS TRIBUNAL DATED 24.01.2006. THESE DECISIONS AS WERE PLACED BY THE LD. DEPARTMENTAL REPRESENTATIVE IN OUR OPINION WILL HAVE A MATERIA L BEARING AND SINCE THE DECISIONS HAVE COME SUBSEQUENTLY WE THEREFORE THINK IT APP ROPRIATE TO SET ASIDE THE IMPUGNED ORDER AND RESTORE THIS ISSUE TO THE FILE O F THE CIT(A). 7. BEFORE DISPOSING ALL THESE APPEALS WE ALSO NOTE D THAT NEITHER THE CIT(A) NOR THE ASSESSING OFFICER HAS CONSIDERED THE PROVISIONS OF EXPLANATION TO SECTION 191 WHICH WILL HAVE A BEARING IN CASE THE PARTIES TO WH OM THE INTEREST ON COMPENSATION HAS BEEN PAID HAS PAID THE TAX ON INTEREST RECEIVE D BY THEM THE ASSESSEE IN OUR OPINION CANNOT BE HELD TO BE AN ASSESSEE IN DEFAUL T WITHIN THE MEANING OF SECTION 201(1). THEREFORE WE DIRECT THE CIT(A) TO DECIDE THIS ISSUE ALSO ALONG WITH THE 8 ORDER OF THE HONBLE HIGH COURT WHETHER THE ASSESSE E CAN BE REGARDED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 201(1) IN VIEW OF THE DECISION OF THE HONBLE MADRAS HIGH COURT AS WELL AS OF HONBLE KARNATAKA H IGH COURT AND THAT OF PROVISIONS OF SECTION 191 AND WHETHER THE ASSESSEE IS LIABLE TO INTEREST UNDER SECTION 201(1A) IF THE PARTIES TO WHOM THE INTEREST ON COMPENSATION WAS PAID HAS DIRECTLY PAID THE TAX. THUS WE SET ASIDE THE ORDE R OF THE CIT(A) AND RESTORE THIS ISSUE TO THE FILE OF THE CIT(A) TO RE-DECIDE THE IS SUE IN ACCORDANCE WITH LAW. 8. IN THE RESULT ALL THE APPEALS FILED BY THE REVE NUE ARE ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 15.07.20 11). SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 15 TH JULY 2011 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY