M/s Viswanadha Educational Society, Visakhapatnam v. The ITO, Ward-6(3), Visakhapatnam

ITA 303/VIZ/2010 | 2009-2010
Pronouncement Date: 10-12-2010 | Result: Allowed

Appeal Details

RSA Number 30325314 RSA 2010
Assessee PAN AAATV0804D
Bench Visakhapatnam
Appeal Number ITA 303/VIZ/2010
Duration Of Justice 6 month(s) 22 day(s)
Appellant M/s Viswanadha Educational Society, Visakhapatnam
Respondent The ITO, Ward-6(3), Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 10-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 10-12-2010
Date Of Final Hearing 26-08-2010
Next Hearing Date 26-08-2010
Assessment Year 2009-2010
Appeal Filed On 19-05-2010
Judgment Text
ITA NOS.302 & 303 VISWANADHA EDUCATIONAL SOCIETY VI SAKHAPATNAM PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NOS.302 & 303/VIZAG/2010 FINANCIAL YEARS : 2007-08 & 2008-09 ASSESSMENT YEARS: 2008-09 & 2009-10 VISWANADHA EDUCATIONAL SOCIETY VISAKHAPATNAM VS. ITO WARD-6(3) VISAKHAPATNAM (APPELLANT) PAN NO: AAATV 0804 D (RESPONDENT) APPELLANT BY: SHRI I. K. KAMA SHASTRI CA RESPONDENT BY: SHRI J. SIRI KUMAR DR ORDER PER SHRI B. R. BASKARAN ACCOUNTANT MEMBER: THESE TWO APPEALS FILED BY ASSESSEE ARE DIRECTED AG AINST THE ORDERS PASSED BY LEARNED CIT(A) VISAKHAPATNAM AND THEY RELATE TO THE FINANCIAL YEARS RELEVANT TO THE ASSESSMENT YEARS 2008-09 AND 2009-10. THERE IS A DELAY OF 18 DAYS AND 93 DAYS RESPECTIVELY IN FILING THESE APPEALS. THE ASSE SSEE HAS FILED A PETITION FOR CONDONING THE DELAY EXPLAINING THEREIN THE CAUSES F OR THE DELAY IN FILING THESE APPEALS. HAVING REGARD TO THE SUBMISSIONS MADE IN T HE PETITIONS WE ADMIT THESE TWO APPEALS AND PROCEED TO HEAR THE CASE. SINCE ON E OF THE ISSUES URGED IN THESE TWO APPEALS ARE IDENTICAL IN NATURE THESE TWO APPE ALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE IS CHALLENGING THE LEVY OF TAX UNDE R SECTION 201 (1) AND INTEREST UNDER SECTION 201 (1A) OF THE ACT IN RESPE CT OF PAYMENTS MADE UNDER THE FOLLOWING HEADS: A) PAYMENT MADE TO M/S BHARGAVA TRAVELS (IN BOTH T HE YEARS) B) PAYMENT OF INTEREST TO M/S SRI RAM TRANSPORT FIN ANCE CO. LTD. (IN THE FINANCIAL YEAR 2007-08). 3. THE FACTS RELATING TO THE ISSUES ARE STATED I N BRIEF. A SURVEY OPERATION WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 16-12-2008 IN ORDER TO VERIFY THE COMPLIANCE OF TDS PROVISIONS. IT WAS NOT ICED THAT THE ASSESSEE WAS ITA NOS.302 & 303 VISWANADHA EDUCATIONAL SOCIETY VI SAKHAPATNAM PAGE 2 OF 4 PAYING A SUM OF RS.32 000/- P.M. TO M/S BHARGAVA TR AVELS FOR OPERATING THE BUSES FOR TRANSPORTATION OF THE STUDENTS. THE ASSESSEE HA D DEDUCTED TAX AT SOURCE UNDER SECTION 194C OF THE ACT AT 2.26% TREATING THE SAID PAYMENT AS CONTRACT PAYMENTS. HOWEVER THE INCOME TAX OFFICER WAS OF THE VIEW THAT THE BUSES ARE TO BE TREATED AS PLANT UNDER THE INCOME TAX ACT AND HENCE THE T DS IS REQUIRED TO BE DEDUCTED UNDER SECTION 194I OF THE ACT AT THE RATE OF 10.3% BY TREATING THE SAID PAYMENTS AS RENTALS. ACCORDINGLY THE INCOME TAX OFFICER HELD THAT THERE IS SHORT DEDUCTION OF TAX AT SOURCE ON THE SAID PAYMENT. THE INCOME TAX OFFICER ALSO NOTICED THAT THE ASSESSEE HAD PAID INTEREST ON LOANS TO VARIOUS FINA NCIAL COMPANIES ON WHICH THE ASSESSEE HAD NOT DEDUCTED TDS UNDER SECTION 194A OF THE ACT. IN VIEW OF THE SHORT DEDUCTION AND NON DEDUCTION OF TAX AT SOURCE THE INCOME TAX OFFICER RAISED DEMAND UPON THE ASSESSEE UNDER SECTION 201(1) AND A LSO INTEREST UNDER SECTION 201(1A) OF THE ACT FOR SUCH SHORT DEDUCTION AND NON -DEDUCTION OF TAX AT SOURCE. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEF ORE LEARNED CIT(A). WE NOTICE THAT THE LEARNED CIT(A) HAS RENDERED DIFFERENT DECI SION ON THE ISSUE OF NON- DEDUCTION OF TAX AT SOURCE ON THE INTEREST PAID TO THE FINANCIAL COMPANIES. IN THE FINANCIAL YEAR 2008-09 RELEVANT TO THE ASSESSMENT Y EAR 2009-10 THE LEARNED CIT(A) ACCEPTED THE SUBMISSION OF THE ASSESSEE THAT IF THE PAYEE HAS ALREADY PAID THE TAX ON THE IMPUGNED INCOME THEN RECOVERY OF TA X CANNOT BE MADE ONCE AGAIN FROM THE ASSESSEE BY FOLLOWING THE DECISION OF HON' BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA-COLA BEVERAGES PVT. LTD. VS. CIT (293 ITR 226). ACCORDINGLY SHE DIRECTED THE ASSESSING OFFICER TO LEVY ONLY INT EREST UNDER SECTION 201(1A) ON THE INTEREST PAYMENTS MADE TO THE FINANCIAL COMPANI ES. HOWEVER IN THE FINANCIAL YEAR 2007-08 RELEVANT TO THE ASSESSMENT YEAR 2008-0 9 SHE CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN RESPECT OF THE INTEREST PAYMENTS. 5. WITH REGARD TO THE PAYMENTS MADE TO M/S BHARG AVA TRAVELS THE LEARNED CIT(A) AGREED WITH THE VIEWS OF THE INCOME TAX OFFI CER THAT THE SAID PAYMENTS ARE TO BE REGARDED AS RENTAL PAYMENTS AND ACCORDINGLY T DS IS REQUIRED TO BE DEDUCTED UNDER SECTION 194I AT HIGHER RATE. HENCE THE LEARNE D CIT(A) CONFIRMED THE ORDER OF THE INCOME TAX OFFICER ON THIS ISSUE. 6. WE HEARD THE RIVAL CONTENTIONS AND CAREFULLY PERUSED THE RECORD. WE FIRST TAKE UP THE ISSUE RELATING TO THE PAYMENTS MADE TO M/S BHARGAVA TRAVELS FOR ITA NOS.302 & 303 VISWANADHA EDUCATIONAL SOCIETY VI SAKHAPATNAM PAGE 3 OF 4 OPERATING AND MAINTENANCE OF THE BUSES. THE ASSESS EE HAS FILED A COPY OF AGREEMENT DATED 24.8.2006 ENTERED BETWEEN THE ASSES SEE AND M/S BHARGAVA TRAVELS IN ITS PAPER BOOK. FROM THE PERUSAL OF THE SAID AGREEMENT WE NOTICE THAT THE ASSESSEE HEREIN IS THE OWNER OF THE BUSES AND M /S BHARGAVA TRAVELS IS ENTRUSTED WITH THE JOB OF OPERATION AND MAINTENANCE OF EIGHT VEHICLES. THERE CANNOT BE ANY DISPUTE THAT RENT IS PAID TO THE OW NER OF THE ASSET IN ORDER TO COMPENSATE HIM FOR THE USE OF THE SAID ASSET. THE ASSESSEE HEREIN IS THE OWNER OF BUSES AND HE HAS PAID THE AMOUNT TO M/S BHARGAVA TR AVELS WHICH MEANS THAT SUCH PAYMENTS CANNOT BE TREATED AS RENT. THE AGR EEMENT IS VERY CLEAR ON THE POINT THAT THE ASSESSEE HAS ENGAGED M/S BHARGAVA TR AVELS FOR THE OPERATION AND MAINTENANCE OF BUSES AND HENCE THE AMOUNT OF RS.32 000/- P.M. IS PAID TO THE SAID CONCERN TO COMPENSATE HIM FOR THE EXPENSES INC URRED ON OPERATION AND MAINTENANCE OF BUSES I.E. THE RECIPIENT M/S BHARGA VA TRAVELS HAS UNDERTAKEN THE CONTRACT OF OPERATION AND MAINTENANCE OF VEHICLES F ROM THE ASSESSEE. HENCE THE AMOUNT PAID BY THE ASSESSEE SQUARELY FALLS UNDER TH E CATEGORY OF CONTRACT IN WHICH CASE THE TDS IS REQUIRED TO BE DEDUCTED ONLY UNDER SECTION 194C OF THE ACT. THERE IS NO DISPUTE THAT THE ASSESSEE HAS DEDUCTED THE TAX AT SOURCE UNDER SECTION 194C OF THE ACT ON THE SAID PAYMENT. IN VIEW OF THE FOREGOING DISCUSSIONS WE DO NOT FIND MERIT IN THE OBSERVATIONS OF THE TAX AUTHO RITIES. ACCORDINGLY WE SET ASIDE THE ORDER OF LEARNED CIT(A) ON THIS ISSUE IN BOTH T HE YEARS UNDER CONSIDERATION AND DIRECT THE INCOME TAX OFFICER TO DELETE THE DEM AND AND INTEREST RAISED RESPECTIVELY UNDER SECTION 201(1) AND 201(1A) OF TH E ACT ON THE PAYMENT MADE TO M/S BHARGAVA TRAVELS. 7. WITH RESPECT TO THE INTEREST PAYMENT MADE TO M/S SHRIRAM TRANSPORT CO DURING THE FINANCIAL YEAR 2007-08 RELEVANT TO THE A SSESSMENT YEAR 2008-09 THE LEARNED A.R HAS BROUGHT TO OUR NOTICE THE CERTIFICA TE OBTAINED BY FROM THAT COMPANY CONFIRMING THE RECEIPT OF INSTALMENTS FROM THE COMPANY. ACCORDINGLY THE LEARNED A.R SUBMITTED THAT THE INCOME TAX OFFIC ER IS ENTITLED TO COLLECT INTEREST UNDER SECTION 201(1A) OF THE ACT SINCE THE RECIPIEN T COMPANY HAS ALREADY PAID THE TAX ON THE INTEREST SO PAID BY THE ASSESSEE. THE S UBMISSION OF THE LEARNED A.R IS IN ACCORDANCE WITH THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA-COLA BEVERAGES PVT. LTD. (SUPRA). HOWEVER W E NOTICE THAT BOTH THE TAX AUTHORITIES HAVE NOT COMMENTED UPON THE SAID CONFIR MATION LETTER OBTAINED FROM THE FINANCE COMPANY. HENCE WE FEEL THAT THIS ISSUE NEEDS TO BE EXAMINED AFRESH ITA NOS.302 & 303 VISWANADHA EDUCATIONAL SOCIETY VI SAKHAPATNAM PAGE 4 OF 4 IN THE LIGHT OF THE CERTIFICATE OBTAINED BY THE ASS ESSEE. ACCORDINGLY WE SET ASIDE THE ISSUE RELATING TO THE TDS ON INTEREST PAYMENT T O THE FILE OF THE INCOME TAX OFFICER WITH A DIRECTION TO CONSIDER THE ISSUE RELA TING TO THE SAME AFRESH IN ACCORDANCE WITH LAW BY DULY CONSIDERING THE EVIDENC ES THAT MAY BE FILED BY THE ASSESSEE IN THAT REGARD. NEEDLESS TO MENTION NECE SSARY OPPORTUNITY OF BEING HEARD SHOULD BE GIVEN TO THE ASSESSEE. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE FOR T HE FINANCIAL YEAR 2007-08 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL RELATING TO THE FINANCIAL YEAR 2008-09 IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 10 TH DECEMBER 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE:10-12-2010 COPY TO 1 VISWANADHA EDUCATIONAL SOCIETY 1 - 44 - 1/1 PLOT NO. HIG - 12 SECTOR - 1 MVP COLONY VISAKHAPATNAM 530017 2 THE ITO WARD - 6(3) VISAKHAPATNAM 3 4. THE CIT (TDS) HYDERABAD THE CIT(A) VISAKHAPATNAM 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM