The Addl.CIT, (TDS), Bhopal v. The Commissioner, Lok Shikshan Sanchalanalaya, Bhopal

ITA 42/IND/2011 | misc
Pronouncement Date: 28-12-2011 | Result: Dismissed

Appeal Details

RSA Number 4222714 RSA 2011
Assessee PAN BPLDO0429C
Bench Indore
Appeal Number ITA 42/IND/2011
Duration Of Justice 7 month(s) 8 day(s)
Appellant The Addl.CIT, (TDS), Bhopal
Respondent The Commissioner, Lok Shikshan Sanchalanalaya, Bhopal
Appeal Type Income Tax Appeal
Pronouncement Date 28-12-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 28-12-2011
Assessment Year misc
Appeal Filed On 20-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH J.M. AND SHRI R.C.SHARM A A.M. PAN NO. : BPLDO0429C I.T.A.NO. 42 & 43 / IND /20 11 PERIOD : 1.4.2008 TO 26.2.2010 ADDITIONAL CIT (TDS) COMMISSIONER BHOPAL VS L OK SHIKSHAN SANCHALANALAYA GAUTAM NAGAR BHOPAL. APPELLANT RESPONDENT APPELLANT BY : SHRI KESHAV SAXENA CIT DR RESPONDENT BY : SHRI A NIL KHABYA CA DATE OF HEARING : 22 . 12.2011 DATE OF PRONOUNCEMENT : 28 .12.2011 O R D E R PER R. C. SHARMA A.M. THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 31 ST DECEMBER 2010 IN THE MATTER OF ORDER PASSED U/S 271C AND U/S 201(1)/201(IA) OF THE INCOME- TAX ACT 1961. -: 2: - 2 2. THE REVENUE IS AGGRIEVED FOR CIT(A)S ACTION FOR CANCELLING THE DEMAND RAISED U/S 201(1)/201(IA) OF THE INCOME-TAX ACT 1961 AND ALSO FOR DELETING THE PEN ALTY IMPOSED WITH RESPECT TO SUCH DEMAND U/S 271C OF THE INCOME-TAX ACT 1961. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. THE AO OBSERVED THAT DURING THE COURSE OF TDS SURVEY PROCEEDINGS IN THE CASE OF THE ASSESSEE IT WAS FOUND THAT NO TAX AT SOURCE HAS BEEN DEDUCTED IN RESPECT OF PAYMENTS MADE FOR CONSTRUCTION WORK. IT WAS ALSO NO TED THAT TDS U/S 194C WAS REQUIRED TO BE MADE AND DEPOSITED ON CONTRACT GIVEN TO M.P. LAGHU UDYOG NIGAM FOR PURCHA SE OF FURNITURE AND CYCLES ETC. BY THE ASSESSEE AS IT CON SOLIDATED WORKS CONTRACT. THE AO FURTHER OBSERVED THAT THE AS SESSEE ALSO FAILED TO DEDUCT TAX AT SOURCE U/S 194J OF THE INCOME-TAX ACT 1961 ON PAYMENT OF SUPERVISION CHARGES TO M.P . LAGHU UDYOG NIGAM. ACCORDINGLY THE ASSESSEE WAS TREATED AS ASSESSEE IN DEFAULT U/S 201(1) FOR NON DEDUCTION AN D DEPOSIT OF TDS AND ALSO INTEREST U/S 201(1A) OF THE INCOME- TAX ACT 1961 ON PAYMENTS TO GOVERNMENT AND PUBLIC SECTOR -: 3: - 3 UNDERTAKINGS OF M.P. STATE GOVERNMENT FOR THE PURPO SE OF CONSTRUCTION OF SCHOOL BUILDINGS AND ARRANGING THE SUPPLY OF FURNITURE/CYCLES. 4. BY THE IMPUGNED ORDER THE LD. CIT(A) DELETED THE DEMAND SO RAISED AFTER HAVING THE FOLLOWING OBSERVA TIONS :- I HAVE GONE THROUGH THE ORDER PASSED BY THE ASSESSING OFFICER AND THE SUBMISSION OF THE APPELLANT. I FIND THAT ON THE FACTS AND CIRCUMSTANC ES OF THE CASE THE AO WAS NOT JUSTIFIED IN TREATING T HE APPELLANT IN DEFAULT U/S 201(1) FOR ITS LIABILITY T O DEDUCT TAX UNDER THE PROVISION OF SECTION 194C TO 194J OF THE INCOME-TAX ACT 1961. FURTHER THE AO WAS NOT JUSTIFIED IN CHARGING INTEREST U/S 201(1A) OF THE INCOME-TAX ACT 1961 IN THE APPELLANTS CASE. I AGREE WITH THE LD. AUTHORIZED REPRESENTATIVES CONTENTION THAT THE APPELLANT HAD REASONABLE CAUSE FOR NON-DEDUCTION OF TDS ON FUND TRANSFERRED TO VARIOUS GOVERNMENT DEPARTMENT UNDERTAKINGS FOR CONSTRUCTION OF SCHOOL BUILDING AND FOR ARRANGING PURCHASE OF CYCLE SCHOOL FURNITURE ETC. AS -: 4: - 4 CONSTRUCTION AND PURCHASE WORK WAS TO BE DONE THROUGH THE GOVERNMENT AGENCIES ONLY. IT IS ALSO PERTINENT TO NOTE THAT THE DEDUCTEE GOVERNMENT AGENCIES HAD DEDUCTED TAX AT SOURCE FROM THE BILL O F THE CONTRACTORS. THAT THE AO WAS HIMSELF DELETED TH E TDS LIABILITY ON SIMPLE CONTRACT OF SALE AND SUPPLY OF GOODS LIKE BICYCLE FURNITURE WHICH WAS EARLIER TREATED AS WORK CONTRACT AND JTDS DEMAND WAS MADE U/S 194C BY PASSING RECTIFICATION ORDER ON 29.11.2010. THE RELIANCE BY THE APPELLANT ON THE DECISION OF HON'BLE SUPREME COURT IN CIT VS. BHARTI CELLULAR LTD. IS APPLICABLE IN THE CASE OF THE APPE LLANT AS THERE IS NO LOSS TO THE REVENUE. THOUGH TDS WAS NOT DEDUCTED BY THE APPELLANT ON THE FUND TRANSFERRED BUT TDS WAS PROPERLY MADE BY THESE DEDUCTEES (GOVERNMENT AGENCIES) WHO MADE PAYMENTS TO CONTRACTORS FOR THE EXECUTION OF WORK CONTRACT. THESE GOVERNMENT AGENCIES HAVE DULY ACCOUNTED FOR THE FUND RECEIVED FROM THE APPELLANT AND DISCHARGED THEIR TAX LIABILITY BY FILING INCOME TAX -: 5: - 5 RETURNS. THE DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ELI LILLY AND CO. (INDIA) PV T.LTD. 312 ITR 225 AND HON'BLE KARNATAKA HIGH COURT IN CHILDREN EDUCATION SOCIETY VS. FDCIT (TDS)319 ITR 409 ALSO SUPPORT THE APPELLANT CASE. IN VIEW OF THE ABOVE FACTS AND AS PER LAW THERE WA S NO DEFAULT ON THE PART OF THE APPELLANT WITHIN THE MEANING OF SECTION 201(1) AND 201(1A) OF THE INCOME - TAX ACT. THUS THE ORDER PASSED U/S 201(1) BY ACIT (TDS) BHOPAL DATED 23.3.2010 FOR THE PERIOD 1.4.2008 TO 26.2.2010 RAISING TOTAL DEMAND OF TDS AND INTEREST OF RS. 3 22 88 503/- IS HEREBY CANCELL ED AND THE GROUNDS OF APPEAL ARE ALLOWED. 5. THE REVENUE IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT THE DEDUCTEE GOVERNMENT AGENCIES HAD DULY DEDUCTED TAX AT SOURCE FROM THE BILLS OF THE CONTRA CTORS AND WE ALSO FIND THAT THE AO HAS DELETED THE TDS LIABILITY ON SIMPLE CONTRACT OF SALE AND SUPPLY OF GOODS WHICH WAS EAR LIER TREATED BY HIM AS WORKS CONTRACT AND TDS DEMAND WAS RAISED U/S -: 6: - 6 194C. SINCE THE ASSESSEE HAS JUST TRANSFERRED THE F UND AND HAD NOT INCURRED ANY EXPENDITURE IT WAS NOT UNDER STATUTORY OBLIGATION TO DEDUCT ANY TAX AND THE TDS WAS PROPER LY DEDUCTED BY THESE GOVERNMENT AGENCIES TO MAKE PAYME NTS TO THE CONTRACTORS FOR EXECUTION OF THE WORKS CONTRACT . WE ALSO FOUND THAT THESE GOVERNMENT AGENCIES HAVE DULY ACCO UNTED FOR THE FUNDS RECEIVED FROM THE ASSESSEE AND DISCHA RGED THEIR TAX LIABILITY BY FILING INCOME TAX RETURNS. THE DET AILED FINDINGS RECORDED BY THE LD. CIT(A) AT PAGE 7 AS REPRODUCED HEREINABOVE HAS NOT BEEN CONTROVERTED BY THE LD. SENIOR D.R. W E THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER O F CIT(A) FOR DELETING THE DEMAND RAISED U/S 201(1) AND 201(1A) O F THE INCOME-TAX ACT 1961. 7. AS THE DEMAND ITSELF HAS BEEN DELETED THERE IS NO MERIT FOR LEVY OF PENALTY FOR SUCH DEFAULT U/S 194C ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF CIT(A) FOR DELETING SUCH PENALTY AFTER HAVING THE FOLLOWIN G OBSERVATIONS :- I HAVE GONE THROUGH THE PENALTY ORDER AS WELL AS TH E WRITTEN SUBMISSIONS OF THE APPELLANT. I FIND THAT T HE -: 7: - 7 AO WAS NOT JUSTIFIED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE TO LEVY PENAL TY U/S 271C OF RS. 2 45 54 563/-. I AGREE WITH THE LD. AUTHORIZED REPRESENTATIVES CONTENTIONS THAT THE APPELLANT HAD REASONABLE CAUSE FOR NON DEDUCTION OF TDS ON FUNDS TRANSFERRED A PAYMENTS MADE TO VARIOUS GOVERNMENT DEPARTMENT UNDERTAKINGS FOR CONSTRUCTION OF SCHOOL BUILDINGS AND PURCHASE OF CYCLES FURNITURE ETC. AS THE CONSTRUCTION AND PURCHASE WORK WAS TO BE DONE THROUGH THESE GOVERNMENT AGENCIES. THAT THESE DEDUCTEES GOVERNMENT AGENCIES HAVE ALSO DEDUCTED TAX AT SOURCE FROM THE BILLS OF CONTRACTORS. THAT EARLIER SIMPLE CONTRACT OF SALE AND SUPPLY OF GOODS LIKE FURNITURE FOR SCHOOL AND CYCLE FOR SCHOOL CHILDREN WAS TREATED AS WORKS CONTRACT BUT SUBSEQUENTLY TDS DEMAND U/S 194C WAS RECTIFIED VIDE ORDER PASSED ON 29.11.2010. I ALSO HOLD THAT LEVY OF PENALTY WOU LD NOT BE JUSTIFIED BY PLACING RELIANCE ON THE DECISIO N OF THE HON'BLE SUPREME COURT IN CIT VS. BHARTI CELLULA R LIMITED (SUPRA) AS THERE IS NO LOSS TO REVENUE. THA T TDS WAS NO DEDUCTED BY THE APPELLANT ON FUNDS TRANSFERRED BUT TDS WAS MADE BY THE GOVERNMENT AGENCIES WHO MADE THE PAYMENT TO CONTRACTORS. FURTHER THESE GOVERNMENT AGENCIES HAVE ACCOUNTED FOR THE FUNDS RECEIVED FROM THE APPELLANT AND -: 8: - 8 DISCHARGED THEIR TAX LIABILITIES AND PAYING TAXES A ND BY FILING INCOME TAX RETURNS. THE DECISIONS OF HON' BLE SUPREME COURT IN CIT VS. ELI LILLY (INDIA) AND HON' BLE KARNATAKA HIGH COURT IN CHILDREN EDUCATION SOCIETY (SUPRA) SUPPORT THE APPELLANTS CASE. THEREFORE ON THE FACTS AND AS PER LAW THE PENALTY U/S 271C OF R S. 2 45 54 563/- IS DELETED IN FULL. 8. IN THE RESULT BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 28 TH DECEMBER 2011. (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH DECEMBER 2011. CPU* 2226