ACIT, TDS, Noida v. M/s Supper Cassette Industries Ltd.,, Noida

ITA 5267/DEL/2013 | 2008-2009
Pronouncement Date: 29-04-2015 | Result: Dismissed

Appeal Details

RSA Number 526720114 RSA 2013
Assessee PAN AABCS4712P
Bench Delhi
Appeal Number ITA 5267/DEL/2013
Duration Of Justice 1 year(s) 7 month(s) 10 day(s)
Appellant ACIT, TDS, Noida
Respondent M/s Supper Cassette Industries Ltd.,, Noida
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 29-04-2015
Date Of Final Hearing 16-04-2015
Next Hearing Date 16-04-2015
Assessment Year 2008-2009
Appeal Filed On 19-09-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI H.S. SIDHU: JUDICIAL MEMBER ITA NOS. 5267 & 5268/DEL/2013 A.Y. 2008-09 & 2009-10 ACIT TDS VS. M/S SUPER CASSETTE INDUSTRIES LT D. 2 ND FLOOR G-BLOCK SHOPPING 16A FILM CITY NOIDA. COMPLEX SECTOR-20 NOIDA. PAN: AABCS 4712 P AND ITA NOS. 4933 & 4934/DEL/2013 A.Y. 2008-09 & 2009-10 M/S SUPER CASSETTE INDUSTRIES LTD. VS. ACIT TDS 2ND FLOOR G-BLOCK SHOPPING 16A FILM CITY NOIDA. COMPLEX SECTOR-20 NOIDA. ( APPELLANT ) ( RESPONDENT ) DEPARTMENT BY : SHRI MOHINDER RAJPAL (MANAGE R TAXATION) ASSESSEE BY : SHRI B.R.R. KUMAR SR. DR DATE OF HEARING : 16-04-2015 DATE OF ORDER : 29-04-2015. O R D E R PER S.V. MEHROTRA A.M:- THESE ARE CROSS APPEALS PREFERRED BY THE REVENUE A S WELL AS BY THE ASSESSEE AGAINST SEPARATE ORDERS PASSED BY THE LD. CIT(A) N OIDA RELATING TO A.Y. 2008-09 & 2009-10. 2 ITA 5267 5268 4933 4944/DEL/2013 SUPER CASSETTE INDUSTRIES LTD. ITA NO. 5267 /DEL/2013 (REVENUES APPEAL) : 2. FOLLOWING GROUNDS ARE RAISED: 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS. 3 49 793/- ON ACCOUNT OF SHORT DEDU CTION AND RS. 1 46 913/- ON ACCOUNT OF INTEREST THEREON AND IN DI RECTING THAT PROVISIONS CONTAINED IN SECTION 194C IS APPLICABLE ON THE PAYMENT MADE BY ASSESSEE FOR HIRING OF BUSES IGNOR ING THE FACT OF THE CASE THAT THE DEDUCTOR COMPANY IS LIABLE TO DEDUCT THE TAX U/S 194 I AT THE RATE OF 10% FOR HIRING OF BUSES IN VIEW OF AMENDMENT MADE U/S 194 I W.E.F. 01-06-2007. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS. 3 49 793/- ON ACCOUNT OF SHORT DEDU CTION AND RS. 1 46 913/- ON ACCOUNT OF INTEREST THEREON WITHOUT A PPRECIATING THE FACT THAT THE HIRED VEHICLES WERE COVERED UNDER THE DEFINITION OF PLANT AND MACHINERY AS PER PROVISIONS OF SECTION 43(3) AND ACCORDINGLY THE TDS WAS DEDUCTIBLE AS PER PROVISION OF SECTION 194 I AT THE PRESCRIBED RATE INSTEAD OF SECTION 194C AS HELD BY LD. CIT(A) AFTER THE INSERTION OF AMENDE D PROVISIONS IN THE SECTION 194 I W.E.F. 13-07-2006. 3. BRIEF FACTS OF THE CASE ARE THAT SURVEY WAS COND UCTED ON 12-11-2009 TO CHECK THE CORRECT APPLICABILITY OF TDS PROVISION. T HE ASSESSEE COMPANY IN THE RELEVANT ASSESSMENT YEAR WAS ENGAGED IN THE BU SINESS OF MANUFACTURING OF CDS DVDS CASSETTES FILM PRODUCTION PRODUCING MUSIC ALBUMS GIVING STUDIOS ON RENT ETC. CORPORATE OFFICE OF THE COMPA NY IS AT NOIDA. IN COURSE OF SURVEY IT WAS OBSERVED THAT THE ASSESSEE HAD HIR ED BUSES FROM VARIOUS TRANSPORTERS AND WHILE MAKING PAYMENT OF HIRE CHARG ES TO SUCH CONCERNS ASSESSEE HAD DEDUCTED TAX U/S 194C OF THE I.T. ACT @ 2%. THE AO WAS OF THE OPINION THAT IN VIEW OF THE AMENDED PROVISION O F SECTION 194I OF THE I.T> ACT W.E.F. 1-4-2008 TO 31-03-2009 TAX WAS TO BE DED UCTED @ 10%. IT WAS 3 ITA 5267 5268 4933 4944/DEL/2013 SUPER CASSETTE INDUSTRIES LTD. FOUND IN COURSE OF PROCEEDINGS THAT ASSESSEE HAD M ADE PAYMENTS FOR VEHICLE HIRING CHARGES FOR THE FY 2007-08 AND 2008-09. THE ASSESSEE IN ITS REPLY INTER ALIA SUBMITTED THAT FOR THE TRANSPORTATION O F THE EMPLOYEES OF THE COMPANY THE COMPANY HAD ENTERED INTO CONTRACTS WIT H VARIOUS CONTRACTORS FOR TRANSPORTATION OF EMPLOYEES TO/FROM VARIOUS LOC ATIONS TO FACTORIES SITUATED IN VARIOUS LOCATIONS IN NOIDA. THE AO AFT ER CONSIDERING THE DETAILED SUBMISSIONS OF ASSESSEE OBSERVED AS UNDER: THE REPLY SUBMITTED BY THE ASSESSEE HAS BEEN EXAMI NED IN DETAIL WHICH IS NOT CONVINCING AS THE CLAUSES(A) ( B) & (C) OF SECTION 1941 OF THE INCOME TAX ACT 1961 HAS BEEN SU BSTITUTED FOR CLAUSES (A) &(B) BY THE FINANCE ACT 2007 W.E.F . 1-6-2007 AS UNDER:- (A) TEN PER CENT FOR THE USE OF ANY MACHINERY OR PLANT OR EQUIPMENT; FURTHER AS PER SECTION 43(3) OF THE INCOME TAX ACT THE PLANT INCLUDES VEHICLES THE SECTION READS AS UNDER:- SECTION 43 OF THE INCOME TAX ACT. (3) 'PLANT' INCLUDES SHIPS VEHICLES BOOKS USE D FOR THE PURPOSE OF THE BUSINESS OR PROFESSION [BUT DOES NOT INCLUDE TEA BUSHES OR LIVESTOCK] (L)' [OR.BUILDINGS OR FURNITURE AND FITTINGS]. AS THE SECTION 1941 HAS BEEN SUBSTITUTED BY THE FIN ANCE ACT 2007 AFTER THE DATE OF INSERTION I.E. 1.7.1995 OF W ORK IN EXPLANATION - .HI HENCE THE PROVISION OF SECTION 1 94-1 READ WITH SECTION 43(3) OF THE INCOME TAX ACT BECOMES OP ERATIVE IN RESPECT OF RENT (HIRING OF VEHICLE) INSTEAD OF PROV ISIONS OF SECTION 194C. ASSESSEE HAS CITED CASE LAWS WHICH ARE PRIOR TO INTRODUCTION OF SECTION 194I(A) W.E.F. 1.6.2007. IT IS PERTINENT TO MENTION HERE THAT THE THE HON'BLE APEX COURT IN THE CASE OF M/S ASSOCIATED HOTELS & INDIA LIMITED V S. R. N. KA POOR (AIR 1959 S'. L 262) HAVE LAID DOWN CERTAIN TESTS FOR DE TERMINATION 4 ITA 5267 5268 4933 4944/DEL/2013 SUPER CASSETTE INDUSTRIES LTD. FOR TENANCY. THE THIRD TEST THEREIN STATES THAT IF UNDER THE DOCUMENTS A PARTY GETS EXCLUSIVE POSSESSION OF THE PROPERTY PRIMA FACIE HE WILL BE CONSIDERED AS TENANT. IN THE INSTANT CASE EXCLUSIVE POSSESSION OF THE BUSES VEHICLE HIRED WER E GIVEN TO THE ASSESSEE AND HENCE SECTION 194-I IS APPLICABLE ON THE ENTIRE PAYMENTS. BESIDES IT IS ALSO PERTINENT TO MENTION HERE THAT THE ASSESSEE BEING THE HIRER WAS NOT ONLY IN EXCLUSIVE POSSESSION OF THE VEHICLE BUT COULD ALSO USE THEM IN THE MANNER IT WANTED AND NO OTHER PERSON COULD USE THEM DURING THE TENAN CY PERIOD. 4. HE ACCORDINGLY DETERMINED THE SHORT DEDUCTION U/S 201 ALONG WITH INTEREST U/S 201(1A) AS UNDER: AMOUNT OF VEHICLE HIRING CHARGES TDS U/S 194C @ 2.2666% TDS U/S 194-I 10.3% SHORT DEDUCTION U/S 194-I DEFAULTS IN MONTHS W.E.F. OCT. 2007 TILL DATE INTEREST U/S 201(1A) @ 1% TOTAL AMOUNT DUE 4353908 98660 448453 349793 42 146913 496700 AMOUNT OF VEHICLE HIRING CHARGES TDS U/S 194C @ 2.2666% TDS U/S 194-I 10.3% SHORT DEDUCTION U/S 194-I DEFAULTS IN MONTHS W.E.F. OCT. 2007 TILL DATE INTEREST U/S 201(1A) @ 1% TOTAL AMOUNT DUE 4435116 145820 662817 516997 30 155099 672096 FY SHORT DEDUCTION U/S 194I INTEREST ON HIRING CHARGES TOTAL AMOUNT PAYABLE 2007-08 349793 146913 496706 2008-09 516997 155099 672096 TOTAL 866790 302012 1168802 5 ITA 5267 5268 4933 4944/DEL/2013 SUPER CASSETTE INDUSTRIES LTD. 5. LD. CIT(A) HELD THAT THE PAYMENTS MADE TO THE TR ANSPORT SERVICE PROVIDER FALL WITHIN THE AMBIT OF THE PROVISION OF SECTION 194C OF THE ACT AND PROVISIONS OF SECTION 194-I ARE NOT ATTRACTED F OR THE FOLLOWING REASONS: (A) THE AGREEMENTS/ CONTRACTS ENTERED BY THE ASSESSEE W ITH THE TRANSPORT SERVICE PROVIDERS WERE PRIMARILY IN THE NATURE OF T RANSPORT CONTRACT/ SERVICE CONTRACT FOR PICK AND DROP FACILITY OF EMPL OYEES TO/ FROM WORK PLACE (OFFICE/ FACTORY) TO THEIR HOMES AND NOT FOR HIRING OF THE VEHICLES. (B) SECTION 191-I REFERS TO PLANT & MACHINERY USED BY T HE ASSESSEE IN ITS BUSINESS BY HIRING THEM BUT NOT HIRING A TRANSPORT SERVICE. (C) EXPLANATION III TO SECTION 194C OF THE ACT DEFINES WORK TO INCLUDE CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF TR ANSPORT OTHER THAN BY RAILWAYS. THE ACTIVITY OF TRANSPORT CONTRACTORS WAS A SIMPLE ACTIVITY OF CARRIAGE OF ITS EMPLOYEE BY WAY OF MODE OF TRANSPORT OTHER THAN BY RAILWAYS AS PER THE CONTRACT. (D) THE DEFINITION OF PLANT & MACHINERY IN SECTION 43(3 ) IS RELEVANT FOR THE PURPOSE OF SECTIONS 28 TO 41 AND IS NOT APPLICA BLE TO THE PRESENT CONTEXT. (E) THE ISSUE IS SQUARELY COVERED BY THE DECISION OF IT AT DELHI BENCH IN THE CASE OF ACIT VS. M/S APEEJAY SCHOOL NOIDA (ITA NOS. 5887 & 5888/DEL/2010 DATED 1-3-2011) WHEREIN ON SIMILAR FACTS TO THE INSTANT CASE IT WAS HELD THAT HIRING OF CARS. TAXI ES BUSES I.E. PASSENGER TRANSPORT VEHICLES AMOUNT TO CONTRACT AND THE AMOUNT PAID TOWARDS HIRING OF SUCH VEHICLES IS LIABLE FOR TDS U /S 194C. 6 ITA 5267 5268 4933 4944/DEL/2013 SUPER CASSETTE INDUSTRIES LTD. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ENTIRE MATERIAL AVAILABLE ON RECORD. HAVING REGARD TO THE AGREEMENT ENTERED INTO BY THE ASSESSEE THE CONTENTS OF WHICH HAVE BEEN SUMMARIZE D BY LD. CIT(A) IN HIS ORDER IT IS EVIDENT THAT ASSESSEE HAD NOT ACQUIRED ANY RIGHT OF POSSESSION OF THE BUSES I.E. VEHICLES WHICH IS AN ESSENTIAL INGR EDIENT OF HIRING. THE ASSESSEE HAD NO INTEREST I.E. AS A LESSEE OR SUB-LE SSEE OR TENANT IN RESPECT OF THE BUSES WHICH WERE BEING USED FOR TRANSPORTATION OF THE EMPLOYEES. THE EXISTENCE OF LANDLORD/ TENANT RELATION OR LICENSOR /LICENSEE IS A MUST BEFORE THE PAYMENT IN QUESTION CAN BE TERMED AS A RENT. AC CORDINGLY WE SEE NO REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) IN D ELETING THE ADDITION ON ACCOUNT SHORT DEDUCTION AS ALSO THE INTEREST CHA RGED U/S 201(1)/201(1A). ITA NO. 5268 /DEL/2013 AY 2009-10 (REVENUES APPE AL) : 7. FOLLOWING GROUNDS ARE RAISED: 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS. 5 16 997/- ON ACCOUNT OF SHORT DEDU CTION AND RS. 1 55 099/- ON ACCOUNT OF INTEREST THEREON AND IN DI RECTING THAT PROVISIONS CONTAINED IN SECTION 194C IS APPLICABLE ON THE PAYMENT MADE BY ASSESSEE FOR HIRING OF BUSES IGNOR ING THE FACT OF THE CASE THAT THE DEDUCTOR COMPANY IS LIABLE TO DEDUCT THE TAX U/S 194 I AT THE RATE OF 10% FOR HIRING OF BUSES IN VIEW OF AMENDMENT MADE U/S 194 I W.E.F. 01-06-2007. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS. 5 16 997/- ON ACCOUNT OF SHORT DEDU CTION AND RS. 1 55 099/- ON ACCOUNT OF INTEREST THEREON WITHOUT A PPRECIATING THE FACT THAT THE HIRED VEHICLES WERE COVERED UNDER THE DEFINITION OF PLANT AND MACHINERY AS PER PROVISIONS OF SECTION 43(3) AND ACCORDINGLY THE TDS WAS DEDUCTIBLE AS PER PROVISION OF SECTION 194 I AT THE PRESCRIBED RATE INSTEAD OF SECTION 194C AS HELD BY LD. CIT(A) AFTER THE INSERTION OF AMENDE D PROVISIONS IN THE SECTION 194 I W.E.F. 13-07-2006. 7 ITA 5267 5268 4933 4944/DEL/2013 SUPER CASSETTE INDUSTRIES LTD. 8. THE GROUNDS RAISED IN AY 2009-10 ARE IDENTICAL T O GROUNDS RAISED IN REVENUES APPEAL FOR A.Y. 2008-09. NO CHANGE IN FAC TS HAVE BEEN POINTED OUT BY EITHER OF THE PARTIES. THEREFORE FOR THE RE ASONS GIVEN BY US IN REVENUES APPEAL FOR AY 2008-09 WE UPHOLD THE ORDE R OF CIT(A) AND DISMISS THE GROUNDS TAKEN BY THE REVENUE. ASSESSEES APPEAL (ITA NO. 4933/DEL/2013 AY 2008- 09) : 9. SOLE EFFECTIVE GROUND RAISED IS AS UNDER: THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- NOIDA ERRED IN CONFIRMING THE INTEREST FOR RS. 36 443/- ( RUPEES THIRTY SIX THOUSAND FOR HUNDRED FORTY THREE ONLY) LEVIED U NDER SECTION 201(1A) OF THE INCOME TAX ACT 1961 BY THE LD. ASSE SSING OFFICER ON A/C OF SHORTFALL DUE TO ALLEGED NON DEDU CTION OF TDS ON AVERAGE RATE UNDER SECTION 192(1) FROM PAYMENT O F SALARY. 10. THE AO REQUIRED THE ASSESSEE TO EXPLAIN AS TO W HY THE TAX HAD NOT BEEN DEDUCTED FROM SALARY PAID TO EMPLOYEES ON AVER AGE RATE OF TAX IN TERM OF SECTION 192(1). THE ASSESSEE SUBMITTED FOLLOWING REPLY: REGARDING AVERAGE RATE OF TDS U/S 192(1) OF THE AC T IN RESPECT OF SALARY WE WOULD LIKE TO INFORM YOU THAT WE ARE DEDUCTING TAX AT SOURCE (TDS) AS PER THE ACT ON THE BASIS OF THE EARNINGS AVAILABLE IN A PARTICULAR MONTH. THE TOTAL EARNINGS VARY DUE TO VARIOUS PAYMENTS BEING MADE IN BETWEEN DURING THE F INANCIAL YEAR SUCH AS - REGULAR INCREMENT IN THE MONTH OF JULY FOR THE EMPL OYEES WHO HAVE JOINED IN THE MONTHS OF APRIL TO JUNE. SPECIAL INCREMENT BEING GIVEN TO THE EMPLOYEES TIME TO TIME. LEAVE ENCASHMENT FULL AND FINAL SETTLEMENT NEW JOINING. 8 ITA 5267 5268 4933 4944/DEL/2013 SUPER CASSETTE INDUSTRIES LTD. 11. THE AO COMPUTED THE INTEREST LEVIABLE U/S 201(1 )/201(1A) BY CONSIDERING THE AVERAGE RATE OF TDS AT RS. 3 56 988 /- FOR AY 2007-08 AND AVERAGE RATE OF MONTHLY TDS WAS TAKEN AT RS. 3 95 1 54/- FOR FY 2008-09. HE ACCORDINGLY COMPUTED THE INTEREST LEVIABLE U/S 2 01(1)/201(1A) AT RS. 36 443/- AND RS. 46 399/- AS PER THE DETAILED COMPU TATION GIVEN AT PAGES 2 & 3 OF HIS ORDER. 12. LD. CIT(A) CONFIRMED THE AOS ACTION INTER ALI A OBSERVING THAT ASSESSEE COMPLETELY FAILED TO PRODUCE ANY EVIDENCE WHAT-SO-EVER TO SUBSTANTIATE ITS CLAIM WHICH WERE PRIMARILY AS UNDE R: A. INCREMENT IN THE MONTH OF JULY. B. SPECIAL INCREMENT GIVEN TO VARIOUS EMPLOYEES TIME T O TIME. C. LEAVE ENCASHMENT PAID IN BETWEEN THE FINANCIAL YEAR D. PAYMENTS MADE DUE TO FULL AND FINAL SETTLEMENT. E. NEW JOINING IN BETWEEN FINANCIAL YEAR. 13. HAVING HEARD BOTH THE PARTIES WE RESTORE THIS M ATTER TO THE FILE OF AO TO PROVIDE OPPORTUNITY TO ASSESSEE TO SUBSTANTIATE ITS CLAIM IN RESPECT OF AFOREMENTIONED REASONS GIVEN FOR ADOPTING THE AVERA GE RATE FOR TDS. WE ORDER ACCORDINGLY. ASSESSEES APPEAL (ITA NO. 4934/DEL/2013 AY 2009- 10) 14. SOLE EFFECTIVE GROUND RAISED IS AS UNDER: 9 ITA 5267 5268 4933 4944/DEL/2013 SUPER CASSETTE INDUSTRIES LTD. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- NOIDA ERRED IN CONFIRMING THE INTEREST FOR RS. 36 399/- ( RUPEES FORTY SIX THOUSAND THREE HUNDRED NINETY NINE ONLY) LEVIED UNDER SECTION 201(1A) OF THE INCOME TAX ACT 1961 BY THE LD. ASSESSING OFFICER ON A/C OF SHORTFALL DUE TO ALLEGE D NON DEDUCTION OF TDS ON AVERAGE RATE UNDER SECTION 192( 1) FROM PAYMENT OF SALARY. 15. THERE BEING NO CHANGE IN FACTS FOR THE ASSESSME NT YEAR IN QUESTION THEREFORE FOR THE REASONS GIVEN BY US IN ASSESSEE S APPEAL FOR AY 2008-09 WE RESTORE THE MATTER TO THE FILE OF AO TO PROVIDE OPPORTUNITY TO ASSESSEE TO SUBSTANTIATE ITS CLAIM FOR ADOPTING THE AVERAGE RAT E FOR TDS. 16. IN THE RESULT REVENUES APPEALS ARE DISMISSED AND THE ASSESSEES APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN OPEN COURT ON 29-04-2015. SD/- SD/- (H.S. SIDHU) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29-04-2015. MP: C OPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 10 ITA 5267 5268 4933 4944/DEL/2013 SUPER CASSETTE INDUSTRIES LTD.