9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (9) TMI 1663 - AT - Income TaxTDS liability on contribution made by the appellant to the concessionaires towards the project u/s 194C - demand created u/s 201 /201(1A) - Payee has already paid tax on the income on which there was a short deduction of tax at source - HELD THAT - In the instant case the Concessionaire / Payee included the amount of grant made by the assessee in his return of income and had already paid taxes on the returned income as per the regularly followed accounting policy and, therefore, present case is squarely covered by the decision of the Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverage (P) Ltd Vs. CIT 2007 (8) TMI 12 - SUPREME COURT wherein held that where the Payee has already paid tax on the income on which there was a short deduction of tax at source, recovery of tax cannot be made once again from the tax deductor - where the assessee has already paid tax on the income on which there was a short deduction of at source, recovery of tax cannot be made once again from the tax deductor. What is common to both the provisos to Section 40(a)(ia) and Section 201 (1) of the Act is that as long as the Payee / resident has filed its return of income disclosing the payment received by and in which the income earned by it is embedded and has also paid tax on such income, the assessee would not be treated as a person in default. See CIT Vs. Ansal Land Mark Township (P) Ltd 2015 (3) TMI 403 - DELHI HIGH COURT No doubt there is a mandatory requirement u/s 201 to deduct tax at source under certain contingencies, but the intention of the legislature is not to treat the Assessee as a person in default subject to the fulfillment of the conditions as stipulated in the first proviso to Section 201(1). The first proviso to section 201(1) of the Act was inserted w.e.f. 1.7.2012. The Hon'ble Delhi High Court has categorically held that insertion of the second proviso to Section 40(a) (ia) also requires to be viewed in the same manner. According to Hon ble High Court this again is a proviso intended to benefit the Assessee. The Hon'ble High Court ruled that the second proviso to Section 40 (a) (ia) of the Act is declaratory and curative in nature and should be given retrospective effect from Ist April 2005. - Decided against revenue Interest u/s 201(1) (1A) - As claimed before us that the recipient / payee had filed the return for the year under consideration declaring loss, therefore, no interest u/s 201(1A) is required to be charged from the assessee (Payer) for not deducing tax at sources. Even if the assessee herein deducts / remit the TDS amount on the income paid to recipient / payee, the same is liable to be refunded to the said recipient / payee and there is no tax liability in their hands. In our view, there is no loss to the Revenue. While taking such a view we are supported by the decision of ITAT, Lucknow Bench in the case of DCIT v Sahara India Commercial Corporation 2014 (12) TMI 721 - ITAT LUCKNOW Tax at source u/s 206C - main contention of the assessee is that the project namely Kiratpursahib-Una Road project was awarded on Built Operate - Transfer (BOT) basis - HELD THAT - As the aforesaid project was awarded on BOT basis and the amount was received as commission fee and not as toll fee, therefore, the provisions of section 206C(7) cannot be applied to the amount received. Section 206C (7) provisions are not attracted in the facts and circumstances of the present case as the assessee had received the payment as commission fee and not as toll fee. In our opinion, the CIT(A) has taken a correct view, therefore, we uphold his view and dismiss the appeal of the Revenue. Default u/s 206C(7) - appellant was required to collect TCS on toll fee - as per the Appellant the concessionaire is responsible for overall operation and maintenance of the project facility and not merely granted the usance of the toll plaza - HELD THAT - Provisions of section 206C are mandatory to collect tax under certain contingencies, but the intention of the legislature is not to treat the assessee as a person in default subject to fulfillment of the conditions stipulated in the proviso to section 206C(6A) - the insertion of second proviso to section 40(a) (ia) of the Act also requires to be viewed in the same manner. This again is a proviso intended to benefit the assessee. The effect of the legal fiction created thereby is to treat the assessee as a person not in default to deduct or collect tax at source under certain contingencies. The first proviso to section 201(1) and proviso section 206C(6A) were brought on statute on 1.7.2012 for rationalization of tax deduction at source (TDS) and Tax Collection at Source (TCS) provisions. These provisions are declaratory and curative in nature and have retrospective effect from 1st April, 2005 being the date from which sub section (ia) to section 40(a) was inserted by Finance (No.2). Act, 2004 - the impugned demand created under section 206C(1C) / 206C(7) of the Act are, hereby deleted. The appeal of the assessee stands allowed. Levying the penalty u/s 271CA - HELD THAT - Under section 271CA, the penalty is imposed for failure to collect tax at source. Since, we have held that there was no failure on the part of the assessee to collect tax at source, therefore, no penalty can be validly levied u/s 271CA of the Act. It is well settled law that the very basis on which penalty was levied, are deleted, there remains no basis at all for levying the penalty. Since, there was no failure on the part of the assessee to collect tax at source; therefore, there remains no basis at all for levying the penalty u/s 271CA of the Act. Accordingly, we allow the appeals and cancel the impugned penalty levied by the Assessing officer and confirmed by CIT(A) for all the assessment years - Decided in favour of assessee
Issues Involved:
1. Applicability of Section 194C for TDS on contractual payments. 2. Liability under Section 201(1) and 201(1A) for non-deduction of TDS. 3. Retrospective effect of the second proviso to Section 40(a)(ia). 4. Applicability of Section 206C for TCS on toll fee receipts. 5. Penalty under Section 271CA for failure to collect TCS. Issue-wise Detailed Analysis: 1. Applicability of Section 194C for TDS on contractual payments: The Revenue argued that the payments made to various contractors were subject to TDS under Section 194C of the Income Tax Act, 1961. The CIT(A) and Tribunal held that the payments made by the assessee were not liable for TDS under Section 194C as the nature of the payments was towards equity participation in a joint venture project and not for work contracts. The Tribunal relied on the CIT(A)'s findings that the assessee was merely a facilitator and not the owner of the roads, and the concessionaires had ownership rights over the assets. 2. Liability under Section 201(1) and 201(1A) for non-deduction of TDS: The Tribunal noted that the payee had already included the amount of grant in its income and paid taxes accordingly. Citing the Supreme Court decision in Hindustan Coca Cola Beverage (P) Ltd Vs. CIT, it was held that recovery of tax cannot be made from the tax deductor if the payee has already paid the tax. The Tribunal also referenced the Delhi High Court decision in CIT Vs. Ansal Land Mark Township (P) Ltd, which supported the view that once the payee has paid taxes on the income, the deductor cannot be treated as an assessee in default. 3. Retrospective effect of the second proviso to Section 40(a)(ia): The Tribunal affirmed that the second proviso to Section 40(a)(ia) is declaratory and curative, having retrospective effect from April 1, 2005. This proviso ensures that if the payee has filed a return and paid taxes on the income, the payer is not considered in default for non-deduction of TDS. This interpretation was supported by the Delhi High Court's ruling in CIT Vs. Ansal Land Mark Township (P) Ltd. 4. Applicability of Section 206C for TCS on toll fee receipts: The Revenue contended that the assessee should have collected TCS on toll fee receipts under Section 206C. The CIT(A) and Tribunal found that the amounts received were concession fees and not toll fees, as the projects were awarded on a BOT (Build-Operate-Transfer) basis. Therefore, the provisions of Section 206C were not applicable. The Tribunal upheld the CIT(A)'s decision to delete the liability created under Section 206C(7). 5. Penalty under Section 271CA for failure to collect TCS: The Tribunal held that since the assessee was not required to collect TCS under Section 206C, no penalty could be imposed under Section 271CA. The Tribunal emphasized that the basis for levying the penalty had been invalidated, thus nullifying the penalty imposed by the Assessing Officer and confirmed by the CIT(A). Conclusion: The Tribunal dismissed the appeals of the Revenue and allowed the appeals of the assessee, confirming that the payments made were not liable for TDS under Section 194C, the assessee was not in default under Sections 201(1) and 201(1A), the second proviso to Section 40(a)(ia) has retrospective effect, and the assessee was not liable to collect TCS under Section 206C. Consequently, the penalties imposed under Section 271CA were also cancelled.
|
