2019 (4) TMI 962 - AT - Income Tax

Interest u/s. 201(1A) - assessee has not remitted the TDS in to the account of Central Government within the time - assessee has not filed Form No. 26A as per provisions to Section 201(1) so that Assessing Officer could have determined whether the assessee is in default or not - HELD THAT - No doubt assessee has not filed the Form 26A but now assessee has brought evidence before the Assessing Officer to substantiate that the payee NECL has filed the return of income and paid the due tax. We cannot forget that assessee is collecting the above tax on behalf of Government and the duty on the assessee is statutorily obligated upon. When assessee fails to comply with the provisions, the liability is on the assessee until the due tax is collected or paid to Government. In this case, no doubt assessee has not complied with the provisions but Government has collected the due tax from the payee on the date of filing the return of income and payee paid the due tax before filing the return of income. Therefore, following the decision of the Hon'ble Supreme Court in the case of Hindustan Coca-Cola Beverages Ltd 2007 (8) TMI 12 - SUPREME COURT OF INDIA the department is allowed to claim interest on failure is upto the date of filing the return of income. Therefore, we direct the Assessing Officer to calculate the interest u/s. 201(1A) from the date of payment to the date of filing of the return of income by the payee. Therefore, ground of appeal filed by the assessee is allowed. Interest u/s. 234B charagibility - double taxation by way of interest, once u/s. 201(1A) from the payer-assessee and again u/s. 234C from Navayuga Engineering Company Limited (NECL) - HELD THAT - Assessee has submitted that the payee has filed return of income and paid the due tax including interest u/s. 234B, Assessing Officer cannot calculate interest u/s. 201(1A). In our view, assessee failed to understand the mandate of the two Sections i.e., Sec. 201(1) is the obligation on the collector of tax and Sec. 234B is the obligation on the tax payer itself, who has to pay the due tax on time. There is significant difference in statutory obligations posted on the collector of tax and statutory obligation on the tax payer. Therefore, these two obligations and the mandate of two sections are different and cannot be equated. Accordingly, grounds raised by assessee are dismissed. Demand raised u/s.201(1) 201(1A) - mis-match of figures and information in Balance Sheet of assessee and NECL - HELD THAT - On careful verification of bank statement of NUTPL submitted before us, we notice that NUTPL received ₹ 54.25 Crores on 25-06-2010 but on the next day, the same funds were transferred to NECL. What is the necessity to transfer on the next day, what is the purpose, is it paid on behalf of assessee or whether they have their own contract. The balance sheet of NECL and NUTPL were not filed before us to verify the figures. Since there are discrepancies noted in the entries and bank transactions, we deem it fit and proper to remit this issue back to the file of Assessing Officer to verify this transaction exclusively from the letter issued to ICICI and payment to NUTPL and subsequently, same payment of ₹ 44.25 Crores and ₹ 10 Crores were made from NUTPL to NECL on the next day. Accordingly, grounds raised by Revenue are allowed for statistical purposes.

Summary

Issues Involved:
1. Condonation of delay in filing appeals by Revenue.
2. Assessee's appeal related to Section 201(1) & 201(1A) concerning TDS on payments to M/s. Navayuga Engineering Company Limited (NECL) and M/s. Navayuga Udipi Tollway Private Limited (NUTPL).
3. Interest calculation under Section 201(1A) on delayed TDS remittance.
4. Revenue's appeal against deletion of demand related to the payment to NUTPL.
5. Assessee's appeal against interest under Section 201(1A) and double taxation concerns.

Condonation of Delay:
The Revenue filed appeals with a delay of 3 days. The Tribunal, satisfied with the reasonable cause for the delay, condoned it and admitted the appeals for hearing on merits.

Assessee's Appeal Related to Section 201(1) & 201(1A):
- Facts: The assessee-company, engaged in construction and operation of a sea port, was found during a TDS survey to have delayed TDS deductions and remittances for payments made to NECL and NUTPL.
- Assessee's Submission: The assessee argued that NECL had filed its return of income, including the ?5 crores payment, and paid the tax. Hence, as per the Supreme Court's judgment in CIT vs. Hindustan Coca-Cola Beverage Ltd., the payer should not be held as an assessee in default.
- CIT(A)'s Decision: The CIT(A) upheld the demand under Section 201(1) due to the absence of Form 26A but accepted the evidence for the ?54.24 crores payment to NUTPL as share application money, thus deleting the consequent TDS demand and interest.
- Tribunal's Decision: The Tribunal directed the Assessing Officer to calculate interest under Section 201(1A) only up to the date of filing the return of income by NECL, following the Supreme Court's decision.

Interest Calculation under Section 201(1A):
- Assessee's Argument: The assessee contended that interest under Section 201(1A) should not be charged as NECL had paid the due tax, and any interest should be limited to the date of filing the return.
- Tribunal's Decision: The Tribunal dismissed the assessee's argument, stating that the obligations under Sections 201(1) and 234B are distinct and cannot be equated. The interest under Section 201(1A) is chargeable until the date of tax payment by the payee.

Revenue's Appeal Against Deletion of Demand Related to Payment to NUTPL:
- Revenue's Argument: The Revenue challenged the CIT(A)'s decision, arguing that the payment was towards EPC contracts and not share application money, citing discrepancies in the balance sheets and transactions.
- Tribunal's Decision: The Tribunal remitted the issue back to the Assessing Officer for further verification of the transactions and the purpose of the payments, considering the discrepancies noted.

Assessee's Appeal Against Interest Under Section 201(1A) and Double Taxation Concerns:
- Assessee's Argument: The assessee argued against the interest under Section 201(1A) on the grounds of double taxation, as NECL had already paid interest under Section 234B.
- Tribunal's Decision: The Tribunal dismissed the argument, reiterating the distinct statutory obligations under Sections 201(1A) and 234B.

Conclusion:
- The appeal in ITA No. 318/Hyd/2018 was partly allowed.
- The appeals in ITA Nos. 275/Hyd/2018, 319/Hyd/2018, and 276/Hyd/2018 were remitted back to the Assessing Officer for further verification and are treated as allowed for statistical purposes.