2019 (7) TMI 290 - AT - Income Tax

Levy of fees u/s 234E - delay in filing TDS statement in Form 26QB - applicabilty of 194IA - allotment letter cannot be treated as transfer of immovable property - imposing fee u/s 234E has become appealable before CIT(A) w.e.f. 1st June 2015 - applicability of section 234E on TDS statements or to a single TDS statement - HELD THAT - It is patent and obvious that the assessee and the seller of the flats have treated the transaction of sale of flats as a transaction coming within the purview of section 194IA. In any case of the matter, the deductee has not expressed any reservation with regard to the applicability of section 194IA to the subject transaction. Therefore, the assessee being a deductor cannot plead inapplicability of the aforesaid provision. In fact, in our view, the contention of inapplicability of section 194IA is redundant and is not available to be taken by the assessee. Once the assessee has proceeded to deduct tax at source u/s 194IA of the Act, all legal consequences arising in pursuance thereto would automatically follow. Validity of Section 234E -The Court in Rashmikant Kundalia Anr. v/s Union of India, 2015 (2) TMI 412 - BOMBAY HIGH COURT has held, the fee charged under section 234E is nothing but a privilege and a special service to the deductor allowing him to file TDS returns / statements beyond the time prescribed by the Act and the Rules. The Court has held that on payment of the fee under section 234E, the deductor is allowed to file the TDS returns/statements beyond the prescribed time so that it can be regularized. Applicability of Section 234E on filing of Form no.26QB - No doubt, the provision contained u/s 234E of the Act makes it clear that it will be applicable if the deductor fails to deliver the TDS statement within the time prescribed in u/s 200(3). Whereas, section 200(3) makes it clear that furnishing of TDS statement in the prescribed form, manner and time applies to all TDS provisions including section 194IA contained under Chapter XVII. Therefore, assessee s claim that since the challan cum statement is generated on a single date, therefore, it will not come within the purview of section 200(3) of the Act, is unacceptable. Thus, we are of the view that the TDS statements in Form no.26QB also comes within the ambit of section 200(3). All the transactions relating to purchase of flats should be taken as a single transaction - At this stage, it will be relevant to observe, clause (c) of sub section (1) of section 200A contemplates that while processing the TDS return, fee u/s 234E shall be computed. Thus, use of word shall in the aforesaid provision makes it mandatory on the part of the Assessing Officer to levy fee u/s 234E. Since, the assessee has filed separate TDS statements u/s 200(3) read with rule 26QB, there is no error on the part of the Assessing Officer in computing fee under section 234E of the Act while processing such statements. Appeal against levy of fee u/s 234E - As regards the contention of the learned Authorised Representative that appeal against levy of fee u/s 234E of the Act is maintainable before the learned CIT(A), we find merit in the same. However, it will not make much difference as learned Commissioner (Appeals) has decided the issue on merit. Grounds are dismissed.

Summary

Issues Involved:
1. Levy of fees under section 234E of the Income Tax Act for delay in filing Form 26QB for each flat purchased.
2. Applicability of section 194IA of the Income Tax Act to the transaction.
3. Whether the transaction should be treated as a single transaction or multiple transactions for the purpose of filing TDS statements and levying fees under section 234E.

Detailed Analysis:

1. Levy of Fees under Section 234E:
The primary issue raised by the assessee was the confirmation of the action of the Assessing Officer in levying fees under section 234E of the Income Tax Act for the delay in filing Form 26QB for each flat purchased. The assessee argued that since the flats were purchased through a single allotment letter, the levy of fees should be restricted to one challan-cum-statement of TDS. The Commissioner (Appeals) dismissed this argument, stating that the fee under section 234E is not a penalty but a compensation for the additional burden on the Department due to late filing. The Tribunal upheld this view, noting that the assessee had filed separate TDS statements for each flat and thus, the levy of fees for each statement was justified.

2. Applicability of Section 194IA:
The assessee contended that section 194IA, which pertains to the deduction of tax at source on the transfer of immovable property, was not applicable as the allotment letter did not constitute a transfer of immovable property. The Tribunal rejected this argument, stating that the assessee had deducted tax at source under section 194IA at the time of making the payment, indicating that both the assessee and the seller treated the transaction as falling under this provision. Consequently, the legal consequences, including the requirement to file TDS statements and the applicability of section 234E for late filing, were applicable.

3. Single vs. Multiple Transactions:
The assessee argued that the purchase of 96 flats should be treated as a single transaction for the purpose of filing TDS statements and levying fees under section 234E. The Tribunal found no merit in this argument, noting that the allotment letter detailed the cost of each flat separately and the assessee had computed and deposited TDS based on the cost of each individual flat. Therefore, the levy of fees under section 234E for each TDS statement filed separately was justified. The Tribunal emphasized that the use of the word "shall" in section 200A(1)(c) made it mandatory for the Assessing Officer to levy fees under section 234E for each delayed TDS statement.

Conclusion:
The Tribunal dismissed all the appeals, upholding the levy of fees under section 234E for each TDS statement filed late. The decision of the Commissioner (Appeals) was affirmed, and the Tribunal found no reason to interfere with it. The Tribunal also acknowledged that the appeal against the levy of fees under section 234E was maintainable before the Commissioner (Appeals), but this did not alter the outcome of the case. The order was pronounced in the open court on 28.06.2019.