2020 (4) TMI 713 - AT - Income Tax

Condonation of delay - delay of 979 days - HELD THAT - Delay cannot be attributed to the deliberate conduct of the assessee neither through intention nor through action. No malafide is made out by the Revenue. Further, we find relevant to extract the relevant paras from the judgment in the case of Atlas Copco 2019 (8) TMI 1415 - ITAT PUNE wherein held that the assessee has raised a legal ground through these Cross objections, which goes to the root of the matter. It would be seen infra that the said legal issue is squarely covered in the assessee s favour by several orders passed by the Tribunal including those by the Pune Benches. Under these circumstances, we condone the delay and take up the Cross objections for disposal on merits. Penalty u/s 271C - Non deduction of TDS on contractual payments - payee is Non Resident Indian (NRI) and the assessee is under statutory obligation to make the deduction of TDS at the rate of 40% - HELD THAT - Assessee brought our attention to the various decisions and submitted that this is a covered issue by virtue of the order of the Bangalore Bench of the Tribunal in the case of ITO vs. Intel Tech India (P.) Ltd.. 2009 (4) TMI 546 - ITAT BANGALORE . Assessee submitted that the levy of interest u/s 201(1)/201(1A) of the Act is not sustainable when the payee made the payment of taxes fully. Non-Discrimination Article is provided by way of Article 25 of the India-Indonesia Treaty whereby the non-resident assessee has to be treated as part with domestic entities. In other words, the judgment of the Hon ble Supreme Court in the case of Hindustan Coca Cola Beverage (P.) Ltd. 2007 (8) TMI 12 - SUPREME COURT is equal applicable to the case of a non-resident like the present deductee. This issue must go back to the file of the CIT(A) for fresh adjudication in the matter of findings of the CIT(A) does not sync with the legal proposition laid down by the various judgements cited above. Therefore, the CIT(A) is directed to examine the issue afresh and applied the correct law after granting reasonable opportunity of being heard to the assessee as per set principles of natural justice. Appeals of the assessee are allowed for statistical purposes.

Summary

Issues:
1. Condonation of Delay
2. Merits of the Case

Condonation of Delay:
The case involved two appeals filed by the assessee against separate orders of the CIT(A)-II, Nagpur for the assessment year 2003-04. The delay in filing the appeals was 979 days. The assessee sought condonation of delay, citing judicial precedents where delay was condoned in similar cases. The Tribunal, after considering the submissions and relevant judgments, found the reasons for delay justified and not deliberate. The delay was condoned based on the principle that no one should be deprived of an adjudication on merits unless deliberate delay is proven.

Merits of the Case:
The primary issue revolved around the failure of the assessee to deduct TDS at the prescribed rate of 40% from contractual payments made to a Non-Resident Indian (NRI). The Assessing Officer invoked sections 201(1) and 271C of the Income Tax Act due to non-compliance. The CIT(A) upheld the orders, stating that payment of taxes by the payee does not absolve the assessee from liability. The assessee argued that legal precedents supported their position, emphasizing that when the payee pays taxes, the deductor cannot be treated as defaulting. The Tribunal agreed with the assessee, directing the CIT(A) to reexamine the issue in light of the legal principles established by various judgments. The appeals were allowed for statistical purposes.

In conclusion, the Tribunal addressed the issues of condonation of delay and the merits of the case, ultimately ruling in favor of the assessee based on legal precedents and the correct interpretation of the law. The case highlighted the importance of adhering to TDS provisions and ensuring fair treatment for deductors in such matters.