2021 (7) TMI 1142 - AT - Income Tax

TDS u/s 194LA - tds on market value of Development Right s Certificate(DRC) - holding the assessee as an assessee in default u/s.201(1) of the Act and levied interest on the tax not deducted at source u/s.201(1A) - HELD THAT - We do not concur with the prayer of the learned DR that the matters in these appeals; i.e., the applicability of the provisions of section 194LA, the section 201(1) / 201(1A) of the Act; in the case on hand be restored to the file of the CIT(A); as in our view, that would only prolong proceedings; more so when this issue is covered in favour of the assessee by the binding decision of the Hon ble Karnataka High Court in the assessee s own case for Assessment Years 2010-11 and 2011-12 2015 (10) TMI 2184 - KARNATAKA HIGH COURT as considered the issue in detail, both on facts and in law and has held that the provisions of section 194LA of the Act would apply only in the case of a compulsory acquisition and not to a case where lands were surrendered by land owners under section 14B of KTCP Act. Hon ble High Court also held that since BBMP is not paying consideration for acquisition of land in the form of cash, cheque, DD or any other mode prescribed under section 194LA but is only issuing CDR, the provisions of section 194LA of the Act are not attracted. The Hon ble Court also held that when CDRs are issued, it is not possible to quantify the value in monetary terms and therefore TDS obligations cannot operate. For all the above reasons, the Hon ble High Court held that the provisions of section 194LA of the Act are not attracted to a case of issue of DRCs by the BBMP for acquisition of land and therefore the assessee cannot be considered as an assessee in default under section 201(1) of the Act. Thus we hold that the provisions of section 194LA of the Act are not applicable / attracted in the facts and circumstances of the case on hand and therefore we hold that the impugned orders under section 201(1) and 201(1A) of the Act are bad in law and hereby quashed. - Decided in favour of assessee.

Summary

Issues:
1. Delay in filing appeal before CIT(A) for Assessment Year 2013-14.
2. Whether the Assessee was liable to deduct tax at source on Development Right's Certificate (DRC) under section 194LA of the Income Tax Act, 1961.
3. Applicability of section 201(1) and 201(1A) of the Act on the Assessee.
4. Merits of the appeals challenging the orders of the Assessing Officer (AO) and CIT(A).

Analysis:
1. The appeals by the Assessee were against the ex-parte orders of CIT(A)-13, Bengaluru, for Assessment Year 2013-14, dismissing the appeals due to delay in filing. The Assessee explained the delay citing preoccupation during the general election. The CIT(A) refused to condone the delay, emphasizing the need to prove diligence. The Tribunal, considering precedents, held that the delay was not willful, and the appeal should be decided on merits.

2. The Assessee, a local authority, provided DRC for land acquisition. The revenue contended that tax should have been deducted at source under section 194LA on the DRC market value. The AO held the Assessee in default under section 201(1) and levied interest under section 201(1A). The Assessee challenged this, citing a previous High Court decision in their favor. The Tribunal upheld that the provisions of section 194LA were not attracted, as the DRC issuance did not involve cash consideration, leading to the quashing of the orders under section 201(1) and 201(1A).

3. The issue revolved around the applicability of section 201(1) and 201(1A) on the Assessee for not deducting tax at source on the DRC. The Tribunal, following the High Court's decision, held that the Assessee was not liable under these sections due to the nature of the transaction involving DRCs and the absence of cash consideration, leading to the orders being quashed.

4. On the merits of the appeals, the Tribunal noted that the issue had been previously decided in favor of the Assessee by the High Court, upholding the Tribunal's decision. Therefore, the Tribunal did not agree to restore the matter to the CIT(A) and allowed the appeals, quashing the orders under section 201(1) and 201(1A) based on the High Court's binding decision in the Assessee's favor for previous assessment years.

This detailed analysis highlights the procedural and substantive aspects of the judgment, covering the issues of delay, tax deduction liability, and the applicability of relevant sections under the Income Tax Act, culminating in the Tribunal's decision based on legal precedents and previous rulings.