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2023 (8) TMI 31 - AT - Income TaxCollection of tax at source (TCS) u/s. 206C - whether or not the assessee was liable for collection of tax at source (TCS) u/s. 206C on the amount of compounding fees received from persons involved in illegal mining and transportation of minerals and whether or not any obligation was cast upon the assessee to have collected tax at source (TCS) on the amount of contributions made by the lease holders i.e. lessees towards DMF and NMET? - HELD THAT - We are of the considered view that the assessee by receiving the aforesaid amount i.e. 10 times of royalty from the illegal miners/transporters of minerals had, in turn, clearly vested/parted with the interest and right in the mine in their favour, which the latter had undeniably used for the purpose of her business. Considering the fact that the orders w.r.t amounts collected by the assessee i.e. DMO from illegal miners/transporters of minerals in itself states that an amount i.e. 10 times of the royalty amount is to be recovered from the illegal miners/transporters, therefore, we are unable to comprehend that as to on what basis it is averred by the AR that the said amounts so received by the assessee would not fall within the realm of Section 206C(1C) - As the assessee in the case before us had not only received royalty from the illegal miners/transporters of minerals as it would have in the normal course received in case of a regular lease or license, but in fact was in receipt of 10 times of royalty amount from them, therefore, the contention of the Ld. AR that the assessee was not exigible for collection of tax at source (TCS) on the amounts received from the illegal miners/transporters of minerals being devoid and bereft of any substance is liable to be rejected. We, thus, in terms of our aforesaid observations, finding no infirmity in the view taken by the lower authorities that the assessee who was liable to collect tax at source (TCS) on the amounts received from illegal miners/transporters, having failed to do so, was to be treated as assessee-in-default u/s. 206C(6) of the Act, uphold the same. Thus, the Ground of appeal No.1 raised by the assessee is dismissed in terms of our aforesaid observations. TCS on the amounts deposited by the lease holders towards DMF - We find that in the accounts of the assessee i.e. DMO for the immediately succeeding year i.e. F.Y.2017-18 the payments made by the lease holders towards Contribution funds are reflected. As the accounts of the assessee prima-facie militates against the aforesaid observations arrived at by us by looking into the provisions of Section 9B of the Mines and Minerals (Development and Regulation) Act, 1957, therefore, in our considered view the matter in all fairness requires to be revisited by the A.O. A.O is directed to verify as to whether the assessee was in receipt of contributions towards DMF from the leaseholders; or as claimed by the assessee the amounts were paid by the respective lease holders directly to the DMF. In case the claim of the assessee i.e. the lease holders were directly making payments to DMF is found to be in order, then as observed by us hereinabove no obligation would be cast upon the assessee to collect tax at source (TCS) on the contributions made by the lease holders to DMF. Needless to say, the A.O shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee. TCS on the contributions made by the lease holders towards NMET - Now when the assessee i.e. DMO had neither debited the amount of lessee s contribution towards NMET to the account of the lease holders; nor at any stage received any amount of contribution towards NMET from the lease holders, therefore, on the said count itself it could not have been saddled with any obligation for collecting any tax at source on the said amount. Admittedly, a pit-pass would be issued by the assessee to the lease holder only after he produced evidence of having paid the amount of royalty a/w. payments towards DMF/NMET, but on the said standalone fact de-hors satisfaction of the requisite conditions contemplated in sub-section (1C) of Section 206C no obligation could have been saddled upon the assessee to collect tax at source (TCS) on the amount of NMET paid by the lease holders. As the accounts of the assessee prim-facie militates against the aforesaid observations arrived at by us by looking into the provisions of Section 9C of the Mines and Minerals (Development and Regulation) Act, 1957, therefore, in our considered view the matter in all fairness requires to be restored to the file of the A.O. The A.O is directed to verify as to whether the assessee was in receipt of contributions towards NMET from the lease holders; or as claimed by the assessee the amounts were paid by the respective lease holders directly to NMET. In case the claim of the assessee, that the lease holders were directly making payments to NMET is found to be in order, then as observed by us hereinabove, no obligation would be cast upon the assessee to collect tax at source (TCS) on the amounts paid by the lease holders to NMET. Needless to say, the A.O shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee.
Issues Involved:
1. Condonation of Delay 2. Collection of Tax at Source (TCS) on Compounding Fees 3. Collection of TCS on Contributions to District Mineral Foundation (DMF) 4. Collection of TCS on Contributions to National Mineral Exploration Trust (NMET) Condonation of Delay: The Tribunal considered the reasons for delay in filing appeals, including staff transfers, skeletal staff, and lack of awareness of the faceless appeal system. The Tribunal found the reasons justifiable and condoned the delay without imposing any cost, emphasizing the need for vigilance in future compliance. Collection of TCS on Compounding Fees: The Tribunal examined whether the assessee (DMO) was liable to collect TCS under Section 206C(1C) of the Income-tax Act on compounding fees received from illegal miners and transporters of minerals. It was concluded that the obligation to collect TCS does not presuppose the existence of a lease or contract but includes any transfer of right or interest in a mine. The Tribunal found that by receiving 10 times the royalty from illegal miners, the assessee had vested interest in the mine for business purposes. Thus, the assessee was liable to collect TCS on these amounts, and the lower authorities' view was upheld. Collection of TCS on Contributions to DMF: The Tribunal referred to Section 9B of the Mines and Minerals (Development and Regulation) Act, 1957, which mandates leaseholders to pay a specified percentage of royalty to the DMF. It was observed that the payments were made directly by leaseholders to DMF without involvement of the assessee. The Tribunal directed the AO to verify the facts and, if the payments were made directly, no obligation to collect TCS would be cast on the assessee. Collection of TCS on Contributions to NMET: Similarly, Section 9C of the Mines and Minerals (Development and Regulation) Act, 1957, mandates leaseholders to pay a specified percentage of royalty to NMET. The Tribunal observed that the payments were made directly by leaseholders to NMET without involvement of the assessee. The AO was directed to verify the facts, and if the payments were made directly, no obligation to collect TCS would be cast on the assessee. Conclusion: The Tribunal partly allowed the appeals for statistical purposes, directing the AO to verify the facts regarding contributions to DMF and NMET. The assessee was found liable to collect TCS on compounding fees received from illegal miners and transporters.
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