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TMI Blog2016 (8) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 8th August and 22nd August 1995. The CBDT’s circulars were at best the opinion of the CBDT and to the extent they were adverse to the Appellant, they were not binding on the Appellant. However, they were binding on the Revenue. As far as the Appellant was concerned, it was entitled to challenge the CBDT's circulars which did not support its case. In fact that is what the Appellant did in the present case. It questioned the order of the AO under Section 201(1) and 201(1A) of the Act before the CIT(A), then before the ITAT and ultimately this Court. Therefore, it cannot be said that there was a deliberate failure on the part of the Appellant to deduct the TDS under Section 194-I of the Act. The facts remains that at the stage when the TDS had to be deducted the question whether TDS had to be deducted under Section 194-C or 194-I of the Act was not a settled one. This explains why the CBDT itself had to issue circulars clarifying the position. Even this Court was persuaded to again frame a question on the issue in its order dated 5th September 2005. For all of the above reasons, the Court is inclined to accept the plea of the Appellant that since the issue whether the TDS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arehousing service charges to POC at a minimum rate of ₹ 37,000 per day irrespective of the actual number of trucks carrying the products for handling products up to 300 trucks a day. 6. At the time of the entering into agreement, the Appellant was to pay POC ₹ 1.35 crores which was to be adjusted in equal amounts in the bills over a period of first thirty months of the agreement. The Appellant was to further pay POC a sum of ₹ 67.50 lakhs which was to be refunded without interest by POC to the Appellant upon the expiry of the agreement. Clause 11 of the agreement stated that the said agreement should not be construed to be assignment, mortgage, sublet, lease, licence or transfer otherwise, the warehouse belonging to the warehouser and/or any privileges and facilities connected thereto; and the possession of the warehouse and the privileges and facilities connected thereto shall always remain with the warehouser . Under Clause 12 both the Appellant and POC were to indemnify the other party against any loss or damages caused due to the negligence of their respective representatives, servants and agents etc. 7. The Appellant treated the payments made to the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istake apparent from the record in the ITAT s order dated 12th July 2002. The Appellant contended that the ITAT had in its order failed to consider its alternative plea that POC had already paid taxes on the payment received from the Appellant, and had in fact received refunds from the Revenue, and therefore the Revenue could not once again seek to recover the tax from the Appellant. 14. The above application Misc. A No. 287/Del/2004 was disposed of by the ITAT by an order dated 13th September 2004. Para 3 of the said order, which is important for the purposes for the present appeal, reads as under: 3. By way of present application, it is contended by the learned counsel that the assessee is not disputing the fact that it is an assessee in default. It is also not disputing that interest levied under Sec.201(1A) has to be recovered from the assessee. However, the grievance is that the assessee s alternate contention has not been considered by the Tribunal. The alternate contention is stated to be that the warehouser has been assessed on its income and due tax has been recovered from it by the department. Since tax has already been recovered by the department on the income p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant against the order dated 11th October 2006 passed by this Court was allowed by the Supreme Court in Hindustan Coco Cola Beverage (P) Ltd. v. Commissioner of Income Tax (2007) 293 ITR 226 (SC). The Supreme Court referred to Circular No.275/201/95-IT(B) dated 29th January 1997 issued by the Central Board of Direct Taxes ( CBDT ), which declared that no demand under Section 201(1) of the Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS that taxes due have been paid by the deductee-assessee. However, this did not alter the liability to charge interest under Section 201(1A) till the date of payment of taxes by the deductee/assessee or the liability for penalty under Section 271C. The Supreme Court held that since the Appellant had paid interest under Section 201(1A) and that there was no dispute that the tax had been paid by POC, the above circular applied to the facts on hand. 20. In coming to the above conclusion, the Supreme Court proceeded on the basis that the Revenue had not challenged the order dated 13th September 2004 of the ITAT recalling the earlier order dated 12th July 2002 to the extent of not considering the ground N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealed the particulars of his income or had deliberately furnished inaccurate particulars. Why the question in this appeal needs to be re-framed 23. However, as far as the present case is concerned, the question whether the Appellant was justified in deducting TDS under Section 194-C rather than Section 194-I of the Act could not have been permitted to be agitated in the penalty proceedings, particularly in view of the order dated 13th September 2004 passed by the ITAT. In para 3 of the said order which has been extracted hereinbefore, the ITAT specifically recorded that the Appellant was not disputing any longer its liability to deduct TDS under Section 194-I of the Act. Therefore, as far as the Appellant was concerned, it had accepted the order dated 21st May 2004 of this Court in the quantum proceedings which imparted finality to the decision of the ITAT on the above question. The Appellant again went before the ITAT with an application in which the above order dated 13th September 2004 was passed recording the above categorical stand of the Appellant. The only issue that remained was regarding the extent of tax if any the Assessee should be asked to pay under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by or under the provisions of Chapter XVII-B . It is like a no-fault liability. The AO is not in such event required to examine, as he would under Section 271(1)(c) of the Act, whether the Assessee had concealed the particulars of income or furnished inaccurate particulars. The nature and scope of the Section 271-C is such that the question of permitting an assessee to again agitate in the penalty proceedings the question that arose in the quantum proceedings, viz., whether TDS ought to have been deducted under a particular provision cannot arise particularly where an assessee, as in this case, accepts the finality of the order passed in that regard in the quantum proceedings. 26. For all of the aforementioned, the Court considers it necessary therefore to re-cast the question that has been framed on 5th September 2005. Analysis of Section 271-C 27. At this stage, it is important to note that the other questions urged by the Appellant are: (a) Whether the penalty under Section 271-C of the Act was attracted in the facts of the case? (b) Even assuming the penalty under Section 271-C of the Act was attracted, whether the Assessee has been able to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the distributor did not take the building on lease, sub-tenancy or under any agreement of similar nature. Mr. Vohra also referred to Circular No. 1/2008 dated 10th January 2008 regarding applicability of Section 194-I to payments made by the customers on account of cooling charges to the cold storage owners. It was clarified by the CBDT that only Section 194-C of the Act would be applicable to the amounts paid to cooling charges by the customers of the cold storage. Mr Vohra pointed out that the decision of this Court in United Airlines v. CIT (2006) 287 ITR 281 (Del) which held that the landing and parking charges paid by the airlines to the airport authorities partook the character of rent and attracted TDS under Section 194-I of the Act was reversed by the Supreme Court in Japan Airlines Co. Ltd. v. CIT (2015) 377 ITR 372 (SC). He further submitted that in the present case POC had paid the full tax on the monies received by it from the Appellant towards warehouse charges and therefore there was no loss of the Revenue whatsoever. The Appellant did not gain anything by not deducting TDS under Section 194-I of the Act. No part of the amount payable either to the excheq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduct TDS under Section 194-C of the Act. This part of the order of the ITAT was in fact commented upon by this Court in its order dated 21st May 2004 while declining to frame a question of law in the appeal filed by the Assessee. The Court, however, clarified that the observations of the ITAT relating to bona fide belief/reasonable cause was of no consequence. 34. The Court is unable to agree with the submission of Mr. Singh that the Assessee could not plead ignorance of law in view of the CBDT Circulars dated 8th August and 22nd August 1995. The CBDT s circulars were at best the opinion of the CBDT and to the extent they were adverse to the Appellant, they were not binding on the Appellant. However, they were binding on the Revenue. As far as the Appellant was concerned, it was entitled to challenge the CBDT's circulars which did not support its case. In fact that is what the Appellant did in the present case. It questioned the order of the AO under Section 201(1) and 201(1A) of the Act before the CIT(A), then before the ITAT and ultimately this Court. Therefore, it cannot be said that there was a deliberate failure on the part of the Appellant to deduct the TDS under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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