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TMI Blog2021 (10) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... 50.00 and it is submitted that the same tallies with the payment shown by the assessee for the assessment years in question. It is vehemently contended that ledger accounts in books of KIADB reflects that no service charges from BMRCL has been collected. On the contrary, the assessment orders of the KIADB placed before the Court refers to certain sum shown as the amount received towards service charges. However, the break-up of the same is not available. Be that as it may, it is the strong case of the assessee that the amount of ₹ 1225 Crores paid by it, is shown as deposit by the KIADB. The aforesaid factual aspects requires re-examination by the Tribunal being the last fact finding authority inasmuch as the payment of ₹ 1225 Crores made by the assessee vis- -vis the accounts of KIADB relating to the said transaction - A finding is necessary whether ₹ 1225 Crores includes the service charges or not which is the primary dispute. Hence, we restore the matter to the file of the Tribunal sans answering the substantial questions of law, setting aside the impugned order, keeping open all the rights and contentions of the parties. - I.T.A.No.673/2016 C/W I.T.A.No.6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ka. For the purpose of construction of piers/portals via duct across the precincts of Bengaluru region, the assessee approached the Karnataka Industrial Area Development Board ( KIADB for short) for acquisition of land in a smooth manner and entered into an agreement with M/s KIADB on 20.6.2005. The appellant paid a sum of ₹ 1,225 Crores to KIADB during 2005-06 to 2012-13 which the appellant - assessee claims to be the payments made towards acquisition of the land. 5. The Assessing Officer initiated proceedings under Section 201 of the Act for the assessment years under consideration on the ground that the appellant ought to have deducted tax at source on payments made to KIADB and passed separate orders holding that the appellant, as an assessee in default under Section 201(1), levied interest under Section 201(1A) of the Act negating the submissions made by the assessee. Being aggrieved, the assessee preferred the statutory appeals before the Commissioner of Income Tax (Appeals) [(CIT(A)) for short]. The CIT(A) passed the common order holding that the Assessing Officer was justified in passing the order under Section 201(1) and levying interest under Section 201(1A) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh Government of Karnataka issued the Government Order dated 21.06.2012 fixing the service charges for acquisition of land for the Bangalore Metro Rail project by KIADB at 4%, Agenda No.5 of the proceedings of the 27th High Power committee held on 10.12.2013 would indicate that BMRCL has informed that 4% service charges charged by KIADB is on the higher side. High power Committee after deliberations decided that KIADB should not charge 4% on compensation paid. The Chief Secretary has stated that the Finance Department should work out the modalities for meeting the administrative expenses which KIADB requires in acquiring the lands for BMRCL. 8. Thus, it was submitted that no final decision has been taken by the Government of Karnataka regarding payment of service charges to KIADB by the appellant for the Phase I. On the other hand, it has been decided at 1% for the Phase - II. Drawing the attention of the Court to the order of the Assessing Officer inasmuch as Note No.29 to accounts for the year ending 31.03.2013 mentioned by the auditors, extracted in the said order, it was pointed out that the total cost of land and properties acquired through KIADB for right of way for Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to two per cent of such sum in case of fees for technical services (not being a professional services), or royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of cinematographic films and ten per cent of such sum in other cases, as income-tax on income comprised therein: 13. In the case of Commissioner of Income-tax vs. Hindustan Housing and Land Development Trust Ltd., reported in (1986) 27 Taxman 450A (SC), the Hon ble Apex Court while considering whether the extra amount of compensation was income arising or accruing to the assessee, has held that there is a clear distinction between the cases, where the right to receive payment is in dispute and it is not a question of merely quantifying the amount to be received and cases where the right to receive payment is admitted and the quantification only of the amount payable is left to be determined in accordance with settled or accepted principles. 14. In Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income of a person cannot be considered as income for the purpose of deduction of tax at source at all. The purpose of deduction of tax at source is not to collect a sum which is not a tax levied under the Act, it is to facilitate the collection of tax lawfully leviable under the Act. In view of the factual finding of the appellate authorities that the payment made by KSL and ML to HSL for various expenses incurred would be a reimbursement and not a fee for technical services, Section 194J of the Act is not attracted. 16. The judgment in Karnataka Power Transmission Corporation Ltd., vs. Deputy Commissioner of Income-tax reported in (2016) 67 taxmann.com 259 deals with Section 194A of the Act. The relevant portion is quoted hereunder: 26. Section 194A of the Act mandates the tax deductor to deduct income tax on any income by way of interest other than income by way of interest on securities . The phrase any income and income tax thereon if read harmoniously, it would indicate that the interest which finally partakes the character of income, alone is liable for deduction of the income tax on that income by way of interest. If the said interest is not fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the date of payment by the concerned employee can be treated as the date of actual payment. 18. In the case of GE India Technology Centre [P.] Ltd., vs. Commissioner of Income-Tax and another reported in (2010) 193 Taxman 234 (SC), the Hon ble Apex Court based on the decision of Transmission Corporation of A.P. Ltd., vs. CIT reported in (1999) 105 Taxman 742 (SC) has held thus: 9. . Therefore, as stated earlier, if the contention of the Department was accepted it would mean obliteration of the expression sum chargeable under the provisions of the Act from Section 195(1). While interpreting a Section one has to give weightage to every word used in that section. While interpreting the provisions of the Income Tax Act one cannot read the charging Sections of that Act de hors the machinery Sections. The Act is to be read as an integrated Code. Section 195 appears in Chapter XVII which deals with collection and recovery. As held in the case of C.I.T. Vs. Eli Lilly Co. (India) (P.) Ltd. [312 ITR 225] the provisions for deduction of TAS which is in Chapter XVII dealing with collection of taxes and the charging provisions of the I.T. Act form one single ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 shows deposit of Bangalore Metro Rail Project as ₹ 12250000050.00 and it is submitted that the same tallies with the payment shown by the assessee for the assessment years in question. It is vehemently contended that ledger accounts in books of KIADB reflects that no service charges from BMRCL has been collected. On the contrary, the assessment orders of the KIADB placed before the Court refers to certain sum shown as the amount received towards service charges. However, the break-up of the same is not available. Be that as it may, it is the strong case of the assessee that the amount of ₹ 1225 Crores paid by it, is shown as deposit by the KIADB. 21. The aforesaid factual aspects requires reexamination by the Tribunal being the last fact finding authority inasmuch as the payment of ₹ 1225 Crores made by the assessee vis- -vis the accounts of KIADB relating to the said transaction. Given the circumstances, a finding is necessary whether ₹ 1225 Crores includes the service charges or not which is the primary dispute. Hence, we restore the matter to the file of the Tribunal sans answering the substantial questions of law, setting aside the impugned order, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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