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Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI
Before: SHRI AMIT SHUKLA & SHRI OM PRAKASH KANT
PER OM PRAKASH KANT, AM These two appeals by the Revenue are directed against the two separate orders dated 15.12.2021 and 21.12.2021 passed by the Ld. Commissioner of Income-tax (Appeals)-53, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2014-15 and 2013-14 respectively.
M/s Blue Star Realtors Pvt. Ltd. M/s Blue Star 2 ITA Nos. 714 & 715/M/2022
As common/connected issue As common/connected issue-in-dispute are involved in these dispute are involved in these appeals, therefore same were heard together and disposed off by herefore same were heard together and disposed off by herefore same were heard together and disposed off by way of this consolidated order for convenience and avoid repetition way of this consolidated order for convenience and avoid repetition way of this consolidated order for convenience and avoid repetition of facts.
ITA No. 714/MUM/2022 ITA No. 714/MUM/2022 Assessment Year: 2014 2014-15 2. First we take up the appeal of the assessee for assessment year First we take up the appeal of the assessee for assessment year First we take up the appeal of the assessee for assessment year 2014-15. The grounds raised by Revenue are reproduced as under: he grounds raised by Revenue are reproduced as under: he grounds raised by Revenue are reproduced as under:
On the facts and in the circumstances of the case and in law, Ld. On the facts and in the circumstances of the case and in law, Ld. On the facts and in the circumstances of the case and in law, Ld. CIT (A), 53, Mumbai has erred in deleting the penalty of Rs. CIT (A), 53, Mumbai has erred in deleting the penalty of Rs. CIT (A), 53, Mumbai has erred in deleting the penalty of Rs. 3.21.90.6374; levied under section 271C for AY 2014-15. 3.21.90.6374; levied under section 271C for AY 2014 3.21.90.6374; levied under section 271C for AY 2014 2. On the facts and in On the facts and in the circumstances of the case and in law Ld. the circumstances of the case and in law Ld. CIT (A), 53, Mumbai has erred in concluding that penalty under CIT (A), 53, Mumbai has erred in concluding that penalty under CIT (A), 53, Mumbai has erred in concluding that penalty under section 271C cannot be sustained in this case as the interest levied section 271C cannot be sustained in this case as the interest levied section 271C cannot be sustained in this case as the interest levied under section 201(IA) has been already deleted by the Hon'ble under section 201(IA) has been already deleted by the Hon'ble under section 201(IA) has been already deleted by the Hon'ble ITAT, Pune in th ITAT, Pune in the assessment's own case for A.Y. 2014 e assessment's own case for A.Y. 2014-15 vide its order No. I'TA No. 1258/PUN/2016 dated 04.09.2019. order No. I'TA No. 1258/PUN/2016 dated 04.09.2019. order No. I'TA No. 1258/PUN/2016 dated 04.09.2019. 3. On the facts and On the facts and-in the circumstances of the case and in law, Ld in the circumstances of the case and in law, Ld CIT(A) 53, Mumbai has erred in not following the a interpretation CIT(A) 53, Mumbai has erred in not following the a interpretation CIT(A) 53, Mumbai has erred in not following the a interpretation of law given by Hon'ble of law given by Hon'ble supreme court in its judgment dated supreme court in its judgment dated 16.08.2007 rendered in the case of M/s Hindustan Coca Cola 16.08.2007 rendered in the case of M/s Hindustan Coca Cola 16.08.2007 rendered in the case of M/s Hindustan Coca Cola Beverage Pvt, Ltd. (Arising out of SLP(C) No. 3883 of 2007), which Beverage Pvt, Ltd. (Arising out of SLP(C) No. 3883 of 2007), which Beverage Pvt, Ltd. (Arising out of SLP(C) No. 3883 of 2007), which lays down that : lays down that :-
M/s Blue Star Realtors Pvt. Ltd. M/s Blue Star 3 ITA Nos. 714 & 715/M/2022
"Be that as it may the circular No.275/201/95-IT(B) dated "Be that as it may the circular No.275/201/95 "Be that as it may the circular No.275/201/95 29.01.1997issued b 29.01.1997issued by the Central Board of Direct Taxes, in our y the Central Board of Direct Taxes, in our considered opinion, should put an end to the controversy. The considered opinion, should put an end to the controversy. The considered opinion, should put an end to the controversy. The circular declares "no demand visualized under section 201(1) of circular declares "no demand visualized under section 201(1) of circular declares "no demand visualized under section 201(1) of the Income the Income-tax Act should be enforced after the tax deductor has tax Act should be enforced after the tax deductor has satisfied the officer satisfied the officer-in-charge of TDS, that taxes due have been charge of TDS, that taxes due have been paid by the duductee paid by the duductee-assessee. However, this will not alter the assessee. However, this will not alter the liability to charge interest under section 201(IA) of the Act till the liability to charge interest under section 201(IA) of the Act till the liability to charge interest under section 201(IA) of the Act till the date of payment of taxes by the deductee date of payment of taxes by the deductee-assessee/or the liability assessee/or the liability for penalt for penalty under section 271C of the Income Tax Act" y under section 271C of the Income Tax Act" 3. At the outset, the Registry pointed out delay of 1782 days in At the outset, the Registry pointed out delay of 1782 days in At the outset, the Registry pointed out delay of 1782 days in filing filing filing the the the appeal. appeal. appeal. In In In response response response to to to the the the Ld. Ld. Ld. Departmental Departmental Departmental Representative (DR) submitted that the Registry has taken the date Representative (DR) submitted that the Registry has taken the date Representative (DR) submitted that the Registry has taken the date of the order as 15.03.201 15.03.2017, whereas the order has been passed by whereas the order has been passed by the Ld. CIT(A) on 15.12.2021. The Ld. DR submitted that said order the Ld. CIT(A) on 15.12.2021. The Ld. DR submitted that said order the Ld. CIT(A) on 15.12.2021. The Ld. DR submitted that said order dated 15.12.2021 of the Ld. CIT(A) was received in the office of the dated 15.12.2021 of the Ld. CIT(A) was received in the office of the dated 15.12.2021 of the Ld. CIT(A) was received in the office of the relevant Commissioner of Income relevant Commissioner of Income-tax on 10.01.2022 and therefore tax on 10.01.2022 and therefore appeal was due for filing on 10.03.2022 filing on 10.03.2022 whereas appeal has been whereas appeal has been filed on 20.04.2022. The Ld. DR submitted that this period of delay The Ld. DR submitted that this period of delay 40 days is covered by the decision of Hon’ble Supreme Court in is covered by the decision of Hon’ble Supreme Court in is covered by the decision of Hon’ble Supreme Court in
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Miscellaneous Application No. 665 of 2021 in SMW(C) No. 3 of Miscellaneous Application No. 665 of 2021 in SMW(C) No. 3 of Miscellaneous Application No. 665 of 2021 in SMW(C) No. 3 of 2020, where the limitation has been extended upto 22.04.2022 limitation has been extended upto 22.04.2022. limitation has been extended upto 22.04.2022 Therefore, appeal filed , appeal filed is within the time. The Ld. Counsel of the within the time. The Ld. Counsel of the assessee could not controvert the factual aspect of date of order assessee could not controvert the factual aspect of date of order assessee could not controvert the factual aspect of date of order passed by the Ld. CIT(A). Accordingly, in view of no delay in filing passed by the Ld. CIT(A). Accordingly, in view of no delay in filing passed by the Ld. CIT(A). Accordingly, in view of no delay in filing the appeal, the appeal is admitted for adjudication. eal, the appeal is admitted for adjudication.
Brief facts qua, the issue Brief facts qua, the issue-in-dispute are that whether the dispute are that whether the penalty u/s 271C of the Income of the Income-tax Act, 1961 (in short ‘the Act’) is tax Act, 1961 (in short ‘the Act’) is leviable despite that liability u/s 201(1) and interest charge leviable despite that liability u/s 201(1) and interest charge leviable despite that liability u/s 201(1) and interest charged u/s 201(1A) of the Act have the Act have been deleted. In the grounds raised, the been deleted. In the grounds raised, the Revenue has challenged deletion of the penalty of Revenue has challenged deletion of the penalty of Revenue has challenged deletion of the penalty of ₹3,21,90,637/- levied u/s 271C of the Act on the ground that deletion of penalty is of the Act on the ground that deletion of penalty is of the Act on the ground that deletion of penalty is not connected with the deletion of interest levied u/s 201(1A) of th not connected with the deletion of interest levied u/s 201(1A) of th not connected with the deletion of interest levied u/s 201(1A) of the Act in the assessee’s own case. Act in the assessee’s own case.
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We have heard rival submissions of the parties on the issue-in- We have heard rival submissions of the parties on the issue We have heard rival submissions of the parties on the issue dispute and perused the relevant material on record. The finding of dispute and perused the relevant material on record. The finding of dispute and perused the relevant material on record. The finding of
the Ld. CIT(A) on issue the Ld. CIT(A) on issue-in-dispute is reproduced as under : dispute is reproduced as under :
“4.1. During the appellate 4.1. During the appellate proceedings, the assessee filed submissions dated proceedings, the assessee filed submissions dated 03.12.2021, in which it had stated that this appeal relates to penalty for the 03.12.2021, in which it had stated that this appeal relates to penalty for the 03.12.2021, in which it had stated that this appeal relates to penalty for the A.Y. 2014-15 and the addition on which the penal 15 and the addition on which the penalty was levied has been y was levied has been PUN/2016 dated deleted by the Hon'ble ITAT, Mumbai vide order no. deleted by the Hon'ble ITAT, Mumbai vide order no. 1258/PUN/2016 dated 04.09.2019. Since the quantum is deleted by the ITAT. the penalty imposed 04.09.2019. Since the quantum is deleted by the ITAT. the penalty imposed 04.09.2019. Since the quantum is deleted by the ITAT. the penalty imposed by the AO should also be deleted. The appellant has also enclosed a copy of by the AO should also be deleted. The appellant has also enclosed a copy of by the AO should also be deleted. The appellant has also enclosed a copy of the order of the Hon'ble ITAT in the case of the assessee for AY 2014-15. the order of the Hon'ble ITAT in the case of the assessee for AY 2014 the order of the Hon'ble ITAT in the case of the assessee for AY 2014
4.2. The penalty order of the AO, submission made by the appellant and the order of the AO, submission made by the appellant and the order of the AO, submission made by the appellant and the order of the ITAT has been perused. The Hon'ble ITAT has been perused. The Hon'ble-ITAT, Mumbai vide order ITAT, Mumbai vide order dated 04.09.2019. has decided the issue in favour of the assessee and deleted dated 04.09.2019. has decided the issue in favour of the assessee and deleted dated 04.09.2019. has decided the issue in favour of the assessee and deleted the interest charged by the AO u the interest charged by the AO u/s. 201(1A) of the IT Act.
The operating part of the decision of the Hon'ble ITAT is as under - The operating part of the decision of the Hon'ble ITAT is as under The operating part of the decision of the Hon'ble ITAT is as under
The facts narrated by the assessee above are not in dispute. 5. The facts narrated by the assessee above are not in dispute. 5. The facts narrated by the assessee above are not in dispute. The assessee has made interest payment of Rs.32,19,06,372/- The assessee has made interest payment of Rs.32,19,06,372/ The assessee has made interest payment of Rs.32,19,06,372/ to its parent company HDIL without deducting tax at source. to its parent company HDIL without deducting tax at to its parent company HDIL without deducting tax at HDIL in its return of income has reflected the interest income HDIL in its return of income has reflected the interest income HDIL in its return of income has reflected the interest income from the assessee. The Commissioner of Income Tax (Appeals) from the assessee. The Commissioner of Income Tax (Appeals) from the assessee. The Commissioner of Income Tax (Appeals) after examining the facts deleted the addition made u/s. after examining the facts deleted the addition made u/s. after examining the facts deleted the addition made u/s. 201(1) of the Act. However, in respect of charging of interest 201(1) of the Act. However, in respect of charging of interest 201(1) of the Act. However, in respect of charging of interest u/s. 201(1A) the Commissioner of Income Tax (Appeals) 201(1A) the Commissioner of Income Tax (Appeals) 201(1A) the Commissioner of Income Tax (Appeals) refused to grant relief on the ground that charging of interest refused to grant relief on the ground that charging of interest refused to grant relief on the ground that charging of interest
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is mandatory and hence, can neither be waived nor reduced. is mandatory and hence, can neither be waived nor redu is mandatory and hence, can neither be waived nor redu The Commissioner of Income The Commissioner of Income (Appeals) placed reliance on the (Appeals) placed reliance on the decision rendered in th decision rendered in the case of Karnataka Urban e case of Karnataka Urban Infrastructure Development & Finance Corporation Vs. Infrastructure Development & Finance Corporation Vs. Infrastructure Development & Finance Corporation Vs. Commissioner of Income Tax & Anr. (supra) to come to such a Commissioner of Income Tax & Anr. (supra) to come to such a Commissioner of Income Tax & Anr. (supra) to come to such a conclusion. On the contrary, the assessee placed reliance on conclusion. On the contrary, the assessee placed reliance on conclusion. On the contrary, the assessee placed reliance on the decision of Kolkata Bench of Tribunal in the case of Haldia the decision of Kolkata Bench of Tribunal in the case of the decision of Kolkata Bench of Tribunal in the case of Petrochemicals Ltd. Vs. Deputy Commissioner of Income Tax Petrochemicals Ltd. Vs. Deputy Commissioner of Income Tax Petrochemicals Ltd. Vs. Deputy Commissioner of Income Tax (supra). The issue before Tribunal was whether the interest (supra). The issue before Tribunal was whether the interest (supra). The issue before Tribunal was whether the interest u/s. 201(1) and 201(1A) can be charged where there is no tax u/s. 201(1) and 201(1A) can be charged where there is no tax u/s. 201(1) and 201(1A) can be charged where there is no tax liability in the hands of the payee. The Tribunal after liability in the hands of the payee. The Tribunal after liability in the hands of the payee. The Tribunal after considering v considering various decisions and examining the facts of the arious decisions and examining the facts of the case held as under : case held as under :
"6. We have heard the rival submissions and perused the "6. We have heard the rival submissions and perused the "6. We have heard the rival submissions and perused the materials available on record including the paper book filed materials available on record including the paper book filed materials available on record including the paper book filed by the assessee. The ld AR argued that there was no liability to by the assessee. The ld AR argued that there was no liability to by the assessee. The ld AR argued that there was no liability to deduct tax at source on the payments made to its subsidiary t tax at source on the payments made to its subsidiary t tax at source on the payments made to its subsidiary company in as much as the subsidiary company had incurred company in as much as the subsidiary company had incurred company in as much as the subsidiary company had incurred huge losses which is quite evident from the Assessment order huge losses which is quite evident from the Assessment order huge losses which is quite evident from the Assessment order of the subsidiary company i.e. M/s Haldia Riverside Estates of the subsidiary company i.e. M/s Haldia Riverside Estates of the subsidiary company i.e. M/s Haldia Riverside Estates Ltd u/s 143(3) dated 2 Ltd u/s 143(3) dated 22.12.2006 for the Asst Year 2004 2.12.2006 for the Asst Year 2004-05. From the said order it could be seen that there would be no From the said order it could be seen that there would be no From the said order it could be seen that there would be no resultant tax payable by the subsidiary company. In response resultant tax payable by the subsidiary company. In response resultant tax payable by the subsidiary company. In response to this, the ld DR vehemently supported the orders of the to this, the ld DR vehemently supported the orders of the to this, the ld DR vehemently supported the orders of the lower authorities. We find that the TDS lower authorities. We find that the TDS provisions mandates provisions mandates deduction of tax at source on the payments made by assessee deduction of tax at source on the payments made by assessee deduction of tax at source on the payments made by assessee to parties if it falls within the deductible limits prescribed u/s to parties if it falls within the deductible limits prescribed u/s to parties if it falls within the deductible limits prescribed u/s 194I of the Act. The purpose of TDS is to ensure that the 194I of the Act. The purpose of TDS is to ensure that the 194I of the Act. The purpose of TDS is to ensure that the
M/s Blue Star Realtors Pvt. Ltd. M/s Blue Star 7 ITA Nos. 714 & 715/M/2022
Government is not deprived of its due taxes in time. Moreover, Government is not deprived of its due taxes in time Government is not deprived of its due taxes in time recovery of taxes through TDS is one of the tax collection recovery of taxes through TDS is one of the tax collection recovery of taxes through TDS is one of the tax collection mechanism formulated by the Government. If the payer mechanism formulated by the Government. If the payer mechanism formulated by the Government. If the payer (assessee herein) fails to deduct tax at source in respect of (assessee herein) fails to deduct tax at source in respect of (assessee herein) fails to deduct tax at source in respect of certain eligible payments, then the payer assessee could be certain eligible payments, then the payer assessee could be certain eligible payments, then the payer assessee could be treated as treated as „assessee in default‟ and the said tax could be ‟ and the said tax could be recovered from the payer assessee on behalf of the payee. But recovered from the payer assessee on behalf of the payee. But recovered from the payer assessee on behalf of the payee. But in the instant case, there is no resultant tax liability in the in the instant case, there is no resultant tax liability in the in the instant case, there is no resultant tax liability in the hands of the payee due to huge losses. In such circumstances, hands of the payee due to huge losses. In such circumstances, hands of the payee due to huge losses. In such circumstances, normally it is expe normally it is expected that the payee should approach the cted that the payee should approach the TDS officer by preferring an application in Form No. 13 TDS officer by preferring an application in Form No. 13 TDS officer by preferring an application in Form No. 13 seeking for lower / nil deduction certificate u/s 197(1) of the seeking for lower / nil deduction certificate u/s 197(1) of the seeking for lower / nil deduction certificate u/s 197(1) of the Act. In the instant case, section 197(1) certificate has been Act. In the instant case, section 197(1) certificate has been Act. In the instant case, section 197(1) certificate has been obtained by the payee only from 1. obtained by the payee only from 1.7.2003 wherein the 7.2003 wherein the deductors have been directed to deduct 1% TDS on payments deductors have been directed to deduct 1% TDS on payments deductors have been directed to deduct 1% TDS on payments made to payees in respect of payments not exceeding Rs. made to payees in respect of payments not exceeding Rs. made to payees in respect of payments not exceeding Rs. 409.34 lakhs and hence the ld AO held that the assessee had 409.34 lakhs and hence the ld AO held that the assessee had 409.34 lakhs and hence the ld AO held that the assessee had violated the TDS provisions in respect of payments made upto violated the TDS provisions in respect of payments made upto violated the TDS provisions in respect of payments made upto 30.6.03 and for payments made in excess of Rs. 409.34 lakhs, .6.03 and for payments made in excess of Rs. 409.34 lakhs, .6.03 and for payments made in excess of Rs. 409.34 lakhs, tax at the rate of 20% should have been deducted. We hold tax at the rate of 20% should have been deducted. We hold tax at the rate of 20% should have been deducted. We hold that mere failure to obtain section 197(1) certificate by the that mere failure to obtain section 197(1) certificate by the that mere failure to obtain section 197(1) certificate by the payee for the entire payments and for the entire period would payee for the entire payments and for the entire period would payee for the entire payments and for the entire period would not automatical not automatically cast a TDS obligation on the payer and ly cast a TDS obligation on the payer and make the payer „assessee in default make the payer „assessee in default‟ when it is certain from ‟ when it is certain from the records in the form of assessment order of the payee that the records in the form of assessment order of the payee that the records in the form of assessment order of the payee that there is no resultant tax liability for the payee." there is no resultant tax liability for the payee."
We observe that the facts in the ins 6. We observe that the facts in the instant case are close to the tant case are close to the facts in the case of Haldia Petrochemicals Ltd. Vs. Deputy facts in the case of Haldia Petrochemicals Ltd. Vs. Deputy facts in the case of Haldia Petrochemicals Ltd. Vs. Deputy
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Commissioner of Income Tax (supra). Thus, following the Commissioner of Income Tax (supra). Thus, following the Commissioner of Income Tax (supra). Thus, following the decision decision decision in in in the the the aforesaid aforesaid aforesaid case, case, case, interest ITA interest interest No.1258/PUN/2016, A.Y. 2014 No.1258/PUN/2016, A.Y. 2014-15 u/s. 201(1A) cannot be 15 u/s. 201(1A) cannot be charged where t charged where there is no tax liability in the hands of the here is no tax liability in the hands of the payee. Accordingly, the impugned order is modified and payee. Accordingly, the impugned order is modified and payee. Accordingly, the impugned order is modified and interest charged u/s. 201(1A) is deleted. interest charged u/s. 201(1A) is deleted. 4.3 In view of the above facts and the judicial pronouncements, the In view of the above facts and the judicial pronouncements, the In view of the above facts and the judicial pronouncements, the addition made in respect of interest u/s 201(1 addition made in respect of interest u/s 201(1A), stands deleted. There A), stands deleted. There remains no base of levy of the penalty and it cannot be sustained. remains no base of levy of the penalty and it cannot be sustained. remains no base of levy of the penalty and it cannot be sustained. Accordingly, penalty of Accordingly, penalty of ₹3,21,90,637/- levied by the AO u/s 271C is not levied by the AO u/s 271C is not justified. The AO is directed to delete the penalty u/s 271C of the Act justified. The AO is directed to delete the penalty u/s 271C of the Act justified. The AO is directed to delete the penalty u/s 271C of the Act accordingly.” 5.1 We find that the Ld. CIT(A) has deleted the penalty e find that the Ld. CIT(A) has deleted the penalty following a e find that the Ld. CIT(A) has deleted the penalty binding precedent in the case of the assessee itself whereas the basis binding precedent in the case of the assessee itself whereas the basis binding precedent in the case of the assessee itself whereas the basis for imposition of the penalty itself stands deleted and therefore, we for imposition of the penalty itself stands deleted and therefore, we for imposition of the penalty itself stands deleted and therefore, we do not find that any error in the order of the Ld. C find that any error in the order of the Ld. CIT(A) on the issue IT(A) on the issue- in-dispute and accordingly dispute and accordingly, we uphold the same. The grounds raised we uphold the same. The grounds raised by the Revenue are accordingly dismissed. by the Revenue are accordingly dismissed.
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ITA No. 715/MUM/2022 ITA No. 715/MUM/2022 Assessment Year: 2013 2013-14 6. Now we take up the appeal of the Revenue for assessment year Now we take up the appeal of the Revenue for assessment year Now we take up the appeal of the Revenue for assessment year 2013-14 in ITA No. 715/Mum/2022. The grounds raised by the No. 715/Mum/2022. The grounds raised by the No. 715/Mum/2022. The grounds raised by the Revenue are reproduced as under: Revenue are reproduced as under:
On the facts and in the circumstances of the case and in law, the 1. On the facts and in the circumstances of the case and in law, the On the facts and in the circumstances of the case and in law, the Ld. CIT(A) Ld. CIT(A)-53, Mumbai has erred in deleting the levy interest of 53, Mumbai has erred in deleting the levy interest of RS. 33.27.908/ under section 201(IA) for A.Y. RS. 33.27.908/ under section 201(IA) for A.Y. 2013 2013-14. 2. On the facts and in the circumstances of the case and in law, On the facts and in the circumstances of the case and in law, On the facts and in the circumstances of the case and in law, same the Ld. CIT(A) same the Ld. CIT(A)-53, Mumbai has failed to appreciate the 53, Mumbai has failed to appreciate the true import of the first proviso to sub true import of the first proviso to sub-section(IA) of section 201 section(IA) of section 201 of the Income Tax Act. 1961 which was inserted in the statutes of the Income Tax Act. 1961 which was inserted in the stat of the Income Tax Act. 1961 which was inserted in the stat with effect from 01.07.2012 with effect from 01.07.2012 3. On the fact and in the circumstances of the case and in law, the On the fact and in the circumstances of the case and in law, the On the fact and in the circumstances of the case and in law, the same Ld. CIT(A) same Ld. CIT(A)-53.Mumbai has erred in relying upon certain 53.Mumbai has erred in relying upon certain judicial precedents that are in respect of A.Ys prior to the judicial precedents that are in respect of A.Ys prior to the judicial precedents that are in respect of A.Ys prior to the insertion of the first Proviso to sub insertion of the first Proviso to sub-section section 1(A) of section 201(1); namely. 201(1); namely.
(a)The decision of the Hon'ble ITAT, Pune in its own case for A.Y. (a)The decision of the Hon'ble ITAT, Pune in its own case for (a)The decision of the Hon'ble ITAT, Pune in its own case for 2014-15 bearing ITA No. 1258/PUN/2016 dated 15 bearing ITA No. 1258/PUN/2016 dated 04.09.2019 04.09.2019 (b) Haldia Petro Chemicals Ltd. ITA No. 55/Kol/2014 (b) Haldia Petro Chemicals Ltd. ITA No. 55/Kol/2014 (b) Haldia Petro Chemicals Ltd. ITA No. 55/Kol/2014
(c) Ramakrishna Vedanta Math 55 SOT417 (Kol)(2003) (c) Ramakrishna Vedanta Math 55 SOT417 (K (c) Ramakrishna Vedanta Math 55 SOT417 (K (d)Allahabad Bank, Aligarh(2014) 46 taxman.com 200 (d)Allahabad Bank, Aligarh(2014) 46 taxman.com 200 (d)Allahabad Bank, Aligarh(2014) 46 taxman.com 200
(e) Bharat Hotels Ltd. (2015), 64 taxmann.com 325(KAR.) (e) Bharat Hotels Ltd. (2015), 64 taxmann.com 325(KAR.) (e) Bharat Hotels Ltd. (2015), 64 taxmann.com 325(KAR.)
M/s Blue Star Realtors Pvt. Ltd. M/s Blue Star 10 ITA Nos. 714 & 715/M/2022
(6) RBL Bank Ltd.(2016),65 taxmann.com 219 (Panaji Trib) (6) RBL Bank Ltd.(2016),65 taxmann.com 219 (Panaji Trib) (6) RBL Bank Ltd.(2016),65 taxmann.com 219 (Panaji Trib) (g)Eli Lilly & Co. (India)P. Ltd & Ors. (2009)312 ITR 225(SC) (g)Eli Lilly & Co. (India)P. Ltd & Ors. (2009)312 ITR 225(SC) (g)Eli Lilly & Co. (India)P. Ltd & Ors. (2009)312 ITR 225(SC) 4. On the facts and in On the facts and in the circumstances of the case and in law, the circumstances of the case and in law, same the Ld CIT(A) same the Ld CIT(A)-53, Mumbai has erred in relying upon CBDT 53, Mumbai has erred in relying upon CBDT Instruction No: 275/201/95/ Instruction No: 275/201/95/-IT(b) dated 29.01.1997 which, too, IT(b) dated 29.01.1997 which, too, is in relation to the legal position prior to the insertion of first is in relation to the legal position prior to the insertion of first is in relation to the legal position prior to the insertion of first Proviso to sub Proviso to sub-section (lA) of section 201 of the Income Tax Act n (lA) of section 201 of the Income Tax Act- 1961. 1961. 7. In the case, the Ld. CIT(A) has deleted the interest liability u/s In the case, the Ld. CIT(A) has deleted the interest liability u/s In the case, the Ld. CIT(A) has deleted the interest liability u/s 201(1A) of the Act for non 201(1A) of the Act for non-deduction of tax at source by the deduction of tax at source by the assessee.
Before Before Before us, us, us, the the the assessee assessee assessee contested contested contested that that that interest interest interest of of of ₹29,01,91,170/- was to be paid to M/s was to be paid to M/s HDIL however, there was no however, there was no tax liability in the hands of the tax liability in the hands of the HDIL as return of income declaring as return of income declaring Nil income was filed and refund was claimed. As no taxes were to be filed and refund was claimed. As no taxes were to be filed and refund was claimed. As no taxes were to be paid by M/s HDIL and therefore, according to the assessee, it wa and therefore, according to the assessee, it was and therefore, according to the assessee, it wa not liable to pay interest pay interest u/s 201(1A) of the Act. The Ld. CIT(A) has u/s 201(1A) of the Act. The Ld. CIT(A) has adjudicated the issue adjudicated the issue-in-dispute as under:
M/s Blue Star Realtors Pvt. Ltd. M/s Blue Star 11 ITA Nos. 714 & 715/M/2022
“4.3 The order of the AO u/s 201(1A) and the submissions made by the The order of the AO u/s 201(1A) and the submissions made by the The order of the AO u/s 201(1A) and the submissions made by the appellant have been considered. appellant have been considered.
The facts of the case are that the appe The facts of the case are that the appellant has paid/credited interest to M/s llant has paid/credited interest to M/s HDIL as under: Date Date Interest credited to ₹ 30.06.2012 30.06.2012 7,07,60,232 30.09.2012 30.09.2012 7,32,79,428 31.12.2012 31.12.2012 7,33,50,340 31.03.2013 31.03.2013 7,28,01,170 The AO held the assessee liable for interest u/s. 201(1A) of the Act and has The AO held the assessee liable for interest u/s. 201(1A) of the Act and has The AO held the assessee liable for interest u/s. 201(1A) of the Act and has determined the interest liability of Rs. 33,27 determined the interest liability of Rs. 33,27,908/.
4.4 The appellant has submitted that interest paid by it of Rs. 29,01.91,170/- 4.4 The appellant has submitted that interest paid by it of Rs. 29,01.91,170/ 4.4 The appellant has submitted that interest paid by it of Rs. 29,01.91,170/ was included in the total income by M/s. HDIL. In the Return of Income for was included in the total income by M/s. HDIL. In the Return of Income for was included in the total income by M/s. HDIL. In the Return of Income for A.Y. 2014-15 filed by M/s. HOIL, a refund of Rs. 15 filed by M/s. HOIL, a refund of Rs. 8,00,821/- was claimed. It is was claimed. It is also submitted that no taxes were to be paid by M/s. HDIL. Therefore, the also submitted that no taxes were to be paid by M/s. HDIL. Therefore, the also submitted that no taxes were to be paid by M/s. HDIL. Therefore, the appellant is not liable to pay Interest u/s. 201(1A) of the Act. The appellant appellant is not liable to pay Interest u/s. 201(1A) of the Act. The appellant appellant is not liable to pay Interest u/s. 201(1A) of the Act. The appellant has relied upon the decisions in the cases of (i) Haldia Petro Chemicals Ltd. has relied upon the decisions in the cases of (i) Haldia Petro Chemicals has relied upon the decisions in the cases of (i) Haldia Petro Chemicals ITA No. 66/Kol/2014, (il) Instruction No. ITA No. 66/Kol/2014, (il) Instruction No. 275/201/95-IT(B) dated IT(B) dated 29.01.1997, (ill) Ramakrishna Vedanta Math 55 SOT 417 (Kol)(2003), 29.01.1997, (ill) Ramakrishna Vedanta Math 55 SOT 417 (Kol)(2003), 29.01.1997, (ill) Ramakrishna Vedanta Math 55 SOT 417 (Kol)(2003), (iv)Allahabad Bank, Aligarh (2014) 46 taxmann.com 200, (v) Bharat Hotels (iv)Allahabad Bank, Aligarh (2014) 46 taxmann.com 200, (v) Bharat Hotels (iv)Allahabad Bank, Aligarh (2014) 46 taxmann.com 200, (v) Bharat Hotels Ltd. (2015) 64 taxmann.com 325 (Kar), (Vi) RB Ltd. (2015) 64 taxmann.com 325 (Kar), (Vi) RBL Bank Ltd. (2016) 65 L Bank Ltd. (2016) 65 taxmann.com 219 (Panajl Trib.) and (vii) Eli Lilly & Co. (India) P. Ltd. &0rs. taxmann.com 219 (Panajl Trib.) and (vii) Eli Lilly & Co. (India) P. Ltd. &0rs. taxmann.com 219 (Panajl Trib.) and (vii) Eli Lilly & Co. (India) P. Ltd. &0rs. (2009) 312 ITR 225 (SC). (2009) 312 ITR 225 (SC).
Further, the appellant has relied upon the decision of ITAT, Pune, in its own Further, the appellant has relied upon the decision of ITAT, Pune, in its own Further, the appellant has relied upon the decision of ITAT, Pune, in its own case for A.Y. 2014-15, wherein similar issue of interest u/s. 201(1A) of the 15, wherein similar issue of interest u/s. 201(1A) of the 15, wherein similar issue of interest u/s. 201(1A) of the Act was involved. The ITAT: Pune has deleted the interest levied uls. 201(1A) Act was involved. The ITAT: Pune has deleted the interest levied uls. 201(1A) Act was involved. The ITAT: Pune has deleted the interest levied uls. 201(1A) in the assessee's own c in the assessee's own case for A:Y. 2014-15 In IT No. 1258/PUN/2016 dated 15 In IT No. 1258/PUN/2016 dated
M/s Blue Star Realtors Pvt. Ltd. M/s Blue Star 12 ITA Nos. 714 & 715/M/2022
04.09.2019. The operating part of the order of the ITAT is reproduced as The operating part of the order of the ITAT is reproduced as The operating part of the order of the ITAT is reproduced as under:
The facts narrated by the assessee above are not in dispute. 5. The facts narrated by the assessee above are not in dispute. 5. The facts narrated by the assessee above are not in dispute. The assessee has made interest payment of Rs.32,19,06,372/- The assessee has made interest payment of Rs.32,19,06,372/ The assessee has made interest payment of Rs.32,19,06,372/ to its parent company HDIL without deducting tax at source. o its parent company HDIL without deducting tax at source. o its parent company HDIL without deducting tax at source. HDIL in its return of income has reflected the interest income HDIL in its return of income has reflected the interest income HDIL in its return of income has reflected the interest income from the assessee. The Commissioner of Income Tax (Appeals) from the assessee. The Commissioner of Income Tax (Appeals) from the assessee. The Commissioner of Income Tax (Appeals) after examining the facts deleted the addition made u/s. after examining the facts deleted the addition made u/s. after examining the facts deleted the addition made u/s. 201(1) of the Act 201(1) of the Act. However, in respect of charging of interest . However, in respect of charging of interest u/s. 201(1A) the Commissioner of Income Tax (Appeals) u/s. 201(1A) the Commissioner of Income Tax (Appeals) u/s. 201(1A) the Commissioner of Income Tax (Appeals) refused to grant relief on the ground that charging of interest refused to grant relief on the ground that charging of interest refused to grant relief on the ground that charging of interest is mandatory and hence, can neither be waived nor reduced. is mandatory and hence, can neither be waived nor redu is mandatory and hence, can neither be waived nor redu The Commissioner of Income The Commissioner of Income (Appeals) placed reliance on the ls) placed reliance on the decision rendered in the case of Karnataka Urban decision rendered in the case of Karnataka Urban decision rendered in the case of Karnataka Urban Infrastructure Development & Finance Corporation Vs. Infrastructure Development & Finance Corporation Vs. Infrastructure Development & Finance Corporation Vs. Commissioner of Income Tax & Anr. (supra) to come to such a Commissioner of Income Tax & Anr. (supra) to come to such a Commissioner of Income Tax & Anr. (supra) to come to such a conclusion. On the contrary, the assessee placed reliance on conclusion. On the contrary, the assessee placed reliance on conclusion. On the contrary, the assessee placed reliance on the decision of Kolkata Bench of Tribunal in the case of Haldia cision of Kolkata Bench of Tribunal in the case of Haldia cision of Kolkata Bench of Tribunal in the case of Haldia Petrochemicals Ltd. Vs. Deputy Commissioner of Income Tax Petrochemicals Ltd. Vs. Deputy Commissioner of Income Tax Petrochemicals Ltd. Vs. Deputy Commissioner of Income Tax (supra). The issue before Tribunal was whether the interest (supra). The issue before Tribunal was whether the interest (supra). The issue before Tribunal was whether the interest u/s. 201(1) and 201(1A) can be charged where there is no tax u/s. 201(1) and 201(1A) can be charged where there is no tax u/s. 201(1) and 201(1A) can be charged where there is no tax liability in the ha liability in the hands of the payee. The Tribunal after nds of the payee. The Tribunal after considering various decisions and examining the facts of the considering various decisions and examining the facts of the considering various decisions and examining the facts of the case held as under : case held as under :
"6. We have heard the rival submissions and perused the "6. We have heard the rival submissions and perused the "6. We have heard the rival submissions and perused the materials available on record including the paper book filed materials available on record including the paper book filed materials available on record including the paper book filed by the assessee. The by the assessee. The ld AR argued that there was no liability to ld AR argued that there was no liability to deduct tax at source on the payments made to its subsidiary deduct tax at source on the payments made to its subsidiary deduct tax at source on the payments made to its subsidiary
M/s Blue Star Realtors Pvt. Ltd. M/s Blue Star 13 ITA Nos. 714 & 715/M/2022
company in as much as the subsidiary company had incurred company in as much as the subsidiary company had incurred company in as much as the subsidiary company had incurred huge losses which is quite evident from the Assessment order huge losses which is quite evident from the Assessment order huge losses which is quite evident from the Assessment order of the subsidiary company i.e. M of the subsidiary company i.e. M/s Haldia Riverside Estates /s Haldia Riverside Estates Ltd u/s 143(3) dated 22.12.2006 for the Asst Year 2004-05. Ltd u/s 143(3) dated 22.12.2006 for the Asst Year 2004 Ltd u/s 143(3) dated 22.12.2006 for the Asst Year 2004 From the said order it could be seen that there would be no From the said order it could be seen that there would be no From the said order it could be seen that there would be no resultant tax payable by the subsidiary company. In response resultant tax payable by the subsidiary company. In response resultant tax payable by the subsidiary company. In response to this, the ld DR vehemently supported the orders of the to this, the ld DR vehemently supported the orde to this, the ld DR vehemently supported the orde lower authorities. We find that the TDS provisions mandates lower authorities. We find that the TDS provisions mandates lower authorities. We find that the TDS provisions mandates deduction of tax at source on the payments made by assessee deduction of tax at source on the payments made by assessee deduction of tax at source on the payments made by assessee to parties if it falls within the deductible limits prescribed u/s to parties if it falls within the deductible limits prescribed u/s to parties if it falls within the deductible limits prescribed u/s 194I of the Act. The purpose of TDS is to ensure that the 194I of the Act. The purpose of TDS is to ensure that the 194I of the Act. The purpose of TDS is to ensure that the Government is not deprived of its due taxes in time. Moreover, overnment is not deprived of its due taxes in time. Moreover, overnment is not deprived of its due taxes in time. Moreover, recovery of taxes through TDS is one of the tax collection recovery of taxes through TDS is one of the tax collection recovery of taxes through TDS is one of the tax collection mechanism formulated by the Government. If the payer mechanism formulated by the Government. If the payer mechanism formulated by the Government. If the payer (assessee herein) fails to deduct tax at source in respect of (assessee herein) fails to deduct tax at source in respect of (assessee herein) fails to deduct tax at source in respect of certain eligible pay certain eligible payments, then the payer assessee could be ments, then the payer assessee could be treated as „assessee in default treated as „assessee in default‟ and the said tax could be ‟ and the said tax could be recovered from the payer assessee on behalf of the payee. But recovered from the payer assessee on behalf of the payee. But recovered from the payer assessee on behalf of the payee. But in the instant case, there is no resultant tax liability in the in the instant case, there is no resultant tax liability in the in the instant case, there is no resultant tax liability in the hands of the payee due to huge hands of the payee due to huge losses. In such circumstances, losses. In such circumstances, normally it is expected that the payee should approach the normally it is expected that the payee should approach the normally it is expected that the payee should approach the TDS officer by preferring an application in Form No. 13 TDS officer by preferring an application in Form No. 13 TDS officer by preferring an application in Form No. 13 seeking for lower / nil deduction certificate u/s 197(1) of the seeking for lower / nil deduction certificate u/s 197(1) of the seeking for lower / nil deduction certificate u/s 197(1) of the Act. In the instant case, section 197(1) certi Act. In the instant case, section 197(1) certificate has been ficate has been obtained by the payee only from 1.7.2003 wherein the obtained by the payee only from 1.7.2003 wherein the obtained by the payee only from 1.7.2003 wherein the deductors have been directed to deduct 1% TDS on payments deductors have been directed to deduct 1% TDS on payments deductors have been directed to deduct 1% TDS on payments made to payees in respect of payments not exceeding Rs. made to payees in respect of payments not exceeding Rs. made to payees in respect of payments not exceeding Rs. 409.34 lakhs and hence the ld AO held that the assessee had 409.34 lakhs and hence the ld AO held that the assessee had 409.34 lakhs and hence the ld AO held that the assessee had violated the violated the TDS provisions in respect of payments made upto TDS provisions in respect of payments made upto
M/s Blue Star Realtors Pvt. Ltd. M/s Blue Star 14 ITA Nos. 714 & 715/M/2022
30.6.03 and for payments made in excess of Rs. 409.34 lakhs, 30.6.03 and for payments made in excess of Rs. 409.34 lakhs, 30.6.03 and for payments made in excess of Rs. 409.34 lakhs, tax at the rate of 20% should have been deducted. We hold tax at the rate of 20% should have been deducted. We hold tax at the rate of 20% should have been deducted. We hold that mere failure to obtain section 197(1) certificate by the that mere failure to obtain section 197(1) certificate by the that mere failure to obtain section 197(1) certificate by the payee for the entire paymen payee for the entire payments and for the entire period would ts and for the entire period would not automatically cast a TDS obligation on the payer and not automatically cast a TDS obligation on the payer and not automatically cast a TDS obligation on the payer and make the payer „assessee in default make the payer „assessee in default‟ when it is certain from ‟ when it is certain from the records in the form of assessment order of the payee that the records in the form of assessment order of the payee that the records in the form of assessment order of the payee that there is no resultant tax liability for t there is no resultant tax liability for the payee."
We observe that the facts in the instant case are close to the 6. We observe that the facts in the instant case are close to the 6. We observe that the facts in the instant case are close to the facts in the case of Haldia Petrochemicals Ltd. Vs. Deputy facts in the case of Haldia Petrochemicals Ltd. Vs. Deputy facts in the case of Haldia Petrochemicals Ltd. Vs. Deputy Commissioner of Income Tax (supra). Thus, following the Commissioner of Income Tax (supra). Thus, following the Commissioner of Income Tax (supra). Thus, following the decision decision decision in in in the the the aforesaid aforesaid aforesaid case, case, case, interest ITA interest interest No.1258/PUN/2016, A No.1258/PUN/2016, A.Y. 2014-15 u/s. 201(1A) cannot be 15 u/s. 201(1A) cannot be charged where there is no tax liability in the hands of the charged where there is no tax liability in the hands of the charged where there is no tax liability in the hands of the payee. Accordingly, the impugned order is modified and payee. Accordingly, the impugned order is modified and payee. Accordingly, the impugned order is modified and interest charged u/s. 201(1A) is deleted. interest charged u/s. 201(1A) is deleted.
As regards the principle laid down in the case of Karnataka 7. As regards the principle laid down in the case of Karnataka 7. As regards the principle laid down in the case of Karnataka Urban Infrastructure Development & Finance Corporation Vs. rban Infrastructure Development & Finance Corporation Vs. rban Infrastructure Development & Finance Corporation Vs. Commissioner of Income Tax & Anr. (supra) there is no Commissioner of Income Tax & Anr. (supra) there is no Commissioner of Income Tax & Anr. (supra) there is no dispute. However, the said principle cannot be applied in the dispute. However, the said principle cannot be applied in the dispute. However, the said principle cannot be applied in the facts of the present case. facts of the present case.
In the result, appeal of the assessee is allowed. In the result, appeal of the assessee is allowed.
4.5 Thus, respectfully following the order of the ITAT, Pune in the case of Thus, respectfully following the order of the ITAT, Pune in the case of Thus, respectfully following the order of the ITAT, Pune in the case of the appellant for AY 2014 the appellant for AY 2014-15, the interest of ₹33,27,908/- levied u/s 201(1A) levied u/s 201(1A) is deleted. According, this ground of appeal is allowed.” is deleted. According, this ground of appeal is allowed.”
M/s Blue Star Realtors Pvt. Ltd. M/s Blue Star 15 ITA Nos. 714 & 715/M/2022
We find that the Ld. CIT(A) has deleted t We find that the Ld. CIT(A) has deleted the interest liability he interest liability following binding precedent following binding precedents on the issue-in-dispute including dispute including decision of the Tribunal in own case and Tribunal Kolkata Bench in of the Tribunal in own case and Tribunal Kolkata Bench in of the Tribunal in own case and Tribunal Kolkata Bench in the case of Haldiya Petrochemical Ltd. v. DCIT (supra) Haldiya Petrochemical Ltd. v. DCIT (supra) wherein Haldiya Petrochemical Ltd. v. DCIT (supra) the Tribunal held that no interest u/s 20 the Tribunal held that no interest u/s 201(1A) can be changed 1(1A) can be changed where there is no tax liability in the hands of the payee. The Ld. where there is no tax liability in the hands of the payee. The Ld. where there is no tax liability in the hands of the payee. The Ld. CIT(A) also relied on the decision CIT(A) also relied on the decision of the Hon’ble Supreme Court in of the Hon’ble Supreme Court in the case of Eli Lilly & Co. (India) Pvt. Ltd. & Ors (2009) 312 ITR Eli Lilly & Co. (India) Pvt. Ltd. & Ors (2009) 312 ITR Eli Lilly & Co. (India) Pvt. Ltd. & Ors (2009) 312 ITR 225 (SC). Since, the Ld. CIT(A) ha the Ld. CIT(A) has followed binding precedent s followed binding precedents on the issue-in-dispute, we do not find any error in the order of the Ld. dispute, we do not find any error in the order of the Ld. dispute, we do not find any error in the order of the Ld. CIT(A) on the issue-in in-dispute and accordingly we uphold the same. dispute and accordingly we uphold the same.
In the result, both the appeals filed by the Revenue are In the result, both the appeals filed by the Revenue are In the result, both the appeals filed by the Revenue are dismissed.
Order pronounced in the open Court in unced in the open Court in 13/10/2022. /10/2022. Sd/- Sd/ Sd/- (AMIT SHUKLA AMIT SHUKLA) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER
M/s Blue Star Realtors Pvt. Ltd. M/s Blue Star 16 ITA Nos. 714 & 715/M/2022
Mumbai; Dated: 13/10/2022 Dragon Legal/Rahul Sharma, Sr. P.S.
Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, BY ORDER, //True Copy// (Sr. Private Secretary) (Sr. Private Secretary) ITAT, Mumbai ITAT, Mumbai