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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI N. K. SAINI & MS SUCHITRA KAMBLE
This appeal has been filed by the assessee against the order dated 19/8/2015 passed by CIT(A)-Ghaziabad for Assessment Year 2009-10.
2. The grounds of appeal are as under:-
That on the fact and in the circumstances of the petitioner bank's branch case. The learned commissioner of Income Tax (Appeals) pass order U/s 250 of Income Tax Act, 1961 before rectifying the Interest demand of Rs. 1763976/- on Principle amount,( Principle amount is already deleted by commissioner of Income Tax Appeals is his order).
That on the fact and in the circumstances of the petitioner bank’s
branch case. The learned commissioner of Income Tax (Appeals) was wrong in charging Interest on short deduction of TDS amounting Rs. 1763976/-. (Principle amount is already deleted by commissioner of Income Tax Appeals is his order).
3. The order made under section 250 is required rectification in respect of Interest amount Rs. 1763976/-
Demand of Rs. 43,96,900/- was raised against the assessee by CPC due to short deduction of TDS. Since the demand was raised by CPC, no separate order u/s 201(1) was passed by the A.O. The assessee claimed before the A.O. that due to technical error, TDS had been made 10% instead of 20% as required by law. The assessee's contention was that deductee had made payment of taxes on all Income earned by them and therefore in view of the decision of Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages Pvt. Ltd. vs CIT, 293 ITR 226(SC), and therefore, the assessee could not be treated as assessee in default. Opportunity was provided to the assessee vide letter dated 27.07.2015 to furnish the documents by the A.O. In response, the assessee filed the following documents –
1. Form No. 26Q for the F. Y 2008-09 2. Details of Challans 3. ITR filed by Uttam Sucrotech International Pvt. Ltd. 4. Assessment Order passed u/s 153(A)/143(3) dated 31.03.2013 for the A.Y 2009-10 of Uttam Sucrotech International Pvt. Ltd. 5. P&L Account of Uttam Sucrotech International Pvt. Ltd. The Assessing Officer passed Assessment order accordingly on 13.09.2014. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) considered the documentary evidence filed before the Assessing Officer as well as before the CIT(A). But the CIT(A) partly allowed the appeal of the assessee by stating that the liability of interest cannot be absorbed and deleted the tax liability.
The Ld. AR further submits that the interest liability cannot arise once the tax liability has been declared as NIL liability. The decision of Hindustan Coca Cola Beverages Pvt. Ltd. Vs. CIT(A) 293 ITR 226 Hon'ble Supreme Court was not considered into proper context by the CIT(A) as per the submissions made by the Ld. AR. The Ld. AR further submits that the CIT(A) in the assessee’s own case vide order dated 20/1/2015 allowed the appeal of the assessee on the same ground after considering Hindustan Coca Cola Beverages Pvt. Ltd.
The Ld. DR relied upon the orders of the Assessing Officer and the CIT(A).
We have heard both the parties and perused the material available on record. The Hon’ble Apex Court in case of Hindustan Coca Cola Beverages P. Ltd. v. CIT, 293 ITR 226 (SC) held that the Payer is not liable to pay the amount of short/non-deduction of tax u/s.201(l) in cases where the Payee has already included the relevant income in his total income and paid the tax. In such cases, the liability to pay interest u/s.201(lA) of the assessee remains and it seems that such interest is payable up to the date on which the Payee has paid the relevant amount of tax. In view of the above settled position with regard to the liability to pay the amount of short/ non deduction by the Payer, a situation may arise in cases where the Payee has included the relevant amount of his income in his total income, but the Payee is not liable to pay tax (may be on account of losses or for other valid reasons). Whether, in such cases, Payer still will not be liable to pay the amount of short/non-deduction of tax. Such liability should not be enforced on the Payer if he satisfies the authority that taxes due have been paid by the Payee. If in such a case, the Payer is held not liable to pay the amount of short/non-deduction, a further issue arises as to whether the Payer will at all be liable to pay the interest u/s.201(l A), as the same is compensatory in nature and there is no loss to the Revenue. In fact in assessee’s own case the CIT(A) vide order dated 20/1/2015 allowed the appeal of the assessee on the same ground after considering Hindustan Coca Cola Beverages Pvt. Ltd. However, in the said order the issue relating to the interest u/s 201(1)/201(A) was set aside to the A.O for recalculation, the Ld.CIT(A) held that the payer is liable to pay the interest only upto the date the payee has not paid the tax on the relevant amount. Therefore, the order of the CIT(A) is set aside on this issue and matter is restored to the A.O for this limited purpose i.e to work out that the calculation of interest if any, in accordance with the ratio laid down in the case of Hindustan Coca Cola Beverages Pvt. Ltd Vs. CIT(Supra).
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 28th December, 2017.