DOLLARS & POUNDS,CHENNAI vs. ACIT CPC TDS, GHAZIABAD

आयकर अपीलीय अिधकरण, “डी” �ायपीठ, चे�ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI �ी ए. मोहन अलंकामणी, लेखा सद� एवं �ी धु�ु� आर.एल रे�ी, �ाियक सद� के सम� Before Shri A. Mohan Alankamony, Accountant Member & Shri Duvvuru RL Reddy, Judicial Member

ITA No(s). Name of the Name of Asst. Quarter Form Appellant the year Respondent 2015/Chny/2018 M/s. Dollar s & The Assistant 2013-14 Qr. 2 24Q Pounds, Commissioner 2013-14 Qr. 3 24Q To No. 44, Sardar Patel of Income 2013-14 Qr. 4 24Q Road, Adyar, Tax, CPC 2013-14 Qr. 2 26Q 2020/Chny/2018 Chennai 600 020 TDS, 2013-14 Qr. 3 26Q Ghaziabad 2013-14 Qr. 4 26Q [PAN:AADFD7285M] 2021/Chny/2018 - do - - do - 2014-15 Qr. 1 24Q To 2014-15 Qr. 2 24Q 2028/Chny/2018 2014-15 Qr. 3 24Q 2014-15 Qr. 4 24Q 2014-15 Qr. 1 26Q 2014-15 Qr. 2 26Q 2014-15 Qr. 3 26Q 2014-15 Qr. 4 26Q 2029/Chny/2018 - do - - do - 2015-16 Qr. 1 24Q 2030/Chny/2018 - do - - do - 2015-16 Qr. 1 26Q Shri B. Ramakrishnan, C.A. अपीलाथ� की ओर से / Appellant by : ��थ� की ओर से/Respondent by : Ms. G.D. Jayanthi Angayarkanni, JCIT सुनवाई की तारीख/ Date of hearing : 29.11.2018 घोषणा की तारीख /Date of Pronouncement : 30.11.2018 आदेश /O R D E R PER BENCH:

This batch of sixteen appeals filed by the same assessee are directed against the common order of the ld. Commissioner of Income Tax (Appeals) 17, Chennai dated 28.05.2018 relevant to the assessment years 2013-14,

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2014-15 and 2015-16 passed under section 200A of the Income Tax Act, 1961 [“Act” in short]. The only common ground raised by the assessee in all the appeals is that the ld. CIT(A) has erred confirming the fee levied under section 234E of the Act on the ground that the provisions of section 200A r.w.s. 234E are applicable only from 01.06.2015.

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Moreover, the ld. Counsel for the assessee has relied on the following decisions: 1. Smt. G. Indhirani v. DCIT [2015] 60 taxmann.com 312 (Chennai- Trib) 2. Sibia Healthcare (P) Ltd. v. DCIT [2015] 63 taxmann.com 333 (Amritsar-Trib)(TM) 3. Maharashtra Cricket Association, Pune v. DCIT [2016] 74 taxmann.com 6 (Pune – Trib) 4. Dharam Deep Public School in ITA Nos. 3112 to 3116/Del/2016 & Kam Air Co. Ltd. in ITA MNos. 2317 to 2319/Del/2016 5. Samikaran Learning Private Limited in ITA Nos. 4050 to 4054/Del/2016 6. Vidya Vardhani Education & Research Foundation v. DCIT [2017] 88 taxmann.com 894 (Pune-Trib.) 7. Gajanan Construction v. DCIT [CPC(TDS)] & Others 5. On the other hand, the ld. DR supported the orders of the authorities below.

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6.1 Section 200A of the Act lays down the manner in which the statements of tax deducted at source are to be processed for issuing the intimation. First of all, the sums deductible under the Chapter are to be computed and interest, if any, shall be computed on the basis of such sums deductible as computed in the statements as per clause (a) and (b) under section 200A(1) of the Act. Clauses (c) to (f) reproduced above were substituted for clauses (c) to (e) by the Finance Act, 2015 w.e.f. 01.06.2015.

6.2 As per newly substituted clause (c) w.e.f. 01.06.2015, the fees, if any, is to be computed in accordance with the provisions of section 234E of the Act. However, under the earlier clause (c), there was no such provision. By relying on various judgements of various courts and various Benches of the Tribunal, in the case of Gajanan Construction v. DCIT [CPC(TDS)] & Others in I.T.A. Nos. 1292 & 1293/PN/2015 & Ors. Vide order dated23.09.2016, the Pune Bench of the Tribunal has observed and held as under: “33. Accordingly, we hold that the amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Hence, the intimation issued by the Assessing Officer under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment provided under section 200A of the Act and such adjustment could not stand in the eye of law. 34. Before parting we may refer to reliance placed upon by the learned DR on the ratio laid down by Chennai Bench of Tribunal in G. Indirani Vs.

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DCIT (supra) on another aspect wherein it was held that before 01.06.2015, whether the Assessing Officer had authority to pass a separate order under section 234E of the Act levying fees for delay in filing the TDS statements under section 200(3) of the Act; the Tribunal held 'yes' that the assessing authority had such power and after 01.06.2015, the Assessing Officer was within his limit to levy fees under section 234E of the Act even while processing the TDS statements under section 200A of the Act. In view of the present set of facts, where the Assessing Officer had charged fees under section 234E of the Act while processing the statements under section 200A of the Act before 01.06.2015, there is no merit in the reliance placed upon by the learned DR on the said proposition laid down by the Chennai Bench of Tribunal and we dismiss the same. 35. Another reliance placed upon by the learned DR was in respect of amendment being retrospective or prospective and reliance was placed on the ratio laid down by Hon'ble Delhi High Court in CIT Vs. Naresh Kumar (supra). However, in view of our decision in the paras hereinabove, where power is being enshrined upon the Assessing Officer to levy or charge while processing the TDS returns w.e.f. 01.06.2015, such provision cannot have retrospective effect as it would be detrimental to the case of tax payer. The Hon'ble Delhi High Court was considering the application of amendment to section 40(a)(ia) of the Act by the Finance Act, 2010, under which certain relaxations were given to the application of said section and it was held that the same applies retrospectively to earlier years. However, in the present set of appeals, the issue is against the provision under which a new enabling power is being given to charge fees under section 234E of the Act while processing TDS returns / statements and such power is to be applied prospectively. In any case, the Parliament itself has recognized its operation to be prospective in nature while introducing clause (c) to section 200A(1) of the Act and hence, cannot be applied retrospectively. Similarly, reliance placed upon by the learned DR on the ratio laid down by the Hon'ble Supreme Court in Govinddas Vs. ITO (supra) is misplaced because of the distinguishable facts and issues. 36. Now, coming to the connected issue raised by the learned Authorized Representative for the assessee by way of ground in some of the appeals appeal No.1 that whether any appeal is maintainable against the intimation issued under section 200A of the Act and / or order passed under section 154 r.w.s. 200A of the Act by Assessing Officer in charging the fees under section 234E of the Act. Both the learned Authorized Representatives have raised varied arguments in respect of said issue and the learned DR has referred to the order of CIT(A), who had held that no appeal is maintainable against the order of Assessing Officer passed while processing the TDS returns / statements and charging of fees under section 234E of the Act. Without going

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into various aspects of the issue, we make reference to the Memorandum explaining the Finance Bill, 2015, under which the heading was rationalization of provisions relating to Tax Deduction at Source (TDS) and Tax Collection at Source (TCS). The said memorandum categorically recognized that under the existing provisions of the Act, after processing of TDS statements, an intimation is generated specifying the amount payable or refundable. It was further noted that this intimation generated after processing TDS statement is (i) subject to rectification under section 154 of the Act; (ii) appealable under section 246A of the Act; and (iii) deemed as notice of payment under section 156 of the Act. Under the amendment, similar position was given to the processing of TCS statements. In other words, the Legislature recognizes that a deductor who has filed his statement of tax deducted at source, which in turn, has been processed by the Assessing Officer and intimation is generated under which, if any amount is found to be payable, then such intimation generated after processing of TDS returns is subject to rectification under section 154 of the Act and / or is also appealable under section 246A of the Act, since the demand issued by the Assessing Officer is deemed to be a notice of payment under section 156 of the Act. Since the intimation in question issued by the Assessing Officer was appealable order under section 246A(1)(a) of the Act, therefore, the CIT(A) should have examined the legality of adjustment made under intimation issued under section 200A of the Act. The CIT(A) has rejected the present set of appeals on the surmise that first of all, no appeal is provided against the intimation issued under section 200A of the Act. Further, the CIT(A) has also decided the issue on merits and the assessee is in appeal before us on both these grounds. Vis-à-vis the first issue of maintainability of appeal against the intimation issued under section 200A of the Act, we hold that such intimation issued by the Assessing Officer after processing the TDS returns is appealable. The demand raised by way of charging of fees under section 234E of the Act is under section 156 of the Act and any demand raised under section 156 of the Act is appealable under section 246A(1)(a) and (c) of the Act. Accordingly, we reverse the findings of CIT(A) in this regard. We find support from the similar proposition being laid down by Mumbai Bench of Tribunal in bunch of cases with lead order in M/s. Kash Realtors Pvt. Ltd. Vs. ITO in ITA No.4199/M/2015, relating to assessment year 2013-14, consolidated order dated 27.07.2016, which had also decided the issue of charging of fees under section 234E of the Act in favour of the assessee following the decisions of other Benches of Tribunal. Once intimation issued under section 200A(1) of the Act is appealable order before the CIT(A) under section 246A(1)(a) of the Act, then such appealable order passed by the CIT(A) under section 250 of the Act is further appealable before the Tribunal under section 253 of the Act. Hence, we admit the present appeals filed by the assessee even on this preliminary issue. We have already adjudicated the issue of charging fees under section 234E of the Act by the Assessing Officer

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while processing returns / statements in the paras hereinabove and in view thereof, we hold that the Assessing Officer is not empowered to charge the fees under section 234E of the Act by way of intimation issued under section 200A of the Act in respect of defaults before 01.06.2015, we allow the claim of assessee on both the aspects. The grounds of appeal raised by the assessee are thus, allowed. 37. In the result, all the appeals filed by different assessees for different quarters relating to different years are allowed.” 6.3 Similar issue on identical fact was subject matter in appeal before the Tribunal in the case of M/s. Palanisamy Gounder Charitable Trust v. ITO (supra) for the assessment years 2013-14 & 2014-15, wherein the Tribunal has observed and held as under: “7. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. Admittedly, the onus was upon the assessee to prepare statements and deliver the same within prescribed time before the prescribed authority, but the power to collect the fees by the prescribed authority vested in such authority only by way of substitution of clause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015. 8. We have perused the Memorandum to the Finance Bill, 2015 in which clause (c) to section 200A(1) of the Act was introduced. The Finance Bill took note of the provisions of Chapter XVIIB, under which the person deducting tax i.e. deductor was required to file quarterly tax deduction at source statement containing the details of deduction of tax made during the quarter by the prescribed due dates. Similar responsibility is on a person required to collect tax of certain specified receipts under section 206C of the Act. In order to provide effective deterrence against the delay in furnishing TDS / TCS statements, the Finance Act, 2012 inserted section 234E of the Act to provide for levy of fees on late furnishing of TDS / TCS statements. The Memo further took note of the fact that the Finance (No.2) Act, 2009 inserted section 200A in the Act, which provided for furnishing of TDS statements for determining the amount payable or refundable to the deductor. It further took note that however, as section 234E of the Act was inserted after the insertion of section 200A in the Act, the existing provisions of section 200A of the Act does not provide for determination of fees payable under section 234E of the Act at the time of processing of TDS statements. It was thus, proposed to amend the

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provisions of section 200A of the Act so as to enable the computation of fees payable under section 234E of the Act at the time of processing of TDS statements under section 200A of the Act. The Memo explaining the Finance Bill, 2015 very categorically held that currently there does not exist any provision in the Act to enable the processing of TCS returns and hence, a proposal was made to insert a provision in this regard and also the post provision shall incorporate the mechanism for computation of fees payable under section 234E of the Act. The Finance Bill further refers to the existing provisions of the Act i.e. after processing of TDS statement, intimation is generated specifying the amount payable or refundable. This intimation generated after processing of TDS statement is (i) subject to rectification under section 154 of the Act; (ii) appealable under section 246A of the Act; and (iii) deemed as notice of payment under section 156 of the Act. The Finance Bill further provided that intimation generated after the proposed processing of TCS statement shall be at par with the intimation generated after processing of TDS statement and also provided that failure to pay tax specified in the intimation shall attract levy of interest as per provisions of section 220(2) of the Act. Further, amendments were also made in respect of the scheme of payment of TDS / TCS by the Government, deductor / collector which are not relevant for deciding the issue in the present appeal and hence, the same are not being referred to. The Finance Bill further provided that the amendment would take effect from 01.06.2015. 9. The above Memo further explaining the provision relating to insertion of clause (c) to section 200A of the Act clarifies the intention of Legislature in inserting the said provision. The provisions of section 234E of the Act were inserted by the Finance Act, 2012, under which the provision was made for levy of fees for late furnishing TDS / TCS statements. Before insertion of section 234E of the Act, the Finance (No.2) Act, 2009 had inserted section 200A in the Act, under the said section, mechanism was provided for processing of TDS statements for determining the amount payable or refundable to the deductor, under which the provision was also made for charging of interest. However, since the provisions of section 234E of the Act were not on statute when the Finance (No.2) Act, 2009 was passed, no provision was made for determining the fees payable under section 234E of the Act at the time of processing the TDS statements. So, when section 234E of the Act was introduced, it provided that the person was responsible for furnishing the TDS returns / statements within stipulated period and in default, fees would be charged on such person. The said section itself provided that fees shall not exceed the amount of tax deducted at source or collected at source. It was further provided that the person responsible for furnishing the statements shall pay the said amount while furnishing the statements under section 200(3) of the Act. However, power enabling the Assessing Officer to charge / levy the fee under section 234E of the Act while processing the TDS returns/ statements

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filed by a person did not exist when section 234E of the Act was inserted by the Finance Act, 2012. The power to charge fees under the provisions of section 234E of the Act while processing the TDS statements, was dwelled upon by the Legislature by way of insertion of clause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015. Accordingly, we hold that where the Assessing Officer has processed the TDS statements filed by the deductor, which admittedly, were filed belatedly but before insertion of clause (c) to section 200A(1) of the Act w.e.f. 01.06.2015, then in such cases, the Assessing Officer is not empowered to charge fees under section 234E of the Act while processing the TDS returns filed by the deductor. 10. The Hon'ble Supreme Court in the case of CIT Vs. Vatika Township Pvt. Ltd. [2014] 49 Taxman 249 has explained the general principle concerning retrospectivity and held that "of the various rules guiding how a legislation has to be interpreted, one established rule is that unless contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. Idea behind the rule is that current law should govern current activities". The Memo explaining the Finance Bill, 2015 very clearly also recognizes that and refers to the current provisions of sub-section (3) to section 200 of the Act, under which the deductor is to furnish TDS statements. However, as section 234E of the Act was inserted after insertion of section 200A in the Act, the existing provisions of section 200A of the Act did not provide for determination of fees payable under section 234E of the Act at the time of processing of TDS statements. In this regard, it was thus, proposed to amend the provisions of section 200A of the Act so as to enable the computation of fees payable under section 234E of the Act at the time of processing of TDS statements under section 200A of the Act. In other words, the Assessing Officer is empowered to charge fees payable under section 234E of the Act in the intimation issued after insertion of clause (c) to section 200A(1) of the Act w.e.f. 01.06.2015. The Legislature itself recognized that under the existing provisions of section 200A of the Act i.e. prior to 01.06.2015, the Assessing Officer at the time of processing the TDS statements did not have power to charge fees under section 234E of the Act and in order to cover up that, the amendment was made by way of insertion of clause (c) to section 200A of the Act. In such scenario, it cannot be said that insertion made by section 200A(1)(c) of the Act is retrospective in nature, where the Legislature was aware that the fees could be charged under section 234E of the Act as per Finance Act, 2012 and also the provisions of section 200A of the Act were inserted by Finance (No.2) Act, 2009, under which the machinery was provided for the Assessing Officer to process the TDS statements filed by the assessee. The insertion categorically being made w.e.f. 01.06.2015 lays down that the said amendment is prospective in nature and cannot be applied to processing of TDS returns / statements prior to 01.06.2015.

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delivered after considering numerous ITAT/High Court decisions and so, this decision in ‘Rajesh Kaurani’ (supra) should be followed. We do not find the view taken by the ld. CIT(A) to be correct in law. As against ‘Rajesh Kaurani’ (supra), ‘Shri Fatehraj Singhvi and Others vs. UOI’, 73 Taxmann.com 252 (Ker), as also admitted by the ld. CIT(A) himself, decides the issue in favour of the assessee. The only objection of the ld. DR is that this decision and others to the same effect have been taken into consideration by the Hon’ble Gujarat High Court while passing ‘Rajesh Kaurani’ (supra). However, while observing so, we find that in the appellate order, the ld. CIT(A) has failed to take into consideration the settled law that where there is a cleavage of opinion between different High Courts on an issue, the one in favour of the assessee needs to be followed. It has so been held by the Hon’ble Supreme Court in ‘CIT vs. Vegetable Products Ltd.’, 88 ITR 192 (SC). It is also not a case where the decision against the assessee has been rendered by the Jurisdictional High Court qua the assessee.

6.5 Our above view is duly fortified by the decision of the Agra Bench of the Tribunal in the cases of State Bank of India v. ITO(TDS) in I.T.A. No. 03,06 & 07/Ag/2018 & others vide order dated 31.05.2018. Under the above facts and circumstances, we set aside the order of the ld. CIT(A) and direct

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the Assessing Officer to delete the fees levied under section 234E of the Act. Accordingly, the ground raised by the assessee stands allowed.

Sd/- Sd/- (A. MOHAN ALANKAMONY) (DUVVURU RL REDDY) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai, Dated, the 30.11.2018 Vm/- आदेश की �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant, 2.��थ�/ Respondent, 3. आयकर आयु� (अपील)/CIT(A), 4. आयकर आयु�/CIT, 5. िवभागीय �ितिनिध/DR & 6. गाड� फाईल/GF.