STEEL AUTHORITY OF INDIA LTD., ,DURGAPUR vs. DCIT (TDS), CIRCLE - 4, DURGAPUR , DURGAPUR

The assessee in the present case is a Public Sector Undertaking. It had deposited TDS on estimated basis for the eleven financial years from 1988-89 to 1998-99 while utilizing the funds meant for modernisation

On the basis of the above re-casted statement, the Assessing Officer found that there was a short-fall in deposits of TDS by the assessee for assessment years 1992-93, 1996-97, 1997-98 and 1998-99. He accordingly worked out the interest payable by the assessee under section 201(1A) for the said four years on the short-fall of TDS payment aggregating to Rs.7,21,85,256/- and after adjusting the overall excess payment of TDS amounting to Rs.2,96,39,555/-, he worked out the amount payable by the assessee for financial years 1992-93, 1997-98 and 1998-99 at Rs.1,16,03,337/-, Rs.48,60,132/- and Rs.2,60,82,232/- respectively. He also charged interest under section 220(2) of the Act for financial years 1992-93, 1997-98 and 1998-99 at Rs.62,65,801/-, Rs.26,44,471/- and Rs.1,40,84,405/- respectively and raised a total demand of Rs.6,55,20,378/- against the assessee vide an order dated 16.01.2017 passed under section 250/201(1)/201(1A) of the Act.

Against the order passed by the Assessing Officer under section 250/201(1)/201(1A) of the Act, an appeal was preferred by the assessee before the ld. CIT(Appeals) and since the submissions made on behalf of the assessee disputing the levy of interest under section 201(1A) and 220(2) were not found acceptable by him, the ld. CIT(Appeals) upheld the order passed by the Assessing Officer under section 250/201(1)/201(1A) of the Act. Aggrieved by the order of the ld. CIT(Appeals), the assessee

The ld. Counsel for the assessee submitted that the assessee in the present case is a Government of India Undertaking, which undertook modernisation work involving a total cost of about Rs.5,000 crores. He submitted that during the period of modernisation from financial years 1988-89 to 1998-99, various types of jobs were carried out by several contractors and sub-contractors. He submitted that the amount payable towards such jobs during the running of the project was being ascertained on estimated basis in the absence of receipt of proper bills from the concerned contractors and sub-contractors. He submitted that the TDS accordingly was made and deposited on adhoc basis on the basis of estimated liability towards contractors which resulted in excess and short payment of TDS on year to year basis as found/ascertained when TDS certificates were finally issued on the basis of actual bills received from the concerned contractors and sub-contractors. He invited our attention to the details of such excess and short deposit of TDS on year to year basis given in his written submission as under:- Financial TDS deposited TDS recovered Excess Short deposit Running Year as per deposit Account certificate (Refund+) 1988-89 32552219 19652504 12899715 - 12899715 1989-90 29696016 33279432 - (9583416) 3316299 1990-91 46428170 25193940 21234230 - 24550529 1991-92 76677732 54215278 22462454 - 47012983

The ld. Counsel for the assessee submitted that the above details which were furnished by the assessee even before the Assessing Officer and reproduced in the order passed under section 250/201(1)/201(1A) of the Act clearly show that there was no short-fall in the payment of TDS if the overall position is considered. He contended that the assessee, on the other hand, had paid excess TDS at any stage during the relevant period of eleven financial years, but the Assessing Officer selected only five years, wherein there was a short-fall in the deposits of TDS on yearly basis and charged interest under section 201(1A) without considering that the excess amount of TDS deposited by the assessee for the earlier year/(s) was available for adjustment, which was more than the short- fall. He contended that such adjustment is permissible as per the communication dated 10.09.2014 issued by the CPC (TDS) and since there would be no short-fall in the payment of TDS by the assessee after such adjustment at any stage during the relevant period, the question of charging of interest under section 201(1A) would not arise and the demand raised against the assessee would require to be quashed.

The ld. Counsel for the assessee further contended that even the TDS certificates were issued by the assessee on the basis of bills raised by the concerned contractors and sub-contractors and not on the basis of adhoc payment of TDS made on estimated basis. He contended that since the concerned parties have availed the credit for TDS on the basis of TDS certificates issued by the assessee, there is no case of claim any extra credit for TDS by the concerned parties than the deposits made by the assessee. He contended that this vital position was appreciated by the ld.

The ld. D.R., on the other hand, strongly relied on the orders of the authorities below in support of the revenue’s case on the issue under consideration. He submitted that the unit of assessment is the assessment year and therefore, the year-wise position as regards the compliance of TDS provision by the assessee is required to be considered. He contended that even though there was a surplus deposit of TDS by the assessee in some years, there was also a short-fall in the payment of TDS in the years under consideration. He contended that the assessee, therefore, was liable to pay interest under section 201(1A) of the Act for such short-fall in respect of the said years and it was a fit case to charge such interest taking into consideration the year-wise position as rightly held by the authorities below.

We have considered the rival submissions and also perused the relevant material available on record. It is observed that pending the finalization of bills of the contractors and sub-contractors, which were involved in carrying out the various jobs in the modernization work of the assessee’s Steel Plant, adhoc payments of TDS were made by the assessee on estimated basis. After finalization of the bills of the contractors and sub-contractors, the exact amount of TDS required to be deducted was ascertained in respect of each of the relevant years and TDS certificates of such amounts were issued by the assessee to the concerned contractors and sub-contractors. After ascertaining the exact amounts of TDS, it came to light that the amounts deposited by the assessee were in excess for some years, whereas there was some short-fall in respect of other years. A perusal of the year-wise details showing excess and short- deposit of TDS shows that there was no short payment of TDS by the assessee at any stage if the overall position of the relevant period is

It is also observed that section 245 of the Act duly authorises the concerned Income Tax Authority to set off the amount of refund or any part of that amount due to any person under any of the provisions of the Act against the sum, if any, remaining payable by the Act by the person to whom the refund is due. It is thus clear that the refund due to any person under the provisions of the Act for one year can be adjusted against the tax liability for the other year and the concerned authorities are duly authorized to make such adjustment. In the case of Motion –vs.- CIT [214 Taxman 335 (Del.). Hon’ble Delhi High Court has taken note of this procedure prescribed under section 245 of the Act and directed the Assessing Officer to adjust the past arrears due to the assessee against the tax liability of the subsequent years.

Keeping in view the communication dated 10.09.2014 issued by the CPC (TDS), the provisions of section 245 and the decision of the Hon’ble Delhi High Court in the case of Motion (supra), we hold that the assessee is entitled for adjustment of the excess deposit of TDS made in the earlier year against the TDS payable for the subsequent year/(s). We accordingly set aside the impugned order of the ld. CIT(Appeals) on this issue and direct the Assessing Officer to recompute the amount payable/ refundable to the assessee on account of TDS for the years under consideration after making such adjustment.

During the course of appellate proceedings before the Tribunal, the assessee has raised an additional ground claiming interest under section 244A of the Act on the refund, if any, due to the assessee for excess deposit of TDS. Since this issue raised by the assessee is purely a legal issue and all the facts relevant to decide the said issue are available on record, the additional ground raised by the assessee is admitted by us keeping in view the decision of the Hon’ble Supreme Court in the case of National Thermal Power Corporation Limited [229 ITR 383]. Since this issue is raised by the assessee for the first time before the Tribunal and the Assessing Officer is required to be given an opportunity to examine/verify the same from the relevant facts available on record as rightly contended by the ld. D.R., we restore this issue to the file of the Assessing Officer for consideration in accordance with law.

In the result, the appeals of the assessee are allowed as indicated above. Order pronounced in the open Court on January 25, 2019.