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Income Tax Appellate Tribunal, DELHI BENCH “G”, NEW DELHI
Before: SHRI. AMIT SHUKLA & SHRI PRASHANT MAHARISHI
PER AMIT SHUKLA, J.M.:
The aforesaid appeals have been filed by the Revenue against the impugned orders of even date; 10/9/2014 passed by the ld. CIT(A)-I, Dehradun in relation to penalty proceedings under section 271C of the Income Tax Act, 1961.
Since the issues involved in all these appeals are common arising out of identical set of facts, therefore, same were heard together and are being disposed of by way of this consolidated order.
The amount of penalty deleted by the ld. CIT(A) under section 271C for assessment year 2010-11 is Rs.42,45,97,334;
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for assessment year 2011-12 is Rs.64,44,18,483/-; and for assessment year 2012-13 is Rs.76,50,88,140/-.
The brief facts are that during the course of survey proceedings carried out under section 133A on 19/2/2013, it was found that assessee has not deducted TDS on various payments of interest in terms of section 194A. In response to show cause notice by the ACIT (TDS), assessee submitted that they are maintaining ‘Site Restoration Fund account’ in respect of ONGC Ltd., which is not a time deposit liable for deduction of tax. During the course of assessment proceedings, Assessing Officer has observed that deposit under STDR is not outside the purview of section 194A and accordingly, he had passed order under section 201(1)/201(1A) computing the short deduction. Consequently, the Assessing Officer also held that assessee is liable for penalty under section 271C and levied penalty for exact amount of short deduction of tax by separate orders.
Before the ld. CIT (A), besides various submissions and reliance on various judicial judgments including that of the Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages Private Limited vs. CIT reported in 293 ITR 226 (SC), the ld. counsel for the assessee relied upon the decision of ITAT Delhi Bench in the case of State Bank of India, Tel Bhawan, Dehradun vs. DCIT (TDS) in I.T.A. No 3924, 3914 & 3915/DEL/2013 for assessment years 2010-11, 2011-12 and 2012-13 vide order dated 18/7/2014, wherein the Tribunal had decided the issue of deductibility of tax under section 194A on Site Restoration Fund in favour of the assessee. The ld. CIT (A)
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in the impugned order has noted down the relevant portion of the order of the Tribunal and thereafter has given relief.
After hearing both the parties and on a perusal of the relevant finding given in the impugned order, we find that this precise issue has been dealt by the Tribunal in the case of State Bank of India, Tel Bhawan, Dehradun vs. DCIT (TDS) (supra) in respect of Site Restoration Fund of ONGC only, wherein the Tribunal has held that there is no liability to deduct tax in terms of section 194A. The relevant observation and finding of this Tribunal, which has been incorporated by the ld. CIT(A), reads as under:-
“7. A copy of the order passed by the ITAT Delhi Bench ‘G’ in ITA No.3936, 3937 & 3938/De!/2013 in the case of DC!T (TDS) Dehradun vs. State Bank of India Tel Bhawan Dehradun and ITA No.3924, 3914, 3915/Del/2013 and in the case of State Bank of India, Tel Bhawan, Dehradun Vs DClT(TDS) pertaining to A.Y. 2010-11, 2011-12 & 2012-13 which was passed on 18.07.2014 was forwarded to the undersigned by the AGM, State Bank of India , Tel Bhawan, Dehradun vide his letter No.AGM/2014-15/148 dated 30.07.2014. It is seen from the order that the Hon’ble ITAT has decided the issue of deductibility of tax u/s 194A on Site Restoration Fund in favour of the assessee deductor and held as under: “17. We have considered the rival submissions and perused the record. Admittedly the assessee did not deduct the tax on the interest accrued on the corpus of SRF fund of ONGC and that triggered the controversy of non-deduction of tax at source. Consequently, State Bank of India was treated as an assessee in default and interest u/s 201(1 A) was also levied.
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17.1 The plea of consistency with reference to certificate granted for A.Y. 2002-03 is not acceptable for the simple reason that certificate is granted for income accruing during a specified period and, therefore, it cannot have any effect for subsequent years. Moreover, principles of res-judicata are not applicable to income-tax proceedings. 17.2 Section 194A mandates the payer of interest to deduct TDS at the time of credit of such interest to the account of the payee. However, by virtue of sub-section (3), provisions of sub-section (1) are not applicable, inter alia, as per clause (vii) in the case of interest credited or paid in respect of deposits (other than time deposits made on or before 1st day of July 1995). Therefore, if a deposit is not in the nature of time deposit, then it is not amenable to the provisions of section 194A. 17.3 In the present case interest has been credited by SBI on SRF a/c which has been opened by OMGC with it as per the provisions of section 33ABA. Therefore, it is necessary to first examine the relevant provisions in this regard to find out whether SRF a/c is time deposit or not. 17.4 Section 33ABA deals with “Site Restoration Fund” in respect of those assessees, who are carrying on business of prospecting for, or extraction or production of petroleum or natural gas or both in India. Relevant portion reads as under: [Site Restoration Fund 33ABA. (1) Where an assessee is carrying on business consisting of the prospecting for, or extraction or production of. petroleum or natural gas or both in India
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and in relation to which the Central Government has entered into an agreement with such assessee for such business, has before the end of the previous year- (a) deposited with the State Bank of India any amount or amounts in an account (hereafter in this section referred to as the special account) maintained by the with that Bank in accordance with, and for the purposes specified in, a scheme (hereafter in this section referred to as the scheme) approved in this behalf by the Government of India in the Ministry of Petroleum and Natural Gas; or (b) deposited any amount in an account (hereafter in this section referred to as the Site Restoration Account) opened by the assessee in accordance with, and for the purposes specified in, a scheme framed by the Ministry referred to in clause (a) (hereafter in this section referred to as the deposit scheme), The assessee shall, subject to the provisions of this section, be allowed a deduction (such deduction being allowed before the loss, if any, brought forward from earlier years is set off under 72) of- (i) a sum equal to the amount or the aggregate of the amounts so deposited; or (ii)a sum equal to twenty per cent of the profits of such business (computed under the head “Profits and gains of business or profession” before making any deduction under this section), Whichever is less: Provided further that where any deduction, in respect of any amount deposited in the special account, or in the Site Restoration Account, has been allowed under
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this sub-section in any previous year, no deduction shall be allowed in respect of such amount in any other previous year: Provided also that any amount credited in the special account or the Site Restoration Account by way of interest shall be deemed to be a deposit. (3) Any amount standing to the credit of the assessee in the special account or the Site Restoration Account shall not be allowed to be withdrawn except for the purposes specified in the scheme or, as the case may be, in the deposit scheme. (5) Where any amount standing to the credit of the assessee in the special account or in the Site Restoration Account is withdrawn on closure of the account during any previous year by the assessee, the amount so withdrawn from the account, as reduced by the amount, if any, payable to the Central Government by way of profit or production share as provided in the agreement referred to in section 42, shall be deemed to be the profits and gains of business or profession of that previous year and shall accordingly be chargeable to income-tax as the income of that previous year. Explanation- Where any amount is withdrawn on closure of the account in a previous year in which the business carried on by the assessee in no longer in existence, the provisions of this section shall apply as if the business is in existence in that previous year. 17.1 Explanation 1 to clause (vii) of sub-section (3) to section 194A clearly contemplates time deposit to mean deposits which are repayable on the expiry of fixed periods.
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17.2 Ld. Sr. counsel has referred to the various forms, forming part of the Schemes, which have been noted in his argument from which it is evident that there is no fixed period prescribed in regard to these deposits and assessee has to give notice to the bank for making withdrawal from this deposit account. The withdrawal is to be made as per requirement of sub-section (3) to section 33ABA. Therefore, it cannot be said to be for a fixed period. The fixed period implies that ‘period’ is determinable at the time of entering into contract. The term ‘period’ is qualified with term ‘fixed’ and, therefore, when period of deposit is left to the eventuality of arising of purposes for withdrawal as contemplated u/s 33ABA (3) then, we fail to appreciate as to how it can come within the ambit of fixed period. The definition/meaning of ‘time deposit’ is given in section 194A and, therefore, it cannot be assigned a general meaning as submitted by Ld. CIT(DR). There is no room for any interpretation/construction in tax laws, when there is no ambiguity in the language of section. When the plain words of statute clearly and directly convey no other meaning, then there is no need for any interpretation. Therefore, Ld. CIT(DR)’s contention that this withdrawal notice itself implies that the deposit is for fixed period cannot be accepted in the backdrop of specific definition given under the Act. 17.3 Further, it is not necessary that entire amount is to be withdrawn in one go and with the withdrawal the scheme will close. On the contrary there are stipulations u/s 33ABA read with the Scheme to ensure that ONGC withdraws the required amount only for utilizing the amount as per the scheme. In order to clarify this aspect, we produce hereunder certain clauses from the Scheme.
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17.4 Clauses 8 & 9 of the Scheme read as under: - “8 Withdrawal and utilization of the amount deposited: A depositor shall be entitled to withdraw from the amount standing to the credit of the account only such amount as is necessary to meet any expenditure to be incurred by him on the expiry or termination of the agreement or relinquishment of part of the contract area, towards removal of all equipments and installations in a manner agreed with the Central Government pursuant to an abandonment plan or toward all necessary site restoration in accordance with modern oilfield and petroleum industry practices and towards meeting all other expenses necessary to prevent hazards to life or property or environment consequent on such expiry, termination or relinquishment. 9. Procedure for withdrawal (1) The depositor shall be entitled to withdrawn the whole or any part of the amount standing to the credit of the account by making an application in Form E, duly authorized by the Ministry of Petroleum & Natural Gas or any agency authorized by the Ministry of Petroleum & Natural Gas in this behalf. (2) On receipt of the request for withdrawal, the deposit office shall, a soon as may be, pay the amount to the depositor through a credit o the designated account. 17.5 SRF deposit can continue to run as long as the agreement of ONGC with the Government runs and withdrawals can be made depending upon requirements. Clause 3 of the SRF Schemes read as under:
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“3. Deposit: hew to be made- (1) A deposit in terms of Section 33BA of the Income-tax Act, 1961 may be made by any depositor in accordance with the provisions of this Scheme. (2) The deposit may be made in one lump sum or in installments (not exceeding four installments in each financial year) (3) Such deposit ahs to be made in India Rupee, and out of profits derived from the business referred in sub paragraph (3) of paragraph 1 above. (4) Shall account shall be maintained in Indian Rupees.” 17.10. This clearly shows that SRF Deposit may be made in one lump sum or installments not exceeding four installments in each financial year. This plea is further fortified by clause 6 of the scheme which contemplated for computing interest and reads as under: “6 Interest: (1) Subject to sub-paragraph (2) the deposit shall carry interest at the highest rate for the applicable period as paid by the State Bank of India on the date the deposit is made for Rupee term deposits prevailing at the end of the financial year. (2) Where during any financial year any part of the deposit is withdrawn, the interest payable on the deposits shall be calculated on the basis of the minimum monthly balance in the account during each of the months in the financial year.
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3 )The interest payable for any financial year, or part thereof, shall only be credited to the account and shall not be payable to the depositor except as part of withdrawal for utilization in terms of paragraph 5 or part of a payment of balance on closure of account in terms of paragraph 12. (4) The gross interest credited to the account in a financial year shall be evidenced by a certificate issued in Form C, by the deposit office and the amount of such gross interest shall be deemed to be a deposit made by the depositor under this scheme in that financial year. 17.11 Sub-clause (2) of clause 6 of the Scheme makes it clear that withdrawal can be made in any financial year and, therefore, it cannot be a case of fixed period. Ld. Sr. counsel in the course of hearing pointed out that not even single paise has been withdrawn for the last 12 years from the corpus of the fund that has now swelled approximately to Rs. Eleven thousand crores. We are in agreement with the submission of the Ld. Counsel for the assessee that SRF is clearly not for fixed period at all. We, therefore, find ourselves in agreement with the submissions of Ld. Counsel for the assessee that in view of clause (vii) to section 194A(3), the provisions of section 194A(1) are not attracted to the present case.” 8. In view of the above finding by the Hon’ble ITAT that the provisions of section 194A(1) are not attracted in the case of Site Restoration Fund Account being maintained by the assessee on behalf of the ONGC, the assessee cannot be said to be an assessee in default within the meaning of section 201 of the Act, 1961. In view of the same, levy of the penalty J/S 271C on the assessee for any purported short deduction of tax is not maintainable. Accordingly, in view of
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the finding of the Hon’ble ITAT in the aforementioned appeal order, the penalty under section 271C of Rs 42,45,97,334/- is hereby deleted.” 7. Since this issue has already been decided in favour of the assessee by the Tribunal which has been followed by the Ld. CIT(A), therefore, we uphold the order of the ld. CIT (A) in deleting the penalty under section 271C. Accordingly, all the appeals filed by the Revenue are dismissed.
In the result, appeals of the Revenue are dismissed.
Order pronounced in the open Court on 26th October, 2017.
Sd/- Sd/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER
DATED: 26th October, 2017 JJ:2610