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Facts
The assessee, Lufthansa Cargo AG, faced a demand for short TDS deduction and interest under section 200A by the CPC for FY 2012-13. The assessee applied for rectification under section 154, arguing that the deductees had already paid tax on the income and citing a Supreme Court judgment, but the CIT(A) rejected this, finding no apparent mistake on record as supporting documents were not initially filed.
Held
The tribunal acknowledged the Supreme Court's view that a payer is not liable if the payee has already paid tax, a fact requiring verification. Therefore, it remanded the matter to the DCIT(TDS) to examine whether the deductees had included the relevant income and paid tax, directing both parties to obtain necessary details and complete rectification under section 154 within 180 days.
Key Issues
1. Whether a demand for short TDS deduction under Section 200A can be rectified under Section 154 if deductees have paid tax. 2. Whether the lack of supporting documents on record at the time of CPC processing constitutes an "apparent mistake from record" for Section 154 rectification.
Sections Cited
Section 200A, Section 154, Section 201(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘D’, NEW DELHI
Before: Shri Kul Bharat & Dr. B. R. R. Kumar
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘D’, NEW DELHI Before Shri Kul Bharat, Judicial Member & Dr. B. R. R. Kumar, Accountant Member
ITA No. 2711/Del/2019 : Asstt. Year: 2013-14 Lufthansa Cargo AG, Vs The DCIT (TDS), Gurgaon, Haryana Present Add: Room No. A-217- 219, Delhi Cargo Service Centre P Ltd., Gate no. 6, Cargo Terminal 2, Cargo Complex, IGI Airport, New Delhi 110037 Earlier at: 12th Floor DLF Building No. 10, Tower-B, DLF City, Ph-II, Gurgaon, Haryana. (APPELLANT) (RESPONDENT) PAN No. AABCL 6458 R Assessee by : Sh. Sujit Ghosh Adv. Sh. Ajinkya Tiwari, Adv. Revenue by : Sh. Vizay B. Vasanta, Sr. DR Date of Hearing: 07.12.2023 Date of Pronouncement: 17.01.2024
ORDER Per Dr. B. R. R. Kumar:- The present appeal has been filed by assessee against the order of Ld.CIT(A)-1, Gurgoan dated 20.09.2018. 2. The assessee has raised the following grounds of appeal:- 1. For that the order passed by the learned Commissioner of Income Tax (Appeals-I), Gurgaon, is bad in law and bad on facts of the case. 2. For that the learned Commissioner of Income Tax (Appeals-I), Gurgaon, has erred in not appreciating that with regard to the demand raised on the assessee u/s 200A, the assessee was eligible to apply u/s 154 of the Act, so as to claim the benefits of the
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Decision of Hon'ble Supreme Court in the case of Hindustan Coco Beverages Pvt. Ltd. on account of short deduction of tax by the Deduction. 3. For that the learned Commissioner of Income Tax (Appeals-I) Gurgaon, has gone wrong by stating that the filing of Application u/s 154 of the Act by the Appellant for getting the relief of a Supreme Court Ruling is not an apparent mistake on record and thus the CPC was justified in rejecting the application u/s 154. 4. For that the learned Commissioner of Income Tax (Appeals-I) Gurgaon, has not appreciated the fact that no opportunity was given to the Appellant and the order was not passed in writing but was a computerized order u/s 154. 5. For that the learned Commissioner of Income Tax (Appeals-I), Gurgaon, has not appreciated that the proof of deductees having paid the taxes on their income can be produced only if the application u/s 154 of the Income Tax Act is admitted and the details with regard to proof of filing the incomes are sought. 6. For that the learned Commissioner of Income Tax (appeals-i) Gurgaon, has not appreciated the finding of Hon'ble Supreme Court in the case of Hindustan Coco Cola Beverages (P) Ltd. v. CIT, 293 ITR 226 (SC) that the payer is not liable to pay the amount of short/non-deduction of tax u/s 201(1) in cases where the payee has already included the relevant income in his total income and unless the opportunity to produce these documents are given to the assessee, the benefit of claim cannot be taken by the Deductor. 7. That the Commissioner of Income Tax (Appeals-I), Gurgaon, has not given any opportunity to the Appellant to produce the documents in support to their claim that the Deductees had considered the Revenue (on which short TDS deduction is made) in their total income. 8. That the interest is consequential and is dependent on the grounds of appeal as above. 9. That the above grounds of appeal are mutually exclusive and without prejudice to each other.
Brief facts as submitted by the appellant are that the appellant is a Foreign International Airline with its head office in Germany and a controlling branch office in Delhi. The controlling branch office filed a TDS return for the 2nd quarter of FY 2012-13 on 15/10/2012. The return was processed by the
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CPC vide order dated 09/06/2016 raising a demand of Rs. 48,18,130/- on account of short deduction of TDS and interest on short deduction. The appellant filed an application for rectification of this order u/s 154 before the DCIT, TDS, Gurgaon with a copy to CPC. The relevant part of the application u/s 154 reads as under:-
"We are in receipt of an intimation us 200A of Income Tax Act, reference no. IDS/1213/260/D/100019395191 in connection with form 26Q of 2nd quarter for the financial year 2012-13. In response to which we hereby submit as follows:- There is short deduction demand of Rs. 3259017/-is on account of TDS deducted in case of M/s. Airlift (India) Pvt. Ltd., Dachser India Private Limited, East West Freight Carriers Limited, Freight Lines (I) P. Ltd., La Freight lift Private Ltd, Leaap International Pvt. Carriers Limited, Freight Lines (I) P. Ltd., La Freight Lift Private Ltd, Leaap International Pvt. Ltd., Modem Cargo Services Pvt. Ltd., Sky Barge Freight Pvt. Ltd., Skylift Cargo Pvt. Lid., UT Worldwide (India) Pvt. Ltd. and Wings Logistics Pvt. Ltd. at a lower rate on the amounts which exceeded the limit amount as per the lower exemption order of the deductee as this being a clerical mistake. However the deductee have already deposited the Income Tax on its entire income and has discharged their Income Tax Liability for the financial year 2012-13, There is no loss to the revenue since of above Deductees have discharged their tax liability for the financial year 2012-13. Copies of Lower exemption certificates are enclosed. Reliance is placed on the Honorable Supreme Court order in the case of Hindustan Coca Cola Beverages P Ltd. V CIT, 293 ITR 226 (SC) where Honorable Court held that the payer is not liable to pay the amount of short/non- deduction of tax u/s 201(1) in cases where the payee has already included the relevant income- in his total income and paid the tax. However, the point for consideration is whether it was necessary to raise this issue at the first stage by the Department in spite of the said circular of the Board. In any case, we hope that now the issue is set at rest. There an interest demand of Rs. 15,29,109/- on above short deduction demand which will also get deleted on account of allowing the above short deduction. In the light of above we thus request your goodself to pass an order u/s 154 after considering the above fact and deleting the demand raised. "
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The CPC vide its order dated 11/03/2017 u/s 154 of the IT Act rejected the contention of the assessee and recomputed the demand at Rs. 51,13,630/- In this re-computation, the demand on account of short deduction of TDS remained the same at Rs. 32,89,018/- while the demand on account of interest on short deduction was increased from 15,29,109/- to Rs. 18,24,615/-.
The assessee vide written submissions dated 17/09/2018 submitted as under:-
"Lufthansa Cargo AG is a foreign International airline with its head office in Germany and a controlling branch office in Delhi for its operations in India at various branches. That the controlling branch office has been filing the TDS returns centrally for all its operations in India and has been paying the taxes in time and has been filing the TDS returns regularly. Lufthansa Cargo AG filed the IDS return for the 2nd Quarter (Financial Year 2012-13) on 15/10/2012 vide acknowledgment no. 070462000206791. That an intimation ws 154 of the Income tax Act, showing a demand of Rs. 5413,030/- was raised on 11/03/2017 On going through the intimation u/s 154, the short deduction demand of Rs. 32,89,018/- is on account of TDS deducted in case of M/s. Airlift (India) Pvt. Ltd., Dachser India Private Limited, East West Freight Carriers Limited, Freight Lines (1) P. Ltd., La Freight Lift Private Ltd, Leaap International Pvt. Ltd., Modern Cargo Services Pvt. Ltd., Sky Barge Freight Pvt. Ltd., Skylift Cargo Pvt. Ltd., UT Worldwide (India) Pvt. Ltd. and Wings Logistics Put. Ltd. at a lower rate on the amounts which exceeded the limit amount as per the lower exemption order of the deductee as this being a clerical mistake. However the deductees must have already deposited the Income Tax on its entire income and has discharged their Income Tax Liability for the financial year 2012-13, There is no loss to the revenue since above Deductees have discharged their tax liability for the financial year 2012-13. Copies of Lower exemption certificates are enclosed. We are pursuing with all the above parties to provide the confirmation as an Annexure 'A of form-26A. Reliance is placed on the Honorable Supreme Court order in the case of Hindustan Coca Cola Beverages P Ltd. V CIT, 293 ITR 226 (SC) where Honorable Court held that the payer is not liable to pay the
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amount of short/non- deduction of tax u/s 201(1) in cases where the payee has already included the relevant income in his total income and paid the tax. However, the point for consideration is whether it was necessary to raise this issue at the first stage by the Department in spite of the said circular of the Board. In any case, we hope that now the issue is set at rest. There an interest demand of Rs. 18,24,615/- on above short deduction demand which will get deleted on account of allowing the above short deduction. We thus humbly request and pray to your honour to kindly allow us some more time to provide the details as per form 26A or pass an order by deleting the demand or to issue the instruction to the Assessing officer to do so or as your honour deem fit in the light of above ruling." 6. The ld. CIT(A) rejected the contention of the assessee and held that, the demand on account of short deduction of TDS was raised by the CPC vide order u/s 200A dated 09/06/2016. As per the rectification application u/s 154, the assessee had contended that the demand raised by the CPC vide order u/s 200A was not justified in view of the fact that the deductees have already deposited the income tax on its entire income and discharged their income tax liability. The ld. CIT(A) held that, It is not the assessee's case that the documents pertaining to the tax deposits by the deductees were a part of the return filed by the assessee. The ld. CIT(A) held that, in fact in the submissions dated 17/09/2018 filed by the assessee, it was contended that the deductees must have already deducted the income tax on its entire income. In these circumstances, it is apparent that there were no documents on record available with the CPC to arrive at a conclusion that the deductees had paid tax on the entire income. There was therefore no mistake apparent from the record which could have been rectified by the CPC u/s 154 of the IT Act. The ld. CIT(A) relied on the judgment
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in the case of Commissioner Of Income-Tax.vs Keshri Metal Pvt. Ltd. 237 ITR 165 (SC). In this case the Hon'ble Supreme Court held as under:- "Under the provisions of section 154 there has to be a mistake apparent from the record. In other words, a look at the record must show that there has been an error and that error may be rectified. Learned counsel for the Revenue has not been able to satisfy us that it shows any apparent error upon the record. Reference to documents outside the record and the law is impermissible when applying the provisions of section 154." 8. Heard the arguments of both the parties and perused the material available on record. 9. The assessee had placed reliance on the decision of the Hon'ble Supreme Court in the case of Hindustan Coco Beverages Pvt. Ltd. (Supra). The assessee has contended that the demand raised by the CPC was a mistake apparent from record and the CPC should have rectified the same u/s 154. In a given case where a person has not deducted the TDS and claimed the benefit of the Hon’ble Supreme Court decision in the case of Hindustan Coco Beverage Pvt. Ltd., the fact whether the deductees have already deposited the income tax on its entire income is a matter which requires verification. The Revenue cannot charge the assessee and also collect the same amount from the recipients. Hence in the interest of justice, we remand the matter to the file of the DCIT(TDS) to examine the issue in toto and rectify the demand notice. Further, we also direct that the assessee & DCIT(TDS) shall endeavor to obtain the relevant details to examine the fact of inclusion of the relevant income in the total income of the recipients. The process of rectification u/s. 154 be completed within 180 days from the date of this
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order, as the matter has not been resolved for the last ten years.
In the result, the appeal of the assessee is allowed for statistical purpose. Order Pronounced in the Open Court on 17/01/2024.
Sd/- Sd/- (Kul Bharat) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 17/01/2024 *NV, Sr. PS*