DEPUTY COMMISSIONER OF INCOME-TAX vs. BAJAJ ALLIANZ INSURANCE CO. LTD., PUNE

आदेश / ORDER

PER ANIL CHATURVEDI, AM :

These two appeals filed by the Revenue u/s 253 of the Act are emanating out of separate orders of Commissioner of Income Tax (A) – Pune – 10, dt.23.12.2015 for the assessment years 2007-08 and 2008-09.

both the appeals can be heard together. In view of the aforesaid

submissions of both the parties, we, for the sake of convenience,

proceed to dispose of both the appeals by a consolidated order but

however, proceed with narrating the facts for assessment year 2007-

08.

as under :-

Assessee is a company engaged in the business of Life

Insurance. A survey action u/s 133A of the Act was conducted in the

office premises of the assessee on 03.01.2008 for verification of

compliance to the various provisions of TDS / TCS. During the

course of survey, it was noticed that during the year assessee had

made payments amounting to Rs.1,66,82,034/- to various parties as

DG set hire charges - and had deducted TDS at 2% plus applicable

surcharge and education cess u/s 194C of the Act. AO was of the

view that in view of the amendment to the definition of ‘rent’ w.e.f.

13.07.2006, assessee ought to have deducted tax at 20% plus

applicable surcharge and cess u/s 194I of the Act. AO also noticed

that assessee had paid a sum of Rs.76,00,000/- to TBWA Anthem

Pvt. Ltd., towards cost of production of three films and assessee had

deducted tax at 1% plus applicable surcharge and cess u/s 194C of

the Act. AO was of the view that assessee ought to have deducted tax

u/s 194J of the Act as the services involved technical, managerial and

professional services. It was also noticed by him that assessee had

made payment to various parties towards AMCs and other charges

(the details of which are listed at page 3 of the order). In respect of all

those payments, assessee had deducted tax u/s 194C of the Act

whereas according to AO, assessee ought to have deducted tax u/s

194J of the Act as the services were in the nature of technical,

managerial and professional. After considering the submissions of

the assessee, AO held that assessee was in default and there was

short deduction of tax. He accordingly worked out the short

deduction of tax of Rs.56,75,161/- as non / short deduction and

interest u/s 201(1A) of the Act of Rs.31,22,147/- and thus

determined an aggregate amount of Rs.87,39,749/- as payable by

assessee by order dt.28.03.2011 passed under Sec.201(1A) of the

Act. On account of the aforesaid short / non deduction of tax, AO

initiated penalty proceedings u/s 271C of the Act and vide order

dt.24.03.2014 levied penalty of Rs.31,36,697/- u/s 271C of the Act.

Aggrieved by the order of AO, assessee carried the matter before

Ld.CIT(A), who (in appeal No.PN/CIT(A)10/Addl.CIT(TDS)/ 619/14-

15) vide order dt.23.12.2015 decided the issue in favour of the

assessee by holding as under :

“5. I have carefully considered the submission of the appellant. In fact, in instant case, the A.O. had levied penalty u/s 271C of I.T. Act for violation of non/short deduction of TDS under the provisions of section 1941 and 194J, however, the appellant had deducted tax u/s. 194C of I.T. Act. The A.R. of appellant, during the appeal proceeding, has brought to the notice that ITAT, Pune, A-Bench vide order dated 21.3.2014 has decided the matter in favour of appellant on quantum issue. wherein I.T.A.T. had viewed that the appellant had correctly deducted the tax u/s 194C of I.T. Act, against the claim of department u/s 194/ and 194J of I.T. Act. Accordingly, there was no short deduction. Hence, considering the above judgment. since quantum issue is deleted on merit, penalty levied for such violation deserves to be also deleted.

before us and has raised the following grounds :

“1. The Ld.CIT(A) erred in allowing the appeal towards the levy of Penalty u/s 271C of the IT Act, 1961.

Identical grounds have been raised by Revenue in ITA No.298/PUN/2016 for A.Y. 2008-09.

other hand, reiterated the submissions made before AO and Ld.CIT(A)

and further submitted that on the quantum issue, assessee had

preferred appeal before Hon’ble Tribunal and the Hon’ble Tribunal of

Pune Bench vide order dt.21.03.2014 in ITA Nos.116 & 117/PN/2013

and ITA Nos.153 & 154/PN/2013 has decided the issue in favour of

the assessee and since the quantum has been decided in favour of

the assessee, the penalty u/s 271C on such quantum does not

survive. He further submitted that against the order of Tribunal, the

Revenue preferred appeal before Hon’ble Bombay High Court. Hon'ble

High Court vide order dated 01.08.2017 in ITA Nos.170 and 171 of

2014 has dismissed the appeals of Revenue. He therefore submitted

that in view of these facts, the appeals of the Revenue needs to be

dismissed.

on record. We find that Ld.CIT(A) while deleting the penalty has noted

that the Tribunal vide order dt.21.03.2014 has decided the matter in

favour of the assessee on quantum issue and had held that the

assessee has correctly deducted TDS u/s 194C of the Act as against

the claim of the Department that assessee ought to have deduct TDS

u/s 194I and 194J of the Act and that there was no short deduction

of tax. The aforesaid finding of Ld.CIT(A) has not been controverted

by Revenue. We further find that against the order of Tribunal,

Revenue preferred appeal before the Hon’ble Bombay High Court. The

Hon’ble Bombay High Court vide order dt.01.08.2017 in ITA Nos.170

and 171 of 2014 has dismissed the appeal of Revenue for A.Y.2007-08

and 2008-09. In such a situation, we find no reason to interfere with

the order of Ld.CIT(A) and thus, the grounds of the Revenue are

dismissed.

No.297/PUN/2016 for A.Y. 2007-08 is dismissed.

Nos.298/PUN/2016 for A.Y. 2008-09 is concerned, in view of the

submission of both the parties that the facts of the case in the years

being identical to the facts and issue of the case in ITA

No.297/PUN/2016 for A.Y. 2007-08, we therefore for the reasons

stated herein while disposing of the appeal in ITA No.297/PUN/2016

for A.Y. 2007-08 and for similar reasons, dismiss the grounds of

appeal of Revenue. Thus, the grounds of the Revenue are

dismissed.

dismissed.

Order pronounced on 31st day of January, 2018.

Sd/- Sd/- (VIKAS AWASTHY) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 31st January, 2018. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A) – Pune-10, Pune. The Pr.CCIT, Pune. 4. The CIT(TDS), Pune. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” / DR, 6 ITAT, “B” Pune; 7. गाड� फाईल / Guard file.

आदेशानुसार/ BY ORDER,स

/ / // True Copy //

व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.