Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCHES: B : NEW DELHI
Before: SHRI R.S. SYAL, AM & SHRI A.T. VARKEY, JM
ITA Nos.4795 to 4798, 5348 & 5350/Del/2011 24 & 27&28/Del/2015 Date of Hearing : 07.03.2016 Date of Pronouncement : 10.03.2016 ORDER PER BENCH : This batch containing four appeals by the assessee and six by the Revenue relating to Financial years 2007-08 and 2008-09 arise out of the common order passed by the CIT(A) on 2.9.2011. Since these appeals are based on similar grounds and common facts, we are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience.
Briefly stated, the facts of the case are that the assessee company is engaged in the business of running a hotel under the name and style of Le Meridian. A survey operation was conducted u/s 133A of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) at the business premises of the assessee on 29.9.2006, which highlighted certain defaults in the matter of deduction of tax at source from the payments made by the assessee. Notice dated 6.8.2007 u/s 201 was issued on the premise that the assessee failed to properly 2
ITA Nos.4795 to 4798, 5348 & 5350/Del/2011 24 & 27&28/Del/2015 deduct tax at source in respect of certain payments. In a common order dated 30.3.2011 passed by the Addl.
Commissioner of Income-tax, Range 49, New Delhi [hereinafter also called `the AO(TDS)’] u/s 201(1)/(1A) of the Act for four years, it was observed that the assessee made payments to some parties including M/s Divya Ahuja and M/s Glow Show Stage Events. The assessee was found to have deducted tax at source on payments made to these two parties u/s 194C of the Act. The AO opined that the tax ought to have been withheld on such payments u/s 194J of the Act instead of section 194C, which resulted into treating the assessee in default u/s 201(1) of the Act. Consequently, interest u/s 201(1A) was also levied. The ld. CIT(A) echoed the view of the AO(TDS) on the payments made to these two parties. In addition, the assessee was also found to have paid Tips to its employees during the two years under consideration on which no deduction of tax at source was made. The AO treated such tips to employees as part of `Salaries’. On the failure of the assessee in deducting tax at ITA Nos.4795 to 4798, 5348 & 5350/Del/2011 24 & 27&28/Del/2015 source u/s 192 of the Act on such tips, the AO treated the assessee in default. Interest under section 201(1A) of the Act was also levied. The ld. CIT(A) overturned the order of the AO (TDS) qua payment of tips to the employees. Both the sides are in appeal on their respective stands.
We have heard the rival submissions and perused the relevant material on record. This batch of appeals was taken up by both the sides simultaneous with the appeals for the A.Ys. 2006-07 and 2007-08. In fact, no separate arguments were advanced in respect of the present appeals and both the sides adopted their arguments made for the said earlier years, for which we have passed a separate order. Following conclusions, which are relevant for the instant appeals, have been arrived at in the order for the earlier years.
Two original consolidated appeals filed by the Revenue
for both the years in respect of defaults u/s 201(1) and 201(1A) are sufficient to protect the interest of the Department and the four separate appeals filed
ITA Nos.4795 to 4798, 5348 & 5350/Del/2011 24 & 27&28/Del/2015 subsequently are infructuous. Accordingly, the question of delay in filing of separate appeals by the Revenue becomes academic and so is the argument of the ld. AR for dismissing some of the Revenue’s appeals, each with tax effect of less than Rs.10 lac.
2. Provisions of section 194J are not applicable on payments made to M/s Divya Ahuja. Accordingly,
deduction of tax at source made by the assessee u/s 194C is in order.
3. Payment made to M/s Glow Show Stage Events
requires deduction of tax u/s 194J of the Act. There will be no liability of the payer-assessee u/s 201(1) to the extent of the payee including the amount received in its total income and paying tax thereon. However, liability towards interest u/s 201(1A) will still be there from the date on which such tax was deductible to the date of furnishing of return of income by M/s Glow
Show Stage Events even if the assessee is not treated as in default u/s 201(1). 5
ITA Nos.4795 to 4798, 5348 & 5350/Del/2011 24 & 27&28/Del/2015 4. Tips to employees are chargeable u/s 15 read with section 17. Deduction of tax at source u/s 192 is required. However, the liability u/s 201(1) gets waived due to bona fide belief of the assessee. However, interest u/s 201(1A) is chargeable.
The above conclusions apply to the instant appeals as well.
In the result, the appeals of the assessee for both the years under consideration are partly allowed; two separate appeals for each year filed by the Revenue are dismissed as infructuous; and consolidated appeals of the Revenue for each of the two years are partly allowed.
Order Pronounced in the open Court on 10.03.2016.