M/S STEEL STRIPS WHEELS LIMITED,CHANDIGARH vs. DCIT (TDS), CHANDIGARH

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘B’, CHANDIGARH

BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.1187/Chd/2017 (Assessment Year : 2012-13) M/s Steel Strips Wheels Limited, Vs. The D.C.I.T.(TDS), SCO 49-50, Sector 26, Sector 17E, Chandigarh. Chandigarh. PAN: AACCS3003L (Appellant) (Respondent)

Appellant by : Shri Ashwani Kumar, CA Respondent by : Shri Manjit Singh, Sr.DR Date of hearing : 07.02.2018 Date of Pronouncement : 04.05.2018

ORDER PER ANNAPURNA GUPTA, A.M.:

This appeal filed by the assessee is directed

against the order of learned Commissioner of Income

Tax(Appeals)-2, Chandigarh dated 30.5.2017 relating to

assessment year 2012-13.

assessee seeking rectification of mistake u/s 154 of the

Income Tax Act, 1961 (in short ‘the Act’), in the intimation

made u/s 200A of the Act, of levy of interest of

Rs.2,31,226/-, consequent to the Assessing Officer holding

it as assessee in default on account of late deposit of TDS

of Rs.51,38,361/- u/s 192 of the Act.

had filed its TDS return which was processed by the

Assessing Officer u/s 200A of the Act, wherein he observed

that the assessee had deducted TDS u/s 192 of the Act of

Rs.51,38,361/- which had been deposited late. The

Assessing Officer therefore levied interest of Rs.2,31,230/-

and issued demand notice u/s 156 of the Act. The assessee

applied for rectification u/s 154 which did not find favour

with the Assessing Officer.

Ld.CIT(Appeals) where the assessee contended that the

interest had been wrongly charged for delay in depositing

TDS when in fact there was no delay and the TDS had in

fact been deposited in time. It was contended that the

amount of commission in this case related to that payable

to the Managing Director of the company which was

finalized only on 29.5.2012, when the books were audited

and finalized and Board meeting was held on the said date.

The Ld. counsel for assessee submitted that thereafter,

after determining the amount of commission payable to

Managing Director amounting to Rs.51.38 lacs on

29.5.2012, the TDS pertaining to the same was deposited on

7.6.2012 i.e. within nine days of determination of the

commission payable. Further it was also contended that

no TDS was in fact deductible in the present case since the

commission paid to the Managing Director was part of his

salary on which TDS was deductible u/s 192 at the time of

actual payment. The Ld.CIT(Appeals), after considering the

assessees submissions, dismissed the appeal stating that

the case of the assessee did not come within the purview of

section 154 of the Act since the mistake pointed out was

not a glaring mistake which was apparent from record. The

Ld.CIT(A) stated that the issue of commission on profits to

the Managing Director was a debatable issue as to whether

it was taxable as business profit or as salary and, therefore

also the issue whether the assessee was liable to deduct

TDS u/s 192 or not was also debatable. Thus the Ld.CIT(A)

held that the same could not be rectified under the present

proceedings u/s 154 where only apparent and glaring

mistakes could be corrected. The relevant findings of the

Ld.CIT(Appeals) at page 5.3 of his order are as under:

“5.3 Submission of the appellant have been considered. Hon'ble Supreme Court in the case of Hero Cycles Pvt. Ltd. has laid down the law that the rectification u/s 154 can only be made when a glaring mistake of fact or law committed by the officer which is apparent from record. Rectification was not possible if the question is debatable. Whether the commission on profit to the Managing Director is a business profit or paid as salary, when the commission became payable after the board meeting and whether the liability to deduct IDS was u/s 192 or not, these are debatable points from which facts can be established by a long drawn process of reasoning. Therefore it is not a mistake apparent from record. Hon'ble Supreme Court has further held in the case of Satyanarayan Laxmi Narayan Hegde AIR 1960 that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. The case of the appellant does not come within the provisions of sec 154 and therefore the ground taken by the appellant is liable to be dismissed.” 5. Aggrieved by the same, the assessee has come up in

appeal before us, raising following grounds:

That the Ld. Commissioner of Income Tax has erred “1. in law by holding that the issue of commission on profit paid to Managing Director is debatable as to whether it is salary or business profit, whereas as per the statutory provision of Section 17(1), the commission on profit is salary and TDS on the same

is applicable at the time of payment as per the provisions of Section 192. Therefore the appeal of the assessee against the rectification order u/s 154 should have been allowed and interest of Rs.231226/- u/s 201(1 A) should have been deleted. 2. That the assessee is not in default for late deposit of TDS u/s 192 and not liable for interest amounting to Rs.231226/- u/s 201(1 A) as the TDS has been deposited in time and therefore interest of Rs.231226/- may kindly be deleted. 3. The assessee craves leave to add, alter and amend the above grounds of appeal before the same are heard or disposed of. 4. It is respectfully prayed that the relief may kindly be allowed to the assessee keeping in view of the aforesaid grounds of appeal.” 6. During the course of hearing before us, the Ld. counsel

for assessee reiterated the contentions made before the

CIT(A) stating that there was no default on the part of the

assessee pertaining to late deposit of TDS in the present

case since TDS was actually deposited within time and

moreover no TDS was deductible in the present case. The

Ld. counsel for assessee relied upon the decision of the

Coordinate Bench of the I.T.A.T. in the case of ITO (TDS)-I,

Vs. M/s Vardhman Textile Ltd. in ITA No.979/Chd/2012

dated 7.12.2012 in this regard. The Ld. counsel for assessee

further contended that the mistake was very much apparent

from the record since the return of TDS had been filed in

Form No.24Q which was the form relating to TDS deducted

on salary and, therefore, there was no debate about the

character of the income on which TDS was deductible as

stated by the Ld.CIT(Appeals).

of the Ld.CIT(Appeals).

have gone through the orders of the authorities below, as

also the documents/orders, referred/relied upon before us.

We find no merit in the present appeal. The assessee has

sought rectification u/s 154 of the Act, of the intimation

made by the AO u/s 200A of the Act on processing TDS

return filed by the assessee, vis-a-vis levy of interest on

account of late deposit of TDS. The said section, i.e. section

154, has limited application, providing for rectification of

only those mistakes which are apparent from record, which

it is now settled must be obvious, clear and patent and

should not involve two opinions. There is no dispute vis-a-

vis this proposition of law. In the present case the facts on

record emanate from the TDS return filed by the assessee in

Form No.24Q, which was processed by the AO u/s 200A of

the Act. The said return mentions the fact of amount of

Rs.1,66,29,000/-, which was paid on 31.3.2012, on which

TDS amounting to Rs.51,38,361/-was deducted and

deposited on 7.6.2012. There is no dispute vis-a-vis these

facts and also that these were the only facts which were

available on record. As per the said facts, there was a

delay of three months in deposit of TDS which again has not

been disputed by the Ld. counsel for assessee. The levy of

interest consequently on account of the delay therefore is

based very much on the facts available on record. There is

therefore no mistake apparent from record justifying any

rectification u/s 154 of the Act. The contention of the

assessee that TDS was deposited well in time is based on

the alleged fact that the payment pertained to commission

paid to managing director which was determined late only

when the books of the assessee were finalized and Board

meeting held on 29.05.2012 and thereafter TDS deducted

and deposited within 9 days. All these facts were not part of

the record at all but were in fact brought on record only

subsequently in the proceedings u/s 154 by the assessee.

The Ld. Counsel for the assessee has not been able to

demonstrate before us as to how the aforesaid facts were

available on record when the TDS return was processed by

the AO u/s 200A of the Act. So also the contention of the

assessee that no TDS was deductible in the present case, is

again based on the fact that the amount on which TDS was

deducted pertained to commission paid to managing

director, which being in the nature of salary, TDS was liable

to be deducted only on payment of commission. As stated

herein before, these facts were not part of record when the

TDS return was processed by the Assessing Officer and were

brought on record only by way of submissions made by the

assessee during proceedings u/s 154 of the Act. Moreover

,the contention of the Ld.CIT(A) that whether commission

on profit to the managing director is a business profit or

salary and hence TDS is deductible u/s 192 or not is a

debatable issue has not been controverted by the

Ld.Counsel for the assessee before us.

present case on account of late deposit of TDS amounting to

Rs.2,31,226/- was not a glaring mistake apparent from

record and thus was not rectifiable u/s 154 of the Act. We,

therefore, uphold the order of the Ld.CIT(Appeals) in this

regard and dismiss the appeal filed by the assessee.

dismissed.

Order pronounced in the open court.

Sd/- Sd/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 4th May, 2018 *Rati* Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) 4. The CIT 5. The DR

Assistant Registrar, ITAT, Chandigarh