TMI Blog2003 (3) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... y appellant to the hotel has been included by the hotel in its income disclosed to the department and advance tax has been paid thereon. ITA No. 1340/D/97 (i) On the facts and in the circumstances of the case, the learned CIT(A) has erred in holding that non-deduction of tax at source on payments made by the appellant to the hotel for accommodation of its crew members was under bona fide belief and in deleting interest charged under section 201(lA) of the Income-tax Act. (ii) On the facts and in the circumstances of the case, the learned CIT(A) has erred in deleting interest charged under section 201(1A) of the Income-tax Act, when the relief allowed in quantum appeal is subject to verification by the ACIT, TDS. ITA Nos. 1341 to 1344/D/97 (i) On the facts and in the circumstances of the case, the learned CIT(A) has erred in holding that the appellant acted honestly in not deducting tax at source on the payments made by it to the hotel for accommodation of its crew members. (ii) On the facts and in the circumstances of the case, the learned CIT(A) has erred in deciding that the demand raised against the appellant on account of short deduction of tax will stand delete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of rent. It was also stressed by the assessee that the payments made by the assessee for taking a room in the hotel includes service tax which is not there in the case of rent. The assessee before the Assessing Officer also relied upon the judgment of the Supreme Court in the case of Shri R.N. Kapoor in support of their submission as to what does the rent mean. It was the case of the assessee before the Assessing Officer that in view of the definition of rent in the judgment of the Supreme Court in R.N. Kapoor's case the payment made by the assessee for taking rooms were not the rent. That apart the assessee submitted before the Assessing Officer that in view of the confusion in the definition of rent and the applicability of the provisions of section 194-1 to the kind of payment made by the assessee for stay of its crew in hotel, they were prevented by sufficient cause and, therefore, they cannot be held to be assessee in default. The assessee also contended before the Assessing Officer that the confusion in the mind of the assessee that they are not liable to deduct TDS was further strengthened on account of the fact that the Bombay High Court had stayed the provisions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds enumerated above. At the time of the hearing of the appeal, the learned DR pressed us on ground No. 2 first. While making submissions on this ground, the learned DR submitted that there is an inherent fallacy in the reason of the CIT(A) who has observed that the short deduction of tax shall stand deleted if the payment made by the assessee to the hotel has been included by the hotel in its income disclosed to the department and advance tax have been paid through. The learned DR contended that if such a reasoning as that of CIT(A) is accepted, the provisions of Chapter XVII and more particularly of section 194 and more particularly the section pertaining to deduction of TDS shall become redundant. The learned DR further contended that if such an interpretation as advanced by the CIT(A) is accepted then any assessee in default who has not complied with the provisions of Chapter XVII would come out and say that as the recipient of the amount has disclosed the payment in its income-tax return and has paid advance tax thereon, no action against him can be taken. The learned DR further submitted that Chapter XVII has been brought into the Statute Book with a specific purpose that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DS and the provisions for the payment of advance tax though fall under the same chapter but they have different purposes. In this case, the TDS in law is required to be deducted and deducted by a person who is making the payment and with respect to the payment with respect to which the rules of deduction of TDS are applicable. He is one individual. He has a liability under the statute to discharge. The non-compliance of the provisions of the statute which direct him to deduct TDS has consequences contained within the statute itself. There he can be dealt with for failure under different provisions of the Act. The provisions for payment of advance tax are different. If a person who is obliged to pay advance tax fails to do the needful then it is he who is to face the consequences and not the person who is making the payment but not deducting the tax. 10. The obligation of one is not dependent on the other as both have different areas in which they operate and different obligations to discharge. The person cannot avoid what is required of him by the statute and if there is no passage given to such a person by law then we fail to understand as to how the CIT(A) say that the short de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed DR as the payment made by the assessee was for rent and the assessees were aware of this and the assessees having not deducting the TDS, the assessees are in default and thus CIT(A) was not justified in deleting penalty. It was the submission of the learned DR that there was no ambiguity in the provisions of the Act as to the applicability to section 194-I of the Act and, therefore, the assessee having not complied with the provisions of section 194-I, the order of the Assessing Officer needs to be confirmed. The learned DR during the course of hearing submitted that the Board has clarified the position from time to time firstly in 1995 vide Circular No. 715 dated 8-8-1995 with regard to the applicability of the provisions of section 194-I to such like payments and then vide circular No. 5 of 2002 dated 5-8-2002. It was the submission of the learned DR that as TDS has not been deducted on the payments having been admittedly made as rent for hiring the accommodations in the hotel, the natural consequences of non-compliance with the provisions of section 194-I are attracted automatically and the order of Assessing Officer needs to be restored. 16. To the arguments raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued clarified the position as to the applicability of the provisions of section 194-I of the Income-tax Act to such like payments, there had been no default and not only the tax had been deducted but paid also. 17. We have heard the parties and taken ourselves through the record. It is not in dispute that section 194-I was brought into the Statute Book with effect from1-6-1994. After the concept of the payment of rent was brought within the net of section 194-I, and subsequently clarification was issued vide circular No. 715 dated8-8-1995clarifying the position of applicability of provisions of section 194-I to such like payments. Once the department had itself issued a clarification vide circular No. 715 it means that there was some gray area in the definition of the rent as defined under section 194-I and it was for this and this reason alone the need to clarify by means of circular arose. The fact that a clarificatory circular was issued leads no room to doubt that there was definitely some re-thinking in the mind of the revenue which lead to the issuance of this circular. Once the department itself is issuing clarificatory circular, we feel that there was definitely some dou ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
