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COMMISSIONER OF INCOME TAX Versus LABH CONSTRUCTION & IND. LTD

2015 (8) TMI 515 - GUJARAT HIGH COURT

Interest payment under Section 201(1A) on late payment of TDS - Tribunal confirming the order passed by the CIT (A) directing the A.O. to recalculate the interest payment from the date of deduction of TDS to the date of assessment of payee or after the date of actual payment of TDS, whichever is earlier - Held that:- In our opinion, when the assessee company had to pay the tax on behalf of the payee companies and when the payee companies themselves had not to pay any tax, subsequent to such decl .....

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a & Ors. (2001 (10) TMI 4 - SUPREME Court) would not be applicable to the present case. - Decided in favour of assessee. - TAX APPEAL NO. 1970 of 2006 With TAX APPEAL NO. 1971 of 2006 - Dated:- 3-8-2015 - MR. A.J.DESAI AND MR. A.G.URAIZEE, JJ. FOR THE APPELLANT : MR MR BHATT, SR. ADVOCATE for MRS MAUNA M BHATT, DVOCATE FOR THE OPPONENT : MR. B.S.SOPARKAR, ADVOCATE for MRS SWATI SOPARKAR, ADVOCATE JUDGMENT (PER : HONOURABLE MR.JUSTICE A.J.DESAI) 1. These two appeals filed by the Commissioner of I .....

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ate of actual payment of TDS, whichever is earlier ? 2. The issue involved in the present case is with regard to interest payable by the respondent assessee company under the provisions of 201(1A) of the Act for the assessment year 1997-989 and 1998-99. 3. The brief facts arise from the record are as under: 3.1. That survey was conducted on respondent assessee company under the provisions of Section 133(A) of the Act on 06.03.2000, wherein the statement of the director of the company under Secti .....

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than company amounting to ₹ 23,66,890/-. It was also noticed that those two parties namely Labh Estate Organizers Pvt. Ltd and M/s. Labh Organizer Pvt. Ltd., though tax was deducted at source to the tune of ₹ 4,46,120/- and ₹ 5,23,770/- respectively, the same was not deposited with the Government. 3.2. The Assessing Officer treated the assessee company in default and demanded of ₹ 14,39,835/- (amount of ₹ 9,69,890/- as TDS + ₹ 4,69,945/- as interest by its ord .....

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assessment of those two companies were made and not subsequent to the said date i.e. till the date when the TDS was deposited by the respondent assessee company. 3.3. The said decision was challenged by the revenue by way of preferring the appeal before the Income Tax Appellate Tribunal (Ahmedabad), Bench B (herein after referred to as the Tribunal for short). The said appeal was heard along with other appeals preferred by the respondent assessee company. However, a common order was passed by t .....

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o credit since the same was deduced at the time of payment to those two companies (herein after referred to as the payee companies for short). He would further submit that it is an undisputed fact that though the assessee company had paid the amount after deducting the TDS, the said tax was not credited with the revenue within prescribed period. 5. Since the respondent assessee company had deposited the said TDS at belated stage, the provisions of Section 201(1A) of the Act would be applicable. .....

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nterest till that date. 6. He would further submit that plain reading of Section 201(1A) of the Act makes it clear that the defaulting assessee company in depositing the tax at belated stage is bound to pay the tax till the tax is actually paid by him and not till the date of the assessment made with regard to the payee companies. 7. By relying upon the decision in case of Commissioner of Income Tax V. Anjum M.H.Ghaswalla & Ors. reported in (2001) 252 ITR 1, he would submit that the Tribunal .....

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ppeals) as well as the Tribunal interpreting the portion of Section 201(1A) of the Act, that interest would be leviable only upto the date of the assessment of the payee companies, is not required to be disturbed since it has been accepted by the Assessing Officer that both the payee companies were running in the losses and were not required to pay any tax under the provisions of the Act. 10. It was argued by Mr.Soparkar, learned advocate that on behalf of the assessee company that the asessee c .....

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artment, the asessee company cannot be compelled to pay any interest on the TDS subsequent to such decision. By relying upon the decision in case of Commissioner of Income Tax V. Rishikesh Apartments Co-op. Housing Society Ltd. reported in (2001) 119 Taxman 239 (Gujarat), he would submit that there is no loss, whatsoever in nature, caused to revenue on account of delay payment of TDS and therefore, would not be entitled to charge any interest subsequent to assessment of payee companies. He would .....

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Hindustan Coca Cola Beverage P. Ltd. V. Commissioner of Income Tax reported in [(2007) 293 ITR 226 (SC)], he would submit that it has been held by the Apex Court that there cannot be double taxation if the department has already received tax from the payee company since the payee company had to pay the tax. He would further submit that in the present case, the Assessing Officer has held that the payee company was not liable to pay any tax and therefore, the CIT (Appeals) and the Tribunal have no .....

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anies namely Labh Estate Organizers Pvt. Ltd and M/s. Labh Organizer Pvt. Ltd. were assessed for two years i.e. 1997-98 and 1998-99 and the Assessing Officer has held that the said companies were not liable to pay any tax under the provisions of the Act. It was accepted by the officers that both the companies were running in losses and considering their income and expenditure, it was held that they are not liable to pay any tax. 13. As far as respondent assessee company is concerned, it is an ad .....

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pay the same within prescribed period, the case would fall under Section 201(1A) of the Act. For ready reference, the relevant part is produced as under: 201(1) If any such person and in the cases referred to in Section 194, the principal officer and the company of which he is the principal officer does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall, without prejudice to any other consequences which he or it may incur, be deemed to be an asses .....

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r after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest at [fifteen] per cent per annum on the amount of such tax from the date on which tax was deductible to the date on which such tax is actually paid.] (2) Where the tax has not been paid as aforesaid after it is deducted, [the amount of the tax together with the amount of simple interest thereon referred to in sub-section (1A)] shall be a charge upon all the assets of the person .....

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t of TDS even though, subsequent to the date of the declaration that the payee companies had not to pay any tax for those financial years. In our opinion, when the assessee company had to pay the tax on behalf of the payee companies and when the payee companies themselves had not to pay any tax, subsequent to such declaration with regard to payee companies, no interest can be leviable against the company since there would be no loss of revenue in whatsoever manner. The case of Commissioner of In .....

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taxes as it was liable to pay the same. It was held that no interest can be refunded under Section 201(1A) of the Act on the delayed payment or on non-deduction of TDS by the assessee. In the present case, the respondent assessee company had already paid the TDS with interest. However, in our opinion, the CIT (Appeals) and the Tribunal had not committed any error in holding that the assessee was liable to pay the interest under Section 201(1A) of the Act. 16. It cannot say that though the payee .....

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201(1A) of the Act, as far as the assessee company is concerned. 17. Para - 11 and 12 of the case of Commissioner of Income Tax V. Rishikesh Apartments Co-op. Housing Society Ltd. (supra) are relevant and the same is re-produced as under: 11. If one looks at the facts of the present case, it is not in dispute that Ravin Builder, on whose behalff the tax was to be deducted and paid under Section 194C, had paid more amount of tax by way of advance tax and than what was payble and had also paid ta .....

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elied upon by Mr. Qureshi cannot help the revenue for the reason that in the said case it was not known whethere the person on whose behalf the tax was to be paid to the revenue had in fact paid the tax payable by him. In the instant case, the contractor, viz., Ravi Builder, had admittely paid the amount of tax payable by it and, thus, no loss of whatsoever nature had been caused to the revenue on account of non-deduction of tax at source by the assessee. 12. From the legal provisions discussed .....

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