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2016 (2) TMI 296 - ITAT KOLKATA

2016 (2) TMI 296 - ITAT KOLKATA - TMI - Default for noncollection of tax at source as per the provisions of Section 206C(6A) - sale of the timber - Held that:- The assessee should not be treated as assessee in default in terms of the amended provisions of the law. From the order of the ld. CIT(A) we find that all the parties to whom the sales were made have furnished their respective returns of income. We also find that the ld. DR has not brought anything contrary to the argument of the ld.AR. A .....

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f order of Commissioner of Income Tax (Appeals)-XIX, Kolkata in appeal No.100-101/CIT(A)-XIX/Wd-57(2)/Kol/11-12 dated 08.01.2013. Assessments were framed by ITO Ward-57(2), Kolkata u/s 206C(7) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') vide his order dated 10.11.2008 for assessment years 2007-08 and 2008-09 respectively. 2. Since common grounds are involved except the change of the figures in all these appeals, therefore, they were heard together and are being dis .....

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Appeals) has misinterpreted the provision of Sec. 206C(6) & 206C(7). 3. Ground No. 3 That on the facts & circumstance of the case, the Ld. CIT (Appeals) has failed to apply his mind in the facts, and the documents as evidence produced by the appellant assessee. 4. Ground No. 4. That the Ld. CIT(Appeals)called for a remand report and the Assessing Officer came to the conclusion that all the deductee have filed the I.T Returns & paid taxes thereon. On these facts, the finding of the CI .....

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ssessee in appeal that Ld. CIT(A) erred in confirming the order of the Assessing Officer by treating assessee in default for noncollection of tax at source as per the provisions of Section 206C(6A) of the Act and raised a demand of ₹ 39,30,344/-. 3.1 Facts of the case are that assessee is a Private Limited Company is engaged in the business of wholesale of timbers. During the course of assessment proceedings, AO found that assessee has not collected the TCS at the appropriate rate from the .....

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es 0.35% 81,846/- 7 Eastern Timber Comm. Trade Pvt. Ltd. 0.25% 1,01,314/- 8 Supreme Wood Product Pvt. Ltd. 0.50% 37,079/- 9 Naini Plywood Pvt. Ltd. 0.30% 27,034/- 10 M.B. Enterprises 2.5% 2,09,970/- 11 D.D. Enterprises 0.35% 93,894/- 12 R.M.C. power Recovery (India) Pvt. Ltd. 2.5% 12,16,089/- 38,34,653 Add: Sc 95,691 On query for said default, assessee submitted that buyers of the timber have paid the taxes in their respective returns of income, so assessee should not be treated as assessee in d .....

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e case of Coca-cola Beverage Pvt. Ltd. vs CIT(2007) 293 ITR 226 (SC) wherein it was held that "the tribunal came to the right conclusion that the tax once again could not be recovered from the appellant (deductor assessee) since the tax has already been paid by the recipient of income. However the ld. CIT(A) has disregarded the plea of the assessee by observing as under : "15. It is in this background that the decision rendered by the Hon'ble Supreme Court in the case of Coca Cola .....

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ime of collection is integral part of such provision. Because of such intrinsic character of TDS provision it is considered to be the most important tool of tax collection and it is required that strict and harmonious interpretation of TDS provisions should be given. The manner in which the judgment of Hon'ble Supreme Court in Coca-Cola is interpreted by the appellant it is unjustified and against the objective of DS provisions. Such interpretation will make the entire TDS provisions redunda .....

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e tax 17. The facts of the case of Coca Cola (P) Ltd. very much corroborate with such observation as in that case the AO was of the view that the ware-housing charges paid by the assessee Coca Cola (P) Ltd. (deductor) of M/s Pradeep Oil Corporation (deductee) was in fact rent and TDS should have been deducted u/s. 194I at higher rate than the tax deducted by the deductor @ 2% treating it as contractual payment. It is in this background and fact that the Hon'ble Supreme Court held that no fur .....

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t the tax has already been paid by the deductee. On the basis of above judgement of Coca Cola even if it is presumed that the deductee has already paid the tax the assessee cannot get relief on the basis of such judgment because of gross violation of TDS provision with no direct proof that the deductee has already paid the tax in contrast to case of Coca Cola (P) Ltd, where there was honest violation of TDs provision. In view of above stated discussions I am of the considered view that the decis .....

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icable in the case of appellant. 26. In view of above stated discussions I am of the considered view that the action of the AO is as per law and the total amount payable by the assessee at ₹ 46,77,109/- is confirmed on merit. All the grounds of appeal raised by the appellant stand disposed off accordingly." Being aggrieved by this order of Ld. CIT(A) assessee preferred second appeal before us. Shri Saumitra Chowdhury, Ld. Authorized Representative appearing on behalf of assessee and S .....

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low. 5.1 From the aforesaid discussions we find that the assessee failed to collect the TCS at the time of selling the timber to the parties as per the provisions of law. Accordingly the AO treated the assessee in default and raised the demand of the tax. However the ld. AR demonstrated that the parties to whom the timbers were sold have filed their income tax returns and relied in the judgment of Hon'ble Apex Court in the case of Coca-cola Beverage Pvt. Ltd. vs CIT(2007) 293 ITR 226 (SC). R .....

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eived from a buyer or licensee or lessee or on the amount debited to the account of the buyer or licensee or lessee shall not be deemed to be an assessee in default in respect of such tax if such buyer or licensee or lessee- (i) Has furnished his return of income under section 139; (ii) Has taken into account such amount for computing income in such return of income; and (iii) Has paid the tax due on the income declared by him in such return of income; We also relied on the order of ITAT Ahmedab .....

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the buyer has taken into account such sum on which tax was required to be collected at source under section 206C for computing income in such return of income, (ii) the buyer has paid the tax due on the income declared by him in such return of income, (iv) the i.e, the person responsible for collecting the tax at source under section 206C, has furnished a certificate inform 27BA confirming the aforesaid; (2) rationalise the provisions relating to collection of tax at source; (3) provide relief .....

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er ensuring that the interest of the Revenue is well protected, the proviso would apply retrospectively." 21. Further, we find that under the scheme of Income Tax Act, the provision of TDS and TCS has been enacted to facilitate the collection of tax which is leviable on the recipient of the income as per provision of section 4 of the Act. In other words, TDS or TCS is not a separate tax, but they are to facilitate the collection of tax which is chargeable u/s. 4 of the AC primarily from the .....

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