TMI Blog2013 (9) TMI 1130X X X X Extracts X X X X X X X X Extracts X X X X ..... OGINDER SINGH(JM) AND SHRI R.C. SHARMA (AM). Appellant by : Shri Ajay Mishra Intervenor by Shri Sumit Nema Respondent by : Shri Abhishek Shukla, SR. DR ORDER: These are appeals filed by the assessee against the order of ld CIT(A) dated 12.4.2012 for the assessment year 2009-2010, in the matter of order passed u/s.201(1)/201(1A) of the I.T. Act, 1961. 2. At the outset, it is pertinent to mention here that a writ petition was filed by M/s Ssangyong Engg. Construction Co Ltd., before the Hon ble M.P. High Court against the recovery proceedings initiated by the department for short deduction of tax by the assessee National Highway Authority of India (in short NHAI ). The Hon ble M.P.High Court vide its order dated 7.8.2013 directed this Tribunal to decide the appeals of the assessee expeditiously as far as possible within a period of three months from the date of communication of the order. While disposing off the writ petition, the Hon ble High Court has also granted permission to M/s Ssangyong Engg. Construction Co Ltd., to move applications seeking intervention and also for stay of recovery of payment before the Tribunal. In compliance with the dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of taxes having been paid by the payees themselves. That, the Return of income was processed u/s 143(1) only and the payee had not fulfilled the conditions laid down in circular No. 275 dated 29/01/0997. He also held that the issuance of order on 30/06/2008 for lower deduction of tax at source was only prospective and no benefit of it could have been allowed to the assessee for the payments made prior to the date of issuance of the certificates and that certificate issued u/s 197(1) of the Act is effective only prospectively and not retrospectively. The ACIT (TDS) held that when the amount was paid, default had already been committed as it was before the issue of certificate, which does not have retrospective effect. He also held that if the contentions of the Counsel are accepted, it would mean that the payer is at liberty to determine for himself whether the company to whom he is making the payment would have taxable income or not and then may decide not to deduct the tax at source and claim that this defiance of specific provisions of section 197(3) and (2) was bonafide and in good faith. He also held that being unaware of the law is no excuse as the assessee is a regular assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there should be no occasion to warrant a conclusion that NHAI was in default in terms of Section 201 for the pending application. In view of the fact that there were no change in the facts and circumstances, that for similar payments a certificate had been granted earlier and or the unpaid amounts also, a certificate for 0.75% withholding had been granted, there was no occasion or need not to issue the certificate. True copies of the certificate issued u/s 197 form F. Y. 2006-07 to F. Y. 2009-10 and clarifications issued in 2008-09 were submitted before the lower authorities. 5. It was further contended before ld CIT(A) that in the instant case, the applications were disposed of by AO authorizing the reimbursement by deduction of tax at source @ 0.75% 1%. The certificate cannot be invalidated on the ground that it was issued subsequent to the passing of the accounting entries by the payer. It was further elaborated that it is not mandatory u/s 197(1) that the certificate should have been obtained or the application made before the date of credit. As is required under the second proviso to Section 194C (3), a certificate obtained after the date of credit but in accordance wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n law and in facts in not holding that the learned ACIT (TDS), Jabalpur grossly erred in treating the very same order passed u/s 197(1) and rejecting the same being invalid on the one hand and being passed erroneously u/s 195(3) on the other hand thus erroneously held that the whole of the payment of ₹ 75,80,29,189 liable to TDS 42.23%. 5. That, the Ld. CIT (Appeals), Jabalpur has erred both in law and in facts in holding that, the learned ACIT (TDS), Jabalpur has not committed any error of law or facts in ignoring the return filed by the payee/deductee for A.Y. 2009-10, wherein the payee has disclosed its net result declared in the return is loss and the whole amount of TDS which has been deducted by the appellant NHAI has been refunded to the payee/ deductee M/s SangYong Engineering Construction Company Ltd. 6. That, the Ld. CAT (Appeals), Jabalpur has erred both in law and in facts in holding that the determination of short deduction of TDS amounting to ₹ 31, 03, 54, 504/- and interest u/s 20l(l) amounting to ₹ 10, 86, 24, 076/- is not erroneous, arbitrary or unjustified and therefore Ld. ACIT (TDS), Jabalpur has not erred either in law or facts i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot have retrospective impact and will have no effect on the payment made prior to 30.6.2008 and being issued in defiance of provision under Rule 28AA, therefore, rendered the assessee in default in deducting the tax at source @ 2.12% and @ 1% on the payment covering the period 10.4.2008 to 24.6.2008 and 1.7.2008 to 31.3.2009. He further contended that ACIT (TDS) has exceeded his jurisdiction in rejecting the order passed under section 197(1) holding the same being issued under Rule 28AA on the ground that same being not communicated to the payer and has been passed in utter violation of Board s circular No.774 dated 17.3.1999 without appreciating the settled position of law that an order cannot be invalidated and continue to haven effect until withdrawn or cancelled by a process known to law and such order once issued, Rule 28AA(5) mandated deduction of tax in accordance with the certificate so issued , therefore, remotely not concerned with the validity or otherwise of the order/certificate. It was also contended that ACIT(TDS) grossly erred in treating the very same order passed u/s.197(1) and rejecting the same being invalid on the one hand and being passed erroneously u/s.195(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Engineering and Construction Company Ltd., with interest. In the instant case, assessee is a project implementation unit of NHAI. The assessee i.e. National Highway Authority of India had entered into contracts for development of national highway with M/s SsangYong Engineering and Construction Company Ltd. The deductee M/s SsangYong Engineering and Construction Company Ltd., with an intention to receive payment from NHAI after having it being subjected to provision of TDS as provided u/s 195 at a marginal rates obtained orders u/s 197(1) from its Assessing Officer, ITO (TDS), Ward 2 (1), International Taxation, New Delhi. The order was passed u/s.197(1) and entitled the deductee to receive payment from the assessee after being subjected to TDS provisions u/s.195(1) at a marginal rates @ 2.1% for F.Y.2006-07, 2.112% for F.Y.2007-08 and 1% for F.Y. 2008-09. The orders granted u/s 197(2) being operated for various F.Y. are detailed herein below: Order Date Period Rate of tax 26.09.06 FY 2006-07 2.1% 22.05.07 FY 2007-08 2.112% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to short deduction of tax on the payments made prior to issue of aforesaid certificate and also in respect of whole of the payments made during the financial year 2008-09 on the allegation of certain discrepancies in the said certificate. The thrust of arguments of ld A.R. was that the recipient of income M/s Ssangyong Engg. Construction Co Ltd., was not liable to tax and the return of income in the relevant assessment year duly incorporating the amount received from the assessee disclosed the net loss and even the tax already deducted at source were refunded by the department with interest. Accordingly, it was pleaded that assessment of the recipient is having a direct bearing and nexus to invoke the provisions of section 201(1)/201(1A) of the I.T.Act, 1961. With respect to validity of certificate issued u/s. 197, reliance was placed on the decision of Hon ble Rajasthan High Court in the case of Jaipur Udyog Ltgd vs CIT, 155 ITR 476. 13. Amongst various contentions, the thrust of arguments of ld A.R. was that since the recipient of the income has duly incorporated the income received from the assessee, which was not taxable as per the assessment framed u/s.143(3), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(B), dt 29-1-1997 clarifies that where the deductee assessee has paid the tax, demand under Section 201 is not visualized but this will not alter the liability of interest under Section 201 (1A) till the date of payment of taxes, by the deductee assessee. This circular supports the case of the assesses, inasmuch as this ' circular visualises the liabilities of interest till the payment of taxes, by deductee assessee. If deductee assessee has no liability of payment of taxes no interest liability under Section 201(1A) is visualised. In the present case, the deductee assessee, i.e., RVPN has no liability of tax and, therefore, the liability of interest under Section 2O1(IA) would not arise since no tax is payable by the RVPN, [Para 11.1]. In view of above and particularly in the facts of the present, case, no interest under Section 201 (IA) is leviable on the, assessee. Hence, this ground is allowed. 14. After considering the above decision on similar facts, the Coordinate Bench of ITAT Indore in the case of Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company Limited vs. ACIT(2012) 20 TTJ 594 have held as under: 7. Facts of the instant case are also pari materia, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided the issue on the main plea, we are not deliberating upon the other aspects. We direct accordingly. 15. The Hon ble Supreme Court has dealt the issue of assessee s liability under section 201(1A) in the case of Hindustan Coca Cola Beverage P. Ltd vs CIT, 293 ITR 226(SC) and held that since the deductee has already paid tax on their income, recovery of short amount of TDS from the deductor amounts to double taxation of the same income. However, interest for delay in deposit of tax was held to be leviable from the date tax was due to be deducted till the date of actual payment of tax by the deductee. 16. In the instant case before us, we found that assessment in the case of to M/s SsangYong Engineering and Construction Company Ltd., for the assessment year 2009-2010 was completed u/s.143(3) vide order dated 30.3.2011, wherein, the income was determined at a loss of ₹ 56,62,17,630/-. Thus, it is clear that recipient of income from the assessee was not required to pay any tax of its losses for the assessment year 2009-2010, as per the assessment framed u/s.143(3). Once it is held that there is no tax liability on the recipient of income i.e. to M/s SsangYong Engineerin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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