TMI Blog2017 (11) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... cate, filed before the CIT(A) can also be examined, keeping in mind the observations of the CIT(A) in the alternate, plea discussed in para 12 of the order of the CIT(A). Therefore, AO is directed to examine about the nature of services and which of the services are coming u/s. 194J, then examine whether a demand u/s. 201(1) can be raised in AYs. 2013-14 and 2015-16. If assessee satisfies that the deductees have paid taxes thereon on the incomes, no demand u/s. 201(1) can be raised. We are of the opinion that to the extent of levy of interest u/s. 201(1A) is concerned, the issue is to be examined whether any of these services are required to be considered u/s. 194J. In case any of the services are considered to be covered u/s. 194J, then AO is statutorily required to levy interest u/s. 201(1A) even though no demand is raised u/s. 201(1). This requires a separate consideration by the AO. The issue of levy of interest u/s. 201(1A) for the duration of interregnum period i.e., from the date of payment on which TDS was to be made and to the dates payment of tax by the deductees is required to be levied after due examination of the facts. AO is directed to examine the facts and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed payments. The demand was also raised on certain payments to Varsity in AY. 2013-14 u/s. 201 and in AY. 2015-16 on entire payments on the reason that the assessee is failed to furnish necessary details of remittance of tax by the deductees in those years. 3. Ld.CIT(A) on appeals by assessee in his detailed orders, extracted the order of the AO from pages 3 to 27, extracted written submissions from 27 to 59 and detailed submissions of AO from 59 to 79 and thereafter considered the issue mostly on legal principles from pages 79 onwards to 96. His conclusions are that assessee has correctly deducted tax holding that the agreements are for works contract and so there is no violation under the TDS provisions. Accordingly, he has cancelled both levy of tax u/s. 201(1) and levy of interest u/s. 201(1A). His conclusions in para 11 12 (AY. 2015-16) are as under: 11. In the light of the foregoing discussion, both on fact and law, following are the findings: That the nature of work performed by the companies falls under the ambit of section 194C. The appellant has appropriately deducted tax to source at the rate of 2% and deposited the same to the credit of Central Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 194J and therefore, cannot be treated as assessee In default for the purpose of Section 201(1), Ground No.5 becomes academic for the purpose of this order. Hence, the Ground No.5 is dismissed . 4. Revenue is aggrieved in all the years and raised the grounds accordingly. For the sake of record, the grounds raised in AY. 2015-16 are extracted hereunder: 1. Whether on the facts and in the circumstances, of the case, the Ld.CIT(A) did not err in deleting the demand amount of Rs,12,15,69,252/- raised under section 201(1) of the Income Tax Act)? 2. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) did not err in deleting the interest amount of ₹ 1,43,40,069/- charged under section 201(1A) of the Income Tax Act? 3. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) did not err in deleting the Interest charged under section 201(1A) of the Income Tax Act by holding that the assessee cannot be treated as the assessee in default under section 201(1) of the Act? 4. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) did not err in deleting the demand raised under section 201(1) and intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent details of the deductees in time so that the demand has been raised, but proviso to Section 201(1) is applicable as the deductees remitted taxes. It was for this reason that Ld.CIT(A) deleted the demands u/s. 201(1). It was further submitted that Ld.CIT(A) also considered the alternate submissions in para 12 of the order. Therefore, the grounds pertaining to Section 201(1) should not survive. 6.1. As far as interest u/s. 201(1A), it was submitted that even in case where tax was to be deducted u/s. 194J, since the deductees have already filed returns by payment of advance tax itself, the period of interest leviable will become zero and therefore, there can be no levy of interest u/s. 201(1A), following the principles laid down by the Hon'ble Karnataka High Court in the case of CIT (TDS) Vs. Bharat Hotels Ltd., [384 ITR 77] (Karn). It was the submission that even if the issue is remitted on the nature of services being rendered, the interest u/s. 201(1A) may not arise as those assessees have paid advance tax in respective years and placed on record a chart containing income declared, advance tax paid to submit that no interest was leviable. Hence, the orders of the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10% 1,01,90,034.30 Examination assessments 194J 1,22,49,404.00 10% 12,24,940.00 Accounts Records 194J 37,43,521.00 10% 3,74,352.10 Content Dev. curriculum Improvement services 194J 1,22,58,852.00 10% 12,25,885.20 Brand Royalty fee 194J 51,88,500.00 10% 5,18,850.00 More or less, similar services are being provided by K12 and Varsity to the assessee. We were informed that consequent to the survey operations, the assessee has changed its opinion and taxes are being deducted u/s. 194C and 194J, as directed by the AO. However, we are not informed which of the services rendered were considered for Section 194J. As far as the impugned years are concerned, by virtue of amendment to Section 201(1), wherein the proviso was inserted, Ld.CIT(A) has given relief as no demand u/s. 201(1) can be raised as the deductees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts Section 194J. As rightly held by the Co-ordinate Bench in the case of Sri Gowtham Academy of General Technical Education Vs. Dy. Commissioner of Income Tax, in ITA No. 433/Hyd/2015 (AY. 2012- 13) dt. 03-02-2017, certain services are covered u/s. 194C where as certain certain other services are covered u/s. 194J. The order of the Co-ordinate Bench in paras 8, 9 and 10 is as under: 8. From the perusal of the above, it is clear that the services rendered by M/s K12 Techno Services Pvt. Ltd. are distinguishable from each other and though the recipient of all the payments is a single party, the nature of the services are discernible and different. If the contention of the Revenue was to be accepted, then why should the TDS be deducted u/s 194J and not u/s 194C for all the payments treating the entire agreement as a work contract?. When the basket of services is filled with different and distinguishable services, we are of the opinion that the assessee was correct in adopting different rates of TDS for different types of payments. 9. The decisions relied upon by the Ld. AO and the CIT(A) are distinguishable from the facts of the case before us. In the case of EMC Vs Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidering the levy of interest u/s. 201(1A), we notice that there is a merit in assessee s contention that those deductees have paid taxes and therefore, following the principles laid down by the Hon'ble Karnataka High Court in the case of CIT (TDS) Vs. Bharat Hotels Ltd., [384 ITR 77] (Karn), there cannot be any interest u/s. 201(1A). Assessee filed a statement that those deductees have paid advance taxes also. However, these are required to be examined by the AO, in the light of the taxes paid and returns filed. The Hon'ble Kerala High Court in the case of US Technologies International P. Ltd., Vs. CIT [195 Taxmann 323] (Ker) has held that the provisions of Section 271C are applicable not only for failure to deduct tax but also failure to remit the tax deducted into Govt. account. Under those facts, the Hon'ble High Court of Kerala has considered that corresponding interest u/s. 201(1A) is required to be paid. Therefore, the issue of levy of interest u/s. 201(1A) for the duration of interregnum period i.e., from the date of payment on which TDS was to be made and to the dates payment of tax by the deductees is required to be levied after due examination of the facts. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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