The Hindustan Corporation (Hyd) ... vs Assessee

ITA No.819/Hyd/2014 : Assessment year 2008-09 ITA No.820/Hyd/2014 : Assessment year 2009-10 ITA No.821/Hyd/2014 : Assessment year 2010-11 ITA No.1723/Hyd/2014 : Assessment year 2011-12

M/s. Ratna Infrastructure V/s. Dy. Commissioner of Income-tax Projects P. Ltd., Hyderabad Circle 15(1), Hyderabad

(PAN - AADCR 5836 P)

(Appellant) (Respondent)

Appellant by : Shri Mohd. Afzal

Respondent by : Shri Ramakrishna Bandi DR

Date of Hearing 13.07.2015 Date of Pronouncement 15.07.2015

ORDER

Per P.M. Jagtap, Accountant Member :

These four appeals field by the assessee are directed against four separate orders passed by the learned Commissioner of Income-tax(Appeals) II, Hyderabad -three dated 1.2.2014 for assessment years 2008-09 to 2010-11 and one dated 26.8.2014 for assessment year 2011-2012- whereby she upheld substantially the orders passed by the Assessing Officer under S.201(1)/201(1A) of the Income Tax Act,1961, treating the assessee as default for its failure to deduct tax at source from the various payments and also imposing interest thereon.

2. The assessee in the present case is a company, which is engaged in the business of execution of civil contracts. In order to 2 ITA No.135 & 279/Hyd/2015 M/s. Ratna Infrastructure Projects P. Ltd., Hyderabad

verify the compliance of TDS provisions by the assessee, a survey under S.133A was carried out in its case on 9.10.2009. As found during the course of survey, the assessee had taken loans for the purchase of machinery and vehicles under hire purchase agreements from various companies, and no tax was deducted from the interest paid on the said loans, as required by the provisions of S.194A. In this regard, the explanation offered by the assessee that the said payments having been made towards the hire charges as per the hire purchase agreement, tax at source was not liable to be deducted under S.194A, was not found acceptable by the Assessing Officer. According to him, the relevant transactions claimed to be that of hire purchase were actually financial transactions as per the relevant terms and conditions and the assessee, therefore was liable to deduct tax at source from the payment of interest charges made to various companies. Since no such tax was deducted at source by the assessee company, the Assessing Officer treated the assessee as in default for such TDS amounts and also charged interest in relation to such amounts for all the four years under consideration .

3. As further noted by the Assessing Officer, there was also default on the part of the assessee of non-deduction or short deduction of tax at source, as required by the provisions of S.194C, 194H, 194I and 194J of the Act. Accordingly, the assessee was treated as in default by the Assessing Officer for such failures also under S.201(1) of the Act, and corresponding interest was also charged by him under S.201(1A).

4. Against the orders passed by the Assessing Officer under S.201(1) and S.201(1A) of the Act for all the four years under consideration, appeals were preferred by the assessee before the learned CIT(A), and after considering the submissions made by 3 ITA No.135 & 279/Hyd/2015 M/s. Ratna Infrastructure Projects P. Ltd., Hyderabad

the assessee as well as the material available on record, including the remand report received from the Assessing Officer, the learned CIT(A) upheld the orders passed by the Assessing Officer under S.201(1) treating the assessee as in default for its failure to deduct tax at source from the payment of interest as required by the provisions of S.194A, except to the extent such interest was paid to some parties who had obtained exemption under S.197(1) of the Act. She also by and large upheld the orders of the Assessing Officer passed under S.201(1) treating the assessee as in default for its failure to deduct tax at source as required by the provisions of S.194C, 194H, 194I and 194J. The action of the Assessing Officer imposing the interest under S.201 of the Act was also substantially upheld by the learned CIT(A). Aggrieved by the orders of the learned CIT(A), assessee has preferred these appeals before this Tribunal.

5. We have heard the arguments of both the sides and also perused the relevant material on record. Although the assessee has raised several grounds in these appeals challenging the action of the learned CIT(A) in upholding the orders passed by the Assessing Officer under S.201(1)/201(1A) substantially, treating it as in default for its failure to deduct tax at source, as required by the provisions of S.194A, 194C, 194I and 914J of the Act, the learned counsel for the assessee, at the time of hearing before us, has raised only one contention relying on the decision of the Hon'ble Supreme Court in the case of Hindustan Beverages Coca-Cola P. Ltd. V/s. CIT (293 ITR 226) that the concerned recipient/payee having declared the corresponding amounts received from the assessee as their income and also having paid taxes thereon, assessee cannot be treated as in default under S.201(1) for the same amount of taxes, which have already been paid by the payee. He has urged that an opportunity may be given 4 ITA No.135 & 279/Hyd/2015 M/s. Ratna Infrastructure Projects P. Ltd., Hyderabad

to the assessee to support and substantiate its stand by producing the relevant documentary evidence before the Assessing Officer, who may be directed to allow appropriate relief to the assessee by verifying the said evidence, in the light of the decision of the Hon'ble Supreme Court in the case of Hindustan Beverages Coca- Cola P. Ltd. (supra). Since the Learned Departmental Representative has also not raised any objection in this regard, we restore these matters to the file of the Assessing Officer for the limited purpose of allowing the assessee an opportunity to support and substantiate its case by producing the relevant documentary evidence to show that the concerned payees have already paid tax on the corresponding payments received from the assessee during all the four years under consideration. On verification of the said documentary evidence, the Assessing Officer shall allow appropriate relief to the assessee in the light of the decision of the Hon'ble Supreme Court in the case of Hindustan Beverages Coca-Cola P. Ltd. (supra). The Assessing Officer is also directed to recompute the interest payable by the assessee under S.201(1A) as per the decision of the Hon'ble Supreme Court in the case of Hindustan Beverages Coca-Cola P. Ltd. (supra). He shall, of course, afford reasonable opportunity of hearing to assessee, before passing appropriate orders in these matters.

6. In the result, all the four appeals of the assessee are treated as partly allowed for statistical purposes.

Order pronounced in the court on 15th July, 2015.

Sd/- Sd/- (Saktijit Dey) (P.M.Jagtap) Judicial Member Accountant Member

Dt/- 15th July, 2015 5 ITA No.135 & 279/Hyd/2015 M/s. Ratna Infrastructure Projects P. Ltd., Hyderabad

Copy forwarded to:

1. M/s. Ratna Infrastructure Projects P. Ltd., C/o. Mohd. Afzal, Advocate, 121-5-475 Sherson's Residency, Flat No.402, Criminal Court Road, Red Hills, Hyderabad 500 004.

2. Dy. Commissioner of Income-tax Circle 15(1), Hyderabad

3. Commissioner of Income-tax(Appeals) II, Hyderabad

4. Commissioner of Income-tax TDS, Hyderabad

5. Departmental Representative, ITAT, Hyderabad.

B.V.S