Income Tax Appellate Tribunal - Amritsar
Dgm, Bsnl, Ntr,, Jalandhar vs Assessee on 12 February, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR.
BEFORE SH. A.D.JAIN, JUDICIAL MEMBER
AND SH. B.P.JAIN, ACCOUNTANT MEMBER
I.T.A. Nos.559, 560, 561 & 562(Asr)/2013
Assessment years:2007-09, 2008-09, 2009-2010 & 2010-11
PAN :AABCB5576G
The DGM, BSNL, NTR vs. Income Tax Officer,
MTCE, Master Tara Singh Nagar, TDS-II,
Jalandhar. Jalandhar.
(Appellant) (Respondent)
Appellant by:Sh.Ravish Sud, Advocate
Respondent by:Sh.Tarsem Lal, DR
Date of hearing:29/01/2015
Date of pronouncement:12/02/2015
ORDER
PER B.P.JAIN,AM:
These four appeals of the assessee arise from the consolidated order of the CIT(A), Jalandhar dated 18.04.2013 for the assessment years 2007-08, 2008-09, 2009-2010 & 2010-11. The issues involved in all the appeals are common and therefore, all the appeals are being taken up by this consolidated order for the sake of convenience as under.
2. In ITA No.559(Asr)/2013 for the A.Y. 2007-08, the assessee has raised the following grounds of appeal:
2 ITA Nos. 559 to 562(Asr)/2013
"1. That the CIT(A) has erred in law and facts of the case in sustaining the order passed by the AO u/s 201(1) & 201(IA) of the Income tax Act, 1961.
2. That the CIT(A) misconceiving the facts of the case read in light of the settled position of law had therein erred in holding the assessee as being in default u/ss.201(1)(201(1A) of the 'Act' as regards the payments made to M/s. Nagpal Hospital, M/s. Escorts Hospital and M/s. Ghai Hospital.
3. That the CIT(A) had gravely erred in law and facts of the case by holding the assessee as being in default u/ss. 201(1) & 201(1A) in respect of payments made to Sh. Devi Talab Hospital, DMC and ASCON.
4. That the CIT(A) erred in failing to appreciate that Sec. 194J contemplates deduction of tax at source only with respect to fees for 'Professional services', therefore even otherwise the assessee could not be held to be in default as regards the payments made to the hospitals, in toto, as such.
5. That without prejudice to the aforesaid, the CIT(A) even otherwise erred in failing to appreciate that now when the 'tax due' had been deposited by the respective deductees, therein the assessee in light of the settled position of law could no longer be held as being in default u/s 201(1) and further be fastened with interest u/s 201(1) beyond the date of deposit of taxes by the deductees.
6. That the CIT(A) had gravely erred in law and facts of the case by partly sustaining the order of the AO holding the assessee as being in default u/s 201(1) and 201(1A) and therein sustaining the consequential demand of Rs.41,184/- and Rs.14,826/- under the respective sections in the hands of the assessee.
7. Any other ground of appeal as may be allowed to be raised at the time of hearing of the appeal."3 ITA Nos. 559 to 562(Asr)/2013
3. In ITA No.560(Asr)/2013 for the AY. 2008-09, the assessee has raised the following grounds of appeal:
"1. That the CIT(A) has erred in law and facts of the case in sustaining the order passed by the AO u/s 201(1) & 201(IA) of the Income tax Act, 1961.
2. That the CIT(A) misconceiving the facts of the case read in light of the settled position of law had therein erred in holding the assessee as being in default u/ss.201(1)(201(1A) of the 'Act' as regards the payments made to M/s. Tagore Hospital, Nayyar Hospital, M/s. Ghai Hospital and M/s. Escorts Hospital.
3. That the CIT(A) had gravely erred in law and facts of the case by holding the assessee as being in default u/ss. 201(1) & 201(1A) in respect of payments made to M/s. Sacred Heart Hospital, Sh. Devi Talab Hospital, DMC, Ludhiana and M/s. ASCON.
4. That the CIT(A) erred in failing to appreciate that Sec. 194J contemplates deduction of tax at source only with respect to fees for 'Professional services', therefore even otherwise the assessee could not be held to be in default as regards the payments made to the hospitals, in toto, as such.
5. That without prejudice to the aforesaid, the CIT(A) even otherwise erred in failing to appreciate that now when the 'tax due' had been deposited by the respective deductees, therein the assessee in light of the settled position of law could no longer be held as being in default u/s 201(1) and further be fastened with interest u/s 201(1) beyond the date of deposit of taxes by the deductees.
6. That the CIT(A) had gravely erred in law and facts of the case by partly sustaining the order of the AO holding the assessee as being in default u/s 201(1) and 201(1A) and therein sustaining the consequential demand of Rs.1,00,207/- and Rs.24,050/- under the respective sections in the hands of the assessee.4 ITA Nos. 559 to 562(Asr)/2013
7. Any other ground of appeal as may be allowed to be raised at the time of hearing of the appeal."
4. In ITA No.561(Asr)/2013, for the A.Y. 2009-10, the assessee has raised the following grounds of appeal:
"1. That the CIT(A) has erred in law and facts of the case in sustaining the order passed by the AO u/s 201(1) & 201(IA) of the Income tax Act, 1961.
2. That the CIT(A) misconceiving the facts of the case read in light of the settled position of law had therein erred in holding the assessee as being in default u/ss.201(1)(201(1A) of the 'Act' as regards the payments made to M/s. Tagore Hospital, Nayyar Hospital, M/s. Kamal Hospital and M/s. Ghai Hospital.
3. That the CIT(A) had gravely erred in law and facts of the case by holding the assessee as being in default u/ss. 201(1) & 201(1A) in respect of payments made to M/s. Sacred Heart Hospital, M/s. CMC, Ludhiana and M/s. ASCON.
4. That the CIT(A) erred in failing to appreciate that Sec. 194J contemplates deduction of tax at source only with respect to fees for 'Professional services', therefore even otherwise the assessee could not be held to be in default as regards the payments made to the hospitals, in toto, as such.
5. That the CIT(A) misconceiving the facts of the case read in light of the settled position of law had therein erred in holding the assessee as being in 'default' u/ss.201(1) & 201(1A) of the Act as regards the payment of Rs.3,58,387/- made to M/s. Mohan Devi Cancer Hospital.
6. That the CIT(A) misconceiving the facts of the case read in light of the settled position of law had therein erred in holding the assessee as being in 'default' u/ss. 201(1) & 201(1A) of the 5 ITA Nos. 559 to 562(Asr)/2013 Act as regards the impugned payment towards 'Commission' made to M.S.T.C.
7. That without prejudice to the aforesaid, the CIT(A) even otherwise erred in failing to appreciate that now when the 'tax due' had been deposited by the respective deductees, therein the assessee in light of the settled position of law could no longer be held as being in default u/s 201(1) and further be fastened with interest u/s 201(1) beyond the date of deposit of taxes by the deductees.
8. That the CIT(A) had gravely erred in law and facts of the case by partly sustaining the order of the AO holding the assessee as being in default u/s 201(1) and 201(1A) and therein sustaining the consequential demand of Rs.92,654/- and Rs.11,118/- under the respective sections in the hands of the assessee.
9. Any other ground of appeal as may be allowed to be raised at the time of hearing of the appeal."
5. In ITA No.562(Asr)/2013 for the assessment year 2010-11, the assessee has raised the following grounds of appeal:
"1. That the CIT(A) has erred in law and facts of the case in sustaining the order passed by the AO u/s 201(1) & 201(IA) of the Income tax Act, 1961.
2. That the CIT(A) misconceiving the facts of the case read in light of the settled position of law had therein erred in holding the assessee as being in default u/ss.201(1)(201(1A) of the 'Act' as regards the payments made to M/s. Tagore Hospital, m/S. Khanna Nursing Home and M/s. Joshi Hospital.
3. That the CIT(A) erred in failing to appreciate that Sec. 194J contemplates deduction of tax at source only with respect to fees for 'Professional services', therefore even otherwise the assessee could not be held to be in default as regards the payments made to the hospitals, in toto, as such.6 ITA Nos. 559 to 562(Asr)/2013
4. That the CIT(A) misconceiving the facts of the case read in light of the settled position of law had therein erred in holding the assessee as being in default u/ss. 201(1) & 201(1A) as regards the payment of Rs.1,91,627/- made to M/s. Mohan Dai Cancer Hospital.
5. That without prejudice to the aforesaid, the CIT(A) even otherwise erred in failing to appreciate that now when the 'tax due' had been deposited by the respective deductees, therein the assessee in light of the settled position of law could no longer be held as being in default u/s 201(1) and further be fastened with interest u/s 201(1) beyond the date of deposit of taxes by the deductees.
6. That the CIT(A) had gravely erred in law and facts of the case by partly sustaining the order of the AO holding the assessee as being in default u/s 201(1) and 201(1A) and therein sustaining the consequential demand of Rs.90,315/- in the hands of the assessee.
7. Any other ground of appeal as may be allowed to be raised at the time of hearing of the appeal."
6. The assessee has furnished an application for additional evidence in the form of certificates, copies of returns of income obtained from various hospitals for the assessment years 2007-08 to 2010-11. It was submitted that the said documents could not be produced due to non-cooperative attitude and lapses on the part of the respective payees. These could be gathered only after the culmination of the proceedings before the lower authorities since the payments have duly been credited by the hospitals the payees in their respective profit & loss account and pursuant thereof subjected to taxes in view of the judgment of Hon'ble Supreme Court in the case of 'Hindustan 7 ITA Nos. 559 to 562(Asr)/2013 Coca Cola Beverage (P) Ltd. vs. CIT' reported in (2007) 293 ITR 226 (SC) and CBDT Circular No.275/201/95/IT(B), dated 29.01.1997, the assessee no more remains in default u/s 201(1) & 201(1A) of the Act. In the application with the production of additional evidence under Rule 19 of the Income Tax (Appellate Tribunal) Rules, 1963, the assessee also submitted, in addition a chart, explaining the hospital-wise details of additional evidences produced and the outcome of each hospital the payee by the decision of the ld. CIT(A).
7. The Ld. DR objected to the admission of the said additional evidences and the said chart containing the details, contending that since they were not filed before the Authorities below, the assessee cannot do so now.
8. We have heard the rival contentions and perused the facts of the case and find constructive reasoning in submitting the additional evidences and chart containing the details before us, which will enable us to pass the order in view of the decision of the Hon'ble Supreme Court, in the case of 'Hindustan Coca Cola Beverage (P) Ltd. vs. CIT' (supra). The additional evidence is accordingly admitted.
9. The brief facts in all the years i.e. assessment years 2007-08 to 2010- 11 are that a TDS inspection was carried out at the premises of assessee on 05.01.2010 and it was found that the person responsible had not deducted 8 ITA Nos. 559 to 562(Asr)/2013 any tax at source on payment to various hospitals on account of medical services i.e. the cash less medical services provided to its employees. No explanation for non-deduction of taxes was filed before the AO. The AO in respect of assessment years 2007-08 to 2010-11 has treated the person responsible as assessee in default in respect of tax not deducted and interest thereon under section 201 and 201(1A) of the Act respectively. In the assessment year 2009-10 apart from non-deduction of tax on payments made to hospitals, it was also noticed that on commission payment to M/s. M.S.T.C. for making sale of scrap and also on perquisites of certain employees in the form of providing rent free accommodation, no TDS was made and the assessee being person responsible was treated to be assessee in default under section 201/201(1A) of I.T. Act.
10. ITA No.559(Asr)/2013 for A.Y. 2007-08: The Ld. CIT(A) vide para 7 has decided the issue at pages 3 to 7 of his order, which is reproduced for the sake of convenience hereinbelow:
"7. Alongwith the written submission, the bifurcation of payments made to different hospitals is filed and in certain cases the certificates from the hospitals that they reflected the receipts from the assessee in their profit and loss accounts are filed. In certain cases, the certificates to the effect that the concerned hospitals income was exempt from taxation were also filed.
(i) AY 2007-08: From the details submitted, it is clear that payments made to M/s Tagore Hospital, M/s Sood Children Hospital, M/s Sachar Hospital, M/s Kidney Hospital, M/s Kappor Hospital, M/s Guru Amar Das Hospital, M/s Civil Hospital and M/s Adesh Medical 9 ITA Nos. 559 to 562(Asr)/2013 Institute were lesser than Rs. 20,000/- during the year hence they are clearly out of purview of TDS and the assessee is not to be treated in default in respect of non-deduction.
From the certificate filed on beahalf of M/s Nagpal Hospital, M/s Escorts Hospital and M/s Ghai Hospital it is not clear as to whether and when due taxes on the receipts from assessee, were paid. The certificate only state that the receipts are reflected in their respective profit and loss accounts. I fear this information is not sufficient to apply the decision of Hon S.C. in case of M/s Hindustan Coca Cola Bewerages Ltd. 163 Taxman 355 wherein it is held that the assessee is not to be treated in default if the taxes are paid by the deductee. Even in that case, interest under Section 201(1A) is leviable upto the date of payment by it. In view of this no relief in given to assessee. However, on producing complete information, the assessee may approach the AO for remedial action, if applicable as per the provisions of I.T.Act. In respect of payments made to Shri Devi Talab Hospital, DMC and ASCON it is claimed that these hospitals are run by exempted entitites being religious charitable Trusts hence no TDS was to be made:
First and foremost it is not ascertainable whether these are exempted entities or not, as no documents to support this contention is filed except a certificate issued by M/s ASCOM. Secondly, I don't find any provision in the act that in respect of payments made to charitable/exempted entities the provisions of TDS are not applicable. In view of this and also insufficient details, no relief can be allowed.
AY 2008-09: In this year the payments made to M/s Pruthi Hospital, M/s Nagpal Hospital, M/s Kidney Hospital, M/s Joshi Hospital and M/s CMC PKt are lesser than Rs.20,000/-. In view of this assessee is not to be treated in default in respect of non-deduction of taxes on payments made.
In respect of M/s Tagore Hospital, M/s Nayyar Hospital, M/s Ghai Hospital and M/s Escorts Hospital the certificates for incusion of receipts in their respective accounts on the pattern as in AY2007-08 is filed. Following my order in AY 2007-08, the remains the same and no relief is granted.10 ITA Nos. 559 to 562(Asr)/2013
In respect of certificates filed claiming the papers are exempted entities in respect of M/s Sacred Heart Hospital, Sh. Devi Talab Charitable Hosptal, M/s DMC, Ludhiana and M/s ASCOM following my order in AY 2007-08, no relief is allowed.
AY 2009-10: Following my order in AY 2007-08, since the payments of M/s Joshi Hospital, M/s Om Prakash Satyam Narain, M/s DMC Ludhiana and M/s Civil Hospital Ptk, are less than Rs. 20,000/-, the assessee is not to be treated in default of non deduction on its payments made t them.
In respect of payments to M/s MMTC of Commission, explanation given is that is a public sector undertaking and in view of the decision of Hon'ble Supreme Court in case of M/s Hindustan Coca Cola Bewerages 163 Taxman the asessee may not be treated in default. No details of payment of taxes by M/s MTC is given alongwith the reply. In view of the absence of this information, no relief can be given at this stage.
In respect of one payment of Rs.42,600/- which was made on order of the count after a suit was filed by an employee, no details are as to whom the payment as made is given. In view of this no relief at this stage can be granted.
In respect of certificates from M/s Tagore Hospital, M/s Nayyar Hospital, M/s Kamal Hospital and M/s Ghai Hospital for inclusion of receipts from assessee in their respective accounts, the decision remains the same as in AY 2007-08.
In respect of one payment of Rs.3,58,387/- made to M/s Mohan Devi Cancer Hospital it is claimed that since it is an outdoor treatment hence not covered under Section 194-J of I.T. Act Section 194-J of I.T. applies to the provisions of TDS on professional services and the character of payment can't change because the payment was for outdoor treatment. The services of the hospital remain in the nature of professional services. In view of this, no relief is allowed to assessee on this count also.
In respect of non-deduction of tax on perquisite to the employees in shape of rent free accommodation, the assessee states that against the 11 ITA Nos. 559 to 562(Asr)/2013 demand of Rs.72756/- a payment of Rs.87165 has already been made. The AO is directed to verify and give effect.
In respect of certificates from M/s Sacred Heart Hospital, M/s CMC and ASCOM to claim that they are exempted entities, the decision remains the same as in AY 2007-08.
AY 2010-11: Following my order in AY 2007-08 the assessee is not to be treated in default in respect of payments made for less than Rs.20,000/- to M/s Sachar Hospital, M/s Raja Diagnostic Centre, M/s Modern Hospital, M/s Kidney Hopital, M/s BBC Heart Care and M/s Anil Bhagi Hospital.
In respect of certificates from M/s Tagore Hospital, M/s Khanna Nursing Home M/s and M/s Joshi Hospital for inclusion of receipts in their respective account, the decision remains the same as in AY 2007-08.
In respect of payment of M/s Ghai Hospital and M/s CMC, Ludhiana it is claimed that the taxes were paid. The AO to verify and give effect. In case there is a delay in payment, interest under Section 201(1A) of I.T.Act is to be charged.
In respect of payment of Rs. 1,91,627/- to M/s Mohan Dai Cancer Hospital outdoor treatment, following my own order in AY 2009-10 no relief is allowed.
In respect of certificates claiming M/s Sacred Heart Hospital and M/s ASCOM being tax exempted entities, following my own order in AY 2007-08 the decision remains the same."
11. The Ld. Counsel for the assessee, Mr. Ravish Sud, Advocate, argued that a rectification application was filed before the AO who declined to consider the said claim of the assessee that when the payees had already paid the taxes on the amounts received from the assessee, then as per decision of the Hon'ble Supreme Court, in the case of 'Hindustan Coca Cola 12 ITA Nos. 559 to 562(Asr)/2013 Beverage P. Ltd. vs. CIT' (supra), the tax once again could not be recovered from the assessee. The said application was rejected by the AO, since the matter is sub-judice before the ITAT, Amritsar Bench and the AO does not have locus standi to adjudicate the said issue. The Ld. Counsel for the assessee argued that the respective payees have already paid taxes on the amounts received from the assessee and therefore, in order to give effect to the decision of the Hon'ble Supreme Court, in the case of 'Hindustan Coca Cola Beverages P. Ltd. vs. CIT'(supra), the matter may be remanded back to the file of the Assessing Officer to find out as to what extent the respective payees had paid the tax on the amounts received from the assessee. The Hon'ble Madras High Court in the case of S.A.A. Ispahani Trust vs. ITO reported in (2013) 216 Taxman 1 ( Mad) observed that there was no finding rendered by the authorities below with regard to the payment of tax by the payees and its quantum and in all fairness remitted the mater back to the AO to re-work the quantum of liability of the assessee to give effect to the judgment of the Hon'ble Supreme Court, in the case of 'Hindustan Coca Cola Beverage P. Ltd. vs. CIT' (supra). Accordingly, the ld. Counsel for the assessee prayed that on the similar lines to the decision of the Hon'ble Supreme Court, in the case of 'Hindustan Coca Cola Beverage P. Ltd. vs. CIT' (supra), the matter may be remitted back to the file of the AO to re- 13 ITA Nos. 559 to 562(Asr)/2013 work the quantum of liability of the assessee. In fact, this is a common issue in all the years except ground Nos. 5 & 6 for the assessment year 2009-10 and ground No.4 for the A.Y. 2010-11 where also he prayed that the amount has been received by the recipients and the same may be remitted to the AO to re-work the quantum of liability of the assessee in view of the judgment of Hon'ble Supreme Court, in the case of 'Hindustan Coca Cola Beverage P. Ltd. vs. CIT' (supra).
12. The Ld. DR, on the other hand, conceded the arguments made by the ld. Counsel for the assessee.
13. We have heard the rival contentions and perused the facts of the case. For the assessment year 2007-08, in the case of M/s. Nagpal Hospital, M/s. Escorts Hospital and M/s. Ghai Hospital, the ld. CIT(A) rejected the claim of the assessee even though the assessee submitted the certificates from these hospitals that the receipts are reflected in the respective profit & loss account. The assessee has now submitted as an additional evidence before us in the form of certificates, returns of income, profit & loss account of the payees hospitals substantiating that the payments made by the assessee had been included in their profit & loss account and the same is assessed in their respective hands. With regard to Sh. Devi Talab Charitable Hospital, M/s. DMC, Ludhiana and M/s. ASCOM hospital, the ld. CIT(A) rejected the 14 ITA Nos. 559 to 562(Asr)/2013 claim of the assessee in view of the insufficient details and in case of M/s. Raja Hospital, M/s. Holy Children Hospital and M/s. Fortis Hospital, the Ld. CIT(A) did not decide the issue with regard to the similar claim of the assessee. In the present appeal, the assessee has not contested that the assessee is not in default under section 201(1) of the Act. By way of ground No.5 and additional evidences submitted, which have been admitted by us hereinabove, tax cannot be recovered from the assessee since the tax has already been paid by the recipient of income in view of the decision of the Hon'ble Supreme Court, in the case of 'Hindustan Coca Cola Beverage P. Ltd. vs. CIT' (supra).
13.1 It is pertinent to refer to the decision of the Hon'ble Supreme Court, in the case of 'Hindustan Coca Cola Beverage P. Ltd. vs. CIT' (supra), which for the sake of convenience is reproduced hereinbelow:
"2. This appeal by special leave preferred by the appellant assessee is directed against the judgment of Delhi High Court dt. 11th Oct., 2006 in IT Appeal No. 478 of 2005 [reported as CIT vs. Hindustan Coca Cola Beverages (P) Ltd. (2007) 207 CTR (Del) 119-Ed.].
3. Briefly stated the facts are as follows:
4. The appellant assesse is engaged in the manufacture and sale of soft drinks. The appellant assessee entered into an agreement with M/s Pradeep Oil Corporation for use of their premises for receipt, storage and dispatch of goods belonging to the appellant company.
There is no dispute that the appellant had paid the warehousing 15 ITA Nos. 559 to 562(Asr)/2013 charges to M/s Pradeep Oil Corporation on which tax was deducted under s. 194C of the IT Act, 1961 (for short 'the Act') @ 2 per cent. The AO vide order dt. 30th March, 2001 held the appellant to be 'assessee in default' for failure to deduct tax at source in respect of warehousing charges paid to M/s Pradeep Oil Corporation. The AO rejected the plea of the assessee that the payments made by the appellant company were in the nature of contractual payments on which tax was deducted under s. 194C of the Act at 2 per cent. The AO accordingly held that the warehousing charges were in the nature of rent as defined in Explanation to s. 194-I of the Act and, therefore, tax ought to have been deducted at 20 per cent under the said provisions as against deduction of tax at 2 per cent under s. 194C of the Act. The AO having held the appellant to be 'assessee in default' for the shortfall in the amount of tax deducted at source levied interest under s. 201(1A) of the Act on the amount of tax alleged to be short deducted. The AO accordingly determined the amount of short deduction of tax and also levied interest payable thereon under s. 201(1A) of the Act.
5. The appellant preferred an appeal against the order of the AO before the CIT(A) and thereafter before the Tribunal. The Tribunal also took the view that the appellant assessee to be an 'assessee in default' in respect of the amount of short deduction of tax and also upheld the levy of interest under s. 201(1A) of the Act. The further appeal preferred by the appellant assessee was dismissed by the High Court on 21st May, 2004.
6. The appellant thereafter preferred miscellaneous application in the appeals that were already disposed of seeking rectification of the order of the Tribunal dt. 12th July, 2002. Be it noted, the appellant did not raise any dispute about it being the 'assessee in default' and also raised no objection as regards the levy of interest under s. 201(1A) of the Act. The grievance of the appellant was that its alternative contention that the warehouser has been assessed on its income and the tax due has been recovered from it by the Department and therefore, no further tax could have been collected from the appellant has not been considered by the Tribunal in its order dt. 12th July, 2002. The contention was that since the tax to be recovered by the Department on the income has already been paid by the assessee, no further tax should be recovered from the appellant on the same 16 ITA Nos. 559 to 562(Asr)/2013 income. The Tribunal vide its order dt. 13th Sept., 2004 allowed the application of the appellant on the ground that the alternative contention of the appellant has not been considered while disposing of the appeal. The contention was specifically raised in ground No.7 of the memorandum of appeal preferred by the appellant. The Tribunal accordingly held, to that extent, there is a mistake apparent on the face of record and, therefore, constitutes a rectifiable mistake under s. 254(2) of the Act. The Tribunal accordingly recalled its earlier order dt. 12th July, 2002 for the limited purpose of taking up the particular ground raised in ground No.7 in the memorandum of appeal. This order directing the reopening of the matter has attained its finality. The Department did not challenge the said order.
7. The Tribunal upon rehearing the appeal held that though the appellant assessee was rightly held to be an 'assessee in default', there could be not recovery of the tax alleged to be in default once again from the appellant considering that Pradeep Oil Corporation had already paid taxes on the amount received from the appellant. It is required to note that the Department conceded before the Tribunal that the recovery could not once again be made from the tax deductor where the payee included the income on which tax was alleged to have been short deducted in its taxable income and paid taxes thereon. There is no dispute whatsoever that Pradeep Oil Corporation had already paid the taxes due on its income received from the appellant and had received refund from the Tax Department. 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.
8. The High Court interfered with the order passed by the Tribunal on the ground that the order dt. 12th July, 2022 of the Tribunal has attained its finality since the appeal filed against the same by the appellant was dismissed by the High Court on 21st May, 2004., the point based on ground No.7 was not taken up in the appeal preferred by the appellant in the High Court. The High Court further held that the Tribunal's order dt. 12th July, 2002 got itself merged into the order passed by it on 21st May, 2004 dismissing the appeal of the appellant herein. The High Court came to the conclusion that the Tribunal could not have reopened the matter for any further hearing. 17 ITA Nos. 559 to 562(Asr)/2013
9. We have already noticed that the order passed by the Tribunal to reopen the matter for further hearing as regards ground No.7 has attained its finality. In the circumstances, the High Court could not have interfered with the final order passed by the Tribunal.
10. Be that as it may, the Circular No.275/201/95-IT(B), dt. 29th Jan., 1997 issued by the CBDT, in our considered opinion, should put an end to the controversy. The circular declares 'no demand visualized under section 201(1) of the IT Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS, that taxes due have been paid by the deductee-assessee. However, this will not alter the liability to charge interest under s. 201(1A) of the Act till the date of payment of taxes by the deductee-assessee or the liability for penalty u/s 271E of the I.T.Act."
11. In the instant case, the appellant had paid the interest under s. 201(IA) of the Act and there is no dispute that the tax due had been paid by deductee-assessee (M/s. Pradeep Oil Corporation). It is not disputed before us that the circular is applicable to the facts situation on hand.
12. In the circumstances, it is not necessary to go in detail as to whether the Tribunal could have at all reopened the appeal to rectify the error apparent on the face of the record. We do not wish to express any firm view on this aspect.s
13. The impugned judgment of the High Court is accordingly set aside. The appeal is allowed with no order as to costs." 13.2. The said decision of the Hon'ble Supreme Court, in the case of 'Hindustan Coca Cola Beverage P. Ltd. vs. CIT' (supra), was followed by the Hon'ble Madras High Court in the case of S.A.A. Ispahani Trust vs. ITO (supra), where it has been held that :
"In the case of 'Hindustan Coca Cola Beverage P. Ltd. vs. CIT' (2007) 293 ITR 226 it was held that though the assessee was held to 18 ITA Nos. 559 to 562(Asr)/2013 be as assessee in default, there could be no recovery of the tax alleged to be in default once again from the assessee considering the fact that the recipient had already paid the tax on the amount received from the assessee. The Apex Court also relied on the circular issued by the Central Board of Direct Taxes in Circular No.275/201/p5/IT(B) dated 29.1.1997 wherein it was declared that no demand visualized u/s 201(1) should be enforced after the tax deductor has satisfied the Revenue that taxes due have paid by the deductee-assessee. While doing so, it was however pointed out that such position would not alter the liability to charge interest u/s 201(1A) till the date of payment of taxes by the deductee assessee. Going by the said decision, what emerged was that the even though the assessee herein was held as assessee in default, tax could not be recovered from them, if the same had been paid by the recipient viz., TNREL. However, it was held that, that would not absolve their liability to pay interest u/s 201(1A) from the date of its liability till the date of actual payment made by the recipient. It was found that there were no findings rendered by the authorities with regard to the payment of tax by the recipient and its quantum. Therefore, the matter was remitted back to the AO to re-work the quantum of liability as well as the interest in the light of the above decision. It was directed that the AO should find out as to what extent the recipient had paid the tax. If the entire tax amount as claimed from the assessee herein had been paid by the recipient, then there could not be any further demand of the same from the assessee. On the other hand, if the recipient had only paid part of the tax amount, then rest of the same shall be recovered from the assessee. In so far as the interest demand was concerned, it was held that, the assessee was liable to pay the interest from the date of its liability till the date of actual payment made by the recipient."
13.3. In view of the decision of the Hon'ble Supreme Court, in the case of 'Hindustan Coca Cola Beverage P. Ltd. vs. CIT' (supra) and the decision of the Hon'ble Madras High Court, in the case of S.A.A. Ispahani Trust vs. ITO (supra), we are of the view that even though the assessee has been held as assessee in default, tax could not be recovered from the assessee, if the 19 ITA Nos. 559 to 562(Asr)/2013 same had been paid by the recipient mentioned in the case of hospitals mentioned hereinabove. Accordingly, the matter is remitted back to the file of the Assessing Officer to re-work the quantum of liability of tax, if any, and as to what extent the recipient had paid the taxes. If the entire tax as claimed from the assessee by the department had been paid by the recipient, there cannot be any further demand of the same from the assessee and if the recipient paid only part of the tax, rest of the same has to recovered from the assessee. Our decision, in view of the decision of the Hon'ble Supreme Court, in the case of 'Hindustan Coca Cola Beverage P. Ltd. vs. CIT'(supra) and the decision of the Hon'ble Madras High Court, in the case of S.A.A. Ispahani Trust vs. ITO (supra) does not absolve the assessee's liability to pay interest u/s 201(1A) from the date of his liability till the date of actual payment made by the recipient. Accordingly, the AO is directed to re- compute the liability of the assessee and pass fresh order. Thus, the appeal of the assessee in ITA No.559(Asr)/2013 is partly allowed for statistical purposes.
14. ITA Nos. 560 to 562(Asr)/2013 for the A.Ys. 2008-09 to 2010-11:
Now, we take up the appeals of the assessee for the assessment years 2008- 09, 2009-10 & 2010-11 where the issue involved is similar to the issue as decided by us hereinabove for the assessment year 2007-08.20 ITA Nos. 559 to 562(Asr)/2013
15. As regards the appeal for the assessment year 2008-09, the issue is similar as in the assessment year 2007-08 decided by us hereinabove. Therefore, the matter is remitted back to the file of the AO in view of our decision for the assessment year 2007-08 hereinabove with regard to the recipients/payees the various hospitals in the impugned year as under:
i) M/s. Tagore Hospital
ii) M/s. Nayyar Hospital
iii) M/s. Ghai Hospital
iv) M/s. Escorts Hospital
v) M/s. Sacred Heart Hospital
vi) Shri Devi Talab Hospital
vii) M/s. DMC
viii) M/s. ASCOM
ix) M/s. Sachhar Hospital
x) M/s. Fortis Hospital
xi) M/s. CMC Hospital
Accordingly, our order for the assessment year 2007-08 is identically applicable to the impugned year except the name of the hospitals mentioned hereinabove. Thus, the appeal of the assessee for the assessment year 2008- 09 is partly allowed for statistical purposes.
16. Now, we take up the appeal of the assessee for the assessment year 2009-10 where the issue involved is similar to the issue as decided by us for the assessment year 2007-08 hereinabove. Accordingly, the matter for the assessment year 2009-10 is remitted back to the file of the AO in view of 21 ITA Nos. 559 to 562(Asr)/2013 our decision for the assessment year 2007-08 hereinabove with regard to the recipients/payees the various hospitals in the impugned year as under:
i) M/s. Nayyar Hospital
ii) M/s. Kamal Hospital
iii) M/s. Ghai Hospital
iv) M/s. Tagore Hospital
v) M/s. Sacred Heart Hospital
vi) M/s. CMC Hospital
vii) M/s. ASCOM Hospital
viii) M/s. Sachhar Hospital
ix) M/s. Raja Diagnostic Centre
x) M/s. Mohan Dai Cancer Hospital
Accordingly, our order for the assessment year 2007-08 is identically applicable to the impugned year except the name of the hospitals mentioned hereinabove. Thus, the appeal of the assessee for the assessment year 2009- 10 is partly allowed for statistical purposes.
17. Now, we take up appeal of the assessee for the assessment year 2010- 11, where the issue involved is similar to the issue as decided by us for the assessment year 2007-08 hereinabove. Accordingly, the matter for the assessment year 2010-11 is also remitted to the file of the AO in view of our decision for the assessment year 2007-08 hereinabove with regard to the recipients/payees the various hospitals in the impugned year as under:
i) M/s. Joshi Hospital
ii) M/s. Tagore Hospital
iii) M/s. Khanna Nursing Home
iv) M/s. Ghai Hospital
v) M/. CMC Hospital
22 ITA Nos. 559 to 562(Asr)/2013
vi) M/s. Sacred Heart Hospital
vii) M/s.ASCOM Hospital
viii) M/s. Karam Singh MHC
ix) M/s. Mohan Dai Cancer Hospital
Accordingly, our order for the assessment year 2007-08 is identically applicable to the impugned year except the name of the hospitals mentioned hereinabove. Thus, the appeal of the assessee for the assessment year 2010- 11 is partly allowed for statistical purposes.
15. In the result, all the four appeals of the assessee in ITA Nos. 559 to 562(Asr)/2013 are partly allowed for statistical purposes.
Order pronounced in the open court on 12th February, 2015.
Sd/- Sd/
(A.D.JAIN) (B.P. JAIN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 12th February, 2015
/SKR/
Copy of the order forwarded to:
1. The Assessee:The DGM, BSNL, NTR MTCE, Master Taran Singh Nagar, Jalandhar.
2. The ITO TDS-II, Jalandhar.
3. The CIT(A), Jalandhar.
4. The CIT, Jalandhar.
5. The SR DR, ITAT, Amritsar.
True copy By order (Assistant Registrar) Income Tax Appellate Tribunal, Amritsar Bench: Amritsar.
23 ITA Nos. 559 to 562(Asr)/2013