Karnataka High Court
Sree Ayyappa Educational Charitable ... vs The Deputy Commissioner Of Income Tax on 12 December, 2017
Author: Vineet Kothari
Bench: Vineet Kothari
1/9
IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 12th DAY OF DECEMBER 2017
BEFORE
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
WRIT PETITION No.618/2015 c/w WRIT PETITION
Nos.5831/2015 & 5990-6001/2015 (T-IT)
IN W.P.No.618/2015
BETWEEN:
SREE AYYAPPA EDUCATIONAL CHARITABLE TRUST
SREE AYYAPPA TEMPLE COMPLEX
JALAHALLI WEST, BANGALORE-560 015
REPRESENTED BY ITS SECRETARY
MR. P. KRISHNAN
AGED ABOUT 69 YEARS.
... PETITIONER
(BY Mr. ASHOK A. KULAKARNI, ADV.,)
AND:
1. THE DEPUTY COMMISSIONER OF INCOME TAX
CENTRALIZED PROCESSING CELL - TDS
AAYKAR BHAWAN, SECTOR-3, VAISHALI
GHAZIABAD, U.P. -201 010.
2. UNION OF INDIA
REPRESENTED BY THE SECRETARY
DEPARTMENT OF REVENUE
MINISTRY OF FINANCE
NORTH BLOCK, NEW DELHI-110 001.
... RESPONDENTS
(BY Mr. JEEVAN J. NEERALGI, ADV.,)
THIS W.P. IS FILED UNDER ARTICLES 226 & 227 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH ANNEX-A
DTD.12.11.2014 NO.TDS/1314/26Q D 100012834699, ANNEX-B
Date of Order 12-12-2017 W.P.No.618/2015 c/w
W.P.Nos.5831/2015 & 5990-6001/2015
Sree Ayyappa Educational Charitable Trust & Anr.
Vs. The Deputy Commissioner of Income Tax & Ors.
2/9
DTD.12.11.2014 NO.TDS/ 314/26Q/D/100012834700, ANNEX-C
DTD.12.11.2014 NO.TDS/1314/26Q/D/100012834701, AND
ANNEX-D DTD.12.11.2014 NO.TDS/1314/26Q/D/
100012834702 TO THE EXTENT THEY SUPPORT TO LEVY AND
COLLECT FEE U/S.234E AS INDICATED THEREIN WHICH ARE
ISSUED BY THE R-1.& ETC.,
IN W.P.NOs.5831/2015 & 5990-6001/2015:
BETWEEN:
M/S SADGURU INFRATECH PVT., LTD.,
COMPANY REGISTERED UNDER THE COMPANIES ACT
NO.636, 4TH CROSS, DR. RAJKUMAR ROAD
'E' BLOCK, 2ND STAGE, RAJAJINAGAR
BANGALORE-560 010.
REP. BY ITS AUTHORISED SIGNATORY
SRI.C.V. MANJUNATH
S/O LATE SRI. C.R. VENKATESH MURTHY
AGED 40 YEARS. ... PETITIONER
(BY Ms. VANI H, ADV.,)
AND:
1. UNION OF INDIA
REP BY ITS SECRETARY
MINISTRY OF FINANCE
SOUTH BLOCK, NEW DELHI
NEW DELHI-110 001.
2. CENTRAL BOARD OF DIRECT TAXES
REP BY ITS CHAIRMAN
DEPARTMENT OF REVENUE
4TH FLOOR, JEEVAN DEEP BUILDING
PARLIAMENT STREET, NEW DELHI-110 001.
3. THE COMMISSIONER OF INCOME TAX
CENTRAL REVENUE BUILDING
QUEENS ROAD, BANGALORE-560 001.
4. THE DEPUTY COMMISSIONER OF INCOME TAX
TDS RECONCILIATION ANALYSIS AND
Date of Order 12-12-2017 W.P.No.618/2015 c/w
W.P.Nos.5831/2015 & 5990-6001/2015
Sree Ayyappa Educational Charitable Trust & Anr.
Vs. The Deputy Commissioner of Income Tax & Ors.
3/9
CORRECTION ENABLING SYSTEM
TDS CPC, AAYKAR BHAWAN
SECTOR-3, VAISHALI
GHAZIABAD, UTTAR PRADESH-201010.
... RESPONDENTS
(BY Mr. K.V. ARAVIND, ADV.,)
THESE W.Ps. ARE FILED UNDER ARTICLES 226 & 227 OF
THE CONSTITUTION OF INDIA PRAYING TO (a) DECLARE THE
NEWLY INSERTED SECTION 234E TO INCOME TAX ACT, 1961
BY FINANCE ACT, 2012 AS VIOLATIVE OF ARTICLES 14 AND 19
AND THUS ULTRA VIRES THE CONSTITUTION OF INDIA IN SO
FAR AS THE PETITIONER IS CONCERNED & ETC.,
THESE W.Ps. COMING ON FOR PRELIMINARY HEARING
'B' GROUP THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER
Mr. Ashok A. Kulakarni, Adv. & Ms. Vani H, Adv. for Petitioners Mr. Jeevan J. Neeralgi, Adv.
Mr. K.V. Aravind, Adv. for Respondents
1. The petitioners are aggrieved by the impugned intimations under Section 200A of the Income Tax Act, 1961 issued by the Centralized Processing Cell (TDS), Ghaziabad, Uttar Pradesh, by the concerned Deputy Commissioner of Income Tax regarding the alleged failure of the petitioners to deduct the Tax at Source and the levy of interest under Section 234E was made Date of Order 12-12-2017 W.P.No.618/2015 c/w W.P.Nos.5831/2015 & 5990-6001/2015 Sree Ayyappa Educational Charitable Trust & Anr. Vs. The Deputy Commissioner of Income Tax & Ors. 4/9 in the impugned intimations resulting in demand against the petitioners-assessees.
2. However, the learned counsels for both the parties have brought to the notice of the Court that the Division Bench of this Court in the case of Fatheraj Singhvi & Ors. Vs. Union of India & Ors, since reported in (2016) 142 DTR Judgments 281 has held that no such interest can be levied under Section 234E of the Act. The relevant paras 23 to 27 are quoted below for ready reference:-
"23. In view of the aforesaid observation and discussion, since the impugned intimation given by the respondent-Department against all the appellants under Section 200A are so far as they are for the period prior to 1.6.2015 can be said as without any authority under law. Hence, the same can be said as illegal and invalid.
24. If the facts of the present cases are examined in light of the aforesaid observation and discussion, it appears that in all matters, the intimation given in purported exercise of power under Section 200A are in respect of fees under Date of Order 12-12-2017 W.P.No.618/2015 c/w W.P.Nos.5831/2015 & 5990-6001/2015 Sree Ayyappa Educational Charitable Trust & Anr. Vs. The Deputy Commissioner of Income Tax & Ors.5/9
Section 234E for the period prior to 1.6.2015. As such, it is on account of the intimation given making demand of the fees in purported exercise of power under Section 200A, the same has necessitated the appellant-original petitioner to challenge the validity of Section 234E of the Act. In view of the reasons recorded by us hereinabove, when the amendment made under Section 200A of the Act which has come into effect on 1.6.2015 is held to be having prospective effect, no computation of fee for the demand or the intimation for the fee under Section 234E could be made for the TDS deducted for the respective assessment year prior to 1.6.2015. Hence, the demand notices under Section 200A by the respondent-authority for intimation for payment of fee under Section 234E can be said as without any authority of law and the same are quashed and set aside to that extent.
25. As such, as recorded earlier, it is on account of the intimation received under Section 200A for making computation and demand of fees under Section 234E, the same has necessitated the appellant to challenge the constitutional validity of Section 234E. When the intimation of the demand notices under Section Date of Order 12-12-2017 W.P.No.618/2015 c/w W.P.Nos.5831/2015 & 5990-6001/2015 Sree Ayyappa Educational Charitable Trust & Anr. Vs. The Deputy Commissioner of Income Tax & Ors.6/9
200A is held to be without authority of law so far as it relates to computation and demand of fee under Section 234E, we find that the question of further scrutiny for testing the constitutional validity of Section 234E would be rendered as an academic exercise because there would not be any cause on the part of the petitioners to continue to maintain the challenge to constitutional validity under Section 234E of the Act. At this stage, we may also record that the learned counsels appearing for the appellant had also declared that if the impugned notices under Section 200A are set aside, so far as it relates to computation and intimation for payment of fee under Section 234E, the appellant-petitioners would not press the challenge to the constitutional validity of Section 234E of the Act. But, they submitted that the question of constitutional validity of Section 234E may be kept open to be considered by the Division Bench and the Judgment of the learned Single Judge may not conclude the constitutional validity of Section 234E of the Act.
26. Under these circumstances, we find that no further discussion would be required for examining the constitutional validity of Section 234E of the Act. Save and except to observe that Date of Order 12-12-2017 W.P.No.618/2015 c/w W.P.Nos.5831/2015 & 5990-6001/2015 Sree Ayyappa Educational Charitable Trust & Anr. Vs. The Deputy Commissioner of Income Tax & Ors.7/9
the question of constitutional validity of Section 234E of the Act before the Division Bench of this Court shall remain open and shall not be treated as concluded.
27. In view of the aforesaid observations and discussion, the impugned notices under Section 200A of the Act for computation and intimation for payment of fee under Section 234E as they relate to for the period of the tax deducted prior to 1.6.2015 are set aside. It is clarified that the present judgment would not be interpreted to mean that even if the payment of the fees under Section 234E already made as per demand/intimation under Section 200A of the Act for the TDS for the period prior to 01.04.2015 is permitted to be reopened for claiming refund. The judgment will have prospective effect accordingly. It is further observed that the question of constitutional validity of Section 234E shall remain open to be considered by the Division Bench and shall not get concluded by the order of the learned Single Judge.
28. The appeals are partly allowed to the aforesaid extent. Considering the facts and circumstances, no order as to costs".
Date of Order 12-12-2017 W.P.No.618/2015 c/w W.P.Nos.5831/2015 & 5990-6001/2015 Sree Ayyappa Educational Charitable Trust & Anr. Vs. The Deputy Commissioner of Income Tax & Ors. 8/9
3. The learned counsel for the petitioners Mr.Ashok A.Kulakarni & Ms.H.Vani have argued that the said judgment of the Division Bench of this Court is binding on the Respondents and since they have not apparently appealed against the said judgment before the Hon'ble Supreme Court, the said judgment deserves to be implemented by them.
4. This is not disputed by the learned counsel for the Revenue Mr.K.V.Aravind.
5. Accordingly, the writ petitions are allowed and the impugned Intimations under Section 200A of the Act issued by the Centralized Processing Cell (TDS) by the concerned Deputy Commissioner of Income Tax are set aside. The matters are remanded back to the local Assessing Authority of the petitioners-assessees to pass fresh orders in accordance with law, if at all called for and necessary, after giving an opportunity of hearing to Date of Order 12-12-2017 W.P.No.618/2015 c/w W.P.Nos.5831/2015 & 5990-6001/2015 Sree Ayyappa Educational Charitable Trust & Anr. Vs. The Deputy Commissioner of Income Tax & Ors. 9/9 the petitioners-assessees in terms of the judgment of the Division Bench quoted above.
No order as to costs.
Sd/-
JUDGE Srl.