Income Tax Appellate Tribunal - Chennai
Poompuhar Shipping Corporation ... vs Assessee on 10 February, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
BENCH 'B' CHENNAI
Before Shri N. S. Saini, Accountant Member and
Shri George Mathan, Judicial Member
________
S.A. Nos. 9, 10, 11, 12 & 13/Mds/2012
(In ITA Nos. 145, 146,147148 & 153/Mds/2012)
Assessment Years :2002-03, 2003-04, 2004-05 & 2006-07
M/s Pumpuhar Shipping Corporation The Assistant Director of
Limited, v. Income-tax, International
No. 692, 4th Floor, Anna Salai, Taxation,
Nandanam, Chennai-600 035. Chennai.
(PAN: AAACP4383J)
(Applicant) (Respondent)
Applicant by : Shri R. Vijayaraghavan,
Advocate
Respondent by : Shri Shaji P. Jacob, Addl. CIT
Date of Hearing : 10-02-2012
Date of Pronouncement : 13-02-2012
ORDER
PER GEORGE MATHAN, JUDICIAL MEMBER :
These are stay applications filed by the assessee in the appeals filed by the assessee in ITA Nos. 145, 146, 147, 148 & 153/Mds/2012 for the assessment years 2002-03, 2003-04, 2004-05 and 2006-07.
2
M.A. Nos. 9-13/Mds/2012
2. Shri R. Vijayaraghavan, Advocate represented on behalf of the assessee and Shri Shaji P. Jacob, learned Sr. DR represented on behalf of the Revenue.
3. It was submitted by the learned authorised representative that the assessee is a State owned public limited company engaged in the business of movement of coal from various Ports in India to the Tamilnadu Generation of Electricity and Distribution Corporation Ltd. It was the submission that the assessee had paid hire charges to foreign shipping companies. It was the submission that the foreign shipping companies had not filed returns of income and had not paid the taxes on the income received by them by way of hire charges. It was the submission that the Assessing Officer has treated the assessee as the representative of the foreign shipping companies u/s 160(1)(i) of the Income Tax Act, 1961 ('the Act' for short) and had passed an order under section 163. It was the submission that the assessee's assessments had also been re-opened by issue of notice under section 148 and the assessments had been completed wherein the hire charges paid by the assessee to the foreign shipping companies had been treated as royalty as per the clause iv(a) of Explanation 2 to section 9(1)(vi) of the Act. It was the submission that the assessee had also been treated as an assessee in default for non-deduction of TDS for the assessment years 2002-03, 2003-04 and 2004-05 and the Tribunal had also upheld the said order holding that the assessee is an assessee in default. It was the further submission that for the assessment year 2003-04, 3 M.A. Nos. 9-13/Mds/2012 2005-06 and 2006-07 the provisions of section 40(a)(ia) of the Act had also been invoked and the payments to the foreign shipping companies disallowed on account of the non-deduction of TDS. It was the further submission that in regard to S.A. No. 13/Mds/2012 the same was against the order passed u/s. 143(3) disallowing payments to the foreign shipping companies by invoking the provisions of section 40(a)(ia) of the Act. It was the submission that for the assessment years 2003-04 and 2005-06 the assessee had been granted stay subject to the payment of ` 1 crore each for the two assessment years vide order of this Tribunal in S.A. Nos. 2 & 3/Mds/2012 dated 20-01-2012. It was the further submission that in regard to stay application in S.A. Nos. 9 to 12/Mds/2012 the stay petition was against the demand raised as a consequence of the assessee being treated as the representative assessee of the foreign shipping companies for the assessment years 2002-03, 2003-04, 2004-05 and 2006-07. It was the submission that as the assessee had been held to be liable for non-deduction of TDS for the assessment years 2002-03, 2003-04 and 2004- 05, the assessee could not be treated as the representative of the assessee for the said assessment years 2002-03, 2003-04 and 20054-05 in view of the decision of the Hon'ble Bombay High Court in the case of Premier Tyres reported in 134 ITR 17 wherein the Hon'ble High Court had laid down the proposition that sections 195 and 163 operate in different fields and there cannot be charging of tax on the same income under two sections. It was the submission that as the 4 M.A. Nos. 9-13/Mds/2012 assessee had already been held to be liable for non-deduction of TDS for the assessment years 2002-03, 2003-04 and 2004-05 the assessee was entitled to full stay for the said assessment years in regard to the appeals for the same assessment years now pending before the Tribunal. It was also the submission that the assessee has paid nearly 35% of the demand as raised as a consequence of the order passed under sections 201(1) & 201(1A) for the assessment years 2002-03 to 2004-05. It was the submission that if that tax is adjusted here for the relevant assessment years against these assessments the assessee would have paid nearly 35% of the demands for these years also. In regard to the assessment year 2006-07 it was the submission that the assessee was only hiring the ships as and when required on account of the non-availability of the Indian ships. It was the submission that the assessee's bank accounts have been attached and the functioning of the assessee company itself is being put into hardship on account of the demands that are being raised. It was the submission that the assessee has a prima facie case to succeed. It was the further submission that the appeals of the assessee are posted for hearing before the Tribunal on 17-04-2012. It was the submission that the assessee may be granted stay of recovery of the disputed tax and the appeals of the assessee may also be posted for hearing on an earlier date.
4. In reply, the learned DR submitted that there was no prima facie case for the assessee. It was the submission that the assessee has not accepted the 5 M.A. Nos. 9-13/Mds/2012 liability on account of the non-deduction of TDS insofar as the assessee has filed an appeal before the Hon'ble High Court. It was the further submission that in regard to the assessment year 2006-07 in any case the demand was enforceable insofar as the assessee has not been treated as an assessee in default in regard to the non-deduction of TDS. It was the further submission that if the assessee is unable to pay or if the assessee's bank account is running at nil, the department would be in a position to enforce the demand and collect the same even from the debtors. It was the submission that if the assessee did not have the money, there was no necessity to file a stay petition. He further placed reliance upon the decision of the Hon'ble Supreme Court in the case of Union of India And Others v. Oswal Woollen Mills Ltd. And Others, reported in 154 ITR 135 as also the decision of the Hon'ble Supreme Court in the case of Assistant Collector of Central Excise , Chandan Nagar v. Dunlop India Ltd. And Others reported in 154 ITR 172 and the decision of the Hon'ble jurisdictional High Court of Madras in the case of Sri Balaji Trading Co. v. Deputy Commercial Tax Officer And Another, reported in 175 ITR 428. It was the submission that stay should not be granted to the assessee as the assessee had not shown a prima facie case nor was there any substantial financial difficulty.
5. We have considered the rival submissions. At the out set in regard to stay application in S.A. No. 13/Mds/2012 it is noticed that this is against the demand 6 M.A. Nos. 9-13/Mds/2012 raised as a consequence of an assessment and the invocation of the provisions of section 40(a)(ia) of the Act for the assessment year 2006-07. It is noticed that in identical circumstances the co-ordinate Bench of this Tribunal in its order in S.P.Nos. 2 & 3/Mds/2012 dated 20-01-2012 stayed the collection of the demand till 30-06-2012 or till the disposal of the appeals filed before the Tribunal whichever is earlier, provided the assessee remits a sum of ` one crore each for the two assessment years to the credit of Government of India on or before 01- 03-2012. As it is noticed that an identical issue has already been decided by the co-ordinate Bench of this Tribunal in the assessee's own case, respectfully following the earlier decision taken by the co-ordinate Bench of this Tribunal in S.P. Nos. 2 & 3/Mds/2012, the assessee is directed to pay ` one crore for the assessment year 2006-07, in respect of the stay application filed in S.A. No. 13/Mds/2012, to the credit of the Government of India on or before 01-03-2012. In regard to S.P. Nos. 9 to 12/Mds/2012 it is noticed that for the assessment years 2002-03, 2003-04 and 2004-05 the assessee has been held to be an assessee in default in regard to the non-deduction of TDS. In regard to the assessment year 2006-07 it is noticed that the assessee has been held to be liable for non-deduction of TDS and as a consequence the Assessing Officer has invoked the provisions of section 40(a)(ia) of the Act to disallow the payments made to the foreign shipping companies. Once it is held that the assessee is liable to deduct TDS, then the decision of the Hon'ble Bombay High Court in the 7 M.A. Nos. 9-13/Mds/2012 case of Premier Tyres Ltd., referred to supra, would have to be taken into consideration. If the decision of the Hon'ble Bombay High Court in the case of Premier Tyres Ltd. is considered, then the assessee does have a prima facie case in regard to the appeals.
6. Now coming to the decision of the Hon'ble Supreme Court in the case of Oswar Woollen Mills Ltd., referred to supra, it is noticed that the Hon'ble Supreme Court has in Writ Petition categorically held that when passing ex parte stay orders the authorities must be careful insofar as it should not jeopardize the public interest. In the present case, admittedly, the assessee is in the business of transporting coal to the Tamilnadu Electricity Board. Attaching their bank accounts and stalling their business would in effect affect the public interest insofar as the transportation of coal itself would come into problems thereby adversely affecting the power supply in the State. Coming to the decision of the Hon'ble Supreme Court in the case of Dunlop India Ltd., referred to supra, it is noticed that the Hon'ble Supreme Court has categorically held that interim orders are not to be made for mere asking. The prima facie case must be there and the balance of convenience and public interest are also to be considered. In the present case, as mentioned above, as the assessee has been held to be an assessee in default on account of the non-deduction of the TDS, a prima facie case has been made out. Further, as mentioned above, the enforcement of this demand, prima facie, would lead to substantial dislocation in its functioning 8 M.A. Nos. 9-13/Mds/2012 which would be against the public interest. Coming to the decision of the Hon'ble jurisdictional High Court in the case of Balaji Trading Co., referred to supra, the Hon'ble jurisdictional High Court has categorically held that the appellate authority must exercise discretion judiciously and pass speaking orders. In the present case, as mentioned by the assessee, nearly 35% of the demand, as raised against the assessee in regard to the demand raised on account of the assessee being treated as an assessee in default on account of the non- deduction of TDS, has already been collected. Enforcing the demand further by even attaching the debtors of the assessee company would only lead to dislocating the assessee's functioning. In the circumstances, we are of the view that the balance of convenience rests in favour of the assessee for granting the assessee a blanket stay of recovery of the demand in regard to the demand raised in S.A. Nos. 9 to 12/Mds/2012 which are against the appeals filed by the assessee against the demand raised by treating the assessee as a representative of the foreign shipping companies. In the circumstances, the assessee is granted stay of recovery of the demand raised for the assessment years 2002- 03, 2003-04, 2004-05 and 2006-07 as prayed for in the stay applications filed in S.A. Nos. 9 to 12/Mds/2012. The appeals of the assessee are posted for hearing on 17-04-2012. These appeals are preponed to 05-03-2012. No notice to the parties as they have been informed in the open court. If the assessee seeks an 9 M.A. Nos. 9-13/Mds/2012 adjournment on 05-03-2012 the stay shall automatically stand vacated. In the circumstances, the stay applications filed by the assessee are allowed.
7. The order was pronounced in the court on 13/02/2012.
Sd/- Sd/-
(N. S. Saini) (George Mathan)
Accountant Member Judicial Member
Chennai,
Dated the 13th February, 2012.
H.
Copy to: Assessee/AO/CIT (A)/CIT/D.R./Guard file