Income Tax Appellate Tribunal - Panji
The Dy. Commr. Of Income Tax, Tds ... vs M/S Gujarat Pipavav Port Ltd.,, Amreli on 28 November, 2017
ITA No. 112/Rjt/2017 & CO 16/Rjt/2017
DCIT vs. Gujarat Pipavav Port Ltd
Assessment year: 2007-08
Page 1 of 4
IN THE INCOME TAX APPELLATE TRIBUNAL
RAJKOT BENCH, RAJKOT
[Coram: Pramod Kumar AM and Rajpal Yadav JM]
ITA No. 112/Rjt/2017 & CO No. 16/Rjt/2017
Assessment Year: 2007-08
The DCIT ..............................Appellant
TDS Circle
Rajkot
Vs.
M/s. Gujarat Pipavav Port Ltd. ........................ Respondent &
Post Uchhaiya Via Rajula, Cross Objector
Amreli, Gujarat - 365560
[PAN : RKTG 00431 E]
Appearances by:
CP Bhatia for the appellant
Kiran Nisar for the respondent
Date of concluding the hearing : 03.11.2017
Date of pronouncing the order : 28.11.2017
O R D E R
Per Pramod Kumar AM:
1. This appeal filed by the Assessing Officer, as also the cross objection filed by the assessee, challenge correctness of the order dated 27.02.2017 in the matter of penalty under section 271C of the Income Tax Act, 1961, for the assessment year 2007-08.
2. Grievances raised by the Assessing Officer, as set out in the memorandum of appeal, are as follows:-
"1. The Ld. CIT(A) in facts and circumstances of the case erred in deleting the penalty u/s. 271C of the I.T. Act.
2. The Ld. CIT(A) in facts and circumstances erred in holding that the assessee did deduct TDS albeit u/s. 194J instead of 194-I without appreciating the fact that the assessee mandated to deduct TDS under the correct provisions of Chapter XVIIB of the I.T. Act.
3. The Ld. CIT(A) in facts and circumstances in the case erred in holding that the issue whether the payment is covered by provisions of section 194-I of 194J is not completely free from debate without appreciating the fact that both at first appellate and second appellate it was categorically held that the payment of wharf age charges attracted withholding provisions of section 194-I as hold by the A.O. Thus there is no dispute of whatsoever nature as averred by the Ld. CIT(A).ITA No. 112/Rjt/2017 & CO 16/Rjt/2017
DCIT vs. Gujarat Pipavav Port Ltd Assessment year: 2007-08 Page 2 of 4
4. On the facts and in the circumstances of the ease, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer.
5. On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have decided the issue under reference, in the light of evidence obtained by him during the appellate proceedings after following the due procedure of law."
3. Notwithstanding rather elaborate grounds of appeal, which are primarily arguments in support of the appeal, the short grievance that we are required to adjudicate in this appeal is whether or not learned CIT(A) was justified in deleting the levy of penalty of Rs.22,73,763/- imposed on the assessee for short deduction of tax at source in respect of wharfage charges paid to Gujarat Maritime Board.
4. Learned representatives fairly agree that whatever we decide for the Assessing Officer's appeal, and assessee's cross-objection, for the assessment year 2006-07, which were heard alongwith this appeal, will apply mutatis mutandis to this appeal as well.
5. Vide our order of even date, we have dismissed Assessing Officer's appeal and assessee's cross-objection for assessment year 2006-07 by observing as follows:-
"4. The issue in appeal lies in a narrow compass of material facts. The assessee is engaged in the business of developing, constructing, operating and maintaining the port on "Build Own Operate Transfer" (BOOT) basis. The port is designed to handle bulk, container and liquid cargo and to provide ancillary port services. It was in this backdrop that the assessee entered into an agreement with Gujarat Maritime Board (GMB) under which the assessee was granted the right to use waterfront against payment of charges to be computed on the basis of actual throughputs achieved in a month. Treating this payment as a royalty, the assessee deducted tax at source, under section 194J, which was 5.16% at the relevant point of time, from the payments made to GMB. The Assessing Officer, however, was of the view that the assessee ought to have treated these payments as rent, and, accordingly deducted tax at source under section 194J which was 22.44% at the material point of time. The Assessing Officer raised a demand, under section 201 r.w.s. 194I, for short deduction of tax at source. As this issue regarding short deduction of tax at source travelled in appeal before a co-ordinate bench of this Tribunal, the matter was remitted to the file of the Assessing Officer for re-adjudication in the light of first proviso to section 201(1) which was held to be retrospective in nature. In effect thus, as long as there was no loss of revenue by such short deduction of tax at source, the recipient has duly filed his return of income under section 139(1) and recipient has duly included these amounts in his returned income and paid due taxes thereon, the demand under section 201(1) is not to be raised. The matter, however, did not rest there. The Assessing Officer also imposed penalty under section 271C by, inter alia, observing as follows:-
"11. Considering all the relevant facts and discussion made in the foregoing para(s) it is clear that the assessee has committed default of non deduction of tax at source on provision for under wharefage at Rs.32,62,080/-. Therefore, the assessee has defaulted in complying with ITA No. 112/Rjt/2017 & CO 16/Rjt/2017 DCIT vs. Gujarat Pipavav Port Ltd Assessment year: 2007-08 Page 3 of 4 the TDS provisions of the I.T. Act and has thus rendered itself liable for levy of penalty u/s 271C of the I.T. Act.
12. The total amount of tax the assessee company has failed to deduct or pay to govt. account works out to Rs.32,62,080/-. As per provisions of section 271C of the IT Act the assessee company is liable to pay, by way of penalty, a sum equal to the amount of tax which it has failed to deduct or pay, as the case may be. Accordingly I am satisfied that it is a fit case for levy of penalty u/s 271C of the I.T. Act and therefore I impose and order to levy the penalty of Rs.32,62,080/- i.e. equal to the amount of tax which it has failed to deduct or pay. Issue demand notice and challan accordingly I.T.N.S. 150 forms part of this order."
5. Aggrieved, assessee carried the matter in appeal before the CIT(A), who cancelled the penalty in question by observing as follows:-
"6. I have duly considered the order u/s 271C, submission of the appellant and also gone through order of the AO u/s 271(1)/201(1A), penalty order in question, orders of CIT(Appeals) and Hon'ble ITAT. After taking everything into account I am of considered opinion that this is not a fit case for levy of penalty due to following reasons:
(a) The appellant did deduct TDS albeit under provisions of section 194J instead of 194I. this in itself shows that there was no malafide intention of the appellant i.e. it had no intention not to deduct TDS.
And the A.O. in his order u/s 201(1)/201(1A) passed on 25/03/2011 has rightly observed that "the assessee has duly deducted TDS and deposited in the Government account and the intention of the assessee is not to conceal the TDS amount and hence the penalty u/s 271C is no initiated". A no of various courts are all in favour of the appellant on this issue.
(b) Even otherwise also the issue whether the payment is covered by provisions of section 194I or 194J is not completely free from debate. And the appellant has not concealed any fact.
Hence, in view of the above facts and law penalty levied is hereby cancelled."
6. The Assessing Officer is aggrieved of the relief so granted by the CIT(A) and is in appeal before us.
7. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.
8. We find that it is only elementary that, as provided in section 273B, no penalty under section 271C shall be imposable for any failure referred to in section 271C as long as the assessee can prove that there was a reasonable cause for the said failure. It is in this context that one has to evaluate stated bonafide belief of the assessee that deduction at source was required to be made under section 194J. In our considered view, the application of section 194I on the facts of this case, at the minimum, was not entirely free from doubt. As a matter of fact, there is no finding on this aspect of the matter, by the co-
ITA No. 112/Rjt/2017 & CO 16/Rjt/2017DCIT vs. Gujarat Pipavav Port Ltd Assessment year: 2007-08 Page 4 of 4 ordinate bench in quantum proceedings. In any case, when assessee is deducting tax at source under one section and making due disclosure of his stand, and the recipient is a public body, no malafides can be attributed to such short tax deduction, even if that be so, by the assessee. In our considered view, the well reasoned findings of the learned CIT(A) are correct, judicious and do not call for any interference. We approve the same and decline to interfere in the matter. As we do so, we may also make it clear that the grounds of appeal raised before us, to a certain extent, deal with irrelevant factors and do not call for our specific comments. Suffice to say that in our considered view relief granted by the CIT(A) is justified and meets our approval.
9. The revenue's appeal is thus dismissed.
10. Learned counsel for the assessee did not press the Cross-Objection, and the Cross-Objection is, as such, dismissed for want of prosecution."
6. We see no reason to take any other view of the matter than the view so taken by us for assessment year 2006-07. Respectfully following the same, we dismiss the Assessing Officer's appeal, as also assessee's cross-objection, for this assessment year as well.
7. In the result, the appeal as also the Cross-Objection are dismissed. Pronounced in the open court today on the 28th day of November, 2017 Sd/- Sd/-
Rajpal Yadav Pramod Kumar
(Judicial Member) (Accountant Member)
Ahmedabad, the 28th day of November, 2017
**am**bt
Copies to: (1) The appellant
(2) The respondent
(3) Commissioner
(4) CIT(A)
(5) Departmental Representative
(6) Guard File
By order
TRUE COPY
Assistant Registrar
Income Tax Appellate Tribunal
Rajkot bench, Rajkot
1. Date of dictation: ..27.11.2017- - 6 pages manuscripts of Hon'ble AM are attached. Order prepared accordingly...... ...
2. Date on which the typed draft is placed before the Dictating Member: ....28.11.2017.......
3. Date on which the approved draft comes to the Sr. P.S./P.S.: ...28.11.2017....... .
4. Date on which the fair order is placed before the Dictating Member for Pronouncement: ...28.11.2017..
5. Date on which the file goes to the Bench Clerk : ...28.11.2017..
6. Date on which the file goes to the Head Clerk : ..................................
7. The date on which the file goes to the Assistant Registrar for signature on the order: ..........................