MAHANAGAR TELEPHONE NIGAM LTD, MUMBAI v. ITO (TDS-I), THANE

ITA 2024/MUM/2009 | 2006-2007
Pronouncement Date: 18-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 202419914 RSA 2009
Assessee PAN AAACM0828R
Bench Mumbai
Appeal Number ITA 2024/MUM/2009
Duration Of Justice 10 month(s) 17 day(s)
Appellant MAHANAGAR TELEPHONE NIGAM LTD, MUMBAI
Respondent ITO (TDS-I), THANE
Appeal Type Income Tax Appeal
Pronouncement Date 18-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 18-02-2010
Assessment Year 2006-2007
Appeal Filed On 01-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI BEFORE SHRI R.S.SYAL AM AND SHRI R.S.PADVEKAR JM ITA NOS.2020 2021 2022 2023 2024 2025 & 2026/M UM/2009 ASST.YEARS 2002-03 2003-04 2004-05 2005-06 200 6-07 2007-08 & 2008-09 M/S.MAHANAGAR TELEPHONE NIGAM LIMITED ACCOUNTS OFFICER (CASH) E-2 CHARAI TELEPHONE EXCHANGE BUILDING MAULI MANDAL ROAD DHOBIALI THANE (WEST) 400 601 PA NO.AAACM0828R. VS. THE INCOME TAX OFFICER (TDS) 1 THANE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K.PRADHAN RESPONDENT BY : S/SHRI S.S.RANA SATISHCHANDRA & T. T.JACOB O R D E R PER BENCH : THESE SEVEN APPEALS BY THE ASSESSEE RELATE TO THE A SSESSMENT YEARS 2002- 2003 2003-2004 2004-2005 2005-2006 2006-2007 2 007-2008 & 2008-2009. SINCE COMMON ISSUES HAVE BEEN RAISED IN THESE APPEA LS WE ARE THEREFORE PROCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. IN THESE APPEALS THE ASSESSEE AGITATED THE FINDI NG GIVEN BY THE LD. CIT(A) QUA ITS LIABILITY TO DEDUCT TAX AT SOURCE UNDER SEC TIONS 194H 194A AND 194I. THE COD GRANTED PERMISSION TO AGITATE THE CLAIM ONLY UN DER SECTIONS 194H AND 194A. THUS THE CLAIM U/S 194I INVOLVED IN SOME OF THE YE ARS WAS NOT RAISED IN THESE APPEALS. 3. THE FIRST COMMON ISSUE IN ALL THE APPEA LS UNDER CONSIDERATION AND THE ONLY GROUND FOR A.Y. 2002-03 IS AGAINST UPHOLDING THE ORDER PASSED U/SECS.201(1) AND 201(1A) TOWARDS FAILURE TO DEDUCT TAX AT SOURCE U/S .194H IN RESPECT OF COMMISSION ITA NOS.2020 TO 2026/MUM/2009 M/S.MAHANAGAR TELEPHONE NIGAM LIMITED. 2 OR BROKERAGE. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE A PUBLIC SECTOR UNDERTAKING MADE PAYMENT OF COMMISSION TO P CO FRANCHISES. IN THE OPINION OF THE ASSESSING OFFICER SUCH PAYMENT WAS L IABLE FOR DEDUCTION OF TAX AT SOURCE U/S.194H. ON BEING SHOW CAUSED THE ASSESSEE STATED THAT THE COMMISSION WAS NOT PAID BY CASH / CHEQUE BUT WAS DIRECTLY CRE DITED TO THE SUBSCRIBERS IN THEIR BILLS. FURTHER RELIANCE WAS PLACED ON CBDT CIRCULAR DATED 16.07.2002 BY WHICH IT WAS CLARIFIED BY THE CBDT THAT THE RECOVERY OF TDS U/S.194H ON COMMISSION RETAINED BY THE STD / PCO FRANCHISES MAY NOT BE ENF ORCED. THE ASSESSING OFFICER TOOK INTO CONSIDERATION THE PROVISO WHICH HAS BEEN INSERTED BY THE FINANCE ACT 2007 TO SECTION 194H WITH EFFECT FROM 1.6.2007 PROV IDING FOR NO LIABILITY TO DEDUCT TAX AT SOURCE ON ANY COMMISSION OR BROKERAGE PAYABL E BY BSNL OR MTNL TO THEIR PUBLIC CALL OFFICE FRANCHISES. IN HIS OPINION THE SAID PROVISO WAS PROSPECTIVELY APPLICABLE. ACCORDINGLY THE ASSESSEE WAS HELD TO BE IN DEFAULT U/S.201(1) FOR SHORT DEDUCTION OF TAX U/S.194H AND ALSO TOWARDS INTEREST U/S.201(1A). NO RELIEF WAS ALLOWED BY THE FIRST APPELLATE AUTHORITY. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE LEARNED A.R. HAS PLACED ON RECORD A COP Y OF THE ORDER PASSED BY THE PUNE BENCH OF THE TRIBUNAL IN BSNL NASIK VS. ITO & ORS. IN ITA NOS.71 TO 77 / PN/2009 COVERING ASSESSMENT YEARS 2002-2003 TO 2008 -2009. AFTER MAKING THOROUGH DISCUSSION ON ALL THE LEGAL ASPECTS OF THE ISSUE THE TRIBUNAL FINALLY CAME TO THE CONCLUSION THAT NO DEMAND COULD BE RAISED U/ S.201(1) R.W.S. 194H FOR NON- DEDUCTION OF TAX AT SOURCE FROM COMMISSION PAID BY THE ASSESSEE TO THE PCO OPERATORS. THE LEARNED DEPARTMENTAL REPRESENTATIVE ADMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE INSTANT APPEALS WERE MATERIALL Y IDENTICAL TO THOSE CONSIDERED BY THE PUNE BENCH OF THE TRIBUNAL. HE HOWEVER ATTEM PTED TO ARGUE THAT THE PROVISO INSERTED BY THE FINANCE ACT 2007 COULD NOT BE HELD TO BE RETROSPECTIVELY APPLICABLE. WE HAVE GONE THROUGH THE AFORESAID ORDE R PASSED BY THE PUNE BENCH OF THE TRIBUNAL IN WHICH A DETAILED DISCUSSION HAS BEE N MADE ON THIS ISSUE INTER ALIA ITA NOS.2020 TO 2026/MUM/2009 M/S.MAHANAGAR TELEPHONE NIGAM LIMITED. 3 CONSIDERING RATIONALE OF INSERTION OF THE PROVISO T O SECTION 194H BY THE FINANCE ACT 2007 VIDE CIRCULAR DATED 12.3.2008. FURTHER IN STRUCTION NO.3/2009 DATED 8.5.2009 HAS ALSO BEEN TAKEN INTO ACCOUNT IN REACHI NG THE CONCLUSION THAT THE ASSESSEE COULD NOT BE HELD TO BE IN DEFAULT FOR NON -DEDUCTION OF TAX AT SOURCE ON COMMISSION PAYMENT U/S.194H. RESPECTFULLY FOLLOWIN G THE PRECEDENT WE OVERTURN THE IMPUGNED ORDERS ON THIS ISSUE AND ORDER FOR THE DELETION OF DEMAND CREATED U/SECS.201(1) AND 201(1A) OF THE ACT PRO TANTO . 5. THE ONLY OTHER ISSUE RAISED IN THESE APPEALS REQ UIRING OUR ADJUDICATION IS AGAINST THE FAILURE OF THE ASSESSEE TO DEDUCT TAX A T SOURCE ON INTEREST ON DEPOSITS U/S.194A OF THE ACT. THE FACTS APROPOS THIS ISSUE A RE THAT THE ASSESSEE ACCEPTED DEPOSITS FROM ITS CUSTOMERS AND PAID INTEREST ON DE POSITS. IN THE OPINION OF THE ASSESSING OFFICER THE ASSESSEE WAS REQUIRED TO DEDU CT TAX AT SOURCE AS PER SECTION 194A OF THE ACT. IN RESPONSE TO SHOW CAUSE NOTICE T HE ASSESSEE STATED THAT INTEREST PAID TO SUBSCRIBERS WAS LESS THAN RS.2 500 IN ALL C ASES I.E. WITHIN THE EXEMPTION LIMIT AS PER SECTION 194A AND HENCE THERE WAS NO QU ESTION OF DEDUCTION OF TAX ON SUCH INTEREST. IN THE ABSENCE OF ANY DETAIL FURNISH ED BY THE ASSESSEE IN THIS REGARD THE ASSESSING OFFICER HELD THAT THE PROVISIONS OF S ECTION 201(1) WERE APPLICABLE AND ALSO THE INTEREST U/S.201(1A) WAS CHARGEABLE FO R THE SAID DEFAULT. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. 6. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE C ONTENDED THAT THE DEPOSITS WERE COLLECTED BY THE ASSESSEE UNDER THE TWO SCHEME S I.E. OYT AND NON-OYT AND THE MAXIMUM AMOUNT OF DEPOSIT IN EACH CASE WAS RS.1 5 000. IT WAS CONTENDED THAT UNDER NO CIRCUMSTANCE COULD THE AMOUNT OF INTEREST EXCEED THE STIPULATED MINIMUM AMOUNT OF INTEREST ON WHICH DEDUCTION OF TA X AT SOURCE WAS REQUIRED. IN THE OPPOSITION THE LEARNED DEPARTMENTAL REPRESENTA TIVE CONTENDED THAT THE ASSESSEE FAILED TO FURNISH THE DETAILS IN RESPECT O F INTEREST PAYMENTS AND IT WAS QUITE POSSIBLE THAT THE ASSESSEE MAY HAVE COLLECTED SEVER AL DEPOSITS FROM SINGLE PERSON ITA NOS.2020 TO 2026/MUM/2009 M/S.MAHANAGAR TELEPHONE NIGAM LIMITED. 4 AND IN SUCH A CASE THE TOTAL AMOUNT OF INTEREST WOU LD EXCEED THE BASIC MINIMUM AMOUNT AS PRESCRIBED U/S.194A FOR NON-DEDUCTION OF TAX AT SOURCE. IN THE REJOINDER THE LEARNED A.R. SUBMITTED THAT THE ASSESSEE HAS GO T COMPLETE DETAILS NOW AVAILABLE WITH IT WHICH COULD BE VERIFIED BY THE ASSESSING AU THORITY. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS FOUND THAT THE ASSESSING OFFICER HAS T REATED THE ASSESSEE IN DEFAULT FOR VIOLATION OF SECTION 194A BASICALLY ON THE GROUND THAT THE ASSESSEE DID NOT FURNISH ANY DETAIL OF THE INTEREST PAID ON DEPOSITS. SINCE THE ASSESSEE IS NOW IN THE POSSESSION OF SUCH DETAILS IN OUR CONSIDERED OPINI ON IT WILL BE JUST AND FAIR IF THE IMPUGNED ORDERS ON THIS ISSUE ARE SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE A.O. WE ORDER ACCORDINGLY AND DIRECT THE ASSESS ING AUTHORITY TO VERIFY THE DETAILS OF INTEREST AND DECIDE THE QUESTION OF DEDU CTIBILITY OR OTHERWISE OF TAX AT SOURCE IN TERMS OF SECTION 194A AS PER LAW AFTER A LLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT THE APPEAL FOR ASSESSMENT YEAR 20 02-2003 IS ALLOWED AND THE OTHERS ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 18 TH DAY OF FEBRUARY 2010. SD/- SD/- ( R.S.PADVEKAR ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI : 18 TH FEBRUARY 2010. DEVDAS* ITA NOS.2020 TO 2026/MUM/2009 M/S.MAHANAGAR TELEPHONE NIGAM LIMITED. 5 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) II THANE. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.