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Citation Codes
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Attorney(S)
Acts
  • u/s 201(1A) of the Income Tax 3 ITA Nos. 3109 & 3110/Del/2017 Act, 1961
  • u/s 201(1) and 201(1A) of the Income Tax Act, 1961 (in short the Act)
  • Section 201(1) of the Income Tax Act, 1961.
  • u/s 201(1A) of the Income Tax Act, 1961
  • u/s 194-I of the Income Tax Act, 1961
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Cites
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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
Acts
  • u/s 201(1A) of the Income Tax 3 ITA Nos. 3109 & 3110/Del/2017 Act, 1961
  • u/s 201(1) and 201(1A) of the Income Tax Act, 1961 (in short the Act)
  • Section 201(1) of the Income Tax Act, 1961.
  • u/s 201(1A) of the Income Tax Act, 1961
  • u/s 194-I of the Income Tax Act, 1961
See more information ...
Smart Summary

Concise Analytical Summary of the Tribunal Opinion

Factual and Procedural Background

These consolidated appeals (ITA Nos. 3109 & 3110/Del/2017) were filed by the assessee against orders dated 23.02.2017 and 24.03.2017 of the Learned Commissioner of Income Tax (Appeals)-41, New Delhi, upholding liability under sections 201(1) and 201(1A) of the Income Tax Act, 1961 for Assessment Years 2012-13 and 2013-14 respectively. The Tribunal heard the matters on 20.02.2020 and pronounced its order on 28.02.2020.

The solitary issue identified in the opinion is the levy of interest under section 201(1A) of the Act in respect of TDS amounts of Rs. 13,51,205 (AY 2012-13) and Rs. 6,32,310 (AY 2013-14) on lease rent paid to NOIDA, where the assessee had not deducted tax at source.

Relevant procedural steps and facts (as recorded in the opinion):

  • For AY 2012-13, notice under sections 201(1)/201(1A) was issued on 18.03.2014 and AO's order dated 28.03.2014 held the assessee an assessee-in-default and created a demand of Rs. 55,15,938 (comprising Rs. 43,55,239 on account of TDS under section 194I on aggregate payments of Rs. 4,35,52,987 and Rs. 11,60,699 as interest).
  • The breakdown of payments (as recorded) included:
    • 24.03.2012 — One-time lease rent Rs. 3,00,40,340; TDS payable Rs. 30,04,034; interest (201(1A)) Rs. 7,51,008
    • 16.05.2011 — Lease premium (FY 2011-12) Rs. 71,89,000; TDS payable Rs. 7,18,900; interest Rs. 2,51,615
    • 29.03.2012 — Lease premium (FY 2012-13) Rs. 63,23,047; TDS payable Rs. 6,32,305; interest Rs. 1,58,076
  • For AY 2013-14, notice under sections 201(1)/201(1A) was also issued on 18.03.2014 and AO's order dated 30.03.2015 held the assessee in default and created a demand of Rs. 7,90,388 (Rs. 6,32,310 TDS on Rs. 63,23,100 and Rs. 1,58,078 interest).
  • The assessee appealed to the CIT(A). The CIT(A) deleted the TDS liability under section 201(1) stating the assessee was not an assessee-in-default and had reasonable cause, following the Delhi High Court decision in Rajesh Projects (India) Ltd. v. CIT. However, CIT(A) directed the AO to re-compute interest under the first proviso to section 201(1A) from the date tax was deductible until the date on which the deductee (NOIDA) filed its return, and to verify Form 26A / whether the deductee had taken the amount into account for income tax purposes.

Legal Issues Presented

  1. Whether the assessee is liable to pay interest under section 201(1A) of the Income Tax Act, 1961 for non-deduction of tax at source on lease rent paid to NOIDA?
  2. Whether the assessee is liable to pay interest under section 201(1A) even when it is not treated as an assessee-in-default under section 201(1)?

Arguments of the Parties

Assessee's Arguments

  • The assessee's counsel submitted that the CIT(A) did not properly follow the Delhi High Court decision in Rajesh Projects (India) Pvt. Ltd. According to the assessee, payments made prior to that judgment to NOIDA mean the responsibility for tax and interest lies with NOIDA (the deductee), not with the assessee. The assessee sought cancellation of the CIT(A)'s direction to raise interest on the assessee.

Revenue's Arguments (Respondent)

  • The Departmental Representative supported the CIT(A)'s order. He relied on the Delhi High Court's decision to submit that no recovery should be made from the assessee only if the deductee (NOIDA) had satisfied the liability including interest. In the present case, the assessee had not submitted any evidence that NOIDA had paid the interest liability; therefore, the CIT(A) was justified in directing interest to be recomputed and levied on the assessee.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Rajesh Projects (India) Private Limited v. CIT (Delhi High Court), W.P.(C) 8085/2014; reported as (2017) 392 ITR 483 (Delhi) The Delhi High Court directed that where amounts were paid by petitioners towards TDS as a result of coercive measures, the (Greater) NOIDA (GNOIDA) should credit/reimburse such payments. It further directed that if the basic liability (with interest to be paid by GNOIDA) was satisfied by GNOIDA, the income-tax authorities should not pursue coercive recovery from the petitioners. The Tribunal treated the Rajesh Projects decision as instructive and analogous. It summarised the High Court's directions (including reimbursement by GNOIDA and restraint on coercive proceedings if GNOIDA satisfied the liability) and applied that reasoning to the NOIDA situation by directing the AO to verify whether NOIDA had paid the basic TDS liability and interest; if so, no recovery should be made from the assessee.

Court's Reasoning and Analysis

The Tribunal's reasoning proceeded by examining the factual matrix and the Delhi High Court's decision relied upon by the parties. Key steps in the Tribunal's analysis (strictly as recorded in the opinion) were:

  1. The Tribunal noted that the only dispute was whether the interest liability under section 201(1A) must be paid by the assessee.
  2. The Tribunal examined the Delhi High Court judgment in Rajesh Projects (India) Private Limited (supra) and extracted the practical directions given there: reimbursement/credit by GNOIDA where TDS had been paid by petitioners under coercion; restraint on coercive proceedings where GNOIDA satisfied the basic liability including interest; and procedural directions for consequential orders.
  3. Although the Rajesh Projects decision concerned payments to Greater NOIDA (GNOIDA), the Tribunal observed that the facts and circumstances of the instant case (payments to NOIDA) were otherwise identical for the purposes of the principle laid down by the High Court.
  4. The Tribunal reviewed the CIT(A)'s approach: CIT(A) deleted the TDS demand under section 201(1) (holding the assessee was not an assessee-in-default and had reasonable cause) but directed the AO to re-calculate interest under the first proviso to section 201(1A) from the date tax was deductible until the deductee filed its return, and to seek Form 26A or other evidence that the deductee had taken the sum into account.
  5. Applying the Delhi High Court's logic, the Tribunal concluded it was incumbent on the assessee to produce documentary evidence that NOIDA had discharged the basic TDS liability along with interest. If NOIDA had already paid both the basic liability and interest, the assessee should not be made to suffer any recovery. Conversely, in absence of such evidence, interest could be recovered from the assessee as directed by CIT(A).
  6. Accordingly, the Tribunal did not finally decide the question of interest on the merits but restored the issue to the Assessing Officer with clear directions to verify whether NOIDA had paid the basic TDS liability and interest and to afford the assessee adequate opportunity to be heard. The assessee was directed to cooperate and provide the relevant information requested by the AO.

Holding and Implications

Disposition: APPEALS ALLOWED FOR STATISTICAL PURPOSES.

Direct effect on the parties:

  • The Tribunal restored the issue to the file of the Assessing Officer with directions to verify whether NOIDA (the deductee) has paid the basic TDS liability and the interest due thereon.
  • If, upon verification, it is found that NOIDA has paid the basic TDS liability and interest, then no liability for the same shall be raised on the assessee.
  • The assessee must cooperate and provide documentary evidence requested by the AO; the AO must afford the assessee adequate opportunity of being heard before making any consequential demand.

Broader implications: The order applies the reasoning of the Delhi High Court's Rajesh Projects decision to payments made to NOIDA and requires fact-specific verification by the AO. The Tribunal did not purport to lay down a new legal precedent; it remitted factual verification to the AO and allowed the appeals for statistical purposes.

Order pronounced on 28 February 2020 by the Tribunal (Vice President and Accountant Member). The summary above is strictly confined to and derived from the contents of the provided opinion text.

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    Prateek Buildtech (India) Pvt. Ltd., New Delhi v. ACIT, New Delhi

    PER O. P. KANT, ACCOUNTANT MEMBER These two appeals have been filed by the assessee aggrieved with the orders dated 23.02.2017 and 24.03.2017 passed by the Learned Commissioner of Income Tax (Appeals)-41, New Delhi upholding the liability u/s 201(1) and 201(1A) of the Income Tax Act, 1961 (in short the Act) for Assessment Year 2012-13 and Assessment Year 2013-14 respectively. Date of Hearing 20.02.2020 Date of Pronouncement 28.02.2020

    2 ITA Nos. 3109 & 3110/Del/2017

    2. In view of the identical impugned orders and grounds raised in both the appeals, same were heard together and disposed of by way of this consolidated order for convenience. The grounds in ITA No. 3109/Del/2017 for Assessment Year 2012-13 are reproduced as under:

    1. That the ld. Commissioner of Income Tax (Appeals) has erred in law and on facts, in holding that assessee is liable to pay interest u/s 201(1A) of the Income Tax Act, 1961 for non-deduction of tax at source u/s 194-I of the Income Tax Act, 1961 on payment of 1% of lease premium of Rs. 1,35,12,047/- (Rs.71,89,000/- and Rs.63,23,047/-) without appreciating the facts of the case and explanation furnished by the assessee. As such, the direction issued by the ld. CIT(A) to the ld. AO for re-computation of interest u/s 201(1A) of the Income Tax Act. 1961 is bad in law and the same may please be rescinded.

    2. That the ld. Commissioner of Income Tax (Appeals) has erred in law and on facts, in holding that the assessee is liable to pay interest u/s 201(1A) of the Income Tax Act, 1961 even when the assessee has not been considered as assessee-in-default for the purpose Section 201(1) of the Income Tax Act, 1961. As such, the direction issued by the ld. CIT(A) to the ld. AO for re- computation of interest u/s 201(1A) of the Income Tax Act, 1961 is bad in law and the same may please be rescinded.

    3. That the ld. Commissioner of Income Tax (Appeals) has erred in law, while not following the judgement of Honble Delhi High Court in Rajesh Projects (India) Pvt. Ltd. Vs CIT(TDS)-II &Ors., W.P.(C) 8085/2014 in its true spirit and holding the assessee liable for interest u/s 201(1A) of the Income Tax Act, 1961. As such, the direction issued by the Ld. CIT(A) to the Ld. AO for re- computation of interest u/s 201(1A) of the Income Tax

    3 ITA Nos. 3109 & 3110/Del/2017 Act, 1961 is bad in law and the same may please be rescinded.

    4. That the appellant craves leave to add, alter, delete & modify any of the ground of appeal at the time of hearing.

    3. Identical grounds have been raised in Assessment Year 2013-14 except change of the amount.

    4. The solitary issue involved is levy of interest under section 201(1A) of the Act in respect of the TDS of 13,51,205/- and of 6,32,310/- for Assessment Year 2012-13 and 2013-14 respectively, on lease rent paid to New Okhla Industrial Development Authority (NOIDA), on which tax was not deducted by the assessee company.

    5. Briefly stated facts of the case are that for Assessment Year 2012-13 notice under section 201(1)/201(1A) of the Act was issued on 18/03/2014 and order dated 28/03/2014 was passed by the Learned Assessing Officer holding the assessee as assessee-in- default and creating liability of 55,15,938/- (43,55,239/- on account of non-deduction of tax at source under section 194I of the Act on amount of 4,35,52,987/- and 11,60,699/- as interest for delayed

    4 ITA Nos. 3109 & 3110/Del/2017 payment) in respect of the land acquired on lease from NOIDA having detail as under: Date of Payment Amount subject to Nature of Amount Amount of TDS payable u/s 194I (Rs.) Amount Interest @1% pm, 201(1A) of the Act (Rs.)

    1. 24.03.2012 3,00,40,340 One-time lease rent 30,04,034 7,51,008

    2. 16.05.2011 71,89,000 Lease Premium in respect of F.Y. 2011-12 7,18,900 2,51,615

    3. 29.03.2012 63,23,047 Lease Premium in respect of F.Y. 2012-13 6,32,305 1,58,076 TOTAL 4,35,52,987 43,55,239 11,60,699

    6. Similarly for Assessment Year 2013-14, notice under section 201(1)/201(1A) of the Act was issued on 18/03/2014 and order dated 30/03/2015 was passed by the Assessing Officer holding the assessee as assessee- in-default and creating liability of 7,90,388/- (6,32,310/- on account of non-deduction of tax under section 194I of the Act on amount of 63,23,100/- and 1,58,078/- as interest for delayed payment) in respect of the land acquired on lease from NOIDA.

    5 ITA Nos. 3109 & 3110/Del/2017

    7. Aggrieved with the orders of the Assessing Officer, the assessee filed appeal before the first appellate authority in respective years. The Ld. CIT(A), while passing the orders deleted the TDS liability on payments stating that the assessee is not considered as assessee- in-default and had a reasonable cause for non-deducting TDS on the payments made to NOIDA following the decision of the Honble Delhi High Court in the case of Rajesh Projects (India) Ltd. versus CIT (2017) 392 ITR

    483 (Delhi), but the Ld. CIT(A) further directed the Assessing Officer to re-compute the interest as per first proviso to section 201(1A) from the date on which tax was deductible till the date of filing of the return of income by the deductee (i.e. NOIDA) in respect of the TDS of 13,51,205/- on lease rent paid to NOIDA for Assessment Year 2012-13 and TDS of 6,32,310/- on lease rent paid for Assessment Year 2013-14.

    8. Before us, the assessee is aggrieved with the direction of the Ld. CIT(A) for raising liability of interest on the amount of TDS for the period from the due date to the date of the filing of the return of income by the NOIDA in respect of assessment years.

    6 ITA Nos. 3109 & 3110/Del/2017

    9. The Learned Counsel of the assessee before us submitted that the Learned CIT(A) has not followed the decision of the Honble Delhi High Court in the case of Rajesh Projects (India) Private Limited (supra). According to him, in view of the decision of the Honble Delhi High Court, once the payment made prior to the date of the said judgement to the NOIDA, the entire responsibility of making tax and interest toward such TDS liability is of the NOIDA and not of the assessee. Accordingly submitted that the direction of the Ld. CIT(A) might be cancelled.

    10. The Learned DR on the other hand supported the order of the Ld. CIT(A) and submitted that Honble Delhi High Court has said that to the extent no recovery should be made from the assessee if the liability in respect of the TDS along with the interest has been satisfied by the NOIDA. He submitted that in the instant case, the assessee has not submitted any evidence that interest liability has been satisfied by the NOIDA, therefore the Ld. CIT(A) is justified in raising the said liability on the assessee, following the decision of the Honble Delhi High Court in the case of Rajesh Project (India) Private Limited (supra).

    7 ITA Nos. 3109 & 3110/Del/2017

    11. We have heard the rival submission and perused the relevant materials on record. The only dispute in the case of the assessee is whether the interest liability under section 201(1A) of the Act has to paid by the assessee or not. We find that the Honble Delhi High Court in the case of Rajesh Project (India) Private Limited (supra) on the issue of liability to pay TDS on lease rentals to the GNOIDA has directed as under: In view of the above conclusions, it is hereby directed that wherever amounts have been paid by the petitioners, towards TDS as a result of the coercive process used by the Revenue, the GNOIDA shall make appropriate orders to credit/reimburse such payments. In case payments are made through deposit, over and above the rental amounts paid to the GNOIDA, without TDS, the income tax authorities shall not pursue any coercive proceedings; GNOIDA shall duly reimburse the petitioners for such amounts. Any amounts deposited in the court or with the Revenue, shall, to the extent of TDS liability only be appropriated for such purpose. It is clarified that GNOIDA shall ensure that reimbursement is made to compensate the petitioners' excess payments; the income tax authorities shall not pursue any coercive methods for recovery of the amounts, or penalty, once the basic liability (with interest, to be paid by GNOIDA) is satisfied. The impugned orders are quashed; the Revenue shall make consequential orders, to give effect to this judgment, after duly hearing the petitioners and those likely to be affected, within 12 weeks from today.

    12. In the above case lease rentals payment have been made to Greater NOIDA, wherein the instant case lease rentals been paid to NOIDA. Thus only difference is of the authority to whom payment have been made, otherwise

    8 ITA Nos. 3109 & 3110/Del/2017 all the facts and circumstances of the instant case are identical to the case of Rajesh Project (India) Private Limited. In above case four situations have been summarised by the Honble Delhi High Court.

    13. Firstly, wherever the amounts have been paid by the buyer (assessee), towards TDS to the Income-Tax Department in the process of coercive measures used, the GNOIDA has been directed to credit or reimbursed the said amount to the Buyer. Because, the buyer has already paid full payment to the GNOIDA and again the TDS amount has been recovered by the Income Tax Department from the assessee.

    14. Secondly, where the payment have been made though deposit over and above the rental paid to GNOIDA, without TDS, the Income-Tax Authorities has been directed not to issue any coercive proceedings and GNOIDA has been directed to reimburse the assessee for such amounts and any amount deposited in the court or with the Revenue to the extent of TDS liability.

    9 ITA Nos. 3109 & 3110/Del/2017

    15. Thirdly, the Income-Tax authorities have been directed not to take any coercive method for recovery of the amounts or the penalty, once the basic liability (with interest to be paid by the GNOIDA) has been satisfied.

    16. In the instant case, the Ld. CIT(A) in Assessment Year 2012-13 has directed the Learned Assessing Officer as under: 7.11 This claim of the appellant has some merit. The appellant had a reasonable cause for not deducting tax on the payments as it was guided by the advise given by the deductee, NOIDA. Hence, following the observation of the Honble High Court, it is not treated as an assessee-in- default. However, it does not absolve the appellant from the interest liability u/s 201(1A), even if it is not considered to be an assessee-in-default. Hence, in view of the provisions of the First Proviso to section 201(1), the Assessing Officer is directed to give opportunity to the appellant to produce the Certificate in Form 26A as per Rule and modify the demand after ascertaining that the deductee has taken into account such sum for computing its income. The AO is further directed to re-calculate the interest u/s 201(1A) from the date on which tax was deductible till date of filing of Return by the deductee. This claim of the appellant is therefore partly allowed.

    17. Identical direction have been issued in Assessment Year 2013-14.

    10 ITA Nos. 3109 & 3110/Del/2017

    18. Thus, the Ld. CIT(A) has directed to reduce or delete the demand u/s 201(1) of the Act to the extent, the deductee (i.e. the NOIDA) has paid tax on the income under reference but directed to raise interest under section 201(1A) of the Act from the date on which tax was deductible till the date of filing of the written by the deductee (i.e NOIDA).

    19. In our opinion, it was the responsibility of the assessee to furnish documentary evidence in support that the NOIDA has paid tax to the Income-Tax department on lease rental income i.e. for the amount of the tax which was deductible on lease rental payment under reference, along with the interest. If the said interest has already been paid by the NOIDA, no recovery can be made from the assessee for the said amount of the interest. The Honble High Court has directed that if the basic liability along with interest to be paid by the GNOIDA has been satisfied, no recovery shall be pursued from the buyer. In view of the facts and circumstances, we feel it appropriate to restore this issue to the file of the Learned Assessing Officer, with the direction to verify whether the NOIDA has made payment of the basic TDS liability along with the interest due thereon. The assessee

    11 ITA Nos. 3109 & 3110/Del/2017 shall cooperate and provide the relevant information required by the Assessing Officer. If after verification, it is found that the basic TDS liability and interest thereon has already been paid by the NOIDA, then no such liability shall be raised on the assessee. Accordingly, we restore this issue to the file of the Assessing Officer with above directions in both the appeal before us. It is needless to mention that A shall be afforded adequate opportunity of being heard.

    20. In the result, the appeals of the assessee for both assessment years are allowed for statistical purposes. Order pronounced in the Open Court on 28th February, 2020. Sd/- Sd/- Sd/- (SUSHMA CHOWLA) (O. P. KANT) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 28/02/2020 Priti Yadav, Sr. PS* Copy forwarded to:

    1. Appellant

    2. Respondent

    3. CIT

    4. CIT(Appeals)

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    Comments

    Prateek Buildtech (India) Pvt. Ltd., New Delhi v. ACIT, New Delhi
    (Feb 28, 2020)