Dc I T (International Taxation) Jaipur Through Commissioner Ofincome Tax, Internationl Taxation-I, New Delhi v. M/S National Highway Authority Of India P1U-Ew-V 7A & B, Ramkamal Road

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 25 / 2016 DC I T (International Taxation) Jaipur through Commissioner ofIncome Tax, Internationl Taxation-I, New Delhi ----Appellant Versus M/S National Highway Authority Of India P1U-EW-V 7A & B, RamKamal Road, No. 5 Bapu Nagar Senthi, Chittorgar ----Respondent Connected With D.B. Income Tax Appeal No. 27 / 2016 DC I T (International Taxation) Jaipur through Commissioner of Income Tax, Internationl Taxation-I, New Delhi ----Appellant Versus M/S National Highway Authority Of India P1U-EW-V 7A & B, RamKamal Road, No. 5 Bapu Nagar Senthi, Chittorgar ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anuroop Singhi with Mr. N.S. BhatiFor Respondent(s) : Mr. S.L. Jain _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 29/11/2017 1.In both appeals common questions of law and facts areinvolved, hence, they are decided by this common judgment. 2.By way of these appeals, the appellant has assailed thejudgment and order of the Tribunal whereby the Tribunal hasdismissed the appeal of the department. 3.This Court while admitting the matters framed the following questions of law:- In DBITA No. 25/2016 “i) Whether on the facts and circumstances of thecase and in law the Tribunal as well as CIT(A) wasjustified in deleting the levy of interest u/s 201(A)of the Act of Rs. 58,05,368/- as the assesseefailed to deduct tax at source as mandatorilyrequired u/s 195 of the Act and wrongly gavebenefit of the orders u/s 195/197 of the Act,beyond the amount mentioned therein. In DBITA No. 27/2016 “i) Whether on the facts and circumstances of thecase and in law the Tribunal as well as CIT(A) wasjustified in deleting the levy of interest u/s201(1A) of the Act of Rs. 26,33,895/- as theassessee failed to deduct tax at source asmandatorily required u/s 195 of the Act andwrongly gave benefit of the orders u/s 195/197 ofthe Act, beyond the amount and period of theirvalidity?” 4.Counsel for the appellant has taken us to the order of CIT(A)as well as the Tribunal. He contended that the Tribunal hasseriously committed an error in passing the order. He has reliedupon the decision of Delhi High Court in case of Commissioner ofIncome Tax vs. American Express Bank Ltd. (2012) 204 taxman0661 wherein it has been held as under:- “9. While we are not inclined to disturb the findingof the Income Tax Appellate Tribunal that theassessee had acted in a bona fide manner, we donot agree with the conclusion of the Income TaxAppellate Tribunal that the assessee cannot beregarded as being as an "assessee in default" inrespect of the short deduction. It is important toremember that the question of "good and sufficientreasons" only arises when one considers theproviso to Section 201(1) of the said Act. Thatproviso has been specifically introduced to negatethe possibility of imposition of penalty underSection 221 if the Assessing Officer is satisfied that the person liable had good and sufficient reasons tonot deduct and pay the tax in question. Thus, theproviso is to be applied only to the question ofpenalty. It would not absolve the assessee insofaras his being considered as an assessee in defaultfor the purposes of Section 201(1) of the said Act.Therefore, this finding of the Tribunal is set aside.Consequently, question No. 1 is decided in favourof the Revenue and against the assessee. the person liable had good and sufficient reasons tonot deduct and pay the tax in question. Thus, theproviso is to be applied only to the question ofpenalty. It would not absolve the assessee insofaras his being considered as an assessee in defaultfor the purposes of Section 201(1) of the said Act.Therefore, this finding of the Tribunal is set aside.Consequently, question No. 1 is decided in favourof the Revenue and against the assessee. 10. Insofar as the second question is concernedi.e., with regard to the interest payable underSection 201(1A) of the said Act, that is amandatory provision, as already held by a DivisionBench of this Court in the case of CIT v. ITCLimited, ITA No. 475/2010, dated 11.05.2011. Thesaid Division Bench observed as under:-XXXXHowever, levy of interest under section 201(1A) isneither treated as penalty nor has the saidprovision been included in Section 273B to make"reasonableness of the cause" for the failure todeduct a relevant consideration. Section 201(1A)makes the payment of simple interest mandatory.The payment of interest under that provision is notpenal. There is, therefore, no question of waiver ofsuch interest on the basis that the default was notintentional or on any other basis. (See BennetColeman & Co. Ltd. v. V.P. Damle, Third ITO,MANU/MH/0083/1984 : [1986] 157 ITR 812 (Bom.)and CIT v. Prem Nath Motors (P). Ltd.,MANU/DE/1938/2001 : [2002] 120 Taxman 584(Delhi). Therefore, the second question is also answered infavour of the Revenue and against the assessee.” 4.1. He has further relied upon the decision of Bombay HighCourt in case of Pentagon Engineering Pvt. Ltd. vs. Commissionerof Income Tax (1995) 212 ITR 0092 wherein it has been held asunder:- "3. The basic question pertains to the interpretationof s. 201(1A) of the Act. According to learnedcounsel, Mr. Arun Sathe, appearing for theassessee, s. 201(1A) of the Act is not mandatoryand the precondition of reasonable cause for non-payment of taxes deducted under s. 192 of the Act ought to have been considered while levyinginterest under s. 201(1A) of the Act.4. We have perused s. 201(1A) of the Act, whichreadsasunder:"201(1A). Without prejudice to the provisions ofsub-s. (1), if any such person, principal officer orcompany as is referred to in that sub-section doesnot deduct or after deducting fails to pay the tax asrequired by or under this Act, he or it shall be liableto pay simple interest at twelve per cent perannum on the amount of such tax from the date onwhich such tax was deductible to the date on whichsuchtaxisactuallypaid."5. The use of the word "shall" in s. 201(1A) makesthe liability to pay interest in circumstancesmentioned mandatory and there is no preconditionof consideration of "reasonable cause" for non-payment in time of tax deducted under s. 192 ofthe Act. We hold that s. 201(1A) of the Act ismandatory and the Tribunal was right in law intaking the view that the ITO was not required totake into consideration the "reasonable cause" fornon-payment of taxes deducted under s. 192 of theAct. We may add here that in the case of BennetColeman & Co. Ltd. vs. V. P. Damle, Third ITOMANU/MH/0083/1984 : [1986]157ITR812(Bom), alearned single judge of this Court has taken thesame view on the interpretation of s. 201(1A)which we have taken herein.” 4.2. He has also relied upon the decision of Gauhati High Court in case of Commissioner of Income Tax vs. Assam Small IndustriesDevelopment Corporation Ltd. (1196) 219 ITR 0324 wherein it has been held as under:- “8. On going through the provision of Section201(1A) it is clear that interest has to be paid fordelayed payment of tax. The section does notimpose any restriction unlike penalty. TheAssessing Officer has jurisdiction to impose penaltyonly when he finds that delay in payment waswithout good and sufficient reason.” 4.2. He has also relied upon the decision of Gauhati High Court in case of Commissioner of Income Tax vs. Assam Small IndustriesDevelopment Corporation Ltd. (1196) 219 ITR 0324 wherein it has been held as under:- “8. On going through the provision of Section201(1A) it is clear that interest has to be paid fordelayed payment of tax. The section does notimpose any restriction unlike penalty. TheAssessing Officer has jurisdiction to impose penaltyonly when he finds that delay in payment waswithout good and sufficient reason.” 5.Counsel for the respondent has relied upon the decision ofthis Court in case of Commissioner of Income Tax vs. RajasthanRajya Vidyut Prasaran Nigam Ltd. [2006] 287 ITR 354 (Raj.)wherein it has been held as under:- “After perusal of the facts of the case and relevantlaw as on the subject, we are of the opinion thatlearned Commissioner of Income Tax (Appeals) hadrightly held that interest under Section 201(1A) ofthe Act was to be deleted after due verification bythe Assessing Officer from the enclosures withsupporting documents. In all the cases, therecipient of the income had claimed refund, whichhad arisen due to tax deducted at source.Therefore, we find no infirmity in the order of thelearned Commissioner of Income Tax (Appeals) andthe same is hereby sustained.” 5.1. He has further relied upon the decision of Gujrat High Courtin case of Commissioner of Income Tax vs. Rishikesh ApartmentsCo-operative Housing Society Ltd. 253 ITR 310 wherein it hasbeen held as under:- “If one looks at the fact whether Ravi Builder had infact paid the amount of tax payable by it on theamount which was paid to it by the assessee, onefinds that Ravi Builder had paid the tax. In fact forboth the years, it had paid more advance tax thanwhat was payable by it. Thus, the entire amount oftax which was payable by it had been duly paid.Had Ravi Builder not paid tax on the amount whichit had received from the assessee, the Revenuecould surely saddle the assessee with the liability ofpayment of interest under the provisions of Section201(1A) of the Act. But in the instant case, as RaviBuilder had already paid the tax on the income, inour opinion, there was no question of levying anyinterest on the assessee as the amount which waspayable to the Revenue had been duly paid. Inother words, we may say that the liability of theassessee-society to make deduction at source andpay the tax to the Revenue is not independent ofthe liability of the contractor or Ravi Builder to paythe tax. If assessment in relation to income of Ravi Builder, i.e., the contractor, had become final and nofurther tax was found due from Ravi Builder, thatwould put an end to the liability of the assessee-society and as the asses-see-society was not liableto make any payment of tax on behalf of thecontractor, no amount of interest could be leviableunder the provisions of Section 201(1A) of the Act.If one looks at the facts of the present case, it is notin dispute that Ravi Builder, on whose behalf the taxwas to be deducted and paid under Section 194C ofthe Act had paid more amount of tax by way ofadvance tax than what was payable and had alsopaid tax on self-assessment. Thus, it is not at all indispute that for the relevant two years the amountof tax was paid by Ravi Builder on its income as perthe provisions of the Act, and for the other twoyears, tax was paid by Ravi Builder a little late. Sofar as the late payment is concerned, the AppellateAssistant Commissioner held that the assessee hadto pay interest under Section 201(1A) for the saidyears and the assessee accepted the said finding.Thus, it can very well be seen that the facts of thecase which has been relied upon by Mr. Qureshicannot help the Revenue for the reason that in thesaid case it was not known whether the person onwhose behalf the tax was to be paid to the Revenuehad in fact paid the tax payable by him. In theinstant case, the contractor, viz., Ravi Builder, hadadmittedly paid the amount of tax payable by it andthus no loss of whatsoever nature had been causedto the Revenue on account of non-deduction of taxatsourcebytheassessee.From the legal provisions discussed hereinabove, itis crystal clear that in the instant case Ravi Builder,on whose behalf the tax was to be paid by theassessee, had duly paid its tax and was not requiredto pay any tax to the Revenue in respect of theincome earned by it from the assessee. If the taxwas duly paid and that too at the time when it hadbecome due, it would not be proper on the part ofthe Revenue to levy any interest under Section201(1A) of the Act especially when Ravi Builder hadpaid more amount of tax by way of advance taxthan what was payable by it. As the amount of taxpayable by the contractor had already been paid byit and that too in excess of the amount which waspayable by way of advance tax, in our opinion, theTribunal was absolutely right in holding that the taxpaid by the contractor in its own case, by way ofadvance tax and self-assessment tax, should bededucted from the gross tax that the assesseeshould have deducted under Section 194C of the Act while computing interest chargeable under Section201(1A) of the Act. If the Revenue is permitted tolevy interest under the provisions of 201(1A) of theAct, even in a case where the person liable to paythe tax has paid the tax on the date due for thepayment of the tax, the Revenue would deriveundue benefit or advantage by getting interest onthe amount of tax which had already been paid onthe due date. Such a position, in our opinion,cannot be permitted. 6.In that view of the matter, the view taken by the jurisdictionHigh Court is required to be accepted and hence, the appeal beingdevoid of merit deserves to be dismissed. Even otherwise there isconcurrent finding of the authorities. 7. The issue is answered in favour of the assessee and againstthe department. 8.The appeals stand dismissed. (VIJAY KUMAR VYAS)J. (K.S. JHAVERI)J. A.Sharma/116-117