Ita/434/2013 Of The Commissioner Of Income Tax v. Chief Electrical Inspector

IN THB HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 29[‘T]DAY OF JANUARY 2014 PRESENT THER HON’BLE MR. JUSTICE DILIP B.BHOSALEAN ] THE HON’BLE MR. JUSTICE B.MANOHAR| I.T.A. No.434/20193C/W. I.T.A. NOS.448/2013, 447/2013, 446/2013,441/2013, 440/2013, 4389/2013, 438/2013,437/2013, 436/2013, 449/2013 & 435/2013, BETWEEN: 1.|The Commissioner of Income-tax. TDS, No.59, HMT Bhavan, v[th]Floor, Bellary Road, Ganganagar, Bangalore. 2 |The Assistant CommissionerOf Income-Tax-TD%S,Of Income-Tax-TD%S, Circle-18(2), No.o9, © HMT Bhavan, 4[th]Floor, Bellary Road, Ganganagar, Bangalore- 560 032. ...APPELLANTS (Common in all) (By Sri.Aravind K.V., Adv.) | AND :. Chief Electrical Inspector To Government, Ground Floor, Mysugar Building, J.C.Road, Bangalore — 560 OOo. ...RESPONDENT (Common in all) (By Sri.T.K.Vedamurthy, HCGP) . . . . -9O-. These I.T.As. are filed under Section 260A of theIncome Tax Act, 1961 praying to (i) formulate thesubstantial questions of law stated therein, (11) allow theappeal and set-aside the order passed by the IncomeTax Appellate Tribunal, Bangalore Bench in I.T.A. Nos.1486/Bang/2012, 1476/Bang/2012, 1477/Bang/2012,1478/Bang/2012, 1479/Bang/2012, 1480/Bang/2012,1481 /Bang/2012, 1482, Bang/2012, 1483/Bang/2012,1484/Bang/2012, 1475/Bang/2012 & 1485/Bang/—2012 respectively, all dated 19.04.2013 confirming theorder of the Appellate Commissioner and confirm theorder passed by the Assistant Commissioner of IncomeTax-TDS, Circle-18(2), Bangalore.| These I.T.As. coming on foradmission,this day,Dilip B.Bhosale, J..delivered the following: JUDGMENT These income-tax appeals are directed against thecommon orders passed by the Income-tax AppellateTribunal(for|shortDthe|Tribunal’)andtheCommissioner of Income-tax (Appeals)-II, Bangalore (forshort‘the First Appellate Authority’) against the)orders dated 19.04.2013 and 10.10.2011 respectively. —The appeals before the First Appellate Authority werepreferred by the respondent-assessee —- the Chief -3- Electrical Inspector to the State Government whilst theappeals before the Tribunal were filed by the Revenue. 2. The substantial questions of law raised in theseappeals read thus: 1.WhetherOrlthefacts|andin|the|circumstances of the case and in law, the|Tribunal was correct in holding that the|order passed u/s. 201 would not fall)u/s.251(1}(a) of the Act, but falls u/s.|251(1)(c)and.hencetheAppellateCommussioner is competent to remand the|proceedings and recorded a _ perversfinding?circumstances of the case and in law, the|Tribunal was correct in holding that the|order passed u/s. 201 would not fall)u/s.251(1}(a) of the Act, but falls u/s.|251(1)(c)and.hencetheAppellateCommussioner is competent to remand the|proceedings and recorded a _ perversfinding? 2)WhetherOrthefacts|and.In|the|circumstances of the case and in law, the|Tribunal was correct in holding that the|provisions of Section 251(1)(a) of the Actare not applicable to the orders passed|u/s. 201 of the Act?circumstances of the case and in law, the|Tribunal was correct in holding that the|provisions of Section 251(1)(a) of the Actare not applicable to the orders passed|u/s. 201 of the Act? 3. Briefly stated, the facts leading to theseappeals, are that the respondent-assessee had delegatedits power for collection of FElectricity-tax to theElectricity Commissioners, who are also supplying -4 _| 2)WhetherOrthefacts|and.In|the|circumstances of the case and in law, the|Tribunal was correct in holding that the|provisions of Section 251(1)(a) of the Actare not applicable to the orders passed|u/s. 201 of the Act?circumstances of the case and in law, the|Tribunal was correct in holding that the|provisions of Section 251(1)(a) of the Actare not applicable to the orders passed|u/s. 201 of the Act? 3. Briefly stated, the facts leading to theseappeals, are that the respondent-assessee had delegatedits power for collection of FElectricity-tax to theElectricity Commissioners, who are also supplying -4 _| electricity to BESCOM, GESCOM, MESCOM, HESCOM-AND CESCOM (for short “ESCOM”). In addition to theelectricity charges on the electricity supplied by theseESCOMs, they also collected Electricity-tax on behalf ofthe Government, which they remit to the Governmentand the Government in turn pay them certain sum tocompensate towards the expenses incurred by them forcollecting tax. Therefore, the question was:whether theamounts paid to the ESCOMs by the assessee could betreated as Commission?' The findings of the AssessingOfficer, the First Appellate Authority and the Tribunalare concurrent insofar as this question is concerned. |All the authorities have concurrently held that thepayment made by the Government to the ESCOMs forcollecting Electricity-tax amounts to commission. Thelearned counsel for the respondent-assessee does notdispute this finding recorded by the authorities belowincluding the Tribunal. The controversy was whetherthe assessee should have deducted tax at source while|makingpaymentTOtheBSCOMs.for.collectingElectricity-tax. Admittedly, the assessee did not deduct. -5 -) the tax at source while making the payment asaforestated. At the same time, it is admitted fact that,that the ESCOMs, on receipt of the said amount fromthe assessee have paid the tax to the Department. It isin this backdrop the First Appellate Authority, aiterconsidering the facts of the case in the lght of therelevant provisions, ultimately directed the AssessingOfficer to pass consequential orders charging interestunder Section 201(1A) of the Income tax Act (for short“the Act?). It also appears from the observations madein paragraph 3.9 and 3.10 in the order of the FirstAppellate Authority that it directed the Assessing Officerto verify whether the ESCOMSs paid tax on the amountsreceived from the assessee for collecting Electricity-tax.The observations made by the First Appellate Authorityin paragraph 3.9 and 3.10 read thus: “3.9 In this regard, the appellant has|furnished copies of the returns of income of.the payees for the relevant assessment years. |The contentions of the appellant appears to be|correct. In such a case, TDS u/s. 201 neednot|be.collectedONCEagain from.the|appellant. The AO is directed to work out the| -6-. relief to the appellant u/s. 201(1) afterverifying the payment of taxes, if any, due as|per the returns of income of the payees reliedupon by the appellant. 3.10 As regards interest levied u/s. 201(1A),which is mandatory and compensatory in|nature, the same would remain and stands|confirmed. However, the appellant has put|forward the contention that the deducteeshave filed returns of income declaring the|commission income therein and paid the taxthereon. The AO is directed to verify the|dates of filing of returns of income and|payment of taxes by the payees and,accordingly, interest u/s 201(1A) is to be|charged up to the date offiling of such returns|of income by the deductees for the respective|years in question. The AO is, _ therefore,directedtoDass|consequentialorders.charging interest u/s 201(1A) accordinglvy. 4. The learned counsel for the respondent-assessee Submits that they do not have any grievanceagainst the order of the First Appellate Tribunal. oO. Mr.K.V.Aravind, learned counsel appearing forthe appellant, on the other hand submits that the - f -) 4. The learned counsel for the respondent-assessee Submits that they do not have any grievanceagainst the order of the First Appellate Tribunal. oO. Mr.K.V.Aravind, learned counsel appearing forthe appellant, on the other hand submits that the - f -) Revenue challenged the order of the First AppellateAuthority under the impression that the First AppellateAuthority remanded the matter to the Assessing Officerfor its consideration afresh. Though he so submitted, hecould not support the apprehension, so expressed onthe basis of the order of the First Appellate Authority.Even we do not find any such direction in the order ofthe Appellate Authority.| 6. The appeals filed before the Tribunal in view ofthe apprehension, as aforementioned, were dismissedby the Tribunal. The Tribunal however, made certainobservations in paragraphs 10 and 11, which, in ourOpinion were unnecessary. Mr. Aravind K.V., learnedcounsel fortheappellantssubmitsthat|iftheobservations made in paragraphs 10 and 11 are set-aside, perhaps, that will serve the purpose of theRevenue.Mr.T.K.Vedamurthy,learnedHCGP|appearing for the respondent-assessee has not opposedthis submission. | -8S-. 7. We also find that directions issued by the FirstAppellate Authority deserves to be maintained withfurther direction to the Assessing Officer to passconsequential orders charging interest under Section201-(1A) of the Act. In view thereof, the learned counselappearing for the appellant fairly states, we need notenter into merits ot the case and address the!substantial questions raised in these appeals. As amatter of fact, in view of the peculiar facts andcircumstances of the case, the substantial questions, as.raised, do not arise for reconsideration. Hence, we pass—the following: ORDER The Assessing Officer, as per the directions issued|by the First Appellate Authority and confirmed by theTribunal shall pass consequential orders charginginterest under Section 201(1A) of the Act after verifyingwhether the ESCOMs have paid the tax on the amountsreceived by them from the respondent-Assessee. In.otherwords,theAssessingOfficer|shallpassconsequential orders as per the directions issued by the -9O-. First Appellate Authority in paragraph 3.9 and 3.10expeditiously. We set-aside the observations made in paragraphs 10 and 11 in the impugned order. With these observations, appeals are.disposed of Sd/-. JUDGE Sd/-. JUDGE