Ita/83/2011 Of The Commissioner Of Income Tax(Tds)Cochi v. M/S. Vodafone Essar Cellular Ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.VINOD CHANDRAN TUESDAY, THE 22ND NOVEMBER 2011 / 1ST AGRAHAYANA 1933 ITA.No. 83 of 2011() -------------------- AGAISNT ORDER DATED 25/01/2011 IN ITA.108/COCH/2009 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT / RESPONDENT ------------------------------ THE COMMISSIONER OF INCOME TAX (TDS), COCHIN. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): APPELLANT ------------------------ M/S. VODAFONE ESSAR CELLULAR LTD., XL/5115, ASHIS BUILDING, SECOND FLOOR, SHANMUGHAM ROAD.P.O, COCHIN - 682 031. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 22/11/2011, ALONG WITH ITA NOS.85, 114 & 124 OF 2011 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA NO.83/2011 APPENDIX APPELLANT'S EXHIBITS ANNEXURE-A :COPY OF ORDER OF A.O. UNDER SECTION 201(1) DATED30/07/2008 FOR THE ASSESSMENT YEAR 2005-06. ANNEXURE-B :COPY OF ORDER DATED 12/01/2009 OF THE COMMISSIONER OFINCOME TAX (APPEALS). ANNEXURE-C :COPY OF ORDER DATED 30/04/2009 OF THE INCOME TAXAPPELLATE TRIBUNAL, COCHIN BENCH. ANNEXURE-D :COPY OF APPEAL MEMORANDUM FILED BEFORE THE HONOURABLEITAT. ANNEXURE-E :COPY OF MISCELLANEOUS PETITION FILED BEFORE INCOME TAXAPPELLATE TRIBUNAL, COCHIN BENCH. ANNEXURE-F :COPY OF JUDGMENT OF HONOURABLE HIGH COURT OF KERALADATED 17/08/2010. ANNEXURE-G :COPY OF ORDER IN M.P. DATED 12/03/2010 OF THE INCOME TAXAPPELLATE TRIBUNAL, COCHIN BENCH. ANNEXURE-H :COPY OF FRESH ORDER OF THE INCOME TAX APPELLATETRIBUNAL, COCHIN BENCH DATED 25/01/2011. //TRUE COPY// jg PA TO JUDGE. C.N.RAMACHANDRAN NAIR & K.VINOD CHANDRAN, JJ. ....................................................................I.T.A. Nos.83, 85, 114 & 124 of 2011 ....................................................................Dated this the 22[nd] day of November, 2011. J U D G M E N T Ramachandran Nair, J. These are appeals filed by the Revenue challenging fresh orders issued by the Tribunal in appeals based onmiscellaneous applications filed by the respondent assessee inthe disposed appeals. Along with the appeals filed, theRevenue has also filed I.A.s seeking permission to raise certainadditional questions of law, besides the questions raised inthe main appeals. 2.We have heard learned Standing Counsel appearingfor the Revenue and have gone through the orders impugnedin the appeal. We have heard learned Standing Counsel appearing 3.After hearing the learned Standing Counsel for theRevenue and after going through the orders, what we notice isthat the Tribunal has in principle upheld the authority of theRevenue to recover tax under Section 201(1) of the Income Tax After hearing the learned Standing Counsel for the ITA Nos.83, 85, 114 & 124 of 2011 Act (hereinafter referred to as the Act for short) for failure to deduct tax at source on payment of commission todistributors of the respondent assessee. The challenge beforethe Tribunal was against the demand of tax by the Departmentunder Section 201(1) of the Act for assessee's failure torecover tax on the commission payments made to distributors.Even though the Tribunal upheld the department's claim, whilegranting relief the Tribunal directed that while raising demandunder Section 201(1) of the Act, the Department should set offtax paid by the distributors on the income received by way ofcommission from the respondent assessee. In other words,the levy authorised by the Tribunal under Section 201(1) of theAct is only short recovery of tax by way of TDS over the taxpaid by the distributors. We are of the view, Section 201(1) of the Act itself is onlyprotective provision authorising the Department to recover taxfrom payers for default in recovery and payment of tax underSection 194H of the Act. The Scheme of deduction of tax atsource by itself does not lead to any levy of tax and it is for We are of the view, Section 201(1) of the Act itself is onlyprotective provision authorising the Department to recover taxfrom payers for default in recovery and payment of tax underSection 194H of the Act. The Scheme of deduction of tax atsource by itself does not lead to any levy of tax and it is for ITA Nos.83, 85, 114 & 124 of 2011 the payees to file returns, claim adjustment of tax payable based on TDS certificates to be produced, and if any excess iscollected at source, the payee can claim refund. Going by thisscheme, recovery of tax under TDS is nothing but advancecollection of tax in respect of income to be considered forassessment at the hands of the payees. So much so, we feelthe direction of the Tribunal to recover only so much of theTDS short collected by the respondent assessee after adjustingpayment of tax on commission payments made by thedistributors does not in any way affect the interest of theRevenue. Consequently, we do not find any merit in theappeals filed by the Revenue. All these appeals are accordingly dismissed. (C.N.RAMACHANDRAN NAIR, JUDGE) (K.VINOD CHANDRAN, JUDGE)