INCOME-TAX OFFICER (TDS) Vs. BEACON PROJECTS (P.) LTD.
INCOME TAX APPELLATE TRIBUNAL
Income -Tax Officer (Tds)
Beacon Projects (P.) Ltd.
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Chandra Poojari, Member (A) -
(1.) THESE appeals filed by the revenue are directed against the common order dated 7th Aug, 2008 and its pertain to the AYs 2012 -13 and 2013 -14 respectively. The assessee filed Cross objections which were delayed by 50 days. The assessee filed condonation petition seeking delay in filing the Cross Objections.
(2.) WE have gone through the condonation petition. The reasons stated in the petition that there was no time to prepare the paper book and the requisite documents. We find that the reasons advanced in the affidavit cannot be find a reasonable cause. To condone the delay there must be a reasonable cause. The reasons advanced by the assessee are general and casual in nature. Being so, we are of the opinion that there is no good and reasonable cause to condone the delay. Accordingly, the Cross Objections filed by the assessee are dismissed as non admitted. In the appeals, the revenue has raised the ground that the CIT(A) erred in deleting the disallowance u/s. 201(1)( and 201(1 A) of the Act.
(3.) BRIEF facts of the case are that during the course of survey u/s. 133A it was found that an amount of Rs. 62.87 lacs has been paid to M/s Kone Elevators during the financial year 2011 -12 without deducting tax at source. According to the AO, the tax deductibles u/s 194C @ 296 works out to Rs. 1,25,740/ -. The assessee pleaded before the AO that the payment was not come under the works contract and it is only a contract of sale. Being so, the provisions of sec. 194C is not applicable. The AO observed that in the instant case there is a contact between both the parties and it is purely for carrying out work of supply, erection and commissioning of lift and the payment has been made as per the invoice. It was mentioned in the invoice that total contract value for design, manufacture, supply, erection, testing and commissioning one number of passenger lift at Rs. 18,00,000/ -. There is no bifurcation of each items mentioned above. The AO gone through the price schedule signed by both the parties and the invoice dated 27.9.2011 issued by M/s Kone Elevator India P Ltd. According to the AO, all the process of erection of lift fall under the clause (iii) of the Explanation to sec. 194C and not as per the sub -clause (e) of clause (iv) as claimed by the assessee. Accordingly, he considered the assessee liable for TDS u/s. 194C of the Act and also considered the assessee in default u/s. 201(1) of the Act. Further, the AO found that the assessee paid a total interest of Rs. 31,37,341/ - out of which Rs. 8,23,250/ - was paid to nonresidents on which TDS is deductible u/s. 195 of the Act @ 30.9% and for the balance amount u/s. 194 @ 10% which workout to Rs. 4,85,794/ -. Accordingly, the AO considered the assessee in default u/s. 201 and 201(1A) of the Act. Similar case in the next year 2013 -14 also.
4.1 On appeal, the CIT(A) by placing reliance on the judgment of the Hon'ble Supreme Court in Civil Appeal No. 6585 of 1999 dt 17.2.2005 in the case of State of Andhra Pradesh v. Kone Elevators (India) Ltd, allowed the claim of the assessee in both years by observing that the contract is not a 'work contract' but only a 'contract for sale' and therefore, no TDS is applicable. Consequently interest charged u/s. 201(1A) in both the years was deleted.
4.2 Further, there was a non -deduction of tax from payments made to certain customers debited in direct expenses under the head "excess payment refund" which was treated as indirect expenses by the assessee. It was submitted by the assessee before the lower authorities that some payments were received by the assessee from customers and who were initially booked the flat by making advance payment plus 1 or 2 instalments; but due to various reasons the customers could not fulfil the payment schedule and they requested for refund. After certain period, the assessee identified some new customers and the flats were sold at higher rate than the previous price. After the sale, the assessee returned the payments received from previous customers with a margin, in order to maintain good business relationship and no TDS has been deducted. However, the AO observed that the expenses debited to P&L Account cannot be treated as refund and on the other hand it is a payment of interest on the amount paid by the original customers which is liable for TDS u/s. 194A of the Act.
4.3 On appeal, the CIT(A) observed that the assessee is acting as an agent between the old customers and new customers. What the assessee is doing is passing on the sale consideration, including the excess amount received on sale of flats from new customers to old customers. The CIT(A) relied upon the decision of the Hon'ble Bombay High Court in the case of CIT v. Tata Services Ltd :  122 ITR 592: :  1 Taxman 427, wherein it has been held that the excess amount received on transfer of right in a property is in the nature of a capital receipt, and therefore, held that the provisions of section 194A is not applicable in the transactions undertaken by the assessee. Accordingly the CIT(A) directed the AO to delete the addition made on this count. Consequently, the interest charged u/s. 201(1A) in both the years was also deleted. Aggrieved, the revenue is in appeal for both the years.;
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