M/S.
Hindustan Coca Cola Beverage Pvt. Ltd Vs. Commissioner of Income Tax [2007] Insc
828 (16 August 2007)
S.H.
Kapadia & B. Sudershan Reddy
CIVIL
APPEAL NO. 3765 OF 2007 (Arising out of SLP(c) No. 3883 of 2007) B.SUDERSHAN
REDDY,J.
Leave
granted.
2. This
appeal by Special Leave preferred by the appellant-assessee is directed against
the judgment of Delhi High Court dated 11.10.2006 in ITA No. 478 of 2005.
3.
Briefly stated the facts are as follows:
4. The
appellant-assessee is engaged in the manufacture and sale of soft drinks. The
appellant- assessee entered into an agreement with M/s. Pradeep Oil Corporation
for use of their premises for receipt, storage and dispatch of goods belonging
to the appellant-company. There is no dispute that the appellant had paid the
warehousing charges to M/s. Pradeep Oil Corporation on which tax was deducted
under Section 194C of the Income Tax Act, 1961 (for short 'the Act') @ 2%. The
Assessing Officer vide order dated 30.3.2001 held the appellant to be 'assessee
in default' for failure to deduct tax at source in respect of warehousing
charges paid to M/s. Pradeep Oil Corporation. The Assessing Officer rejected
the plea of the assessee that the payments made by the appellant- company were
in the nature of contractual payments on which tax was deducted under Section
194C of the Act at 2%. The Assessing Officer accordingly held that the
warehousing charges were in the nature of rent as defined in Explanation to
Section 194-I of the Act and, therefore, tax ought to have been deducted at 20%
under the said provisions as against deduction of tax at 2% under Section 194C
of the Act. The Assessing Officer having held the appellant to be 'assessee in
default' for the shortfall in the amount of tax deducted at source levied
interest under Section 201 (1A) of the Act on the amount of tax alleged to be
short deducted. The Assessing Officer accordingly determined the amount of
short deduction of tax and also levied interest payable thereon under Section
201 (1A) of the Act.
5. The
appellant preferred an appeal against the order of the Assessing Officer before
the Commissioner of Income Tax (Appeals) and thereafter before the Tribunal.
The Tribunal also took the view that the appellant-assessee to be an 'assessee
in default' in respect of the amount of short deduction of tax and also upheld
the levy of interest under Section 201 (1A) of the Act. The further appeal
preferred by the appellant- assessee was dismissed by the High Court on
21.5.2004.
6. The
appellant thereafter preferred miscellaneous application in the appeals that
were already disposed of seeking rectification of the order of the Tribunal
dated 12.7.2002. Be it noted, the appellant did not raise any dispute about it
being the 'assessee in default' and also raised no objection as regards the
levy of interest under Section 201 (1A) of the Act. The grievance of the
appellant was that its alternative contention that the warehouser has been
assessed on its income and the tax due has been recovered from it by the
department and therefore, no further tax could have been collected from the
appellant has not been considered by the Tribunal in its order dated 12.7.2002.
The contention was that since the tax to be recovered by the department on the
income has already been paid by the assessee, no further tax should be
recovered from the appellant on the same income. The Tribunal vide its order
dated 13.9.2004 allowed the application of the appellant on the ground that the
alternative contention of the appellant has not been considered while disposing
of the appeal. The contention was specifically raised in Ground No. 7 of the
memorandum of appeal preferred by the appellant. The Tribunal accordingly held,
to that extent, there is a mistake apparent on the face of record and,
therefore, constitutes a rectifiable mistake under Section 254 (2) of the Act.
The Tribunal accordingly recalled its earlier order dated 12.7.2002 for the
limited purpose of taking up the particular ground raised in Ground No. 7 in
the memorandum of appeal. This order directing the reopening of the matter has
attained its finality. The department did not challenge the said order.
7. The
Tribunal upon rehearing the appeal held that though the appellant-assessee was
rightly held to be an 'assessee in default', there could be no recovery of the
tax alleged to be in default once again from the appellant considering that Pradeep
Oil Corporation had already paid taxes on the amount received from the
appellant. It is required to note that the department conceded before the Tribunal
that the recovery could not once again be made from the tax deductor where the
payee included the income on which tax was alleged to have been short deducted
in its taxable income and paid taxes thereon. There is no dispute whatsoever
that Pradeep Oil Corporation had already paid the taxes due on its income
received from the appellant and had received refund from the tax department.
The Tribunal came to the right conclusion that the tax once again could not be
recovered from the appellant (deductor- assessee) since the tax has already
been paid by the recipient of income.
8. The
High Court interfered with the order passed by the Tribunal on the ground that
the order dated 12.7.2002 of the Income-Tax Appellate Tribunal has attained its
finality since the appeal filed against the same by the appellant was dismissed
by the High Court on 21.5.2004; the point based on Ground No. 7 was not taken
up in the appeal preferred by the appellant in the High Court. The High Court
further held that the Income-tax Appellate Tribunal's order dated 12.7.2002 got
itself merged into the order passed by it on 21.5.2004 dismissing the appeal of
the appellant herein.
The
High Court came to the conclusion that the Tribunal could not have reopened the
matter for any further hearing.
9. We
have already noticed that the order passed by the Tribunal to reopen the matter
for further hearing as regards ground No. 7 has attained its finality. In the
circumstances, the High Court could not have interfered with the final order
passed by the Income-tax Appellate Tribunal.
10. Be
that as it may, the circular No. 275/201/95- IT(B) dated 29.1.1997 issued by
the Central Board of Direct Taxes, in our considered opinion, should put an end
to the controversy. The circular declares "no demand visualized under
Section 201 (1) of the Income- tax Act should be enforced after the tax deductor
has satisfied the officer-in-charge of TDS, that taxes due have been paid by
the deductee-assessee. However, this will not alter the liability to charge
interest under Section 201 (1A) of the Act till the date of payment of taxes by
the deductee-assessee or the liability for penalty under Section 271C of the
Income-tax Act."
11. In
the instant case, the appellant had paid the interest under Section 201 (1A) of
the Act and there is no dispute that the tax due had been paid by deductee- assessee
(M/s Pradeep Oil Corporation). It is not disputed before us that the circular
is applicable to the facts situation on hand.
12. In
the circumstances, it is not necessary to go in detail as to whether the
Tribunal could have at all reopened the appeal to rectify the error apparent on
the face of the record. We do not wish to express any firm view on this aspect.
13.
The impugned judgment of the High Court is accordingly set aside. The appeal is
allowed with no order as to costs.
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