Amendment in section 194H by insertion of provision 3 is not applicable retrospectively

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH ‘A’: NEW DELHI

BEFORE SHRI G.D.AGRAWAL, VICE PRESIDENT AND

SHRI HARI OM MARATHA, JUDICIAL MEMBER

ITA Nos.1578/Del/2012, 1579/Del/2012 & 1580/Del/2012

Assessment Years: 2005-06, 2006-07 & 2007-08

Assistant Commissioner of

Income Tax,

TDS Circle,

Gurgaon.

(Appellant)

Vs.

M/s Bharat Sanchar Nigam Limited,

Main Telecom Exchange,

Old Delhi Road,

Gurgaon.

PAN: AABCB5576G.

 (Respondent)

Appellant by: Shri Pirthi Lal, Sr.DR.

Respondent by: Shri R.K.Gupta, AR.

ORDER

PER G.D.AGRAWAL, VP:

These three appeals filed by the Revenue are directed against the consolidated order of learned CIT(A), Faridabad dated 25th January, 2012 for the AY 2005-06, 2006-07 & 2007-08.

2. Common issue is raised in all these appeals by the Revenue which read as under:-

“The ld.Commissioner of Income Tax (A) has erred in law and on the facts in deleting the demand of Rs.46,72,608/- for A.Y. 2005-06, Rs.40,04,520/- for A.Y. 2006-07 & Rs.53,75,247/- for A.Y. 2007-08 vide his order dated 25.01.2012 in Appeal No.14/GGN/2011-12 made u/s 201 & 201(1A) of the Income Tax Act for the assessment year ITA Nos.1578 2 to 1580/Del/2012 2005-06 to 2007-08 (Financial Year 2004-05 to 2006-07) holding that:-

1. The present case is identical and similar to the issue decided by COD’s and the amendment made through the Finance Act, 2007 wherein it has been provided that tax shall not be deducted on payments of commission or brokerage payable by Bharat Sanchar Nigam Limited or Mahanagar Telephone Nigam Limited to their public call office franchises. As a matter of fact, the CBDT has taken a stand that the demands are not to be enforced on BSNL and MTNL offices expects in the cases where taxes have been deducted at sources but not paid over to the revenue.

The order of the ld.CIT(A) is not acceptable as the amendment in section 194H by way of insertion of provision 3 is not applicable retrospectively and only applicable after 30th May, 2007. Further, the Hon’ble High Court, Chandigarh has also decided the appeal in favor of the assessee on the ground that the matter has been referred to the Committee on Disputes for awarding the decision. However, in the present order a liberty has been given to the department to file appropriate application for revival of the appeal if such a necessity arises on the basis of the decision taken by the committee on disputes. Only instant on the instruction of CBDT issued on 08-05-2009 vide instruction No.03/2009 about not for seen demand/penalty against BSNL/MTNL for non-deduction of TDS on STD/PCO commission is not sufficient parameters about raising of demand and passing of order u/s 201(1)/201(1A) of the I.T.Act. Further, the reliance of Delhi ITAT decision in order No.ITA/3946/D/2004 dated 20-10- 2005 is not justified as Hon’ble Chandigarh High Court has already decided this issue in the assessee’s own case.

2. It is prayed that the order of the ld.Commissioner of Income Tax (Appeals) be cancelled and that of the Assessing Officer may be restored.

3. The appellant craves for the permission to add or amend any grounds of appeal before the appeal is heard or disposed off.”

3. We have heard both the parties and perused the material placed before us. We find that this issue is squarely covered in favour of the assessee by the decision of ITAT in assessee’s own case for AY 2003- 04 to 2008-09 vide ITA Nos.193/Del/2012 to 198/Del/2012, wherein the ITAT held as under:-

“6. We have heard the rival contentions and perused the material placed before us. We find that the issue involved in the present appeals is covered in favour of the assessee by the order of the Tribunal dated 7th December, 2011 (supra) passed in assessee’s own case for AY 2006-07 & 2007-08. In the said order, the ITAT Pune Bench has followed the earlier order of the Tribunal in assessee’s own case in ITA Nos.71 to 77/PN/2009 for the AY 2002-03 and 2008-09, and held that the amendment brought in Section 194H is only clarification in nature. The relevant portion of the said order is reproduced below :-

“5. From the above, it is evident that the Finance Act, 2007 has incorporated third proviso to section 194H stating, ‘no deduction shall be made under this section of any commission or brokerage payable by BSNL or MTNL to their PCO franchisees. The same is relevant for the A.Y. 2008-09. The issue is whether similar exemption is applicable for the assessment year prior to the assessment year 2008-09. This issue was adjudicated in favour of the assessee by co-ordinate Bench of this Tribunal in assessee’s own case in ITA No.71 to 77/PN/2009. It has taken support from the order of the Tribunal in the case of ITO Vs. Accounts Officer, BSNL (ITA No.3996/Del/2004). Considering the exact nature of the issue, we are of the opinion that the CIT(A) was justified in cancelling the orders of the A.O. u/s 201 and 201(1A) for the years under

consideration.”

7. Respectfully following the aforesaid order of the ITAT in assessee’s own case, we hold that the authorities below have erred in treating the assessee in default under Section 201(1)( and 201(1A). Accordingly, we reverse the orders of authorities below and allow the appeals filed by the assessee.”

4. Since the issue in the years under appeal is identical to the issue decided by the ITAT in the earlier years, we, respectfully following the above decision of the ITAT, uphold the order of learned CIT(A) and dismiss the appeals of the Revenue.

5. In the result, all the appeals of the Revenue are dismissed.

Decision pronounced in the open Court on 26th October, 2012.

Sd/- Sd/-

(HARI OM MARATHA) (G.D.AGRAWAL)

JUDICIAL MEMBER VICE PRESIDENT

Dated : 26.10.2012

VK.

Copy forwarded to: -

1. Appellant: Assistant Commissioner of Income Tax, TDS Circle, Gurgaon.

2. Respondent: M/s Bharat Sanchar Nigam Limited, Main Telecom Exchange, Old Delhi Road, Gurgaon.

3. CIT

4. CIT(A)

5. DR, ITAT

Assistant Registrar