TaxTMI 
TaxTMI 
2016 (3) TMI 539
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.... the business premises of the assessee on 29.9.2006, which highlighted certain defaults in the matter of deduction of tax at source from the payments made by the assessee. Notice dated 6.8.2007 u/s 201 was issued on the premise that the assessee failed to properly deduct tax at source in respect of certain payments. In a common order dated 30.3.2011 passed by the Addl. Commissioner of Incometax, Range 49, New Delhi [hereinafter also called `the AO(TDS)'] u/s 201(1)/(1A) of the Act for four years, it was observed that the assessee made payments to four parties including M/s Divya Ahuja and M/s Glow Show Stage Events. The assessee was found to have deducted tax at source on payments made to these two parties u/s 194C of the Act. The AO opined that the tax ought to have been withheld on such payments u/s 194J of the Act instead of section 194C, which resulted into treating the assessee in default u/s 201(1) of the Act. Consequently, interest u/s 201(1A) was also levied. The ld. CIT(A) echoed the view of the AO(TDS) on the payments made to these two parties. Apart from the above, the assessee was also found to have made payments to Auth. Bridge Research Services P. Ltd. and Wang Profes....
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....mitted that the tax effect on the consolidated appeals of the Revenue for each year is more than Rs. 10 lac. In support of the contention that separate appeals should have been filed, the ld. AR relied on certain orders by largely focusing on the decision of Mumbai Bench of the Tribunal in ITO vs. Vodafone Essar Ltd. (2011) 44 SOT 304. On a pointed query, it was admitted that though there is no direct precedent on the point laying down that separate appeals should be filed in respect of quantum and interest u/s 201, the ld. AR submitted that in these orders separate appeals were preferred, which has not been disputed. The ld. AR fortified his contention of filing separate appeals by submitting that in certain cases there may be the only levy of interest under section 201(1A) de hors any liability u/s 201(1) because of the deductee including the amount received from the deductor in his total income. 4.3. The primary question which arises for our consideration is as to whether separate appeals are required to be filed against the order u/s 201(1) [Quantum] and 201(1A) [Interest]. In this regard, we find that section 246A deals with appealable orders before Commissioner (Appeals). ....
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....on was put across, the ld. AR was fair enough to concede that none of the decisions cited by him has a precedent value of having a ratio decidendi by the Tribunal requiring separate filing of appeals against liability u/s 201(1) and interest u/s 201(1A). We, therefore, jettison this contention urged on behalf of the assessee. It is ergo held that two original consolidated appeals filed by the Revenue for both the years in respect of defaults u/s 201(1) and 201(1A) are sufficient to protect the interest of the Department and the four separate appeals filed subsequently are infructuous. In view of our this decision, the question of delay in filing of separate appeals by the Revenue becomes academic and so is the argument of the ld. AR for dismissing some of the Revenue's appeals, each with tax effect of less than Rs. 10 lac. LIMITATION 5.1. The ld. AR vehemently argued that the order passed by the AO (TDS) is barred by limitation in so far as the Financial year 2005-06 is concerned. It was put forth that the AO (TDS) passed order on 30.3.2011, which is beyond a period of four years from the end of the financial year 205-06 and, hence, barred by limitation. In support of this co....
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....period is only for `initiating' proceedings u/s 201. It is apparent from the question as referred to in para 1 of the judgment in which the reference is to initiation of the proceedings against the assessee in default who does not deduct tax at source. Similar position is borne out from the judgment in the case of Hutchison Essar (supra), in which the entire discussion about the period of limitation has been made qua initiation of proceedings u/s 201. Nowhere any reference has been made to the date of passing of order u/s 201 vis-à-vis the period of limitation of four years. In view of the direct judgments of the Hon'ble Delhi High Court including one rendered in the assessee's own case, we are of the considered opinion that it is the 'initiation' of proceedings u/s 201, which has been related with a period of four years from the end of the relevant financial year. Turning to the facts of the instant case, we find that though order u/s 201 was passed by the AO on 30.3.2011, but the proceedings were commenced by way of notice dated 6.8.2007, which period is within four years from the end of the relevant financial year 2005-06, which expires on 31.3.2010. Since the proceedings....
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....ered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section;' 6.4. On going through the prescription of 'fees for professional services', it emerges that the definition given in clause (a) of the Explanation is exhaustive and not inclusive. It is manifest that payment to Gazal group cannot be considered as a quid pro quo for rendering services in the carrying on of any legal, medical, engineering or architectural profession or profession of accountancy or technical consultancy or interior decoration or advertising. What remains for consideration is the last part of the definition of 'Professional services' being: 'such other profession as is notified by the Board for the purposes of section 44AA or of this section.' Section 44AA discusses about 'any other profession as is notified by the Board in the official Gazette.' Rule 6F of the Income-tax Rules, 1962 covers, inter alia, 'film artist', which term has been defined in clause (c) of the E....
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....thorities below in this regard and hold that the provisions of section 194J are not applicable. Ex conseqenti, the deduction of tax at source u/s 194C is in order. The assessee succeeds. 7.1. The next item under dispute is payment by the assessee to M/s Glow Show Stage Events which was made during the financial year 2006-07 after deduction of tax at source u/s 194C of the Act. The AO (TDS) has discussed the nature of this payment on page 2 of his order by noticing that this agency was hired as a `Consultant' for promoting F&B (Food & Beverages) outlet of the assessee providing services like Advisory services for product upgrade, entertainment, consultancy, sourcing entertainment from worldwide. Such payment was held to be falling within the ambit of 'Professional or consultancy services.' That is how, section 194J was applied treating the assessee in default u/s 201(1) and also 201(1A). The ld. CIT(A) affirmed the view taken by the AO on this issue. 7.2. We have gone through the Agreement between the assessee and M/s Glow Show Stage Events, a copy of which has been placed on page 9 onwards of the paper book. This Agreement is, again, dated 26.8.2008. The ld. AR contended that....
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....rrangements is the sole responsibility of the assessee-hotel and M/s Glow Show Stage Events has nothing to do with it as it is simply concerned with their fixed monthly fee, which is not dependent on the successful sourcing of a particular entertainment from worldwide resources. It is further palpable that there is no separate bifurcation of the fee payable by the assessee to M/s Glow Show Stage Events qua the services rendered under sub-clauses (a) to (g) of Clause 2 of the Agreement. Taking a holistic view of the services rendered by M/s Glow Show Stage Events, the inescapable conclusion which follows is that the nature of services provided by them are `Consultancy'. In our considered opinion, such payment falls within the purview of section 194J of the Act. The contention of the assessee that the provisions of section 194C were applicable, is hereby repelled as sans merit. 7.4. The next plank of the arguments of the ld. AR was that even if payment to M/s Glow Show Stage Events was considered as covered u/s 194J, the assessee still could not be treated in default because the receipts from the assessee were included by the payee in its total income. 7.5. In this regard, we f....
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.... no liability on the assessee u/s 201(1) of the Act. 7.6. It is however pertinent to note that the judgment Hindustan Coca Cola Beverages Pvt. Ltd. (supra) does not discharge the obligation of the assessee towards interest u/s 201(1A) notwithstanding the obliteration of demand u/s 201(1) of the Act. Their Lordships in para 10 of this judgment have categorically upheld the liability of the assessee towards interest by relying on Circular No. 275/201/95-IT(B), dt. 29th Jan., 1997 issued by the CBDT, declaring that this will not alter the liability to charge interest under s. 201(1A) of the Act till the date of payment of taxes by the deductee. It is further observed that proviso to sub-section (1A) of section 201 provides in unambiguous terms that in case any person fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso of subsection (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such res....
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....d in the customer bills and in turn given to staff on regular interval on point basis. Insofar as the obligation of deduction of tax at source on the amount of tips is concerned, we find that this issue is no more res integra in view of the judgment of the Hon'ble Delhi High Court in assessee's own case captioned as ITC Ltd. (supra), in which it has been clearly held that once the tips are paid by the customers either in cash directly to the employees or by way of charge to the credit cards in the bills, the employees can be said to have gained additional income. When the tips are received by the employees directly in cash, the employer hardly has any role and it may not be even knowing the amount of tips collected by the employees. That would rightly be out of the purview of responsibility of the employer under s. 192 of the Act. But, however, when the tips are charged to the bill either by way of fixed percentage of amount, say 10 per cent or so on the total bill, or where no percentage was specified and amount is indicated by the customer on the bill as a tip, the same goes into the receipt of the employer and is subsequently disbursed to the employees depending upon the nature ....
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....in the payment of tax'. As regards the interest liability u/s 201(1A), their Lordships held that : `the AO shall examine and find out whether interest has been paid/recovered for the period between the date on which tax was deductible till the date on which the tax was actually paid. If, in any case, interest accrues for the aforestated period and if it is not paid then the adjudicating authority shall take steps to recover interest for the aforestated period under s. 201(1A)'. The last part taken up was on the scope of penalty s. 271C for failure to deduct the whole or any part of the tax as required by the provisions of Chapter XVII-B. On this score, it was held that section 271C is subject to section 273B which provides that no penalty shall be imposed on the assessee for failure to deduct tax at source if he proves that there was a reasonable cause for the said failure. It was finally held that no penalty was exigible under s. 271C as the respondent discharged its burden of showing reasonable cause for failure to deduct tax at source. From the above discussion it transpires that the liability to deduct tax at source u/s 192 has been sustained, the failure of which attracts cons....