|The Tax Publishers2020 TaxPub(DT) 5142 (Luck-Trib) : (2020) 181 ITD 0576
INCOME TAX ACT, 1961
Where assessee, Government Authority, which acquired lands on behalf of UP Awas Evam Vikas Parishad and did not deduct tax on interest payment on delayed compensation voluntarily paid to farmers for acquiring their land, considering that assessee was under bona fide belief that tax was not deductible at source, as assessee was ignorant of amendment in rule 29C which came into effect during year under consideration, act of assessee was mere technical breach, and did not warrant imposition of penalty under section 271C.
Penalty under section 271C - Non-deduction of tax at source - Assessee, Govt. Authority, paid compensation along with interest on delayed payment to farmers for acquisition of their lands -
Assessee was Government Authority, which acquired lands on behalf of UP Awas Evam Vikas Parishad. Assessee paid compensation along with interest on delayed payment to farmers for their lands. AO alleged that no tax was deducted on source on interest amount and imposed penalty under section 271C. Held: It was found that said compensation and interest on delayed payment was paid voluntarily and there existed bona fide belief that tax was not deductible at source, as assessee was ignorant of amendment in rule 29C which was brought in statute with effect from 1-4-2010, i.e., year under consideration. Since payment was made by Government Authority there was no element of personal profit attributable to assessee, thus, it was undoubtedly bona fide belief and in ignorance of amendment of rule 29C, assessee did not make tax deduction at source on interest amount. It was an inadvertent mistake amounting to mere technical breach. Since department was unable to produce anything on record to prove that belief entertained by assessee was mala fide belief, penalty levied by AO was invalid.
REFERRED : CIT v. Cadbury India Ltd. (2011) 11 taxmann.com 66 (Delhi) : 2011 TaxPub(DT) 0987 (Del-HC), CIT v. ITO CHU Corpn. (2004) 139 Taxman 348 (Del) : (2004) 268 ITR 172 (Delhi) : 2004 TaxPub(DT) 1656 (Del-HC), CIT v. Mitsui & Co. Ltd. (2004) 140 Taxman 430 (Del) : (2005) 272 ITR 545 (Delhi) : 2005 TaxPub(DT) 0235 (Del-HC), ITO v. Cincom System India (P) Ltd. (IT Appeal No. 634 (Delhi) of 2010, dated 18-3-2016), ACIT (TDS) v. Ex. Engineer PHED (IT Appeal No. 297 (Jodh.) of 2016) and ITO (TDS) v. Pushpanjali Hospital and Research Centre (P) Ltd. (IT Appeal No. 450 (Agr.) of 2015) : 2016 TaxPub(DT) 2229 (Agra-Trib).
FAVOUR : In assessee's favour
A.Y. : 2010-11 to 2012-13
IN THE ITAT, LUCKNOW 'A' BENCH
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