Fwd: Bangalore bench ITAT detailed order on TDS applicability on payments in kind; connotation of word "sum" SC order in Kanchangenga distinguished and held We are in complete agreement with the contention of the learned counsel for the Assessee that the provisions for deducting tax at source and paying it over to the Government on behalf of the recipient of the payment is in the nature of vicarious liability. The said liability can be easily and without any effort can be discharged when payment of compensation in a sum of money i.e., in the form of monetary compensation. At least in cases where the quantification of the sum of money takes place in terms of money but the payment or discharge of the liability is made by adjustment which is otherwise than by payment of monetary compensation, it can be said that there would still be a liability. But where neither there is quantification of the sum payable in terms of money nor actual payment in monetary terms, it would be unfair to burd
Kapil Goel
From: CA.KAPIL GOEL <kapilnkg...@gmail.com>
Date: Mon, Nov 17, 2014 at 5:11 PM
Subject: Bangalore bench ITAT detailed order on TDS applicability on payments in kind; connotation of word "sum" SC order in Kanchangenga distinguished and held We are in complete agreement with the contention of the learned counsel for the Assessee that the provisions for deducting tax at source and paying it over to the Government on behalf of the recipient of the payment is in the nature of vicarious liability. The said liability can be easily and without any effort can be discharged when payment of compensation in a sum of money i.e., in the form of monetary compensation. At least in cases where the quantification of the sum of money takes place in terms of money but the payment or discharge of the liability is made by adjustment which is otherwise than by payment of monetary compensation, it can be said that there would still be a liability. But where neither there is quantification of the sum payable in terms of money nor actual payment in monetary terms, it would be unfair to burden a
To: Kapil Goel <advocate...@gmail.com>
Bangalore bench ITAT detailed order on TDS applicability on payments in kind; connotation of word "sum" SC order in Kanchangenga distinguished and held We are in complete agreement with the contention of the learned counsel for the Assessee that the provisions for deducting tax at source and paying it over to the Government on behalf of the recipient of the payment is in the nature of vicarious liability. The said liability can be easily and without any effort can be discharged when payment of compensation in a sum of money i.e., in the form of monetary compensation. At least in cases where the quantification of the sum of money takes place in terms of money but the payment or discharge of the liability is made by adjustment which is otherwise than by payment of monetary compensation, it can be said that there would still be a liability. But where neither there is quantification of the sum payable in terms of money nor actual payment in monetary terms, it would be unfair to burden a person with the obligation of deducting tax at source and exposing him the consequences of such default.
IN THE INCOME TAX APPELLATE TRIBUNAL
“A” BENCH : BANGALORE
S.P. Nos. 206 & 207/Bang/2014
AND
ITA No.719 & 720/Bang/2014
Assessment years : 2010-11 & 2011-12
Chief Accounts Officer,
Bruhat Bangalore Mahanagar Palike
Date of Pronouncement : 14.11.2014
24. We have given a very careful consideration to the rival submissions.
The first issue that arises for our consideration is as to whether provisions
of Sec.194LA of the Act are applicable to the facts and circumstances for
the present case for the reason that (a) there was no compulsory
acquisition; (b) there was no payment of any monetary consideration.
25. On the above issue, we are of the view that submissions made by
the learned counsel for the Assessee are acceptable. As rightly submitted
by him the application of Sec.194LA of the Act to the facts of the present
case is purely a legal issue which can be decided on the basis of facts on record. As rightly contended by him the process of surrender of land for
public purpose by owners of land and issue of CDRs has no element of
“Compulsory Acquisition” which is necessary to attract application of the
provisions of Sec.194LA of the Act. The meaning of the term “compulsory
acquisition” is that land should be taken under statutory powers without the
agreement of the owner. It is clear from material brought on record that the
surrender of land by owners was voluntary and in exercise of option under
a notification laying down conditions for grant of TDR in exercise of powers
u/s.14-B of KTCP. It is also clear that BBMP wherever owners did not
respond to offer of CDRs, BBMP has resorted to compulsory acquisition
proceedings in accordance with the provisions of the Land Acquisition Act,
1894. In the case of compulsory acquisition there are procedure for
objecting to the acquisition on the ground that the proposed acquisition is
not for public purpose, requirement of notice, determination of
compensation, payment of compensation and thereafter taking possession
and ownership. Such elements are absent when land owners surrender
their land to BBMP under the scheme of issue of CDRs. It is also clear that
there is no process of quantification or determination of value of land
acquired when BBMP takes over land under the CDR scheme. Whenever
BBMP does compulsory acquisition of land and pays compensation, it duly
deducts tax at source as required u/s.194LA of the Act. We are in
complete agreement with the contention of the learned counsel for the
Assessee that the provisions for deducting tax at source and paying it over to the Government on behalf of the recipient of the payment is in the nature
of vicarious liability. The said liability can be easily and without any effort
can be discharged when payment of compensation in a sum of money i.e.,
in the form of monetary compensation. At least in cases where the
quantification of the sum of money takes place in terms of money but the
payment or discharge of the liability is made by adjustment which is
otherwise than by payment of monetary compensation, it can be said that
there would still be a liability. But where neither there is quantification of
the sum payable in terms of money nor actual payment in monetary terms,
it would be unfair to burden a person with the obligation of deducting tax at
source and exposing him the consequences of such default. We agree
with his submission that the liability to pay tax is that of a third person and
not that of BBMP and the spirit behind the provisions of Sec.190 of the Act
has been totally lost sight of by the Revenue in the present case. We are
therefore of the view that on the facts of the present case the provisions of
Sec.194LA of the Act were not applicable because there was no
compensation paid towards compulsory acquisition under any law in force
and therefore the order u/s.201(1) & 201(1A) of the Act deserves to be
quashed.
26. We are also of the view that the provisions of Sec.194LA of the Act
would apply only when there is monetary payment. In this regard we find
that provisions of Sec.194LA of the Act applies only when the person
making payment should make payment of a “sum of money” which clearly indicates that the provisions of Sec.194LA of the Act are applicable only
when payment is made in terms of money. The expression “any sum” used
in Sec.194LA of the Act is a clear indication that those provisions are
applicable only when payment is of consideration in terms of money. 28. Sec.194LA of the Act also uses the expression “any sum” which
clearly indicates that it is only when payment is made in monetary terms
that those provisions are attracted.
29. We also agree with his submission that the expression in
Sec.194LA, “at the time of payment of such sum in cash or by issue of a
cheque or draft or by any other mode” means that payment can be in the
mode of giving cash, or by issuing cheque or draft or any other mode like
telegraphic transfer or mail transfer, via money order or postal order, bill of
exchange, promissory note, electronic transfer like RTGS, NEFT etc.
DRCs cannot be brought within the meaning of the expression “by any
other mode” used in Sec.194LA of the Act. The rule of “Ejusdem Generis”
in interpretation of statutes, which lays down that where general words
follow enumeration of persons or things, by words of a particular and
specific meaning, such general words are not to be construed in their
widest extent, but are to be held as applying only to persons or things of
the same general kind or class as those specifically mentioned is fully
applicable to the interpretation of Sec.194LA of the Act. It is a canon of
statutory construction, where general words follow the enumeration of
particular classes of things, the general words will be construed as applying
only to things of the same general class as those enumerated. The general word in Sec.194LA of the Act is “payment of such sum” and the
mode of payment qualified is cash, issue of cheque or draft or by any other
mode. The expression any other mode has therefore to be confined only to
payment of “any sum” in a mode other than cash, cheque or draft and not
to a case where DRCs are issued. Even on this ground the order
u/s.201(1) & 201(1A) of the Act deserves to be quashed and is hereby
quashed.
30. We are also of the view that the decision of the Hon’ble Supreme
Court in the case of Kanchanganga Sea Foods Ltd. (supra) is entirely
on the question of accrual of income in India and had nothing to do with the
question as to whether the expression “a sum” would include payment in
kind. Therefore on facts of the case in the case of Kanchanganga Sea
Foods Ltd. (supra) there was quantification of sum payable which was in
monetary terms and the measure was only of the monetary terms was with
reference to value of fish caught and therefore the facts of the said case
stands totally on a different footing from the facts of the present case. The
present case there was no quantification of the value of CDRs. Therefore
the decision rendered in the case of Kanchanganga Sea Foods Ltd.
(supra), in our view, will not apply to the facts of the present case. 32. For the reasons stated above we hold that the provisions of
Sec.194LA of the Act are not applicable in the facts and circumstances of
the present case and therefore the orders u/s.201(1) & 201(1A) of the Act
as upheld by the CIT(A) are held to be bad in law and hereby quashed.
The appeals of BBMP are allowed.