New Delhi v. Sam sung Heavy I ndust ries Com pany Lim it ed C/ o Price

paym ent s t o Arj un Engineering Pvt . Lt d. and Builcraft I nt erior Pvt . Lt d and deduced t ax at source @2% t hereon in t erm s of sect ion 194C of t he Act for carrying out elect rificat ion int erior work respect ively. The work and revenue concluded t hat t he said work falls under t he lim b of professional services and services warrant ing deduct ion of t ax at source u/ s 194J of t he Act @10% . Since t he assessee had not deduct ed t ax at source in t erm s of sect ion 194J of t he Act , t he ld AO proceeded t o disallow t he expenses u/ s 40( a) ( ia) of t he Act . Now t he arises t hat considerat ion t he provision of sect ion 40( a) ( ia) of t he Act per se could be m ade applicable for short deduct ion of t ax at source. This issue is no longer res int egra in view of t he decision of Hon’ble Calcut t a High Court in t he case of S. K. Tekriwal in I TA No. 183/ 2012 GA No. dat ed 03.12.2012 wherein it had been cat egorically held t hat sect ion 40( a) ( ia) of t he Act cannot be m ade applicable t o short deduct ion of t ax at source and t he disallowance m ade was delet ed. Furt her t he Hon’ble Delhi High Court in t he case of PCI T Vs. Fut ure First info Services Pvt . Lt d in I TA No. 195/ 2022 dat ed 14.07.2022 had also given sam e proposit ion. The ld CI T( A) however relied on t he decision of t he Hon’ble Kerala High Court in t he case of PVS I nt ernat ional Hospit al Lt d report ed in 380 I TR 284 ( Ker) and decided t he issue against t he assessee. As could be seen above, none of t he High Court decisions referred are t he decisions rendered by t he Hon’ble Jurisdict ional High Court . The Hon’ble Suprem e Court t he case of Veget able Product s Lt d report ed in 88 I TR 192 had held t here are divergent views of t hat when various non- Jurisdict ional High Court s on an ident ical t he const ruct ion t he assessee should be favourable considered. Respect fully following t he said decision of t he Hon’ble Suprem e Court , we are inclined t o follow t he rat io laid down by issue, t o t hat t he 4 ( supra) and hold t he Hon'ble Calcut t a High Court and decision rendered by t he Hon’ble Delhi High Court referred t hat sect ion t he Act cannot be m ade 40( a) ( ia) of t ax at applicable source. Accordingly, is hereby direct ed t o delet e t he disallowance t hereon. t he assessee are The grounds raised by allowed.” for short deduct ion of t he ld AO

5. Learned counsel for t he appellant subm it t ed t hat adm it t edly t his is a case pert aining t o short deduct ion of T.D.S. The T.D.S. was deduct ed by t he assessee under Sect ion 194C at t he rat e of 2 percent , inst ead of deduct ion under Sect ion 194J at t he rat e of 10 percent , t herefore, t he Assessing Officer invoked t he provision under Sect ion 40( a) ( ia) of t he I ncom e Tax Act , 1961. I n order t o but t ress his argum ent , learned counsel for appellant placed reliance upon t he j udgm ent rendered by High Court of Kerala in t he case of “ Com m issioner of I ncom e Tax Vs. PVS Mem orial Hospit al Lt d.” , report ed ( 2016) 380 I TR 284 ( Kerala) , wherein t he Court , in paragraph no.9, held as under: t hat t he expression “ 9 . I f Sect ion 40( a) ( ia) is underst ood in t he m anner as laid down by t he Apex Court , it “ t ax can be seen deduct ible at source under Chapt er XVI I - B” occurring in t he Sect ion has t o be underst ood t he t ax deduct ible at source under appropriat e provision of Chapt er XVI I - B. Therefore, as in t his case, if t ax is deduct ible under Sect ion 194J but is deduct ed under Sect ion 194C, such a deduct ion would not sat isfy t he requirem ent s of Sect ion 40( a) ( ia) . The lat t er part of t his Sect ion t hat such t ax 5 has not been deduct ed, again refers t o t he t ax deduct ed under t he appropriat e provision of Chapt er XVI I - B. Thus, a cum ulat ive reading of t his provision, t herefore, shows t hat deduct ion under a wrong provision of law will not save an assessee from Sect ion 40( a) ( ia) .”

6. Per cont ra, Mr. Arij it Prasad, learned Senior Counsel assist ed by Mr. Pulak Raj Mullick, learned counsel for t he respondent ( assessee) subm it t ed t hat t he I ncom e Tax Appellat e Tribunal has right ly relied on t he law laid down by Hon’ble Calcut t a High Court in t he case of Com m issioner of I ncom e Tax Vs. S.K. Tekriwal, report ed in [ 2014] 361 I TR 432 ( Calcut t a) .

7. Learned Senior Counsel for t he respondent placed reliance on t he j udgm ent rendered by Hon’ble Suprem e Court in t he case of Com m issioner of I ncom e Tax Vs. Veget able Product s Lt d., report ed in [ 1973] 88 I TR 192 ( SC) , wherein it is held t hat when t here are divergent views of various non- j urisdict ional High Court s on an ident ical issue, t he const ruct ion t hat is favourable t o t he assessee should be considered.

8. I n view of t he law laid down by Hon’ble Suprem e Court in t he aforesaid case, t his Court has no hesit at ion in upholding t he finding ret urned by learned I ncom e Tax Appellat e Tribunal, wherein it has held t hat Sect ion 40( a) ( ia) of t he I ncom e Tax Act , 1961 cannot be m ade applicable t o short deduct ion of t ax at source and t he disallowance m ade was direct ed t o be delet ed. This finding of learned I ncom e Tax Appellat e Tribunal is 6 based on t he j udgm ent rendered by Hon’ble Calcut t a High Court in t he case of Com m issioner of I ncom e Tax Vs. S.K. Tekriwal ( supra) . Learned I ncom e Tax Appellat e Tribunal have negat ed t he subm ission of t he revenue, which relied on t he decision of Kerala High Court in t he case of Com m issioner of I ncom e Tax Vs. PVS Mem orial Hospit al Lt d.( supra) , by relying on t he j udgm ent passed by t he Hon’ble Apex Court in t he case of “ Com m issioner of Tax Vs. Veget able Product s” , report ed in [ 1973] 88 I TR 192 ( SC) , wherein it was held t hat when t here are divergent views of various non- j urisdict ional High Court s on an ident ical issue, t he const ruct ion t hat is favorable t o t he assessee should be considered.

9. Learned counsel for t he appellant furt her subm it t ed t hat t he j udgm ent of Hon’ble Kerala High Court has been challenged before t he Hon’ble Suprem e Court in Special Leave t o Appeal No. 26075- 26076 of 2016 M/ s. PVS Mem orial Hospit al Lt d. Vs. The Com m issioner of I ncom e Tax and, vide order dat ed

02.11.2018, t he Hon’ble Suprem e Court grant ed leave in t he m at t er and now it has been convert ed t o Civil Appeal No( s) . 10915- 10916/ 2018 and, as per t he websit e of Hon’ble Suprem e Court , t he case is ripe- up final hearing and is st ill pending considerat ion before t he Hon’ble Suprem e Court , t herefore, t he hearing of present Appeal m ay be deferred t ill decision in t he aforesaid Civil Appeal. 7

10. We do not find any infirm it y in t he order of t he I ncom e Tax Appellat e Tribunal.

11. I n t he light of above observat ions, in our considered view, no subst ant ial quest ion of law arises for considerat ion in t he present Appeal and, t herefore, we refuse t o adm it t he Appeal.

12. Accordingly, t he I ncom e Tax Appeal st ands dism issed. However, libert y is grant ed t o t he Revenue t o approach t his Court , if t he aforesaid Civil Appeal is decided in t heir favour and t he order passed by Hon’ble Kerala High Court is upheld. ( G. N A REN D A R, C.J.) ( A LOK M A H RA , J.) Arpan ARPAN JAISWAL DN: c=IN, o=HIGH COURT OF UTTARAKHAND, ou=HIGH COURT OF UTTARAKHAND, 2.5.4.20=eabb68a3895e41937c266c23964c04853654 45e3a20dddb7393398f9fe45ba3e, postalCode=263001, st=UTTARAKHAND, serialNumber=060FC17022BEAE3DE215D68D9D454 C5109CB987446351E4DF04AADAA2C2CEA66, cn=ARPAN JAISWAL 8

paym ent s t o Arj un Engineering Pvt . Lt d. and Builcraft I nt erior Pvt . Lt d and deduced t ax at source @2% t hereon in t erm s of sect ion 194C of t he Act for carrying out elect rificat ion int erior work respect ively. The work and revenue concluded t hat t he said work falls under t he lim b of professional services and services warrant ing deduct ion of t ax at source u/ s 194J of t he Act @10% . Since t he assessee had not deduct ed t ax at source in t erm s of sect ion 194J of t he Act , t he ld AO proceeded t o disallow t he expenses u/ s 40( a) ( ia) of t he Act . Now t he arises t hat considerat ion t he provision of sect ion 40( a) ( ia) of t he Act per se could be m ade applicable for short deduct ion of t ax at source. This issue is no longer res int egra in view of t he decision of Hon’ble Calcut t a High Court in t he case of S. K. Tekriwal in I TA No. 183/ 2012 GA No. dat ed 03.12.2012 wherein it had been cat egorically held t hat sect ion 40( a) ( ia) of t he Act cannot be m ade applicable t o short deduct ion of t ax at source and t he disallowance m ade was delet ed. Furt her t he Hon’ble Delhi High Court in t he case of PCI T Vs. Fut ure First info Services Pvt . Lt d in I TA No. 195/ 2022 dat ed 14.07.2022 had also given sam e proposit ion. The ld CI T( A) however relied on t he decision of t he Hon’ble Kerala High Court in t he case of PVS I nt ernat ional Hospit al Lt d report ed in 380 I TR 284 ( Ker) and decided t he issue against t he assessee. As could be seen above, none of t he High Court decisions referred are t he decisions rendered by t he Hon’ble Jurisdict ional High Court . The Hon’ble Suprem e Court t he case of Veget able Product s Lt d report ed in 88 I TR 192 had held t here are divergent views of t hat when various non- Jurisdict ional High Court s on an ident ical t he const ruct ion t he assessee should be favourable considered. Respect fully following t he said decision of t he Hon’ble Suprem e Court , we are inclined t o follow t he rat io laid down by issue, t o t hat t he 4 ( supra) and hold t he Hon'ble Calcut t a High Court and decision rendered by t he Hon’ble Delhi High Court referred t hat sect ion t he Act cannot be m ade 40( a) ( ia) of t ax at applicable source. Accordingly, is hereby direct ed t o delet e t he disallowance t hereon. t he assessee are The grounds raised by allowed.” for short deduct ion of t he ld AO

5. Learned counsel for t he appellant subm it t ed t hat adm it t edly t his is a case pert aining t o short deduct ion of T.D.S. The T.D.S. was deduct ed by t he assessee under Sect ion 194C at t he rat e of 2 percent , inst ead of deduct ion under Sect ion 194J at t he rat e of 10 percent , t herefore, t he Assessing Officer invoked t he provision under Sect ion 40( a) ( ia) of t he I ncom e Tax Act , 1961. I n order t o but t ress his argum ent , learned counsel for appellant placed reliance upon t he j udgm ent rendered by High Court of Kerala in t he case of “ Com m issioner of I ncom e Tax Vs. PVS Mem orial Hospit al Lt d.” , report ed ( 2016) 380 I TR 284 ( Kerala) , wherein t he Court , in paragraph no.9, held as under: t hat t he expression “ 9 . I f Sect ion 40( a) ( ia) is underst ood in t he m anner as laid down by t he Apex Court , it “ t ax can be seen deduct ible at source under Chapt er XVI I - B” occurring in t he Sect ion has t o be underst ood t he t ax deduct ible at source under appropriat e provision of Chapt er XVI I - B. Therefore, as in t his case, if t ax is deduct ible under Sect ion 194J but is deduct ed under Sect ion 194C, such a deduct ion would not sat isfy t he requirem ent s of Sect ion 40( a) ( ia) . The lat t er part of t his Sect ion t hat such t ax 5 has not been deduct ed, again refers t o t he t ax deduct ed under t he appropriat e provision of Chapt er XVI I - B. Thus, a cum ulat ive reading of t his provision, t herefore, shows t hat deduct ion under a wrong provision of law will not save an assessee from Sect ion 40( a) ( ia) .”

6. Per cont ra, Mr. Arij it Prasad, learned Senior Counsel assist ed by Mr. Pulak Raj Mullick, learned counsel for t he respondent ( assessee) subm it t ed t hat t he I ncom e Tax Appellat e Tribunal has right ly relied on t he law laid down by Hon’ble Calcut t a High Court in t he case of Com m issioner of I ncom e Tax Vs. S.K. Tekriwal, report ed in [ 2014] 361 I TR 432 ( Calcut t a) .

7. Learned Senior Counsel for t he respondent placed reliance on t he j udgm ent rendered by Hon’ble Suprem e Court in t he case of Com m issioner of I ncom e Tax Vs. Veget able Product s Lt d., report ed in [ 1973] 88 I TR 192 ( SC) , wherein it is held t hat when t here are divergent views of various non- j urisdict ional High Court s on an ident ical issue, t he const ruct ion t hat is favourable t o t he assessee should be considered.

8. I n view of t he law laid down by Hon’ble Suprem e Court in t he aforesaid case, t his Court has no hesit at ion in upholding t he finding ret urned by learned I ncom e Tax Appellat e Tribunal, wherein it has held t hat Sect ion 40( a) ( ia) of t he I ncom e Tax Act , 1961 cannot be m ade applicable t o short deduct ion of t ax at source and t he disallowance m ade was direct ed t o be delet ed. This finding of learned I ncom e Tax Appellat e Tribunal is 6 based on t he j udgm ent rendered by Hon’ble Calcut t a High Court in t he case of Com m issioner of I ncom e Tax Vs. S.K. Tekriwal ( supra) . Learned I ncom e Tax Appellat e Tribunal have negat ed t he subm ission of t he revenue, which relied on t he decision of Kerala High Court in t he case of Com m issioner of I ncom e Tax Vs. PVS Mem orial Hospit al Lt d.( supra) , by relying on t he j udgm ent passed by t he Hon’ble Apex Court in t he case of “ Com m issioner of Tax Vs. Veget able Product s” , report ed in [ 1973] 88 I TR 192 ( SC) , wherein it was held t hat when t here are divergent views of various non- j urisdict ional High Court s on an ident ical issue, t he const ruct ion t hat is favorable t o t he assessee should be considered.

9. Learned counsel for t he appellant furt her subm it t ed t hat t he j udgm ent of Hon’ble Kerala High Court has been challenged before t he Hon’ble Suprem e Court in Special Leave t o Appeal No. 26075- 26076 of 2016 M/ s. PVS Mem orial Hospit al Lt d. Vs. The Com m issioner of I ncom e Tax and, vide order dat ed

02.11.2018, t he Hon’ble Suprem e Court grant ed leave in t he m at t er and now it has been convert ed t o Civil Appeal No( s) . 10915- 10916/ 2018 and, as per t he websit e of Hon’ble Suprem e Court , t he case is ripe- up final hearing and is st ill pending considerat ion before t he Hon’ble Suprem e Court , t herefore, t he hearing of present Appeal m ay be deferred t ill decision in t he aforesaid Civil Appeal. 7

10. We do not find any infirm it y in t he order of t he I ncom e Tax Appellat e Tribunal.

11. I n t he light of above observat ions, in our considered view, no subst ant ial quest ion of law arises for considerat ion in t he present Appeal and, t herefore, we refuse t o adm it t he Appeal.

12. Accordingly, t he I ncom e Tax Appeal st ands dism issed. However, libert y is grant ed t o t he Revenue t o approach t his Court , if t he aforesaid Civil Appeal is decided in t heir favour and t he order passed by Hon’ble Kerala High Court is upheld. ( G. N A REN D A R, C.J.) ( A LOK M A H RA , J.) Arpan ARPAN JAISWAL DN: c=IN, o=HIGH COURT OF UTTARAKHAND, ou=HIGH COURT OF UTTARAKHAND, 2.5.4.20=eabb68a3895e41937c266c23964c04853654 45e3a20dddb7393398f9fe45ba3e, postalCode=263001, st=UTTARAKHAND, serialNumber=060FC17022BEAE3DE215D68D9D454 C5109CB987446351E4DF04AADAA2C2CEA66, cn=ARPAN JAISWAL 8