- CIT (TDS)-2 Vs Sikka Infrastructure Pvt Ltd (Delhi High Court)
- Department's Appeal Under Section 260A
- Revenue's Submissions
- Respondent's Submissions
- Delhi High Court's Observations on Rajesh Projects
- AY 2012-13 Covered by Earlier Judgment
- Finding on GNOIDA's Treatment of Similarly Situated Assessees
- High Court Declined to Interfere
- Final Decision
- Cases Discussed
CIT (TDS)-2 Vs Sikka Infrastructure Pvt Ltd (Delhi High Court)
Summary: The Delhi High Court considered the Department’s appeal under Section 260A of the Income Tax Act, 1961 against the Income Tax Appellate Tribunal, Delhi Bench, ‘G’, New Delhi order dated 28.03.2025 for AY 2012-13 in ITA No. 2495/Del/2022. The Tribunal had dismissed the Commissioner of Income Tax’s appeal against the order dated 25.07.2022 passed by the Commissioner of Income Tax (Appeals), relying upon the Delhi High Court’s judgment in Rajesh Projects (India) Pvt. Ltd. Vs CIT (TDS), decided on 16.02.2017 and reported in [2017] 392 ITR 483, as well as Mahagun (India) (P.) Ltd. vs. ACIT [2024] 209 ITD 236 (Delhi) (Trib.).
The Department argued that the earlier Rajesh Projects judgment arose from peculiar facts and could not determine the respondent’s case since it was not one of the petitioners. The respondent submitted that the earlier judgment had directed the Revenue to provide an opportunity of hearing to all similarly situated assessees and that GNOIDA had made the respondent believe that, being a Government authority, no tax was required to be deducted.
The High Court noted that Rajesh Projects had held that GNOIDA did not fall within the expression ‘Government’ and that one per cent tax was required to be deducted from annual lease rent. However, it had also held that where non-deduction occurred at the insistence of GNOIDA, no adverse action should be taken against the assessees. Since the respondent had not been heard pursuant to paragraph 21 of that judgment, the Court was not convinced that the respondent had failed to establish that GNOIDA had similarly insisted upon non-deduction. The Court held that an authority’s stand would naturally be similar qua similarly situated persons and declined to interfere with the Tribunal and authorities below. The appeal therefore failed.
Department’s Appeal Under Section 260A
The Department filed the present appeal under Section 260A of the Income Tax Act, 1961 against the order dated 28.03.2025 passed by the ITAT, Delhi Bench, ‘G’, New Delhi.
The appeal concerned AY 2012-13 and ITA No. 2495/Del/2022. The Tribunal had dismissed the appeal filed by the Commissioner of Income Tax against the order dated 25.07.2022 passed by the Commissioner of Income Tax (Appeals).
Revenue’s Submissions
Mr. Anurag Ojha, learned Senior Standing Counsel for the Department, submitted that the Tribunal had dismissed the Revenue’s appeal by relying upon the judgment in Rajesh Projects (India) Pvt. Ltd. and Ors v. Commissioner of Income Tax (TDS)-II and Ors., decided on 16.02.2017 and reported in [2017] 392 ITR 483, along with Mahagun (India) (P.) Ltd. vs. ACIT [2024] 209 ITD 236 (Delhi) (Trib.), decided by the ITAT, Delhi Bench E on 04.09.2024.
The Department contended that Rajesh Projects was decided on peculiar facts and that, since the present assessee was not before the High Court in that matter, the judgment could not determine the respondent’s case.
It was further submitted that it could not be presumed that GNOIDA had also insisted that the respondent/assessee should not deduct tax from the payment made to it.
Respondent’s Submissions
Learned counsel for the respondent drew the Court’s attention to paragraph 21 of the Rajesh Projects judgment. It was submitted that the High Court had expressly directed the Revenue to provide an opportunity of hearing not only to the petitioners but also to all persons likely to be affected by the judgment.
The respondent submitted that no such opportunity had been given to the assessee and that the assessee had also been made to believe by GNOIDA that, being a Government authority, no tax was required to be deducted.
Delhi High Court’s Observations on Rajesh Projects
The High Court examined the judgment in Rajesh Projects and found that it had clearly held that GNOIDA did not fall within the ambit of the expression ‘Government’. Accordingly, one per cent tax was required to be deducted from the annual lease rent paid to GNOIDA.
At the same time, the Court noted that the earlier judgment had made an important observation concerning the circumstances in which the concerned assessees had not deducted tax. Since such non-deduction was at the insistence of the authority, the Court had directed that no adverse action should be taken against the assessees because of the non-deduction of tax.
The earlier judgment is also reported by TaxGuru in relation to lease rent paid to GNOIDA.
AY 2012-13 Covered by Earlier Judgment
The High Court noted that the period involved in the present case was indisputably covered by the Rajesh Projects judgment. The impugned assessment related to AY 2012-13, while Rajesh Projects concerned FYs 2010-11 to 2012-13, corresponding to AYs 2011-12 to 2013-14.
The Court accepted that the respondent/assessee had not been a party to the batch of petitioners in Rajesh Projects. However, paragraph 21 of that judgment had directed the Assessing Officer to hear all similarly situated assessees.
Since the respondent had not been heard, the Court observed that it could not lead evidence that it too had been insisted upon by GNOIDA not to deduct tax.
Finding on GNOIDA’s Treatment of Similarly Situated Assessees
The High Court was not convinced by the Department’s submission that the respondent had failed to prove that GNOIDA had similarly persuaded it not to deduct tax.
The Court observed that it could not be believed that GNOIDA would ask Rajesh Projects and the other petitioners who had filed the writ petitions not to deduct tax from payments made to it, while not saying so to the respondent/assessee. The Court stated that the stand of an authority would naturally be similar qua all similarly situated persons dealing with it.
The Court further observed that, had this not been the position, there was nothing preventing the respondent/assessee from making the applicable tax deduction from payments made to the authority.
High Court Declined to Interfere
The Court noted that the issue under challenge concerned the respondent’s responsibility or liability to deduct tax at source from payments made to GNOIDA.
The relevant assessment year was AY 2012-13. The Court also observed that the assessment of the authority, if any, must have been finalised by that stage.
In these circumstances, the High Court was not inclined to interfere with the order passed by the Tribunal and the authorities below.
Final Decision
The Delhi High Court declined to interfere with the Tribunal’s order. The Department’s appeal therefore failed.
Cases Discussed
- Rajesh Projects (India) Pvt. Ltd. and Ors v. Commissioner of Income Tax (TDS)-II and Ors. (Delhi High Court), decided on 16.02.2017, reported in [2017] 392 ITR 483
- Mahagun (India) (P.) Ltd. vs. ACIT [2024] 209 ITD 236 (Delhi) (Trib.), ITAT Delhi Bench E, decided on 04.09.2024
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. By way of the present appeal, which is filed under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’), the Department has challenged the order dated 28.03.2025 passed by the Income Tax Appellate Tribunal, Delhi Bench, ‘G’, New Delhi (hereinafter referred to as ‘ITAT’) for the Assessment Year 2012-13 (hereinafter referred to ‘AY’) in ITA No. 2495/Del/2022.
2. Mr. Anurag Ojha, learned Senior Standing Counsel for the Department submitted that the Tribunal has dismissed the appeal filed by the Commissioner of Income Tax against the order dated 25.07.2022, passed by the Commissioner of Income Tax (Appeals), while relying upon the judgment of this Court in the case of Rajesh Projects (India) Pvt. Ltd. and Ors v. Commissioner of Income Tax (TDS)-II and Ors., decided on 16.02.2017 reported in [2017] 392 ITR 483 as well as Mahagun (India) (P.) Ltd. vs. ACIT [2024] 209 ITD 236 (Delhi) (Trib.) decided by the ITAT, Delhi Bench E on 04.09.2024.
3. Mr. Ojha, learned Senior Standing Counsel for the Department submitted that the judgment in the case of Rajesh Projects (supra) was passed in peculiar facts and since the present assessee was not before this Court and thus, what has been held by this Court in its judgment dated 16.02.2017, passed in the case of Rajesh Projects (supra) cannot decide respondent’s fate.
4. He further invited Court’s attention towards paragraph No. 20(2) of the judgment and submitted that it cannot be presumed that the respondent/ assessee was also insisted by the Greater Noida Industrial Development Authority (hereinafter referred to as ‘GNOIDA’) not to deduct tax from the payment being made to it.
5. Learned counsel for the respondent, on the other hand, invited Court’s attention towards paragraph No. 21 of the aforesaid judgment and pointed out that the High Court in unambiguous terms, had directed the Revenue to provide opportunity of hearing not only to the petitioner but also to all those who were likely to be affected by such judgment.
6. He submitted that no opportunity of hearing was accorded to the respondent/assessee, who was also made to believe by the GNOIDA that, it being a Government authority, no tax is required to be deducted.
7. Heard learned counsel for the parties.
8. A perusal of the judgment passed in the case of Rajesh Projects (supra), makes it abundantly clear that this Court had clearly held that GNOIDA does not fall within the ambit of expression ‘Government’ and thus, one percent tax is required to be deducted from the annual lease rent being paid to it. But while holding so, this Court had observed that since it was at the insistence of the authority that the concerned assessee could not and did not deduct tax, it was held that no adverse action shall be taken against the assessees because of the non-deduction of tax.
9. The period in question is indisputably covered by the judgment inasmuch as the impugned Assessment Order relates to AY 2012-13, whereas the case of Rajesh Projects (supra) related to Financial Years (FY) 2010-11 to 2012-13 (AY 2011-12 to 2013-14). True it is that the respondent/assessee was not a part of the batch of petitioners in whose cases above referred order was passed by this Court on 16.02.2017. But in para 21 of the judgment, the High Court directed the AO to hear all the similarly situated assessees. Since the respondent was not heard, it could not lead evidence that it was also insisted by GNOIDA that no tax be deducted.
10. We are not much convinced with the arguments of Mr. Ojha, learned Senior Standing Counsel, respondent/assessee has failed to prove that it was also persuaded by the GNOIDA not to deduct tax from the payment being made to it.
11. It cannot be believed that the authority would ask Rajesh Projects (supra) and other petitioners (who had filed the writ petitions) not to deduct tax from the payment being made to it, while not saying so to the respondent/ assessee. A stand of an authority would naturally be similar qua all the similarly situated persons dealing with it.
12. Had it not been so, nothing prevented the respondent/assessee from making deduction of applicable tax from the payments being made to the authority.
13. In any event, what is under challenge is the respondent’s responsibility or liability to deduct tax at source, and that too from GNOIDA. The assessment year in question is 2012-13, assessment of such authority (if any) must have been finalised by now. We are, therefore, not inclined to interfere with the order passed by the Tribunal and authorities below.
14. The present appeal, therefore, fails.
