Case Law Details
Basavaraj Gurusiddappa Sindhur Vs ITO (TDS) (Karnataka High Court)
Karnataka High Court held that interest under section 201 of the Income Tax Act and late filing fee under section 234E leviable for non-deduction of TDS from sale consideration paid to Bengaluru Development Authority [BDA] for allotment of made by BDA.
Facts- The petitioner had applied to the 3rd respondent/Bengaluru Development Authority for allotment of a site. The petitioner was allotted a site in the Nadaprabhu Kempegowda Layout of the BDA for a total sale consideration of ₹96,87,510/-. BDA officials has insisted to remit the entire balance amount without deducting any TDS.
Thereafter, upon obtaining legal advice, since the allotment made by the BDA was likely to be cancelled, the petitioner paid a sum of ₹96,875/- on 29.09.2018 being 1% TDS amount. Accordingly, after payment of the said TDS, the petitioner got generated Form-16B TDS Certificate and 26QB-Statement and furnished the same to the BDA.
Subsequently, the petitioner received intimation dated 03.10.2018, whereunder, a sum of ₹1,23,010/- was demanded by charging a sum of ₹26,136/- as interest u/s. 201 of the IT Act and late filing fee of ₹96,875/- u/s. 234E of the IT Act. Being aggrieved, the present writ petition is filed.
Conclusion- Held that BDA is not registered under 12A of the IT Act and that deducting TDS is mandatory. It is clear that the petitioner has paid the entire balance sale consideration to the BDA without deducting any TDS on the ground that the BDA was an exempted institution. However, subsequently, the BDA has sought Form 16B and Form 26QB to complete the registration process and the petitioner has paid the TDS amount to the tax authorities, resulting in the tax authorities issuing the demand dated 3.10.2018 claiming interest and late filing fee. Hence, it is clear that the petitioner himself having done various acts i.e., non deducting of TDS while making the balance sale consideration and thereafter, belatedly remitting the TDS, the question of favorably considering the reliefs sought for in the present petition does not arise.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The present writ petition is filed seeking for the following reliefs:
“27. WHEREFORE, the Petitioner prays that this Honourable High Court may be pleased to grant interim prayer by issue of writ of
a) “Mandamus to R-2 to Stay the operation of Intimation dated 03/10/18 vide Communication Reference No. TDS/2017/BEO667936/D/ 100000725277 under Sec.200A of IT Act in Annexure ‘A’ sent by R-2; or Alternatively.
b) Mandamus to R-1 Restraining from commencing recovery proceedings of the Demand in said Intimation dated 03/10/18 vide Communication Reference No.
28. No harm or prejudice is caused on grant of Interim Stay. The balance of convenience is clearly in favour of the Petitioner and it is a fit case for grant of interim stay by this Honourable Court. On the contrary if Interim Stay is refused then it will lead to hardship.”
2. The fact situation in a nutshell leading to the present writ petition is that the petitioner had applied to the 3rd respondent/Bengaluru Development Authority1 for allotment of a site by making an initial deposit of ₹12,11,000/-, pursuant to which, vide allotment letter dated 07.12.2016 (Annexure-B to the writ petition), the petitioner was allotted a site in the Nadaprabhu Kempegowda Layout of the BDA for a total sale consideration of ₹96,87,510/-. After deducting the initial deposit of ₹12,11,000/-, the balance sale consideration that the petitioner was required to pay the BDA was ₹84,76,510/- within 60 days of receipt of the allotment letter.
3. It is the case of the petitioner that he enquired with the office of the BDA as to whether it enjoyed any income tax exemption under Section 12A of the Income Tax Act, 19612 and as to whether the petitioner was required to deduct tax at source as per the provisions of the IT Act. It is the case of the petitioner that the BDA officials has insisted to remit the entire balance amount without deducting any TDS and accordingly the petitioner remitted the entire balance consideration of ₹84,76,510/- on 09.06.2017, as is forthcoming from the remittance challan dated 24.04.2017 (Annexure-C to the writ petition).
4. It is the further case of the petitioner that since he was required to furnish Form-16B-TDS Certificate and 26QB-statement relating to the 1% TDS, the petitioner requested the BDA to make adjustment of the 1% TDS deduction of ₹96,875/- out of the total consideration of ₹96,87,510/- already deposited with the BDA. It is the further case of the petitioner that subsequently, upon obtaining legal advice, since the allotment made by the BDA was likely to be cancelled, the petitioner paid a sum of ₹96,875/- on 29.09.2018 being 1% TDS amount. Accordingly, after payment of the said TDS, the petitioner got generated Form-16B TDS Certificate and 26QB-Statement and furnished the same to the BDA.
5. Subsequently, the petitioner received intimation dated 03.10.2018 (Annexure-A to the writ petition), whereunder, a sum of ₹1,23,010/- was demanded by charging a sum of ₹26,136/- as interest under Section 201 of the IT Act and late filing fee of ₹96,875/- under Section 234E of the IT Act for the period 24.04.2017 i.e., the date of payment of total consideration by the petitioner to the BDA till 29.09.2018, which is the date of payment of 1% TDS amount of ₹96,875/-. It is further stipulated at paragraph No.6 of the intimation (Annexure-A) that if the demand of ₹1,23,010/- was not paid by the petitioner within the specified period, recovery proceedings will be commenced by the 1st respondent as per provisions of the IT Act. Being aggrieved, the present writ petition is filed.
6. The 3rd respondent/BDA has filed statement of objections, whereunder, it admits issuance of the allotment letter dated 01.12.2016 for a total sital value/sale consideration of ₹96,87,510/-. It is the contention of the BDA that the petitioner was required to pay the balance sital value within the prescribed time and the same not having been paid, the BDA issued show cause notice dated 24.05.2018, calling upon the petitioner to show cause as to why his allotment should not be cancelled in view of nonpayment of balance sital value. In response, the petitioner got issued reply dated 31.08.2018, informing the BDA that he had paid the entire sital value on 09.06.2017 itself. It is the further contention of the BDA that it has issued an endorsement dated 07.09.2018, calling upon the petitioner to submit all the original documents along with Form-16B and Form-26QB, in compliance of which, the petitioner has submitted all the requisite documents to the BDA and is requesting for execution of lease cum sale agreement in his favour.
7. It is the further contention of the BDA that, at no point of time it had instructed the petitioner not to deduct TDS while making payment of the balance sital value. It is further placed on record by the BDA that it is not registered under Section 12A of the IT Act. That deducting TDS is mandatory and that the 3rd respondent/BDA cannot be held responsible for the action initiated by the Income Tax department against the petitioner. It is the contention of the 3rd respondent/BDA that the petitioner has paid a sum of ₹79,528/- in excess of the amounts payable and the 3rd respondent/BDA is willing to reimburse to the petitioner the said sum of ₹79,528/-.
8. Heard submissions of learned counsel Sri. Manoj. D. Pukale for the petitioner, learned counsel Sri. M. Thirumalesh for respondent Nos.1 and 2/Tax Authorities and learned counsel Sri. Ajay Kumar for respondent No.3/BDA.
9. It is the contention of the 2nd respondent that the petitioner having belatedly remitted the TDS, is liable to pay interest and other levies in terms of the intimation – Annexure-A and the transaction inter se between the petitioner and the BDA will not in any manner absolve the petitioner for payment of the necessary dues in terms of the provisions of the IT Act.
10. The question that arise for consideration is, whether the relief sought in the present writ petition is liable to be granted?
11. Before considering the contentions put forth by the learned counsel in the above matter, it is relevant to notice certain statutory provisions.
12. Section 194-IA of the IT Act requires a transferee, at the time of the payment of consideration to the transferor for transfer of any immovable properties, to deduct a certain percentage as income tax. The deduction made under Section 194-IA is commonly known as ‘Tax Deducted at Source3. Rule 30 (2A) of the income Tax Rules 19624 stipulates that any sum deducted under Section 194-IA shall be paid to the credit of the Central Government within a period of 30 days from the end of the month in which the deduction has made and shall be accompanied by a challan-cum-statement in Form No.26QB. Section 203(1) of the IT Act stipulates that the person who has deducted TDS (transferee) shall furnish to the person to whose account the said amount was credited (transferor) a certificate to the effect that tax has been deducted and specifying the amount so deducted and the rate at which the tax has been deducted as also other particulars as may be described. Section 201(1A)(i)(ii) of the IT Act stipulates that if a person does not deduct the whole or any part of TDS and pay a sum as required under the IT Act, he shall be liable to pay interest in terms of the stipulation contained under Sub-section (1A)(i)(ii) of Section 201 of the IT Act. Rule 31-A of the Rules stipulates that every person responsible for deduction of tax under Chapter-XVII-B, shall, in accordance with Section 200(3) of the IT Act deliver a quarterly statement in terms of the stipulation contained therein.
13. Section 12A of the IT Act sets out that Section 12 of the IT Act pertaining to TDS shall not apply to a Trust or institution and the conditions for the applicability of Section 12A of IT Act are enumerated in the said Section. Section 12AA(3) of the IT Act also stipulates that the exemption could be withdrawn under certain circumstances which are enumerated therein. Section 2(15) IT Act defines “charitable purpose” and proviso stipulates that if the activity involves trade, commerce or business, it shall not be considered as charitable purpose unless such activity is undertaken in the course of actual carrying out of advancement of any other object of general public utility or the aggregate receipts of the previous year do not exceed 20% total receipts of the previous year. Section 10(46 and 46-A) of the IT Act stipulates that a Board or Trust or Commission constituted by the Central or State Government with the object of regulating or administrating any activity for the general public is also exempted.
14. It is relevant to notice that the total sale consideration payable by the petitioner for the site allotted vide allotment dated 07.12.2016 was a sum of ₹96,87,510/-. Having regard to the fact that the petitioner had already paid a sum of ₹12,11,000/- by way of initial deposit along with his application, the balance sale consideration payable was a sum of ₹84,76,510/-. While paying the said balance consideration, the petitioner was required to deduct TDS under Section 194-IA of the IT Act on the total sale consideration of ₹96,87,510/-.
15. It is the case of the petitioner that he enquired with the office of the BDA as to whether respondent No.3-BDA enjoyed any exemption under Section 129 of the IT Act and it is further averred that since the officials of the BDA insisted on payment of entire balance consideration of ₹84,76,510/-, the same was paid on 24.04.2017. However, it is relevant to note that there is no correspondence placed on record by the petitioner to demonstrate that he had enquired with the BDA or that the officials of the BDA had, to the specific query of the petitioner as to whether the BDA was exempted under Section 12A of the IT Act, insisted for payment of the entire balance consideration of ₹84,76,510/-.
16. Subsequently, having regard to the fact that the petitioner was required to furnish Form No.16B-TDS-certificate and Section 26QB statement relating to the TDS payment of 1% along with other papers to the BDA, it is the case of the petitioner that after obtaining legal advice that the allotment was likely to be cancelled, paid 1% TDS i.e., a sum of ₹96,875/- on 29.09.2018 and after payment of TDS, the petitioner got generated Form No.16B-TDS-Certificate and 26QB statement and furnished the same to respondent No.3-BDA. Having regard to the fact that 1% TDS amount of ₹96,875/- was paid only on 29.09.2018, a demand of ₹1,23,010/- has been made by the respondents 1 and 2/Tax Authorities for interest in terms of Section 201 of the IT Act and for late filing fee in terms of Section 234 of the IT Act for the period 24.07.2017 when the balance sale consideration was paid by the petitioner till 29.09.2018 on which date payment of 1% TDS for ₹96,875/- was paid by the petitioner.
17. It is vehement contention of the petitioner that the BDA being exempted under Section 12A of the IT Act, the petitioner was not required to deduct TDS amount and remit the 1% TDS amount. It is further contended that, at the earliest instance when the petitioner learnt regarding the payment of TDS amount, the same having been paid, the petitioner seeks indulgence of this Court in granting reliefs sought for in the present writ petition for the purpose of quashing the intimation dated 03.10.2018 demanding late fee and interest i.e., claimed by the respondent No.2-Tax Authorities.
18. At this stage, it is relevant to note that although it is vehement contention of the petitioner that respondent No.3-BDA is an exempted institution as per Section 12A of the IT Act, respondent No.3-BDA in its statement of objections has, at paragraph 7, made categorical averment that BDA is not registered under 12A of the IT Act and that deducting TDS is mandatory.
19. The petitioner has vehemently contended that the information available in the website of the Income Tax Department denotes BDA as an exempted institution. The printout of the said website has also been placed on record along with the memo dated 26.11.2024. However, it is also relevant to note that there are litigations pending before the Division Bench of this Court with regard to the exemption of the BDA and other such entities. Although the learned counsel for the petitioner seeks to demonstrate by making reference to the litigation pending before this Court as well as certain orders of the Hon’ble Apex Court and seeks to contend that with regard to the institutions like the BDA, they are exempted under Section 12A of the IT Act, it is relevant to note that in the present proceedings it is not just and proper for this Court to go into the question as to whether the BDA is an exempted institution under Section 12A of the Act. Suffice to state that at the time when the petitioner paid the balance sale consideration of ₹84,76,510/- to the BDA, there was no material on record, even to the knowledge of the petitioner or by way of any specific assertion by the BDA, that the BDA is an exempted institution. Further, it is also relevant to note that there is no material on record to demonstrate that the officials of the BDA called upon the petitioner to pay the entire balance sale consideration of ₹84,76,510/- on the ground that the BDA is an exempted institution under Section 12A of the Act.
20. Having regard to the discussion made above, it is clear that the petitioner has paid the entire balance sale consideration to the BDA without deducting any TDS on the ground that the BDA was an exempted institution. However, subsequently, the BDA has sought Form 16B and Form 26QB to complete the registration process and the petitioner has paid the TDS amount to the tax authorities, resulting in the tax authorities issuing the demand dated 3.10.2018 (Annexure-A) claiming interest and late filing fee. Hence, it is clear that the petitioner himself having done various acts i.e., non deducting of TDS while making the balance sale consideration and thereafter, belatedly remitting the TDS, the question of favorably considering the reliefs sought for in the present petition does not arise.
21. The question framed for consideration is answered in the negative.
22. Hence, the petitioner has not made out any ground for grant of reliefs as sought for in the present writ petition.
23. In view of the aforementioned, the writ petition is dismissed as being devoid of merit.
Notes:-
1 Hereinafter referred to as the ‘BDA’
2 Hereinafter referred to as the ‘IT Act’
3 Hereinafter referred to as the ‘TDS’
4 Hereinafter referred to as ‘Rules’
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