Commissioner of Income Tax vs Canon India (P.) Ltd.

In Commissioner of Income Tax, Bombay etc. Vs. M/s. Podar Cement Pvt. Ltd. etc., the Supreme Court has cited with approval a passage from R.B. Jodha Mal Kuthiala Vs. The Commissioner of Income Tax, Punjab, Jammu and Kashmir, Himachal Pradesh and Patiala, where it has been observed that provisions of a section of the Income Tax Act should not be interpreted in such a manner that to make it capable of being an instrument of oppression. The Revenue is aggrieved by an order dated 20th October, 2006 passed by the Income Tax Appellate Tribunal, Delhi Bench ''D'' in ITA Nos. 4732 4735/Del/2004 relevant for the financial years 1999-2000 to 2002-2003.

The Assessee had taken some premises on rent along with fixtures and furniture. The Assessee deducted tax at source on the rent paid by it u/s 194C of the income tax Act, 1961. With regard to the amount paid towards fixtures and furniture also the Assessee deducted tax at source u/s 194C of the Act.

According to the Assessing Officer, the Assessee should have deducted tax at source u/s 194-I of the Act and since it did not do so it was liable to penalty u/s 271C of the Act.

On appeal, both the Commissioner of Income Tax (Appeals) as well as the Tribunal were of the view that the Assessee was under a bona fide belief that it was not required to deduct tax at source u/s 194I of the Act in respect of the fixture and furniture charges.

There is no dispute about the fact that the assessee did deduct tax at source u/s 194C of the Act in respect of these charges. On this basis, both the Commissioner as well as the Tribunal came to the conclusion that the Assessee had shown reasonable cause as required by section 273B of the Act and, therefore, the penalty provision u/s 271C of the Act was not applicable.

In the present case, notwithstanding the findings of two authorities, the Revenue is seeking to interpret the law in such a manner that it oppresses the Assessee, which, we think is no permissible. No substantial question of law arises. Dismissed.