District Mining Officer Liable To Collect TCS On Compounding Fee Received From Illegal Miners: ITAT
The Raipur Bench of the Income Tax Appellate Tribunal (ITAT) has held that the assessee, the District Mining Officer, is liable to collect tax at source on the compounding fee received from illegal miners even in the absence of a valid lease or licence of mines.The bench of Ravish Sood (Judicial Member) and Arun Khodpia (Accountant Member) has observed that even in the absence of any...
The Raipur Bench of the Income Tax Appellate Tribunal (ITAT) has held that the assessee, the District Mining Officer, is liable to collect tax at source on the compounding fee received from illegal miners even in the absence of a valid lease or licence of mines.
The bench of Ravish Sood (Judicial Member) and Arun Khodpia (Accountant Member) has observed that even in the absence of any lease, licence, or contract, if there is any transfer by the assessee of any right or interest in the mine, then the case of the assessee would clearly fall within the meaning of Section 206C(1C) of the Income Tax Act and TCS would be liable to be collected.
The survey officials came across the issue that the assessee, by not collecting tax at source (TCS) on the amount of compounding fees that were received from illegal miners and transporters of minerals, had violated the provisions of Section 206C (1C).
On being queried about its failure to collect tax at source on the compounding fees received from illegal miners and transporters of minerals, it was submitted by the assessee that no liability was cast upon it to collect any tax at source on the said receipts.
The assessee submitted that no direction to collect tax at source on the compounding fees and penalties received from the illegal miners and transporters of minerals was issued by the Directorate of Mining, State Government of Chhattisgarh.
However, the explanation of the assessee did not find favour with the AO. The AO was of the view that the amount received by the assessee from the illegal miners and transporters of minerals was towards royalty and the market value of the minerals. Therefore, as per the mandate of Section 206C(1C), it was obligated to have collected tax at source (TCS) on the amount.
The AO was of the view that the amounts recovered by the assessee from the illegal miners and transporters of minerals were not in the nature of penalties but were compensatory payments.
The AO rejected the claim of the assessee that, as per Section 23A of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act), the amounts collected from illegal miners and transporters were for the compounding of an offence; therefore, no obligation was cast upon it to collect tax at source on the same.
The assessee carried the matter in appeal before the CIT (Appeals). The CIT (Appeals) did not find any infirmity in the view taken by the AO.
The ITAT stated that the obligation cast upon an assessee to collect TCS does not presuppose the existence of a lease, licence, or contract but would also be applicable to a case where a person had transferred any right or interest, either in whole or in part, inter alia, in a mine to another person.
The ITAT held that, as per Section 206C, the assessee was under a statutory obligation to collect tax at source on any "Amount Payable" by the lease-holders, and it was not restricted only to royalty.
Case Title: District Mining Officer Versus The Deputy Commissioner of Income Tax (TDS) Raipur (C.G)
Case No.: ITA Nos. 8/2023
Date: 21.07.2023
Counsel For Appellant: G.S. Agrawal
Counsel For Respondent: Choudhary N.C Roy