Prabha Mehra vs Delhi Development Authority
2003 Latest Caselaw 517 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. The petitioner was allocated an SFS DDA flat in Sarita Vihar in 1984 and made the payment in pursuance of the Installments in pursuance thereof. An allotment-cum-demand letter dated 1st June, 1989 was issued to the petitioner allotting flat No. 280, Pocket A, Category III, Sarita Vihar, New Delhi and making a net demand which was also paid. In the allotment letter, the petitioner was given credit of Rs. 54,944.65 on account of the delay in construction by DDA.

2. The petitioner applied for conversion of the flat into freehold on 26th March, 1993 and deposited the amount of conversion fee in Installments as per the scheme. The conveyance deed stands executed in the name of the petitioner.

3. The grievance of the petitioner is that the petitioner has not been refunded the excess amount of Rs. 2,513/- which was so liable to be refunded to the petitioner after execution of the conveyance deed being the excess amount paid. Apart from this, an amount of Rs. 7,486/- has also been detained on account of retention money.

4. This amount was paid as excess amount at the stage of payment of conversion fee. This amount was so deposited during the pendency of the writ petition in terms of the order dated 7th October, 1999 since the conversion of the flat of the petitioner, into freehold was being held up on that account and on such deposit the conversion took place.

5. Learned Counsel for the petitioner contends that there is thus excess payment of Rs. 9,999/- which is not being refunded to be the petitioner. The amount is being retained by the respondent on account of the fact that proceedings were initiated against the respondent DDA by the Income Tax authorities on the ground that the respondent had failed to deduct tax at source while making payment on account of the interest to the allottees of belated construction interest which was adjusted in the price at the stage of issuance of the allotment letter.

6. Learned Counsel for the petitioner submits that in terms of the provisions of Section 194A of the Income Tax Act, 1961, (hereinafter referred to as the said Act), there is an obligation to deduct tax at source at the time of crediting or payment of interest to the account of payee and under Section 199 such tax deducted at source is treated as payment of tax by the person from whose income the deduction of tax has been made. The person deducting such tax is required to issue a TDS Certificate within the stipulated time stating the amount deducted and when the same has been deposited to the tax authorities. This TDS Certificate thereafter can be used as proof of deposit of tax by the person in whose favor such certificate has been issued. However, the benefit of such certificate is available to the person claiming the benefit only in respect of the relevant assessment year in question. Thus, it is stated that the petitioner cannot claim the benefit under Section 199 of the Act as the same relates to the assessment year 1987-88. It is further stated that the proceedings against the respondent are as a consequence of the failure of the respondent to deduct and pay which may result in levy of penalty and interest in terms of Sections 201(1) and 201(1A) of the Act. It is thus contended that the petitioners cannot be penalised for the consequences of the failure of the respondent to comply with the provisions of the Act, if any.

7. A counter-affidavit has been finally filed by the respondent in which it is stated that the ITO initiated proceedings against the DDA in respect of the relevant assessment years in question on account of failure to deduct tax at source which culminated in an order against the respondent. The appeal filed by the respondent before Commissioner of Income Tax was dismissed but thereafter the appeal filed before the Income Tax Appellate Tribunal was allowed by the order dated 24th January, 1995 and it was held that the amounts, if any, recovered from the DDA were to be refunded immediately. It is further stated that there is no stay of the order dated 24th January, 1995 by this Court though a reference is pending before this Court. It is averred in the counter-affidavit that where there has been belated construction, this amount has been withheld from every allottee of the SFS who has paid belated construction interest.

8. I have considered the submissions advanced by learned Counsel for the parties.

9. The aforesaid facts show that there is no default on the part of the petitioner in complying with his obligations. It was for the respondent to consider as to whether tax was or was not liable to be deducted at source. If the respondent has failed to act in accordance with the Act, it is for the respondents to bear the consequences thereof. This is also to be appreciated in view of the fact that if this amount is now recovered from the petitioner, the respondent is not in a position to issue a TDS Certificate and for that matter, the petitioner cannot utilise the TDS Certificate. Thus, the petitioner will not be able to seek adjustment of this amount against the tax payable by the petitioner and the petitioner cannot be penalised on this account.

10. It may also be further noted that the order of the Income Tax Appellate Tribunal dated 24th January, 1995 is in favor of the respondent and as on date the said respondent is not liable to pay any amount. No stay of the said order has been obtained by the Department against the respondent and thus, the directions of the ITAT continue to subsist directing refund of the amount. If the respondent has not taken steps in respect of the same, the consequences cannot fall on the petitioner. Further, no details have been given as to what amount, if any, has been paid by the respondent to the tax authorities on this account.

11. There is another aspect of the matter inasmuch as in the case of the petitioner, it is not a question of retention of the amount but that at the stage of conversion, the petitioner was asked to deposit the excess amount on this account and the conversion of the properly from leasehold to freehold was being held up. The amount was deposited during the pendency of the writ petition in order to enable the petitioner to get the property converted into freehold.

12. I am thus of the considered view that it is not open to the respondent to detain the aforesaid amount of Rs. 9,999/- and the same is liable to be refunded to the petitioner within a maximum period of four weeks from today, failing which the amount shall carry interest of 15% per annum for the period of delay in payment apart from any other remedy available to the petitioner.

13. The writ petition is allowed in the aforesaid terms leaving the parties to bear their own costs.

14. dusty to learned Counsel for the parties.