Oil and Natural Gas Corporation Ltd., Ankleshwar V. The ACIT.,(TDS), Baroda

ITA 1066/AHD/2010

• Counselvise Citation: 106620514 RSA 2010
• Duration Of Justice: 2 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-07-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 07-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVINIDRA KUMAR
• Assessee Lawyers: S N SOPARKAR SRAR; MRS URVASHI SHODHAN
• Keywords: Salary income; Opportunity of being heard; Deemed to accrue or arise in india
• Section: 10(14); 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.184-185 & 1066/AHD/2010 ASSESSMENT YEAR:2009-10 OIL AND NATURAL GAS CORPORATION LTD., BARODA, DY. GENERAL MANAGER (F&A), OIL AND NATURAL GAS CORPORATION LTD., WESTERN ONSHORE BASIN, MAKARPURA ROAD, BARODA 390009 [ PAN NO. AAACO 2598A ] V/S . ASSTT. COMMISSIONER OF INCOME TAX (TDS), AAYKAR BHAVAN, RACE COURSE CIRCLE, BARODA 390001 / APPELLANT .. / (RESPONDENT) ITA NO. 609-611/AAHD/2010 ASSESSMENT YEAR:2009-10 ACIT,TDS CIRCLE, ROOM NO.5, GROUND FLOOR, AAYKAR BHAVAN, RACE COURSE CIRCLE, BARODA 390001 ACIT,TDS CIRCLE, ROOM NO.5, GROUND FLOOR, AAYKAR BHAVAN, RACE COURSE CIRCLE, BARODA 390001 ACIT, TDS CIRCLE, ROOM NO.5, GROUND FLOOR, AAYAKAR BHAVAN, RACE COURSE, BARODA V/S . V/S . V/S . M/S. OIL & NATURAL GAS CORPORATION LTD., BASIN OFFICE (EMPLOYEE, MAKARPURA, BARODA M/S. OIL & NATURAL GAS CORPORATION LTD., WORKSHOP, (SALARY) BARODA M/S. OIL & NATURAL GAS CORPORATION LTD., WORKSHOP, BARODA (CONTRACTS), ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 2 / (APPELLANT) .. / (RESPONDENT) ITA NO. 1343/AHD/2010 ASSESSMENT YEAR:2009-10 ACIT,TDS CIRCLE, ROOM NO.5, GROUND FLOOR, AAYKAR BHAVAN, RACE COURSE CIRCLE, BARODA 390001 V/S . M/S. OIL & NATURAL GAS CORPORATION LTD., ANKLESWAR ASSET, ANKLESWAR /BY ASSESSEE SHRI S.N.SOPARKAR, SR-AR & MRS. URVASHI SHODHAN, AR /BY REVENUE SHRI RAVINIDRA KUMAR, CIT-DR /DATE OF HEARING 26-09-2012 ! /DATE OF PRONOUNCEMENT 16-11-2012 ' ' ' ' /O R D E R PER BENCH:- THESE ARE CROSS-APPEALS FILED BY THE ASSESSEE AND REVENUE AND ALL ARE RELATED TO ASSESSMENT YEAR (AY) 2009-10 ARISING OUT OF THREE SEPARATE ORDERS OF COMMISSIONER OF INCOME-TAX (APPEALS)-VI, BARODA (CIT(A) FOR SHORT) OF DIFFERENT DATES I.E., 13-11-2099 AND 09-12-2009 FOR VARIOUS OFFICES OF THE ASSESSEE-COMPANY. IN ALL THESE APPEALS, ISSUE INVOL VED IS REGARDING THE DEMAND RAISED BY THE ASSESSING OFFICER (AO) U/S. 20 1(1) & 201(1A) OF THE INCOME-TAX ACT, 1961 (THE ACT HEREINAFTER) ON THI S ALLEGATION THAT TAX DEDUCTED AT SOURCE (TDS) WAS NOT PROPERLY DEDUCTED BY THE ASSESSEE- COMPANY U/S 194-I, 194J ETC., ALL THESE APPEALS WER E HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR T HE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE WITH REGARDS TO ALLEGATION OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT DED UCTED TDS FROM THE COST OF UNIFORM ITEMS, STITCHING CHARGES, WASHING EXPENS ES ETC., REIMBURSED TO THE ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 3 EMPLOYEES. THIS APPEAL IS ITA NO. 184/AHD/2010. THE ONLY GROUND RAISED BY THE ASSESSEE IS AS UNDER:- 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND I N FACTS AND CIRCUMSTANCES OF THE CASE IN UPHOLDING THE ORDER PA SSED BY ACIT, TDS, BARODA WHEREBY THE APPELLANT WAS HELD TO BE AN ASSE SSEE IN DEFAULT FOR NOT DEDUCTING TAX AT SOURCE FROM THE COST OF UNIFOR M ITEMS, STITCHING CHARGES, WASHING EXPENSES, ETC. REIMBURSED TO ITS E MPLOYEES AND WAS CALLED UPON TO PAY THE TAX ALLEGEDLY SHORT DEDUCTED FROM ITS EMPLOYEES U/S. 201(1) ADDITION INTEREST THEREON U/S. 201(1A) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS ON THIS ISSUE TILL THE STAGE OF PASS ING OF ORDER BY AO U/S. 201 & 201(1A) OF THE ACT ARE NOTED BY LD. CIT(A) IN PAR A-4 AND 4.1 OF HIS ORDER AND THESE TWO PARAS ARE REPRODUCED BELOW:- 4. THE SECOND GROUND OF APPEAL IS THAT THE ASSESSI NG OFFICER TREATED THE APPELLANT IN DEFAULT FOR NOT DEDUCTING THE TAX DEDUCTED AT SOURCE FROM PAYMENTS MADE TOWARDS REIMBURSEMENT OF COST OF UNIFORM ITEMS, STITCHING CHARGES, WASHING EXPENSES, ETC., 4.1 THE SURVEY ACTION WAS CARRIED BY THE T.D.S. CIR CLE, BARODA AT THE PREMISES OF THE APPELLANT. DURING THE COURSE OF SUR VEY/DETAILS OF SALARY WERE VERIFIED AND THE ACIT CAME TO THE CONCLUSION T HAT THE AMOUNT OF UNIFORM ALLOWANCE HAS BEEN PAID TO THE EMPLOYEES IN MONEY IN ADVANCE OF THE QUARTER AND NO EVIDENCE OF HAVING AC TUALLY INCURRED THE EXPENSES WAS PRODUCED ANY TIME AFTER WARDS. IN VIEW OF THESE FACTS IT CAN SAFELY BE CONCLUDED THAT THE PAYMENT OF THE UNI FORM ALLOWANCE IS CLEARLY AN ALLOWANCE PAID TO PAS AN ADDITIONAL ALLO WANCE IN ADDITION TO SALARY/. FROM THE ABOVE DISCUSSION AND CIRCUMSTANCE S IT IS PROVED THAT THE UNIFORM ALLOWANCE IS PART OF SALARY. THE AMOUNT OF MONEY PAID IN THE NAME OF UNIFORM ALLOWANCE EVEN WHEN THE AMOUNT IS NOT INCURRED FOR THE PURPOSE FOR WHICH IT IS PAID SHOWS HAT THE AMOUNT OF THIS ALLOWANCE IS INTENDED TO MAKE PAYMENT IN ADDITION T O THE AMOUNT OF SALARY PAID. THUS THE PAYMENT NOT BASED ON ACTUAL I NCURRING OF EXPENDITURE. AS THE PAYMENT OF THE UNIFORM ALLOWANC E APPEARS TO HAVE BEEN MADE EVEN WHEN EMPLOYEE DOES NOT WEARING UNIFO RM & ALSO DURING THE LEAVE PERIOD, SHOWS THAT THE PAYMENT OF UNIFORM ALLOWANCE IS NOTHING BUT ADDITIONAL SALARY PAID IN FORM OF AN AL LOWANCE AND IT DESERVES TO BE TAXED AS SALARY INCOME U/S. 17(1) (I V) AS IT CAN NOT BE ALLOWED DEDUCTION UNDER SECTION 10(14) (VI) AS EXPE NDITURE IS NOT PROVED AS HAVE BEEN INCURRED. BEFORE THE ASSESSING OFFICER THE ASSESSEE SUBMITTED THAT THIS BEING A REIMBURSEMENT OF EXPENSES INCURRED BY EMPLOYEE FOR THE MAINTENANCE OF UNIFORM IS NOT TAXABLE IN THE EMPLOYEES HANDS BY VIRTUE OF THE EXCLUSION CON TAINED IN SECTION ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 4 10(14) OF THE ACT READ WITH RULE 2BB OF THE IT RULE S, 1962. FURTHER ASSESSEE IS PAYING F.B.T. ON THE SAME. BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APP EAL BEFORE LD. CIT (A) BUT WITHOUT SUCCESS AND NOW THE ASSESSEE IS FURTHER APP EAL BEFORE US. 4. IT WAS THE SUBMISSION OF LD. AR OF THE ASSESSEE THAT ALL THESE PAYMENTS WERE MADE BY THE ASSESSEE-COMPANY TO ITS EMPLOYEES ON WHICH FRINGE BENEFITS TAX (FBT FOR SHORT) WAS DULY PAID BY THE A SSESSEE-COMPANY. THEREFORE, AS PER THE PROVISIONS OF CLAUSE (VI) OF SUB-SECTION 2 OF SECTION 17 AS IT WAS ON THE STATUTE BOOK BEFORE ITS AMENDMENT BY THE FINANCE NO.2 ACT 2009 WITH EFFECT FROM 1-4-2010, PERQUISITES DID NOT INCLUDE THE FRINGE BENEFITS CHARGEABLE TO TAX UNDER CHAPTER-XIIH. HE FURTHER SU BMITTED THAT AS PER SECTION 115WB (2)E UNDER CHAPTER-XIIH, ANY EXPENDITURE INCU RRED FOR EMPLOYEES WELFARE IS CONSIDERED AS FRINGE BENEFIT ON WHICH FB T IS PAYABLE EXCLUDING THESE EXPENDITURE FOR EMPLOYEES WELFARE WHICH ARE INCURRED TO FULFILL ANY STATUTORY OBLIGATION OR TO MITIGATE OCCUPATIONAL HA ZARD ETC., IT WAS FURTHER SUBMITTED BY HIM THAT BENEFITS GIVEN BY THE ASSESSE E-COMPANY TO ITS EMPLOYEES BY WAY OF UNIFORM, STITCHING CHARGES AND WASHING EXPENSES ETC., WERE NOT TO FULFILL ANY STATUTORY OBLIGATION OR TO MITIGATE OCCUPATIONAL HAZARD AND THIS EXPENDITURE DID NOT FALL UNDER EXCLUSION A S SPECIFIED IN THE EXPLANATION TO CLAUSE-E OF SUB-SECTION 2 OF SECTION 115WB AND THEREFORE, FBT IS PAYABLE BY THE ASSESSEE-COMPANY ON THE BENEFITS PROVIDED BY THE ASSESSEE-COMPANY TO ITS EMPLOYEES AND ASSESSEE HAS DULY PAID FBT ON THESE PAYMENTS TO ITS EMPLOYEES AND THEREFORE, THE SAME CANNOT BE CONSIDERED AS PERQUISITES AND AS A RESULT, NO TDS I S REQUIRED TO BE DEDUCTED BY THE ASSESSEE FROM THIS EXPENDITURE. RELIANCE WAS PLACED BY HIM ON THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF R & B FALCON (A) PTY. LTD. V. CIT (2008) 301 ITR 309 (SC) AND IN PARTICULAR, OUR ATTE NTION WAS DRAWN TO PARA-17 AND 30 OF THIS JUDGMENT WHICH ARE AVAILA BLE ON PAGE NO. 319 AND 321 OF 301 ITR. ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 5 5. ONE MORE SUBMISSION WAS MADE BY HIM THAT THE ASS ESSEE WAS UNDER BONA FIDE BELIEF THAT NO TDS IS REQUIRED TO BE DEDU CTED FROM THIS EXPENDITURE INCURRED FOR THE WELFARE OF THE EMPLOYEES AND THERE FORE ALSO, NO DEMAND FOR TDS AND INTEREST THEREON CAN BE RAISED ON THE ASSES SEE AND IN SUPPORT OF THIS CONTENTION, RELIANCE WAS PLACED ON VARIOUS JUDGMENT S AS NOTED BELOW:- A) CIT V. OIL AND NATURAL GAS CORPORATION LTD. (20 02) 254 ITR 121 (GUJ) B) ITO V. GUJARAT NARMADA VALLEY FERTILIZERS CO. LT D. (2001) 247 ITR 305 (GUJ) C) CIT (TDS) V. RELIANCE INDUSTRIES LTD. (2009) 30 8 ITR 82 (GUJ) HE ALSO SUBMITTED THAT AS PER THE BOARDS CIRCULAR REPORTED IN 277 ITR (ST) PAGE 20 ALSO, NO TDS WAS REQUIRED TO BE DEDUCTED IN THE FACTS OF THE PRESENT CASE. 6. AS AGAINST THIS, LD. CIT-DR OF THE REVENUE SUPPO RTED THE ORDERS OF AUTHORITIES BELOW ON THIS ISSUE. HE FURTHER SUBMITT ED THAT QUESTION NO. 74 AS PER CBDT CIRCULAR NO.8 OF 2005 DATED 29-08-2005, WH ICH IS AVAILABLE ON PAGE NO.57 AND 58 OF THE PAPER BOOK SUBMITTED BY THE ASS ESSEE, FBT IS NOT PAYABLE ON ANY EXPENDITURE INCURRED FOR MEETING THE EMPLOYERS STATUTORY OBLIGATION UNDER THE EMPLOYMENT STANDING ORDER ACT, 1948 BECAUSE IT FALLS WITHIN THE SCOPE OF THE EXCLUSION IN THE EXPLANATIO N TO CLAUSE-E OF SUB- SECTION-2 OF SECTION 115WB AND THEREFORE, THIS EXPE NDITURE FOR PROVIDING STITCHING UNIFORM OR EQUIPMENT TO THE EMPLOYEES OR INCURRED FOR THE PURPOSE OF REIMBURSEMENT OF WASHING CHARGES IS EXEMPT FROM FBT TO THE EXTENT SUCH EXPENDITURE INCURRED TO MEET STATUTORY OBLIGATION. HE FURTHER SUBMITTED THAT IT IS NOT STATUTORY OBLIGATION OF THE ASSESSEE-COMPANY TO PROVIDE UNIFORM AND NONE OF THE EMPLOYEES HAS OFFERED THIS INCOME IN TH EIR HANDS. HE ALSO SUBMITTED THAT IN COURSE OF SURVEY, IT WAS FOUND TH AT NO EMPLOYEE WAS WEARING ANY UNIFORM. HE ALSO SUBMITTED THAT THIS ALLOWANCE WAS PAID TO THE EMPLOYEES EVEN WHEN THEY WERE ON LEAVE. IT HAS NO RELATION TO OFFICIAL WORK OF THE ASSESSEE. HE ALSO PLACED RELIANCE ON THE JUDGMENT O F HONBLE JURISDICTIONAL ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 6 HIGH COURT RENDERED IN THE CASE OF CIT (TDS) V. RELIANCE INDUSTRIES LTD. (2009) 308 ITR 82 (GUJ) ALTHOUGH RELIANCE ON THIS J UDGMENT WAS PLACED BY LD. AR OF THE ASSESSEE ALSO. REGARDING RELIANCE PLACED BY THE ASSESSEE ON THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF R & B FALCON (A) PTY. LTD. (SUPRA), IT WAS SUBMITTED THAT THIS JUDGMENT IS NO T APPLICABLE IN THE PRESENT CASE BECAUSE THE LD. AR HAS DRAWN INFERENCE FROM THIS JUDGMENT BUT THE SAME IS NOT CORRECT. HE FURTHER SUBMITTED THAT FBT IS NOT PAYABLE ON THIS EXPENDITURE AND EVEN IF PAID BY THE ASSESSEE, IT WI LL NOT ALTER LEGAL POSITION REGARDING REQUIREMENT OF DEDUCTION OF TDS BY THE AS SESSEE. 7. REGARDING THIS CONTENTION OF THE LD. AR OF THE A SSESSEE THAT ASSESSEE WAS UNDER THE BONA FIDE BELIEF, IT WAS SUBMITTED TH AT NO PERSON CAN HAVE BONA FIDE BELIEF IN THE ABSENCE OF ANY CONTROL ABOU T ACTUALLY INCURRING OF EXPENDITURE BY THE EMPLOYEES. 8. IN REJOINDER, IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT THERE IS NO DISPUTE ON THIS ASPECT THAT FBT WAS PAID BY THE ASSESSEE ON THIS EXPENDITURE AND IF IT IS HELD THAT THE FBT WAS NOT PAYABLE ON THIS EXPENDITURE AND THEREFORE, TDS WAS REQUIRED TO BE DEDUCTED, DIR ECTION MAY BE GIVEN FOR GRANTING REFUND OF THE FBT PAID BY THE ASSESSEE IF THE ASSESSEES MAIN CONTENTION IS NOT ACCEPTED THAT TDS WAS NOT REQUIRE D TO BE DEDUCTED BECAUSE FBT WAS PAYABLE FOR THE EXPENDITURE AND SAME WAS AC CORDINGLY PAID. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW AND JUDGMENTS CITED BY BOTH THE SIDES. FIRST, WE DEAL WITH THIS ASPECT THAT WHETHER FBT WAS PAYABLE BY THE ASSESSEE-COMPANY ON THIS EXPENDITURE OR NOT AND IF IT IS FOUND THAT FBT WAS PAYABLE BY THE ASSESSEE ON THIS EXPEND ITURE, WHICH WAS ACTUALLY PAID ALSO, WHETHER THERE IS A LIABILITY OF THE ASSESSEE TO DEDUCT TDS FROM THIS EXPENDITURE INCURRED FOR THE WELFARE OF T HE EMPLOYEES. IN THIS REGARD, ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 7 WE FEEL THAT PROVISIONS OF SECTION-17(2) (VI) AND S ECTION 115WB 2E WITH EXPLANATION ARE RELEVANT AND THE SAME ARE REPRODUCE D BELOW:- 17. (1) (2) *(VI) THE VALUE OF ANY OTHER FRINGE BENEFIT OR AMEN ITY (EXCLUDING THE FRINGE BENEFITS CHARGEABLE TO TAX UNDER CHAPTER XII -H) AS MAY BE PRESCRIBED; 115WB (1) (2) THE FRINGE BENEFIT PURPOSES, NAME LY:- (E) EMPLOYEES WELFARE. [EXPLANATION. FOR THE PURPOSES OF THIS CLAUSE, AN Y EXPENDITURE INCURRED OR PAYMENT MADE TO (I) FULFILL ANY STATUTORY OBLIGATION; OR (II) MITIGATE OCCUPATIONAL HAZARDS; OR (III) PROVIDE FIRST IS FACILITIES IN THE HOSPITAL O R DISPENSARY RUN BY THE EMPLOYER; OR (IV) PROVIDE CRCHE FACILITY FOR THE CHILDREN OF TH E EMPLOYEE; OR (V) SPONSOR A SPORTSMAN, BEING AN EMPLOYEE; OR (VI) ORGANIZE SPORTS EVENTS FOR EMPLOYEES, SHALL NO T BE CONSIDERED AS EXPENDITURE FOR EMPLOYEES WELFARE;] 10. FROM THE PROVISIONS OF SECTION 17 (2) (VI), WE FIND THAT PERQUISITES DOES NOT INCLUDE THE FRINGE BENEFIT CHARGEABLE TO TAX UN DER CHAPTER-XIIH. IN CHAPTER-XIIH, THE RELEVANT SECTION REGARDING LIABIL ITY TO PAY FBT ON EMPLOYEES BENEFITS WELFARE IS AS PER CLAUSE-E OF S UB-SECTION-2 OF SECTION 115WB WHICH HAS BEEN REPRODUCED ABOVE. AS PER THE S AME, FBT IS PAYABLE ON ANY EXPENDITURE INCURRED ON EMPLOYEES WELFARE E XCLUDING THOSE EXPENDITURES WHICH ARE INCURRED TO FULFILL ANY STAT UTORY OBLIGATION OR TO MITIGATE OCCUPATIONAL HAZARDS ETC. THIS IS NOT IN DISPUTE TH AT FBT WAS PAID BY ASSESSEE-COMPANY ON THIS EXPENDITURE AND THIS IS AL SO ADMITTED POSITION THAT THIS EXPENDITURE IS IN THE NATURE OF EMPLOYEES WEL FARE. ONE MORE CONTENTION WAS RAISED BY THE LD. DR OF THE REVENUE THAT IN THE PRESENT CASE, THESE ALLOWANCES ARE GIVEN TO EACH EMPLOYEE SEPARATELY AN D THE BENEFIT ARISING TO EACH EMPLOYEE IS ASCERTAINABLE AND THEREFORE, ON SU CH BENEFIT, FBT IS NOT ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 8 PAYABLE AND ONLY THOSE EXPENDITURES IN RESPECT OF E MPLOYEES WELFARE ARE LIABLE TO FBT, WHICH ARE COMMON EXPENDITURE AND BEN EFIT OBTAINED BY EACH EMPLOYEE IS NOT ASCERTAINABLE. WE DO NOT FIND ANY M ERIT IN THIS CONTENTION OF LD. DR OF THE REVENUE BECAUSE THERE IS NO SUCH REST RICTION PROVIDED IN SECTION 115WB THAT ONLY COMMON EXPENDITURE ON EMPLO YEES WELFARE IS LIABLE TO FBT AND NOT THOSE EXPENDITURES WHICH ARE ATTRIBU TABLE TO AN EMPLOYEE DIRECTLY AND WHOSE BENEFIT ENJOYED BY AN EMPLOYEE I S ASCERTAINABLE. ONLY EXCEPTION CARVED OUT FROM THE LIABILITY OF FBT IS A S PER EXPLANATION TO CLAUSE- E OF THIS SECTION AS REPRODUCED ABOVE WHICH INCLUDE S THOSE EXPENDITURES WHICH ARE INCURRED TO FULFILL ANY STATUTORY OBLIGAT ION OR TO MITIGATE OCCUPATIONAL HAZARDS ETC. THE IMPUGNED EXPENDITURE WHICH IS IN D ISPUTE BEFORE US DOES NOT FALL IN ANY OF THE EXCLUSION CLAUSE OF THE EXPLANAT ION. THE SECOND ARGUMENT OF THE LD. DR OF THE REVENUE IS THIS THAT ACTUAL EXPEN DITURE WAS NOT INCURRED BY THE EMPLOYEES OF THE ASSESSEE BECAUSE AT THE TIME O F SURVEY ALSO, NO EMPLOYEES WAS FOUND WEARING ANY UNIFORM. REGARDING THIS CONTENTION ALSO, WE FIND THAT THERE IS NO EXCLUSION PROVIDED IN SECT ION 115WB TO EXCLUDE THOSE EXPENDITURES INCURRED BY THE ASSESSEE-COMPANY FOR E MPLOYEES WELFARE WHICH WERE NOT ACTUALLY INCURRED BY THE EMPLOYEES AS PER THE INTENTION FOR WHICH THE EXPENDITURE WAS INCURRED. AS PER SUB-SECTION 1 OF S ECTION 115WB, ANY PRIVILEGE, SERVICE, FACILITY OR AMENITY DIRECTLY OR INDIRECTLY PROVIDED BY AN EMPLOYER WHETHER BY WAY OF REIMBURSEMENT OR OTHERWI SE TO HIS EMPLOYEES IS COVERED WITHIN THE DEFINITION OF FRINGE BENEFIT ON WHICH FBT IS PAYABLE. AS PER SUB-SECTION 2 OF SECTION 115WB, IT IS PROVIDED THAT FRINGE BENEFIT SHALL BE DEEMED TO HAVE BEEN PROVIDED BY THE EMPLOYER TO ITS EMPLOYEE IF THE EMPLOYER HAS IN THE COURSE OF BUSINESS INCURRED ANY EXPENDITURE ON OR MADE ANY PAYMENT FOR VARIOUS PURPOSE WHICH INCLUDES EMPL OYEES WELFARE. AS PER CLAUSE-E OF THIS SUB-SECTION, IT DOES NOT COME OUT THAT IT HAS TO BE ENQUIRED AND LOOKED INTO WHETHER THE EMPLOYEE HAS INCURRED T HE AMOUNT GIVEN TO HIM BY THE EMPLOYER FOR THE SAME PURPOSE FOR WHICH IT W AS GIVEN TO THE EMPLOYEE. IN OUR CONSIDERED OPINION, FOR THIS REASON THAT THE EMPLOYER HAS PAID FBT ON A PARTICULAR EXPENDITURE, IT IS CONSIDERED AS PAYMENT OF INCOME TAX ONLY ON ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 9 DEEMED INCOME OF THE EMPLOYEE OUT OF VARIOUS EXPEND ITURES INCURRED BY THE EMPLOYER AND HENCE, THIS IS NOT RELEVANT AS TO WHET HER THE EMPLOYEE HAS ACTUALLY INCURRED THOSE EXPENDITURES AS INTENDED BY THE EMPLOYER. 11. IN VIEW OF OUR ABOVE DISCUSSION AND IN VIEW OF THIS FACT THAT FBT WAS ACTUALLY PAID BY THE ASSESSEE-COMPANY ON THE IMPUGN ED EXPENDITURE ON UNIFORM, WASHING ALLOWANCE ETC., THE SAME CANNOT BE CONSIDERED AS PERQUISITES IN THE HANDS OF THE EMPLOYEES AND THERE FORE, THERE IS NO LIABILITY OF THE ASSESSEE-COMPANY TO DEDUCT TDS THEREFROM. 12. NOW, WE EXAMINE THE APPLICABILITY OF CBDT CIRCU LAR NO. 8 OF 2005 DATED 29-08-2005 (SUPRA). FROM THE RELEVANT QUESTION OF T HIS CIRCULAR I.E., QUESTION NO. 74 AS PER WHICH, THE QUESTION WAS AS TO WHETHER FBT IS PAYABLE ON A EXPENDITURE INCURRED ON PROVIDING SAFETY SHOES OR U NIFORMS OR EQUIPMENTS TO THE EMPLOYEES OR FOR THE PURPOSE OF REIMBURSEMENT O F WASHING CHARGES. REPLY WAS THIS THAT ANY EXPENDITURE INCURRED FOR ME ETING THE EMPLOYERS STATUTORY OBLIGATION UNDER THE EMPLOYMENT STANDING ORDER ACT, 1948 FALL WITHIN THE SCOPE OF EXCLUSION IN THE EXPLANATION TO CLAUSE -E OF SUB-SECTION-2 OF 115WB AND THEREFORE, TO THE EXTENT, SUCH EXPENDITUR E IS COVERED BY THIS EXCLUSION, FBT IS NOT REQUIRED TO BE PAID. IN THE P RESENT CASE, WE HAVE SEEN THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IN RE SPECT OF UNIFORM, WASHING CHARGES ETC., IS NOT A STATUTORY OBLIGATION OF THE ASSESSEE-COMPANY AND THEREFORE, IT IS NOT COVERED BY THE EXCLUSION CLAUS E OF EXPLANATION TO CLAUSE-E OF SUB-SECTION 2 OF SECTION 115WB. THE CONSEQUENCE OF THIS IS THAT THE SAME IS NOT PERQUISITES AS PER SECTION 17 (2) (VI) OF TH E IT ACT. NOW, WE EXAMINE THE APPLICABILITY OF THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF R & B FALCON (A) PTY. LTD. (SUPRA). IN PARA-17 OF THIS JUDGMENT, IT IS NOTED BY HONBLE APEX COURT THAT FBT IS NEW CONCEPT AND THE TAX IS TO BE LEVIED ON THE FRINGE BENEFIT PROVIDED OR DEEMED TO HAVE BEEN PROV IDED BY ANY EMPLOYER TO EMPLOYEE @ 30% ON THE VALUE OF SUCH FRINGE BENEFIT. IT IS FURTHER NOTED BY HONBLE APEX COURT THAT INTENTION OF THE PARLIAMENT TO TAX THE EMPLOYER ON THE ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 10 ONE HAND FOR THE EXPENDITURE FOR THE BENEFIT OF THE EMPLOYEES INCLUDING ENTERTAINMENT ETC., AND ON THE OTHER, WHEN AN EMPLO YEE IS GETTING THE PERKS ARE NOT TO BE TAXED. THOSE WHO GET DIRECT OR INDIRE CT BENEFIT FROM THE EXPENDITURE INCURRED BY THE EMPLOYER, NO TAX IS LEV IABLE. IN PARA-30 OF THE JUDGMENT, IT IS ALSO NOTED BY THE HONBLE APEX COUR T THAT PARLIAMENT, IN INTRODUCING THE CONCEPT OF FRINGE BENEFIT, WAS CLEA R IN ITS MIND THAT IN SO FAR AS ON THE ONE HAND, IT HAS AVOIDED IMPOSITION OF DOUBL E TAXATION I.E., TAX BOTH IN THE HANDS OF EMPLOYEE AND EMPLOYER AND ON THE OTHER HAND, IT IS INTENDED TO BRING SUCCOR TO THE EMPLOYER FOR OFFERING SOME PRIV ILEGE, SERVICE FACILITY OR AMENITY, WHICH WAS OTHERWISE THOUGH TO BE NECESSARY OR EXPEDIENT. FROM THIS OBSERVATION OF THE HONBLE APEX COURT IN THIS JUDGM ENT AND ALSO FROM THE RELEVANT PROVISIONS OF SECTION 17 (2) (VI) AND 115W B (2) AS REPRODUCED ABOVE, IT BECOMES VERY CLEAR THAT ON FRINGE BENEFIT LIKE U NIFORM AND WASHING ALLOWANCE ETC., PROVIDED BY ASSESSEE TO ITS EMPLOYE ES OTHERWISE THAN FOR A STATUTORY OBLIGATION, IS LIABLE TO FBT AND SAME IS NOT LIABLE TO INCOME TAX IN THE HANDS OF THE EMPLOYEE BECAUSE THE SAME CANNOT BE CO NSIDERED AS PERQUISITES AS PER THE PROVISIONS OF SECTION 17(2)( VI) OF THE ACT. ONCE WE COME TO THIS CONCLUSION, IT IS ABUNDANTLY CLEAR THAT NO TDS IS REQUIRED TO BE DEDUCTED BY THE EMPLOYER FROM SUCH EXPENDITURE INCU RRED BY THE EMPLOYER FOR THE BENEFITS OF THE EMPLOYEES. ACCORDINGLY, IN THE PRESENT CASE, WE HOLD THAT TDS WAS NOT REQUIRED TO BE DEDUCTED BY THE ASSESSEE -COMPANY FROM THIS EXPENDITURE INCURRED BY IT ON PROVIDING UNIFORM, WA SHING CHARGES AND WASHING ALLOWANCE ETC., SO THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. NOW WE TAKE UP THE APPEAL OF REVENUE ARISING OUT OF SAME ORDER OF LD. CIT(A) IN ITA NO.609/AHD/2010. 14. THE GROUND RAISED BY THE REVENUE IS AS UNDER:- ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 11 1. THE LD. CIT(A) ERRED IN LAW AS WELL AS FACTS OF THE CASE IN DELETING THE ORDER PASSED U/S. 201(1) & INTEREST CHARGED U/S . 201(1A) OF THE IT ACT OF RS.1,79,03,719/- FOR A.Y. 2009-10 BY THE AO EVEN THOUGH DURING THE COURSE OF VERIFICATION IT WAS NOTICED THAT THE ASSESSEE COMPANY WAS PAID CONVEYANCE, MAINTENANCE, REIMBURSEMENT EXPENDI TURE (CMRE) TO ITS EMPLOYEES EVERY MONTH BASED ON THEIR STATUS, DE SIGNATION. DESPITE THE FACT THE PAYMENT OF CMRE WAS TAXABLE AS SALARY AND EMPLOYER HAD NOT DEDUCTED TDS ON THE SAME. 15. BRIEF FACTS ON THIS ISSUE ARE NOTED BY LD. CIT (A) IN PARA-3 AND 3.1 OF HIS ORDER, WHICH ARE REPRODUCED BELOW:- 3. THE FIRST GROUND OF APPEAL IS THAT THE ASSESSIN G OFFICER HAS TREATED THE APPELLANT AS IN DEFAULT FOR NOT DEDUCTING THE T AX DEDUCTED AT SOURCE FROM THE AMOUNT OF CMRE (CONVEYANCE AND MAINTENANCE OF EXPENSES) REIMBURSED TO EMPLOYEES. 3.1 THE SURVEY ACTION WAS CARRIED BY THE TDS CIRCLE , BARODA AT THE PREMISES OF THE APPELLANT. DURING THE COURSE OF SUR VEY DETAILS OF SALARY WERE VERIFIED AND THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE CMRE AND THE TRANSPORT ALLOWANCES ARE PART OF THE S ALARY AND WHICH ARE NOT BASED ON ANY REIMBURSEMENT NATURE. THE ASSE SSING OFFICER ALSO CONTENDED THAT AS A PAYMENT OF CMRE IS MADE EVEN TO EMPLOYEES PROVIDED A STAFF CAR, EVEN IF HE DOES NOT KEEP HIS CAR AT THE STATION OF POSTING AND ALSO WHEN ON LEAVE, CONCLUDED THAT THE PAYMENT OF CMRE IS NOTHING BUT ADDITIONAL SALARY PAID IN THE FORM O F ALLOWANCES AND IT DESERVED TO BE TAXED AS SALARY INCOME U/S. 17(1)(IV ). BEFORE THE ASSESSING OFFICER THE ASSESSEE SUBMITTED THAT CMRE IS SUBJECT TO FBT AND BEING IN THE NATURE OF REIMBURSEMENT OF CONVEYA NCE EXPENSES TO EMPLOYEES IS TAXABLE ONLY AS A FRINGE BENEFIT IN TH E EMPLOYERS HAND U/S. 115 WA OF THE INCOME TAX ACT. THE ASSESSEE HAS SUBMITTED THAT IT IS PAYING FBT ON THIS AND HENCE THE SAME IS NOT TAX ABLE IN THE EMPLOYEES HANDS BY VIRTUE OF THE EXCLUSIONS CONTAI N IN SECTION 17(2) (VI) OF THE ACT. THE ASSESSING OFFICER WAS NOT CONV INCED BY THE SUBMISSIONS OF THE ASSESSEE AND HELD THAT ASSESSEE IS IN DEFAULT FOR NOT DEDUCTING THE TAX DEDUCTED AT SOURCE FROM THE AMOUN T OF CMRE (CONVEYANCE AND MAINTENANCE REIMBURSEMENT EXPENSES) REIMBURSED TO EMPLOYEES AND TAXED AS SALARY INCOME U/S.17(1)(I V). 16. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE LD. CIT (A) WHO DECIDED THE ISSUE IN FAVOUR OF ASSESSEE AND NOW REVENUE IS IN APPEAL BEFORE US. ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 12 17. ON THIS ISSUE, ARGUMENT FROM BOTH SIDES ARE SAM E. ARGUMENT OF LD. AR OF THE ASSESSEE IN THIS THAT FBT IS PAID AND THEREF ORE, IT CANNOT BE COVERED IN PERQUISITES AS PER SUB-SECTION 17(2) (VI) AND THERE FORE NO TDS IS REQUIRED TO BE DEDUCTED BY THE ASSESSEE FROM SUCH EXPENDITURE A ND THE SUBMISSION OF LD. DR OF THE REVENUE WAS THIS THAT FBT IS NOT REQU IRED TO BE PAID ON THIS EXPENDITURE ALSO AND THEREFORE, ORDER OF LD. CIT (A ) SHOULD BE REVERSED AND THE ORDER OF ASSESSING OFFICER SHOULD BE RESTORED. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT (A) AS PER PARA-3.3 OF HIS ORDER, WHICH IS REPRODUCED:- 3.3 I HAVE CONSIDERED THE SUBMISSION OF THE LEARNE D AUTHORIZED REPRESENTATIVE, REMAND REPORT OF LEARNED ACIT AND R EPLY OF REMAND REPORT OF AUTHORIZED REPRESENTATIVE AND FURTHER CON SIDERING THE ARGUMENTS OF BOTH THE APPELLANT AND RESPONDENT AND FACTS OF THE CASE. IT IS SEEN THAT THE CONVEYANCE MAINTENANCE REIMBURSEME NT (CMRE) SCHEME WAS INTRODUCED IN ONGFC TO REIMBURSE TO EMPL OYEES THE EXPENDITURE INCURRED BY THEM ON MAINTENANCE AND USE OF THEIR OWN VEHICLES IN THE PERFORMANCE OF OFFICIAL DUTIES AND THEREBY REDUCE PRESSURE ON ONGC VEHICLES AND MAINTENANCE COST THER EOF, THUS SAVING A PORTION OF EXPENDITURE, WHICH OTHERWISE COULD HAV E BEEN BORNE BY THE APPELLANT. THE CMRE IS NOT BLANKET PAYMENT, BUT THE REIMBURSEMENT IS FOR THE ACTUAL AMOUNT INCURRED IN MAINTAINING AND R UNNING THE VEHICLE RESTRICTED TO MAXIMUM AMOUNTS PER MONTH FIXED BY ON GC, TAKING VARIOUS PARAMETERS INTO ACCOUNT. EACH EMPLOYEE IS R EQUIRED TO SUBMIT HIS CLAIM ON MONTHLY BASIS FOR THE REIMBURSABLE RUN NING & MAINTENANCE EXPENDITURE INCURRED DIN THE PRECEDING MONTH, IN TH E PRESCRIBED FORM. THE CLAIMS ARE SUBMITTED BY EMPLOYEE ON LINE BY MAK ING NECESSARY ENTRIES IN THE APPELLANTS COMPUTERIZED SYSTEM. IT IS ALSO NOT TRUE THAT ALL EMPLOYEES AUTOMATICALLY BECOME ELIGIBLE FOR D\RECEI VING CMRE PAYMENTS. RATHER, CMNRE IS ALLOWED ONLY TO THOSE EM PLOYEES IN RESPECT OF WHOM PERMISSION IS GRANTED BY A COMPETEN T AUTHORITY TO DO SO AFTER APPLICATIONS ARE MADE BY THE EMPLOYEES AND AFTER SUCH APPLICATIONS ARE APPROVED BY THE EMPLOYEES CONTROL LING OFFICERS, ON A THROUGH SCRUTINY. IN ADDITION, EMPLOYEES ARE ALSO A LLOWED REIMBURSEMENT ONCE EVERY YEAR TOWARDS THE COST OF I NSURANCE INCURRED BY THEM ON THE VEHICLES FOR WHICH THEY HAVE BEEN AL LOWED TO CLAIM CMRE. THIS REIMBURSEMENT IS ALLOWED ON PRODUCTION O F RECEIPT FOR PAYMENT OF INSURANCE PREMIUM AND COPY OF INSURANCE POLICY/COVER NOTE ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 13 ETC., RESTRICTIONS ON PAYMENTS WHEN EMPLOYEES WERE ON LEAVE OR ABSENT FROM DUTIES FOR MORE THAN 30 DAYS AND 60 DAY S REVEAL THAT THE CONTENTION OF THE AO THAT EVEN WHEN THE VEHICLES WE RE NOT USED, THE CMRRE WAS PAID FALLS FLAT. THERE IS A CONSIDERABLE MERIT IN THE SUBMISSIONS OF THE APPELLANT THAT WHEN THE EMPLOYEE S ARE ON ONSHORE DUTY FOR LONGER PERIODS, THEN EXPENSES LIKE INSURAN CE, MAINTENANCE EXPENSES ETC., ARE NECESSARY TO BE REIMBURSED TO EM PLOYEES COMING UNDER THE SCHEME IS ACCEPTABLE. EVEN THOUGH MANY CH ECKS AND BALANCES WERE IN VOGUE LIKE SELECTION OF THE EMPLOY EES COMING UNDER THIS SCHEME, PROCEDURE FOR REIMBURSEMENTS, ONLINE C LAIM BY THE EMPLOYEES ETC, IS THERE, FOR ANY SHORTCOMINGS COMMI TTED BY THE EMPLOYEES, THE EMPLOYEE CANNOT BE FOUND FAULT WITH, RATHER IT IS FOR THE AO ASSESSING THE EMPLOYEES TO FIND OUT THE CORRECTN ESS OF THE CLAIM AND IN CASE OF ANY DEFAULT TO TAKE APPROPRIATE ACTI ON. THE FACT THAT THE EMPLOYER IS PAYING FRINGE BENEFIT TAX ON CME CANNOT BE IGNORED. THUS, TAKING THE OVERALL PICTURE OF THE CMRE, THERE IS NO HESITATION TO HOLD SUCH REIMBURSEMENT TO EMPLOYEES COMING UNDER THE SC HEME AS NOT PART OF THE SALARY AND ACCORDINGLY NO TDS IS ATTRAC TED IN THE HANDS OF THE EMPLOYER. HENCE, I AM OF THE VIEW THAT THE ASSE SSING OFFICER WAS NO JUSTIFIED BY TREATING THE ASSESSEE IN DEFAULT U/S. 201(1) AND 201(1A) OF THE ACT. HENCE, THE ASSESSING OFFICER IS DIRECTED T O DELETE THE SAME, I.E., THE LEVIES U/S. 201(1) AND 201(1A). WE FIND THAT WHILE DECIDING THIS ISSUE IN FAVOUR OF ASSESSEE, THIS WAS STATED BY THE LD. CIT (A) THAT THAT THE FACT THAT EMPLOYER IS PAYING FRINGE BENEFIT TAX ON CMRE CANNOT BE IGNORED. REGARDING THIS EXPENDITURE ALSO I.E., CMRE, THIS COULD NOT BE SHOWN OR ESTABLISHED BY LD. DR OF THE REVENUE THAT FBT IS NOT PAYABLE ON THIS EXPENDITURE. THIS EXPENDITURE IS AL SO NOT INCURRED TO FULFILL ANY STATUTORY OBLIGATION OR TO MITIGATE OCCUPATIONAL HA ZARDS OR FALL IN ANY OTHER EXCLUSION AS SPECIFIED IN EXPLANATION TO CLAUSE-E O F SUB-SECTION-2 OF SECTION 115WB. THIS ALSO IS AN ADMITTED FACT THAT FBT WAS P AID BY THE ASSESSEE- COMPANY ON THIS EXPENDITURE ALSO. HENCE FOR THE SAM E REASON FOR WHICH, WE HAVE DECIDED THE ISSUE RAISED BY THE ASSESSEE IN IT S APPEAL IN FAVOUR OF ASSESSEE, THIS ISSUE IS ALSO DECIDED IN FAVOUR OF A SSESSEE AND WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A). 19, IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 14 20. NOW WE TAKE UP ANOTHER APPEAL OF ASSESSEE WHICH IS ARISING IN ITA 185/AHD/2010 IN RESPECT OF ONGC MAKARPURA. THE CROS S APPEAL OF THE REVENUE IS AS PER ITA NO.610/AHD/2010. 21. GROUND RAISED BY ASSESSEE IS AS UNDER:- 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND I N FACTS AND CIRCUMSTANCES OF THE CASE IN UPHOLDING THE ORDER PA SSED BY ACIT, TDS, BARODA WHEREBY THE APPELLANT WAS HELD TO BE AN ASSE SSEE IN DEFAULT FOR NOT DEDUCTING TAX AT SOURCE FROM THE COST OF UNIFOR M ITEMS, STITCHING CHARGES, WASHING EXPENSES, ETC. REIMBURSED TO ITS E MPLOYEES AND WAS CALLED UPON TO PAY THE TAX ALLEGEDLY SHORT DEDUCTED FROM ITS EMPLOYEES U/S. 201(1) ADDITION INTEREST THEREON U/S. 201(1A) OF THE INCOME TAX ACT, 1961. 22. BOTH SIDES AGREED THAT ISSUE INVOLVED IN THIS A PPEAL IS IDENTICAL TO THE ISSUE INVOLVED IN ITA NO. 184/AHD/2010 AND THIS CAN BE DECIDED ON SIMILAR LINE. IN ITA NO.184/AHD/2010, THIS ISSUE WAS DECIDE D BY US IN FAVOUR OF ASSESSEE AS PER PARA - 9 TO 12. ACCORDINGLY, IN THI S APPEAL ALSO, THIS ISSUE IS DECIDED IN FAVOUR OF ASSESSEE ON SIMILAR LINE. 23. IN THE RESULT, ASSESSEES THIS APPEAL IS ALSO A LLOWED. 24. THE GROUND IN REVENUES APPEAL I.E. ITA 610/AHD /2010 IS IDENTICAL TO ITA NO.609/AHD/2010. THIS APPEAL WAS DECIDED IN FAV OUR OF THE ASSESSEE AS PER PARA-17 ABOVE. ON SIMILAR LINE, IN THIS YEAR AL SO, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 25. NOW WE TAKE UP THIRD APPEAL OF THE ASSESSEE I.E ., ITA NO.1066/AHD/2010, WHICH IS IN RESPECT OF OFFICE OF THE ASSESSEE-COMPANY AT ANKLESHAR. THE GROUND RAISED BY THE ASSESSEE ARE AS UNDER:- 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND I N FACTS AND CIRCUMSTANCES OF THE CASE IN UPHOLDING THE ORDER PA SSED BY ACIT, TDS, BARODA WHEREBY THE APPELLANT WAS HELD TO BE AN ASSE SSEE IN DEFAULT FOR NOT DEDUCTING TAX AT SOURCE FROM THE COST OF UNIFOR M ITEMS, STITCHING CHARGES, WASHING EXPENSES, ETC. REIMBURSED TO ITS E MPLOYEES AND WAS ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 15 CALLED UPON TO PAY THE TAX ALLEGEDLY SHORT DEDUCTED FROM ITS EMPLOYEES U/S. 201(1) ADDITION INTEREST THEREON U/S. 201(1A) OF THE INCOME TAX ACT, 1961. 2. THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND I N FACTS AND CIRCUMSTANCES OF THE CASE IN UPHOLDING THE ORDER PA SSED BY ACIT, TDS, BARODA WHEREBY THE APPELLANT WAS HELD TO BE AS AN A SSESSEE IN DEFAULT FOR SHORT DEDUCTING TAX AT SOURCE FROM THE PAYMENT OF HIRING CHARGES OF CRANE AND WAS CALLED UPON TO PAY THE TAX ALLEGEDLY SHORT DEDUCTED FROM IT CONTRACTORS U/S. 201(1) AND INTEREST THEREON U/S . 201(1A) OF INCOME- TAX ACT, 1961. 26. IT WAS AGREED BY BOTH SIDE THAT ISSUE INVOLVED IN GROUND NO.1 OF THIS APPEAL IS SIMILAR TO THE ISSUE INVOLVED IN THE REMA INING TWO APPEALS OF ASSESSEE I.E., ITA NO.184-185/AHD/2010 AND THE SAME CAN BE DECIDED ON SIMILAR LINE. WHILE DECIDING THOSE TWO APPEALS OF T HE ASSESSEE, THIS ISSUE WAS DECIDED BY US IN FAVOUR OF ASSESSEE AS PER PARA NO. 9 TO 12 AND ON SIMILAR LINES, IN THIS APPEAL ALSO, THESE ISSUE AS PER GROU ND NO.1 IS DECIDED ON SIMILAR BASIS IN FAVOUR OF ASSESSEE. GROUND NO.1 IS ALLOWED . 27. REGARDING GROUND NO.2 OF THIS APPEAL OF THE ASS ESSEE, IT WAS SUBMITTED BY AR OF THE ASSESSEE THAT FINDING OF LD. CIT (A) I N PARA-5.3.4 OF HIS ORDER IS THIS THAT SINCE THE ASSESSEE HAS NOT PROVIDED THE D ETAILS REGARDING HIRING CHARGES PAID FOR CMRE AND OTHERS DURING THE ASSESSM ENT PROCEEDINGS OR DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE IS D IRECTED TO DO SO NOW SO AS TO ENABLE THE ASSESSING OFFICER TO RE-COMPUTE THE L IABILITY OF THE ASSESSEE AFRESH NOW. HE SUBMITTED THAT THE ASSESSEE WILL COM PLY WITH DIRECTION OF THE LD. CIT (A)/AO AND FURNISH THE REQUIRED DETAILS BEF ORE THE AO. HENCE, AO SHOULD BE DIRECTED TO DECIDE THE ISSUE AFRESH AS PE R LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . AS AGAINST THIS, LD. DR OF THE REVENUE SUPPORTED THE ORDER OF LD. CIT (A). 28. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. WE FIND THAT ISSUE IN DISPUTE IS THIS AS TO WHETHER TDS WAS REQUIRED TO B E DEDUCTED FROM HIRING ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 16 CHARGES OF CMRE U/S 194C OF THE IT ACT @ 2% OR U/S1 94I @ 10%. ON THIS ISSUE, LD. CIT (A) HAS DIRECTED THE ASSESSING OFFIC ER TO RE-COMPUTE THE LIABILITY AFTER THE ASSESSEE PROVIDES THE REQUIRED DETAILS RE GARDING CHARGES PAID FOR CMRE. BEFORE US, THE SUBMISSION OF THE LD. AR OF TH E ASSESSEE IS THIS THAT THE A. O. MAY BE DIRECTED TO DECIDE THIS ENTIRE ISS UE AFRESH AFTER NECESSARY DETAILS ARE FILED BY THE ASSESSEE BEFORE HIM AND AF TER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ARE OF THE CONSIDERED OPINION THAT IN THE INTEREST OF JUSTICE, THE AO MAY BE DIRE CTED TO DO SO AND HENCE, WE SET ASIDE THIS ORDER OF LD. CIT(A) ON THIS ISSUE AN D RESTORE THIS ENTIRE MATTER BACK TO THE FILE OF AO FOR FRESH DECISION. THE ASSE SSEE HAS TO FURNISH NECESSARY DETAILS BEFORE THE AO REGARDING CMRE HIRI NG CHARGES PAID BY THE ASSESSEE AND THEREAFTER, THIS ENTIRE ISSUE WILL BE DECIDED BY AO AFRESH AND HE HAS TO PASS NECESSARY ORDER AS PER LAW AFTER PROVID ING REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 29. IN THE RESULT, ASSESSEES THIS APPEAL IS ALLOWE D IN THE TERMS INDICATED ABOVE. 30. NOW, WE TAKE UP REMAINING APPEAL OF REVENUE ITA NO. 611/AHD/2010 IN RESPECT OF WESTERN ONSHORE BASIN, MAKARPURA, BAR ODA. THE GROUND RAISED BY THE REVENUE IS AS UNDER:- 1. THE LD. CIT (A) ERRED IN LAW AS WELL AS FACTS O F THE CASE IN DELETING THE ORDER PASSED U.S. 201(1) & INTEREST CHARGED U/S . 201(1A) OF THE IT ACT OF RS.6,20,14,169/- FOR A.Y. 2009-10 BY TREATIN G THE VARIOUS CONTRACT U/S. 194C OF THE ACT AS AGAINST 194I AND 194J OF TH E ACT BY THE AO [PAGE-6 OF A.OS ORDER DATED 20.03.2009] 31. BRIEF FACTS ARE THAT CERTAIN PAYMENTS WERE MADE BY ASSESSEE AND TDS WAS DEDUCTED BY IT U/S. 194C BUT THE ASSESSING OFFI CER WAS OF THE OPINION THAT TDS WAS REQUIRED TO BE DEDUCTED U/S. 194I IN RESPEC T OF PAYMENT FOR HIRING OF EQUIPMENTS I.E., XEROX MACHINE AND HIRING OF CAR JE EPS AND FOR THE REMAINING PAYMENTS, TDS WAS TO BE DEDUCTED BY THE ASSESSEE U/ S. 194J. THE AO HAS ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 17 NOTED IN THIS MANNER THAT THE ASSESSEE HAS DEDUCTED LESSER AMOUNT OF TDS AND HE WORKED OUT SUCH SHORT DEDUCTION OF TDS BY TH E ASSESSEE AT RS.5,84,47,382/- AND HE ALSO WORKED OUT INTEREST TH EREON U/S. 201A AT RS.35,66,787/- TOTAL RS.6,20,14,169/-. BEING AGGRIE VED, ASSESSEE CARRIED MATTER IN APPEAL BEFORE LD. CIT(A) WHO HAS DELETED BOTH THESE DEMANDS RAISED BY THE AO U/S. 201 AND U/S. 201A AND NOW, TH E REVENUE IS IN APPEAL BEFORE US. 32. LD. DR OF THE REVENUE SUPPORTED THAT ORDER PASS ED BY ASSESSING OFFICER WHEREAS LD. AR OF THE ASSESSEE SUPPORTED TH E ORDER PASSED BY LD. CIT(A). HE FURTHER SUBMITTED THAT AS PER PAGE-1 OF THE ORDER PASSED BY ASSESSING OFFICER, THREE TYPES PAYMENTS ARE IN DISP UTE I.E. NO.(I) SEISMIC JOB SERVICE AND SHORT HOLE (II) AMC-FOR EPINET, VRC HAR DWARE, PSDM SUB SYSTEM; ACS; LIFTS AND UPS, FACILITY AND (III) CONT RACTS FOR HIRING OF VEHICLES PLANT AND EQUIPMENTS. REGARDING ITEM NO.(II) AMC-FO R EPINET, VRC HARDWARE, PSDM SUB-SYSTEM; ACS; LIFTS AND UPS FACIL ITY, HE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE TRIBUNALS ORDER RENDERED IN THE CASE OF KANDLA PORT TRUST V. DCIT (2011) 16 TAXMANN.COM 273 (RJT). REGARDING HIRE CHARGES OF VEHICLES, LD. AR OF THE A SSESSEE DRAWN OUR ATTENTION TO PAGE NO. 31 AND 32 OF THE ORDER OF LD. CIT(A) IN RESPECT OF REVENUES APPEAL IN ITA NO.1347/AHD/2010. HE SUBMIT TED THAT A CLEAR FINDING HAS BEEN GIVEN BY THE LD. CIT(A) THAT THE CAR FOR V EHICLE WAS TO TRANSPORT EMPLOYEES OF THE ASSESSEE FROM PLACE TO PLACE I.E. FROM RESIDENCE TO WORK- PLACE AND BACK AS PER TIME-SCHEDULE OF THE CONTRACT EE AND IT MAY BE USED FOR ANY OF THE BUSINESS PURPOSE AS DEEMED NECESSARY BY THE ASSESSEE AND THERE IS NO STIPULATION IN THE AGREEMENT THAT THE SAME CA R OR VEHICLE HAS BEEN PROVIDED AND IT IS ENOUGH IF THE MERE TYPE OR MODEL OF THE VEHICLE AS SPECIFIED IS PLACED AT THE DISPOSAL OF THE ASSESSEE FOR THE P URPOSE FOR WHICH THE SAME HAS BEEN HIRED AND THEREFORE, THIS IS FOR RENDERING SERVICE AND NOT VEHICLES GIVEN ON HIRE. HE FURTHER SUBMITTED THAT LD. CIT(A) HAS RIGHTLY HELD THAT FOR SUCH SERVICES AVAILED BY THE ASSESSEE ON PAYMENT OF CAR HIRING CHARGES, ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 18 SECTION 194C IS APPLICABLE AND NOT SECTION 194I OF THE ACT AND THEREFORE, THE ORDER OF LD. CIT(A) ON THIS ASPECT SHOULD BE AFFIRM ED. 33. REGARDING THIRD ASPECT I.E. REGARDING SEISMIC J OB SERVICE AND SHORT HOLE AND HIRE OF PLANT AND EQUIPMENTS, HE SUBMITTED THAT AS PER EXPLANATION-2 TO SECTION 9(1)(VIII), PROFESSIONAL SERVICE MEANS SERV ICES RENDERED BY A PERSON IN THE COURSE OF CARRYING ON LEGAL, MEDICAL, ENGINEERI NG OR ARCHITECTURAL OR PROFESSION OF ACCOUNTANCY OR TECHNICAL CONSULTANCY OR SUCH OTHER PROFESSION AS IS NOTIFIED BY THE BOARD FOR THE PURPOSE OF U/S. 44AA OF THE ACT. HE SUBMITTED THAT AS PER THIS EXPLANATION-2 OF SECTION 9(1)(VII), THE IMPUGNED PAYMENT CANNOT BE CONSIDERED AS FEES FOR TECHNICAL SERVICES. HE ALSO DRAWN OUR ATTENTION TO INSTRUCTION NO. 1862 DATED 22-10-1 990 WHICH IS AVAILABLE AT PAGE NO.25 AND 26 OF THE PAPER BOOK AND SUBMITTED T HAT AS PER THIS INSTRUCTION ALSO, THE IMPUGNED PAYMENT CANNOT BE CO NSIDERED AS FEES FOR TECHNICAL SERVICES BECAUSE IT DOES NOT FALL WITHIN SECTION AS PROVIDED IN EXPLANATION-2 SECTION 9(1)(VII) OF THE ACT. RELIANC E WAS ALSO PLACED ON THE JUDGMENT OF HONBLE MADRAS HIGH COURT RENDERED IN T HE CASE OF SKYCELL COMMUNICATIONS LTD. AND ANOTHER V. DCIT AND OTHERS (2001) 251 ITR 53 (MAD) AND ALSO ON ONE TRIBUNAL DECISION RENDERED IN THE CASE OF GUJARAT STATE ELECTRICITY CORPORATION LTD. V. ITO (2004) 82 TTJ 456 (AHD). AS AGAINST THIS, LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF AUTHO RITIES BELOW AND HE PLACED RELIANCE ON THE JUDGMENT OF HONBLE JURISDIC TIONAL HIGH COURT AS RENDERED IN CIT (TDS) V. SWAYAM SHIPPING SERVICES P. LTD. (2011) 339 ITR 647 (GUJ). 34. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW AND THE JUDGMENTS CITED BY BOTH THE SIDES. REGARDING THIS ASPECT, WE FEEL THAT PROVISIONS OF SECTION 9(1)(VII) AND EXPLANATION-2 ARE VERY RELEVA NT AND HENCE, THE SAME ARE REPRODUCED BELOW:- ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 19 (VII) INCOME BY WAY OF FEES FOR TECHNICAL SERVICES PAYABLE BY (A) THE GOVERNMENT ; OR (B) A PERSON WHO IS A RESIDENT, EXCEPT WHERE THE FE ES ARE PAYABLE IN RESPECT OF SERVICES UTILISED IN A BUSINESS OR PROFE SSION CARRIED ON BY SUCH PERSON OUTSIDE INDIA OR FOR THE PURPOSES OF MA KING OR EARNING ANY INCOME FROM ANY SOURCE OUTSIDE INDIA ; OR A PERSON WHO IS A NON-RESIDENT, WHERE THE FEES AR E PAYABLE IN RESPECT OF SERVICES UTILIZED IN A BUSINESS OR PROFESSION CA RRIED ON BY SUCH PERSON IN INDIA OR FOR THE PURPOSES OF MAKING OR EA RNING ANY INCOME FROM ANY SOURCE IN INDIA PROVIDED THAT NOTHING CONTAINED IN THIS CLAUSE SHAL L APPLY IN RELATION TO ANY INCOME BY WAY OF FEES FOR TECHNICAL SERVICES PA YABLE IN PURSUANCE OF AN AGREEMENT MADE BEFORE THE 1 ST DAY OF APRIL, 1976, AND APPROVED BY THE CENTRAL GOVERNMENT. EXPLANATION 1 FOR THE PURPOSES OF THE FOREGOING P ROVISO, AN AGREEMENT MADE ON OR AFTER THE 1 ST DAY OF APRIL, 1976, SHALL BE DEEMED TO HAVE BEEN MADE BEFORE THAT DATE IF THE AGREEMENT IS MADE IN ACCORDANCE WITH PROPOSALS APPROVED BY THE CENTRAL G OVERNMENT BEFORE THAT DATE. EXPLANATION 2 FOR THE PURPOSES OF THIS CLAUSE, FE ES FOR TECHNICAL SERVICES MEANS ANY CONSIDERATION (INCLUDING ANY LUM P SUM CONSIDERATION) FOR THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SE RVICES OF TECHNICAL OR OTHER PERSONNEL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT UNDE RTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD SALARIES. 35. FROM THE ABOVE EXPLANATION-2 TO SECTION 9(1)(VI I), WE FIND THAT CONSIDERATION PAID FOR ANY CONSTRUCTION, ASSEMBLY M INING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT CHARGEABLE OR RECEIPTS TAXABLE UNDER THE HEAD SALARY ARE TO BE EXCLUDED FROM FEES FOR TECHNICAL SERVICES. IN THE PRESENT CASE, THIS IS NOT THE CASE OF ANYBODY THAT IMPUGNED AMOUNT IS INCOME OF THE RECIPIENT UNDER THE HEAD SALARY. HENCE, WE HAVE T O EXAMINE WHETHER THE IMPUGNED PAYMENT CAN BE CONSIDERED AS CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBLY MINING OR LIKE PROJECT UNDERTAKEN BY THE R ECIPIENT. IN THE PRESENT ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 20 CASE, THE MINING OR LIKE PROJECT IS UNDERTAKEN BY T HE ASSESSEE AND NOT BY THE RECIPIENT. THIS IS CLEARLY NOTED BY THE LD. CIT(A) AT PAGE-4 OF HIS ORDER THAT MINING AND EXPLORATION WAS BUSINESS ACTIVITY OF THE ASSESSEE AND THE PARTIES TO WHOM THE PAYMENTS HAS BEEN MADE FOR RENDERING TE CHNICAL SERVICES ARE NOT IN THE BUSINESS OF MINING BUT THEY ARE IN BUSIN ESS OF PROVIDING TECHNICAL SERVICES FOR PRE-MINING / PREPARING FOR MINING I.E. CONDUCTING SEISMIC SURVEY AND RENDERING CONNECTED SERVICES. HENCE, IN OUR CON SIDERED OPINION, THE IMPUGNED PAYMENT IS NOT COVERED UNDER EXCEPTION CAR VED OUT IN EXPLANATION- 2 TO SECTION 9(1)(VII). AS PER CBDT INSTRUCTION NO. 1862 DATED 22-10-1990 ALSO, IT IS OPINED BY ATTORNEY GENERAL OF INDIA THA T EXPLANATION-2 TO SECTION 9(1) (VII) OF THE ACT IS COVERS RENDERING OF SERVIC ES LIKE IN PARKING OF TRAINING AND CARRYING OUT DRILLING OPERATIONS FOR EXPLORATIO N OR EXPLOITATION OF OIL AND NATURAL GAS. IN THE PRESENT CASE, IT IS NOT THE CAS E OF THE ASSESSEE THAT IMPUGNED PAYMENT WAS MADE FOR IMPARTING OF TRAINING . THE SECOND POINT OF THIS BOARD INSTRUCTION IS THAT WHETHER EXTRACTION O R PRODUCTION OF MINERAL OIL CAN BE TERMED AS MINING OPERATIONS AND IN THIS REGARD, IT WAS OPINED BY THE ATTORNEY GENERAL OF INDIA THAT TERM MINING PROJECT OR LIKE PROJECT WOULD COVER CARRYING OUT DRILLING OPERATION FOR EXPLORATION OR EXPLOITATION OF OIL AND NATURAL GAS, BUT EVEN THEN IT HAS TO BE ACCEPTED THAT SUCH PROJECT SHOULD HAVE BEEN UNDERTAKEN BY THE RECIPIENT AND IN THE PRESENT CASE , SUCH PROJECT OF EXPLORATION OF OIL AND NATURAL GAS IS UNDERTAKEN BY THE ASSESSEE AND NOT BY THE RECIPIENT. THE RECIPIENT HAS ONLY PROVIDED TECH NICAL SERVICES AND THEREFORE, IN OUR CONSIDERED OPINION, EVEN AFTER CONSIDERING C BDT INSTRUCTION NO. 1862 DATED 22-10-1990, THE IMPUGNED PAYMENT IS NOT COVER ED BY EXPLANATION-2 TO SECTION 9(1)(VII) OF THE ACT. 36. REGARDING RELIANCE PLACED BY THE LD. AR OF THE ASSESSEE ON THE JUDGMENT OF HONBLE MADRAS HIGH COURT RENDERED IN T HE CASE OF SKYCELL COMMUNICATION LTD. AND ANOTHER (SUPRA), WE FIND THAT THIS JUDGMENT IS NOT APPLICABLE BECAUSE FACTS ARE DIFFERENT. IN THAT CAS E, THE FACTS WERE THAT CELLULAR MOBILE TELEPHONE SERVICES WERE PROVIDED TO THE SUBS CRIBER AND UNDER THESE ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 21 FACTS, IT WAS HELD BY HONBLE MADRAS HIGH COURT THA T WHEN A PERSON DECIDES TO SUBSCRIBE TO A CELLULAR TELEPHONE SERVICE IN ORDER TO HAVE THE FACILITY OF BEING ABLE TO COMMUNICATE WITH OTHERS, HE DOES NOT CONTRA CT TO RECEIVE A TECHNICAL SERVICE. WHAT HE DOES AGREE TO IS TO PAY FOR THE US E OF THE AIRTIME FOR WHICH HE PAYS A CHARGE. THE FACT THAT THE TELEPHONE SERVICE PROVIDER HAS INSTALLED SOPHISTICATED TECHNICAL EQUIPMENT IN THE EXCHANGE T O ENSURE CONNECTIVITY TO ITS SUBSCRIBER, IT DOES NOT AMOUNT TO RENDERING OF TECH NICAL SERVICES TO ITS SUBSCRIBER. IN THE PRESENT CASE, TECHNICAL SERVICES WERE RENDERED BY THE RECIPIENT OF THE CONSIDERATION AND THEREFORE, THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE. 37. SIMILARLY, THE RELIANCE PLACED BY LD. AR OF THE ASSESSEE ON THE TRIBUNALS DECISION RENDERED IN THE CASE OF GUJARAT STATE ELECTRICITY CORPORATION LTD. (SUPRA) IS ALSO OF NO HELP TO THE ASSESSEE BECAUSE FACTS ARE DIFFERENT. IN THAT CASE, PAYMENTS WERE MADE BY THE ASSESSEE-COMPANY TO GUJARAT ELECTRICITY BOARD FOR ENTIRE OPERATION AND MAINTENANCE OF POWER PLANT UNDER A COMPREHENSIVE CONTRACT AND HENCE, IT WAS HE LD THAT IT CANNOT BE TREATED AS PAYMENT OF FEES FOR PROFESSIONAL SERVICE S AS CONTEMPLATED IN SECTION 194J BECAUSE IT COMES WITHIN THE LIMB OF EX CLUSIONARY PART AS PER EXPLANATION-2 TO SECTION 9(1)(VII) OF THE ACT. WE H AVE ALREADY SEEN THAT IN THE PRESENT CASE, THE IMPUGNED PAYMENT DOES NOT FALL WI THIN THE EXCLUSIONARY PART AS PER EXPLANATION-2 TO SECTION 9(1)(VII) OF THE AC T. MOREOVER, IN THE PRESENT CASE, THE ASSESSEE HAS NOT GRANTED ENTIRE OPERATION AND MAINTENANCE OF OIL EXPLORATION WORK PROJECT TO THE RECIPIENT AS IN THA T CASE, WHERE THE ENTIRE OPERATION AND MAINTENANCE OF POWER PLANT WAS HANDE D OVER TO THE RECIPIENT UNDER A COMPREHENSIVE CONTRACT. HENCE, THIS JUDGMEN T IS NOT APPLICABLE IN THE PRESENT CASE. 38. AS PER ABOVE DISCUSSION, WE FIND THAT ON THIS A SPECT OF THE MATTER, NO CASE COULD BE MADE OUT BY LD. AR OF THE ASSESSEE TH AT IMPUGNED PAYMENT IS NOT FOR FEES FOR TECHNICAL SERVICES OR THAT IT FALL S WITHIN THE EXCLUSIONARY CLAUSE ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 22 AS PER EXPLANATION-2 TO SECTION 9(1)(VII) OF THE AC T. HENCE, ON THIS ASPECT, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) AND THIS ISSUE IS DECIDED AGAINST THE ASSESSEE. 39. REGARDING HIRING OF VEHICLES WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY TWO JUDGMENTS OF HONBLE J URISDICTIONAL HIGH COURT RENDERED IN THE CASE OF SWAYAM SHIPPING SERVICES P. LTD. (SUPRA) AND ALSO ANOTHER RENDERED IN THE CASE OF CIT V. SHREE MAHALAXMI TRANSPORT CO. (2011) 339 ITR 484 (GUL) AND HENCE, RESPECTFULLY FOLLOWING THESE TWO JUDGMENTS OF HONBLE JURISDICTIONAL HIGH COURT, WE DECIDE THIS A SPECT OF THE MATTER REGARDING HIRE CHARGE PAID FOR VEHICLE IN FAVOUR OF ASSESSEE. 40. REGARDING REMAINING ONE ASPECT I.E. AMOUNT PAID FOR AMC-FOR EPINET, VRC HARDWARE, PSDM SUB-SYSTEM; ACS; LIFTS AND UPS F ACILITY, WE FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY TRIB UNALS DECISION RENDERED IN THE CASE OF KANDLA PORT TRUST (SUPRA) AND RESPECTFULLY FOLLOWING THIS TRIBUNALS DECISION, WE DECIDE THIS ASPECT ALSO IN FAVOUR OF A SSESSEE. 41. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOW ED IN THE TERMS INDICATED ABOVE. 42. NOW, WE TAKE UP THE APPEAL OF REVENUE IN ITA NO .1343/AHD/2010. THIS IS A CROSS-APPEAL OF THE REVENUE AND CORRESPONDING APPEAL OF ASSESSEE IN ITA NO.1066/AHD/2010 IS ALREADY DECIDED ABOVE. 43. THE GROUND RAISED BY REVENUE IS AS UNDER:- 1. THE LD. CIT(A) ERRED IN LAW AS WELL AS FACTS OF THE CASE IN DELETING THE ORDER PASSED U/S. 201(1) & INTEREST CHARGED U/S . 201(1A) OF THE IT ACT OF RS.3,90,114,538/- FOR A.Y. 2009-10 BY THE AO EVEN THOUGH DURING THE COURSE OF VERIFICATION IT WAS NOTICED THAT THE ASSESSEE COMPANY WAS AID CONVEYANCE, MAINTENANCE, REIMBURSEMENT EXPENDIT URE (CMRE) TO ITS EMPLOYEES EVERY MONTH BASED ON THEIR STATUS, DE SIGNATION. DESPITE ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 23 THE FACT THE PAYMENT OF CMRE WAS TAXABLE AS SALARY AND EMPLOYER HAD NOT DEDUCTED TDS ON THE SAME. 2. THE LD. CIT(A) ERRED IN LAW AS WELL AS FACTS OF THE CASE IN DELETING THE ORDER PASSED U/S. 201(1) & INTEREST CHARGED U/S.201 (1A) OF THE IT ACT OF RS.2,16,40,530/- FOR A.Y. 2009-10 BY TREATING THE V ARIOUS CONTRACT U/S. 194C OF THE ACT AS AGAINST 194J OF THE ACT BY THE A O. 44. REGARDING GROUND NO.1 OF THIS APPEAL, IT WAS AG REED BY BOTH SIDES THAT THIS ISSUE IS IDENTICAL TO GROUND NO.1 RAISED BY RE VENUE IN ITA NO.309/AHD/2010 AND THE SAME CAN BE DECIDED ON SIMI LAR LINE. WHILE DECIDING THAT APPEAL, WE HAVE ALREADY DECIDED THIS ISSUE IN FAVOUR OF ASSESSEE AND ACCORDINGLY, HERE ALSO, WE DECIDE THIS ISSUE IN FAV OUR OF ASSESSEE. ACCORDINGLY, GROUND NO.1 IS REJECTED. 45. REGARDING GROUND NO.2, LD. DR OF THE REVENUE SU PPORTED THE ORDER PASSED BY ASSESSING OFFICER WHEREAS LD. AR OF THE A SSESSEE SUPPORTED THE ORDER PASSED BY LD. CIT(A). HE FURTHER SUBMITTED TH AT AMOUNT DISPUTED BY THE REVENUE AS PER THIS GROUND IS AFTER EXCLUDING TDS O F RS.26,80,578/- IN RESPECT OF HIRING OF EQUIPMENT AND TDS OF RS.1,34,5 9,616/- IN RESPECT OF HIRE OF VEHICLES OF ALL TYPES AND THEREFORE, IT INCLUDES THE AMOUNT OF TDS IN RESPECT OF AMC CONTRACT, APPROVAL DRILLING INSTALLATION OF EQUIPMENT O & M CONTRACT- OTHERS, ONGC VEHICLES AND AMOUNT OF INTEREST ON ENT IRE AMOUNT OF TDS AND SUCH AMOUNT IS RS.20,39,940/-. HE FURTHER SUBMITTED THAT QUESTION OF INTEREST AMOUNT WHICH IS RELATED TO HIRING OF EQUIPMENT AND HIRING OF VEHICLES OF ALL TYPES SHOULD NOT BE INCLUDED IN THIS GROUND BECAUSE WHEN NO GROUND IS RAISED BY REVENUE IN RESPECT OF TDS AMOUNT IN RESPECT OF T HESE TWO ISSUES, INTEREST THEREON CANNOT BE CHARGED AND SAME IS RIGHTLY DELET ED BY LD. CIT(A). HE FURTHER SUBMITTED THAT THIS GROUND IS INTERCONNECTE D WITH GROUND NO.2 OF THE APPEAL RAISED BY ASSESSEE IN ITS CROSS-APPEAL IN IT A NO.1066/AHD/2010 AND SINCE THE ISSUE IS REQUIRED TO BE RESTORED TO THE F ILE OF ASSESSING OFFICER/LD. CIT(A), GROUND RAISED BY REVENUE I.E. GROUND NO.2 S HOULD ALSO BE RESTORED BACK TO AO/LD. CIT(A) FOR FRESH DECISION BECAUSE OR DER OF LD. CIT(A) IS NOT A ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 24 SPEAKING ORDER. ON THE OTHER HAND, LD. DR OF THE RE VENUE STRONGLY SUPPORTED THE ORDER PASSED BY ASSESSING OFFICER. 46. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. WE FIND THAT THIS ISSUE IS CORRECTED WITH THE ISSUE RAISED BY ASSESSE E RAISED AS PER GROUND NO.2 RAISED IN ITS CROSS-APPEAL IN ITA NO.1006/AHD/ 2010 AND WHILE DECIDING THAT GROUND OF THE ASSESSEES APPEAL, WE HAVE ALSO RESTORED BACK THE ENTIRE MATTER TO THE FILE OF ASSESSING OFFICER AS PER PARA NO. 28 ABOVE. 47. WE ALSO FIND THAT LD. CIT(A) HAS DISCUSSED REGA RDING THIS ISSUE TOGETHER WITH THE ISSUE RAISED FOR EQUIPMENT ALONG WITH CMRE HIRING CHARGES AND THEREAFTER, HE HAS STATED THAT ASSESSING OFFICER WA S JUSTIFIED IN APPLYING 10% TDS RATE INSTEAD OF 2% ADOPTED BY ASSESSEE IN RESPE CT OF THIS EQUIPMENT. BUT SINCE, THE ASSESSEE HAS NOT PROVIDED THE DETAILS RE GARDING HIRE CHARGES PAID FOR CMRE AT ANY STAGE, THE ASSESSEE WAS DIRECTED TO DO SO NOW SO AS TO ENABLE THE AO TO RE-COMPUTE THE LIABILITY OF THE AS SESSEE AFRESH NOW. 48. FROM THIS DIRECTION OF LD. CIT(A), IT IS NOT CL EAR AS TO WHETHER HE HAS DIRECTED THE ASSESSING OFFICER TO RE-COMPUTE THE LI ABILITY AFRESH IN RESPECT OF GROUND OF HIRE CHARGES ALONE OR REGARDING EQUIPMENT S ETC. ALSO AND HENCE, WE FEEL THAT THIS MATTER SHOULD GO BACK TO THE FILE OF LD CIT (A) FOR FRESH DECISION AND ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT( A) ON THIS ASPECT AND RESTORE THIS MATTER ALSO BACK TO HIS FILE FOR FRESH DECISION. LD. CIT(A) IS DIRECTED TO PASS A FRESH AND SPEAKING ORDER AS PER LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. THIS GROU ND OF REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 49. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.184-185,1066, 609-611/AHD/2010 A.Y. 2009-1 0 ONGC V. ACIT(TDS), BRD PAGE 25 50. IN COMBINED RESULT, ALL THREE APPEALS OF THE AS SESSEE ARE ALLOWED IN THE TERMS INDICATED ABOVE, TWO APPEALS OF THE REVENUE I .E. ITA 609 & 610/AHD/2010 ARE DISMISSED, REVENUES APPEAL IN ITA 611/AHD/2010 IS PARTLY ALLOWED AND THE REMAINING APPEAL OF THE REVENUE IN ITA 1343/AHD/2010 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (KUL BHARAT) (A.K.GARODIA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, *DKP #$%- 16/11/2012 +,- . ' ' ' ' //0 //0 //0 //0 10 10 10 10 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. $-$/4 5 / CONCERNED CIT 4. 5- / CIT (A) 5. 0 89 ///4, /4!, +,- / DR, ITAT, AHMEDABAD 6. 9;< => / GUARD FILE. BY ORDER/ ' , /TRUE COPY/ ?/+ $ /4!, +,- . STRENGTHEN PREPARATION & DELIVERY O F ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 05/09 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE NO 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 05/09, 06/09 07/09 4) DATE OF CORRECTION 5) DATE OF FURTHER CORRECTION 15/11 6) DATE OF INITIAL SIGN BY MEMBERS 15/11 7) ORDER UPLOADED ON 21/11 8) ORIGINAL DICTATION PAD-PART HAS BEEN ENCLOSED IN THE FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 21/11