ITO, TDS-3, Pune V. M/s. Wings Travels., Pune

ITA 1136/PUN/2009

• Counselvise Citation: 113624514 RSA 2009
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-08-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 18-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARESHWAR SHARMA
• Assessee Lawyers: NILESH KHANDELWAL
• Section: 133A; 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO 1136/PN/09 (ASSTT. YEAR: 2008-09) INCOME-TAX OFFICER, .. APPELLANT TDS-3, PUNE VS. M/S WINGS TRAVELS, RESPONDENT S.NO.111/1 PLOT NO 34, RANAKPUR DARSHAN, YERWADA, PUNE 411 006 PAN:AALFM 0670R APPELLANTS BY: SHRI HARESHWAR SHARM A RESPONDENT BY: SHRI NILESH KHANDELWAL ORDER PER G.S. PANNU, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE C OMMISSIONER OF INCOME-TAX (APPEALS)-I, PUNE DATED 04.07.2009, WHICH I N TURN, HAS ARISEN OUT OF THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 201/ 201(1A) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING T O THE F. Y. 2007-08. 2. IN GROUND NOS.1 & 2 OF ITS APPEAL, THE REVENUES G RIEVANCE IS THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DELETING THE DEMAND OF RS 3,59,80,046/- UNDER SECTION 201 AND INTEREST OF RS 48,1 5,498/- UNDER SECTION 201(1A) OF THE ACT AND FURTHER THAT THE COMMISSIONER O F INCOME-TAX (APPEALS) ERRED IN HOLDING THAT PAYMENTS MADE TO THE VEHICLE OW NERS WERE COVERED UNDER SECTION 194C AND NOT UNDER SECTION 194I OF THE ACT. 3. THE FACTS, IN BRIEF, ARE THAT A SURVEY ACTION UNDE R SECTION 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 25. 2.2008 BY THE TDS WING OF THE DEPARTMENT. DURING THE COURSE OF SURVE Y, IT WAS NOTICED THAT THE 2 ITA NO 1136/PN/09 M/S WINGS TRAVELS, PUNE ASSESSEE HAD MADE PAYMENTS AMOUNTING TO RS 38,98,94,328/- ON ACCOUNT OF CAR HIRE CHARGES DURING THE FINANCIAL YEAR 2007-08 ON WHICH TAX WAS DEDUCTED AT THE RATE OF 1.13% UNDER SECTION 194C OF THE ACT TREATING T HE SAID PAYMENT AS PAYMENT MADE TO SUB-CONTRACTOR. HOWEVER, ACCORDING TO T HE ASSESSING OFFICER, THE SAID PAYMENTS FELL UNDER THE PURVIEW OF SECTION 1 94-I OF THE ACT AND, THEREFORE, TAX WAS REQUIRED TO BE DEDUCTED AT THE RAT E OF 10.33%. THE ASSESSING OFFICER, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CONCLUDED THAT THE PAYMENT MADE TO VEHICLE OWNERS BY THE ASSESSEE WAS IN THE NATURE OF RENT AND SINCE THE VEHICLES WOULD FALL UNDER THE CATEGORY OF PLA NT AND MACHINERY, SUCH PAYMENTS WERE COVERED BY THE PROVISIONS OF SECTION 194-I AND TDS SHOULD HAVE BEEN MADE FROM SUCH PAYMENTS AT THE RATES PRESCRIBED THE REIN. ACCORDINGLY, THE SHORT DEDUCTION WAS WORKED OUT BY THE ASSESSING OFFICER AT RS 3,59,80,046/- AND INTEREST UNDER SECTION 201(1A) WAS ALSO CHARGED AT RS 48,1 5,498/-. 4. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (AP PEALS), THE ASSESSEE FILED DETAILED WRITTEN SUBMISSIONS AND ALSO RELIED ON V ARIOUS CASE LAWS IN SUPPORT OF ITS CASE. THE COMMISSIONER OF INCOME-TAX (APPEALS), AFT ER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE DEMAND OF RS 3,59, 80,046/-RAISED BY THE ASSESSING OFFICER ON ACCOUNT OF SHORT DEDUCTION UNDER SECTION 201(1) AND THE INTEREST OF RS 48,16,498/- CHARGED UNDER SECTION 201 (1A) IN RESPECT OF SUCH SHORT DEDUCTION. THE RELEVANT OBSERVATIONS OF THE COMM ISSIONER OF INCOME-TAX (APPEALS) ARE WORTHY OF NOTICE, WHICH ARE REPRODUCED AS BELOW: 4.1 IN VIEW OF THE FOREGOING DISCUSSION, CONSIDERI NG THE SUBMISSION OF THE APPELLANT AND TAKING INTO ACCOUNT THE MATERIAL ON RECORD, IT IS H ELD THAT THE PROVISIONS OF LAW AS CONTAINED IN SECTION 194C WERE APPLICABLE TO PAYMEN TS DEBITED UNDER THE HEAD HIRE CHARGES ON ACCOUNT OF TRANSPORT VEHICLES PROVIDED BY THE PARTIES TO WHOM SUCH PAYMENT IS MADE. FROM THE FACTS ON RECORD, IT IS CLEAR THAT APPELLANT ENTERED INTO CONTRACT WITH COMPANIES AND USED VEHICLES OF OTHER OPERATORS BESI DES USING ITS OWN VEHICLES FOR CARRYING OUT WORK RELATING TO TRANSPORTATION WITHIN THE MEANING OF SECTION 194C. SUCH ACTIVITY IS HELD TO BE COVERED WITHIN THE EXPRESSIO N WORK INCLUSIVELY DEFINED BY EXPLANATION III TO SECTION 194C OF THE INCOME-TAX A CT, 1961. ON FACTS OF THE CASE, THE PAYMENT OF RS 38,09,04,328/- IS HELD TO BE PAYMENT MADE ON ACCOUNT OF SUB-CONTRACT WORK. IN VIEW OF THIS, IT IS HELD THAT THE APPELLAN T HAS CORRECTLY DEDUCTED TAX ON ACCOUNT OF SUB-CONTRACT U/S 194C @ 1.13% IN RESPECT OF AMOUNT OF RS 38,98,94,328/- AND SUCH PAYMENTS DO NOT COME UNDER THE PURVIEW OF SECTION 1 94I OF THE INCOME-TAX ACT, 1961. ACCORDINGLY, DEMAND RAISED BY THE AO ON ACCOUNT OF SHORT DEDUCTION U/S 201(1) IN RESPECT OF AMOUNT OF RS 38,98,94,328/- BY INVOKING SECTION 194I AT RS 3,59,80,046/- IS HEREBY DELETED. CONSEQUENTLY, THE INTEREST CHARGED U/S 201(1A) IN RESPECT OF SUCH SHORT DEDUCTION AT RS 48,16,498/- ALSO STANDS DELETED. 3 ITA NO 1136/PN/09 M/S WINGS TRAVELS, PUNE AGGRIEVED WITH THIS ORDER OF THE COMMISSIONER OF INCOM E-TAX (APPEALS), REVENUE IS IN FURTHER APPEAL BEFORE US. 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ISSUE INVOLVED IN THE REVENUES APPEAL STANDS DECIDED IN FAVO UR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE FOLLOWING JUDICIAL PRONOUN CEMENTS: (I) ACIT (TDS) 1(1) MUMBAI V. ACCENTURE SERVICES P. L TD., MUMBAI, VIDE ITA NOS 5920 TO 5922/MUM/09 DATED 20.10.2010 ; (II) CIT (TDS) V. SWAYAM SHIPPING SERVICES P. LTD. VI DE TAX APPEAL NO 1037 OF 2009 DATED 11.01.2011(GUJ.)(HC); AND, (III) AHMEDABAD URBAN DEVELOPMENT AUTHORITY, AHMEDA BAD V. ACIT, TDS CIR. AHMEDABAD, VIDE ITA NO 1637/AHD/10 DATED 1 0.3.2011. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESEN TATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER IN SUPPORT OF THE REVENUES CASE. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND HAVE ALSO GONE THROUGH THE VARIOUS DECISIONS RELIED UPON BY THE ASSESSEE. WE FIND THAT THE ISSUES RAISED BY THE REVENUE IN GROUND NOS. 1 & 2 STAND FULLY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE AFORESAID DECISIONS. OUR CO- ORDINATE BENCH IN THE CASE OF ACCENTURE SERVICES P. LTD., (SUPRA) CONSIDERED THE APPLICABILITY OF SECTIONS 194C OR 194I OF THE ACT TO TH E PAYMENTS MADE FOR HIRING OF VEHICLES. AS PER THE TRIBUNAL, SUCH AN ARRANGEMENT ENTAILS DEDUCTION OF TAX AT SOURCE AS PER SECTION 194C OF THE ACT AND NOT UNDER SECTION 194I OF THE ACT. SIMILARLY, THE HONBLE GUJARAT HIGH COURT IN THE CA SE OF SWAYAM SHIPPING SERVICES P. LTD. (SUPRA) ALSO HELD THAT PAYMENTS MADE TO HIRE CRANES AND TRAILERS WERE LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER SECTI ON 194C OF THE ACT AND NOT UNDER SECTION 194I OF THE ACT, AS BEING CONTENDED BY T HE REVENUE. FOLLOWING THE AFORESAID PRECEDENTS, WE AFFIRM THE DECISION OF THE COM MISSIONER OF INCOME-TAX (APPEALS) THAT THE IMPUGNED PAYMENT MADE FOR CAR HIR ING WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER SECTION 194C OF THE ACT. ACCORDINGLY, THE ISSUES RAISED BY THE REVENUE BY WAY OF GROUND NOS 1 & 2 ARE HEREBY DISMISSED. 4 ITA NO 1136/PN/09 M/S WINGS TRAVELS, PUNE 7. THE NEXT ISSUE RAISED BY THE REVENUE BY WAY OF GROU ND NO. 3 IS THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DELETING THE DEMAND OF RS 73,847/- ON ACCOUNT OF SHORT DEDUCTION AND INTEREST UNDE R SECTION 201/201(1A) BY NOT APPLYING THE PROVISIONS OF SECTION 194J IN RESPECT O F RADIO AIR TIME CHARGES, EVEN THOUGH RADIO AIR TIME CHARGES ARE LIABLE TO BE TREATED IN THE NATURE OF FEES OF TECHNICAL SERVICES WITHIN THE MEANING OF SECTION 194J OF THE ACT. ON VERIFICATION OF THE RECORDS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD INCURRED AN EXPENDITURE OF RS 4,94,013/- ON ACCOUNT OF RADIO AIR TIME (WALKY- TALKY EXPENDITURE). IT WAS CONTENDED BY THE ASSESSEE THAT THE SAID CHARGES DID NOT COME UNDER THE PURVIEW OF FEES FOR TECHNICAL SERVI CES AND, THEREFORE, PROVISIONS OF SECTION 194J WERE NOT APPLICABLE TO THE SAM E. IN SUPPORT, RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE MADRAS HIGH CO URT IN THE CASE OF SKYCELL COMMUNICATIONS LTD. V. DCIT 251 ITR 53 (MAD.). HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE SUBMISSIONS OF T HE ASSESSEE AND BY APPLYING THE PROVISIONS OF SECTION 194J, HE RAISED A DE MAND OF RS 73,847/- ON ACCOUNT OF SHORT DEDUCTION AND INTEREST UNDER SECTION 201 (1)/201(1A) OF THE ACT. IN APPEAL, THE COMMISSIONER OF INCOME-TAX (APPEALS) HEL D THAT SUCH PAYMENTS BEING NOT IN THE NATURE OF PROFESSIONAL OR TECHNICA L SERVICES FELL OUTSIDE THE PURVIEW OF SECTION 194J OF THE ACT. HE ALSO HELD THAT TH E PAYMENTS WERE ALSO OUTSIDE THE PURVIEW OF SECTION 194C AS SUCH PAYMENTS COUL D NOT BE SAID TO BE ON ACCOUNT OF ANY WORKS CONTRACT. IN THIS VIEW OF THE MATTER , THE COMMISSIONER OF INCOME-TAX (APPEALS) DELETED THE DEMAND RAISED BY THE ASSESSING OFFICER UNDER SECTION 201/201(1A) OF THE ACT AMOUNTING TO RS 73,847/- . AGAINST THIS, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 8. HAVING HEARD BOTH THE PARTIES, WE FIND THT THE PA RITY OF REASONING LAID DOWN BY THE HONBLE MADRAS HIGH COUT IN THE CASE SKYCELL COMM UNICATIONS LTD. (SUPRA) FULLY COVERS THE CONTROVERSY IN QUESTION. AS PER T HE PARITY OF REASONING PROPOUNDED BY THE HONBLE MADRAS HIGH COURT, THE PA YMENTS MADE TOWARDS RADIO AIR TIME CHARGES CANNOT BE CONSTRUED AS SERVICES IN THE NATURE OF 5 ITA NO 1136/PN/09 M/S WINGS TRAVELS, PUNE PROFESSIONAL OR TECHNICAL SERVICES SO AS TO FALL WITHIN THE PURVIEW OF SECTION 194J OF THE ACT. NO DECISION TO THE CONTRARY HAS BEEN BROUGH T TO OUR NOTICE AND, IN THIS BACKGROUND, WE HEREBY AFFIRM THE ORDER OF THE COMMISSIO NER OF INCOME-TAX (APPEALS) AND ACCORDINGLY THE GROUND RAISED BY THE REVE NUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2011. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G. S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEM BER PUNE, DATED: 30 TH AUGUST, 2011 B COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT (A)-I, PUNE 4) CIT (TDS), PUNE 5) DR, A BENCH, ITAT, PUNE. 6) GUARD FILE BY ORDER TRUE COPY ASST. REGISTRAR, I.T.A.T., PUNE