DY. CIT, Pune V. Shri MARUTI WINDPARK DEVELOPERS, Satara

ITA 1457/PUN/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2565 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SUBHASH K R
• Keywords: Recovery proceedings; Question of law
• Section: 133A; 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 1457/PN/2013 %' ( ')( / ASSESSMENT YEAR : 2009-10 DY. COMMISSIONER OF INCOME TAX, (TDS) 2, PUNE ....... / APPELLANT ' / V/S. SHRI MARUTI WINDPARK DEVELOPERS, 30, VISHWANAJLI SADAT BAZAR, ARMY OFFICERS COLONY, SATARA - 1 PAN : PNES22368D / RESPONDENT ASSESSEE BY : SMT. DEEPA KHARE REVENUE BY : DR. SUBHASH K.R. / DATE OF HEARING : 11-01-2016 / DATE OF PRONOUNCEMENT : 09-03-2016 * / ORDER PER VIKAS AWASTHY, JM : THE APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DATED 10-04 -2013 PASSED U/S. 201(1) AND 201(1A) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER REFERRED TO AS THE ACT) FOR THE ASSESSMENT YEAR 20 09-10. 2 ITA NO. 1457/PN/2013, A.Y. 2009-10 2. THE ONLY ISSUE RAISED BY THE REVENUE IN APPEAL IS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 194I ARE NOT APPLICABLE IN RESPECT OF CRANE HIRE CHARGES WITHOUT APPRECIATING THE FACT THAT AS PER THE AMENDED PROVI SIONS OF SECTION 1941 W.E.F. 13-07-2006, THE RENT IN RESPECT OF MACHINERY, PLANT OR EQUIPMENT ETC WERE BROUGHT INTO THE AMBIT OF SECTION 194I.. 3. A SURVEY U/S. 133A OF THE ACT WAS CARRIED OUT IN TH E CASE OF THE ASSESSEE ON 06-03-2009 FOR VERIFICATION OF COMPLIANCE OF TDS PROVISIONS UNDER THE ACT. CERTAIN TDS VIOLATIONS WERE NOTICED DURING THE COURSE OF SURVEY WHICH INTER ALIA INCLUDE SHORT DEDUCTION OF TAX AT SOURCE ON PAYMENTS MADE TO M/S. SIDDHIVINAYAK EARTH MOVERS FOR HIRIN G OF CRANES, JCB, POCLAIN ETC. FOR EXCAVATION WORK. ON THE PAY MENTS MADE FOR HIRING OF THE ABOVE MACHINES, THE ASSESSEE DEDUCTED T AX AT SOURCE UNDER THE PROVISIONS OF SECTION 194C @ 1.22%. THE ASSESS ING OFFICER HELD THAT ON PAYMENTS MADE FOR HIRING THE MACHINES, THE A SSESSEE SHOULD HAVE DEDUCTED TAX AT SOURCE UNDER THE PROVISION S OF SECTION 194I @ 11.33%. FOR THE SHORT DEDUCTION OF TAX AT SOURC E ON THE ABOVE PAYMENTS, THE ASSESSING OFFICER RAISED THE DEMAND OF ` 9,36,182/- U/S. 201(1) AND 201(1A) OF THE ACT. AGGRIEVED BY THE ORDER DATED 21-03-2011 PASSED U/S. 2 01(1) AND 201(1A) OF THE ACT, THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF I NCOME TAX (APPEALS) AFTER ANALYZING THE FACTS OF THE CASE CONCLUD ED THAT THE ASSESSEE HAD HIRED MACHINES/CRANES ON CONTRACT. THERE FORE, THE ASSESSEE HAS RIGHTLY DEDUCTED TAX AT SOURCE UNDER TH E PROVISIONS OF 3 ITA NO. 1457/PN/2013, A.Y. 2009-10 SECTION 194C OF THE ACT. IN SUPPORT OF HIS FINDINGS, THE CO MMISSIONER OF INCOME TAX (APPEALS) PLACED RELIANCE ON THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SWAYAM SHIPPIN G SERVICES (P) LTD. IN INCOME TAX APPEAL NO. 1037 OF 2009 REPORTED AS 339 ITR 647 (GUJ.). AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APP EALS), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. DR. SUBHASH K.R. REPRESENTING THE DEPARTMENT SUBMITTE D THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN COMIN G TO THE CONCLUSION THAT ON THE PAYMENTS MADE FOR HIRING OF EXCAVA TION MACHINERY AND CRANES THE TAX AT SOURCE HAS BEEN RIGHT LY DEDUCTED UNDER THE PROVISIONS OF SECTION 194C. THE FACTS ON RECOR D SHOW THAT THE ASSESSEE HAS BEEN MAKING PAYMENTS FOR THE USE OF MACHINERY ON MONTHLY BASIS. IN ADDITION TO THE PAYMENTS, THE ASSESSE E IS ALSO CATERING FOOD FOR THE MACHINE OPERATORS. THERE IS NO WRIT TEN CONTRACT BETWEEN THE ASSESSEE AND M/S. SIDDHIVINAYAK EARTH MOVER S FOR PROVIDING CRANES AND MACHINERY. THE LD. DR VEHEMENTLY SU PPORTED THE ORDER OF THE ASSESSING OFFICER AND PRAYED FOR SETTING ASIDE THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THE ISSUE. 5. ON THE OTHER HAND SMT. DEEPA KHARE APPEARING ON BE HALF OF THE ASSESSEE SUBMITTED THAT ADMITTEDLY THERE IS NO WRITTEN CONTRACT BETWEEN THE ASSESSEE AND M/S. SIDDHIVINAYAK EARTH MOVER S. HOWEVER, THE FACTS OF THE CASE WOULD CLEARLY ESTABLISH THAT THE AS SESSEE IS USING CRANES AND OTHER EARTH MOVING EQUIPMENTS/MACHINERY ON CONTRACTUAL BASIS. THE SUPPLIER OF MACHINERY IS BEARING THE COST OF R EPAIR AND MAINTENANCE OF THE MACHINERY, SALARY OF THE OPERATOR, FUEL E XPENSES 4 ITA NO. 1457/PN/2013, A.Y. 2009-10 ETC. THE ASSESSEE IS MAKING MONTHLY PAYMENTS AS BILLS A RE RAISED BY THE CONTRACTOR ON MONTHLY BASIS. THUS, IT IS EVIDENT FRO M THE RECORDS THAT IT IS A CASE OF SUPPLY OF EQUIPMENT/MACHINERY ON CO MPOSITE CONTRACT AND NOT HIRING OF MACHINERY ON RENT. THE ASSES SEE HAS RIGHTLY DEDUCTED TAX AT SOURCE UNDER THE PROVISIONS OF SECTION 194C OF THE ACT. THE LD. AR FURTHER SUBMITTED THAT THE CASE OF THE ASSES SEE IS SQUARELY COVERED BY THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF BHARAT FORGE LTD. VS. ADDL. CIT IN ITA NO. 1357 & 1358/PN /2010 FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09 DECIDED ON 31-01-2 013. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. THE ONLY ISSUE IN THE APPEAL IS; WHETHER ON THE PAYMENTS MAD E FOR HIRING OF MACHINERY, CRANES ETC., THE TAX AT SOURCE IS TO BE DEDU CTED UNDER THE PROVISIONS OF SECTION 194C OR SECTION 194I OF THE ACT. 7. THE ASSESSEE HAD HIRED MACHINERY, JCB, POCLAIN ETC. FOR EXCAVATION. THE FACT WHETHER THE ASSESSEE HAS TAKEN T HE MACHINERY/CRANES ETC. ON RENT OR CONTRACT CAN BE ASCERTAINED FROM THE TERMS AND CONDITIONS OF THE AGREEMENT BETWEEN THE PARTIES. UNDISPUTEDLY, IN THE PRESET CASE THERE IS NO SUCH WRITTE N AGREEMENT. THEREFORE, WHETHER THE PAYMENTS MADE BY THE ASSESSEE FOR USING THE MACHINERY ARE IN THE NATURE OF RENT OR CONTRACT PAY MENT HAS TO BE ASCERTAINED FROM THE FACTS OF THE CASE. THE COMMISSIONER OF INCOME TAX (APPEALS) IN HIS ORDER HAS GIVEN A CATEGORIC FINDING THAT THE OPERATOR WAS REQUIRED TO MAINTAIN THE EQUIPMENT AND BEA R THE COST OF REPAIR, DRIVER, FUEL ETC. THE LD. AR HAS DRAWN OUR ATTENTION TO LETTER 5 ITA NO. 1457/PN/2013, A.Y. 2009-10 DATED 28-03-2013 WRITTEN BY M/S. SIDDHIVINAYAK EARTH MOV ERS TO THE COMMISSIONER OF APPEALS PLACED ON RECORD AT PAGE 3 OF THE PAPER BOOK. IT HAS BEEN SPECIFICALLY STATED IN THE LETTER THAT M/S. S IDDHIVINAYAK EARTH MOVERS HAS INCURRED EXPENSES TOWARDS FUEL, DRIVER SALARY, REPAIR AND MAINTENANCE ETC. AND THE BILLS WERE RAISED ON THE BAS IS OF MONTHLY USES AND WORK DONE. 8. AS PER THE PROVISIONS OF SECTION 194C, THE TAX IS TO BE DEDUCTED AT SOURCE ON THE PAYMENTS MADE TO CONTRACTORS AND UNDE R THE PROVISIONS OF SECTION 194I THE TAX IS TO BE DEDUCTED AT SOURCE ON THE PAYMENT OF RENT. FROM THE EXAMINATION OF THE FACTS OF THE CASE AN D DOCUMENTS ON RECORD IT IS EVIDENT THAT IT IS NOT A CASE WHERE THE ASS ESSEE HAS TAKEN MACHINERY/CRANE ON RENT. THE ASSESSEE HAS TAKEN THE MACHINERY / EQUIPMENT FOR EXCAVATION ON A COMPOSITE CONTRACT WHEREIN THE RESPONSIBILITY OF MAINTENANCE AND REPAIR OF THE MACHINERY, PAYMENT OF DRIVER SALARY, FUEL ETC. IS THAT OF SUPPLIER. THE REVENUE HAS NOT REBUTTED THE EVIDENCE FURNISHED BY ASSESSEE IN SUPPORT OF ITS CLAIM. 9. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF BHARAT FORGE LTD. VS. ADDL. CIT (SUPRA) IN A SIMILAR CASE HAS HELD THAT ON THE PAYMENTS MADE FOR HIRING OF CRANES, THE PROVISIONS OF SECTIO N 194C WOULD APPLY. IN THE SAID CASE CONTRACTOR WAS TO BEAR THE EXPENSES FOR PETROL, OPERATOR DAY TO DAY REPAIR AND MAINTENANCE OF TH E CRANES. THE RELEVANT EXTRACT OF THE TRIBUNAL ORDER IS REPRODUCED HERE-IN-U NDER: 18. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE. THE 6 ITA NO. 1457/PN/2013, A.Y. 2009-10 ONLY DISPUTE TO BE DECIDED IN THE INSTANT GROUND IS REGARDING THE APPLICABILITY OF PROVISIONS OF SECTION 194C OR 194I ON ACCOUNT OF PAYMENTS FOR HIRING OF CRANES FOR LOADING AND UNLOA DING OF MATERIAL AT ITS FACTORY WHEN THE CRANES ARE PROVIDED BY THE PARTIES ALONG WITH DRIVER/OPERATOR AND ALL EXPENSES ARE BORNE BY THE O WNERS ONLY . WE FIND THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SHREE MAHALAXMI TRANSPORT COMPANY (SUPRA) HAS DISCUSSED AN IDENTICAL ISSUE AN D HAS OBSERVED AS UNDER : CHAPTER XVII OF THE INCOME-TAX ACT, 1961, MAKES PR OVISION FOR COLLECTION AND RECOVERY OF TAX. PART B THEREOF MAKES PROVISION FOR DEDUCTION AT SOURCE AND IS COMPRISED OF SECTIONS 192 TO 206AA. S ECTION 194C BEARS THE HEADING PAYMENTS TO CONTRACTORS AND LAYS DOWN THAT ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT FOR CARRYING OUT ANY WORK INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT AN Y WORK IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIE D PERSON SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CO NTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OF BY ISSUE OF CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO THE PERCENTAGE SPECIFIED THEREUNDER OF SUCH SUM AS INCOME-TAX ON I NCOME COMPRISED THEREIN. SECTION 194-I OF THE ACT WHICH BEARS THE HEADING R ENT PROVIDES THAT ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDI VIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY INCOME BY WAY OF RENT, SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF CHEQ UE OR BY DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT INCOME -TAX THEREON AT THE RATE SPECIFIED THEREUNDER. THUS, SECTION 194C OF THE ACT MAKES PROVISION FOR D EDUCTION OF TAX AT SOURCE IN RESPECT OF PAYMENTS MADE TO CONTRACTORS W HEREAS SECTION 194-I MAKES PROVISION FOR DEDUCTION OF TAX AT SOURCE IN R ESPECT OF INCOME BY WAY OF RENT. EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGH T OF THE AFORESAID STATUTORY PROVISIONS, FROM THE FINDINGS OF FACT REC ORDED BY THE COMMISSIONER (APPEALS) IT IS APPARENT THAT THE ASSE SSEE HAS NOT TAKEN THE DUMPERS ON HIRE/RENT FROM THE PARTIES IN QUESTI ON. THE ASSESSEE HAS GIVEN CONTRACTS TO THE SAID PARTIES FOR THE TRANSPO RTATION OF GOODS AND HAS NOT TAKEN MACHINERIES AND EQUIPMENT ON RENT. IN THE CIRCUMSTANCES, THE COMMISSIONER (APPEALS) WAS JUSTIFIED IN HOLDING THAT THE TRANSACTIONS IN QUESTION BEING IN THE NATURE OF CONTRACTS FOR SH IFTING OF GOODS FROM ONE 7 ITA NO. 1457/PN/2013, A.Y. 2009-10 PLACE TO ANOTHER WOULD BE COVERED AS WORKS CONTRACT S, THEREBY ATTRACTING THE PROVISIONS OF SECTION 194C OF THE ACT. THAT SIN CE THE ASSESSEE HAD GIVEN SUB-CONTRACTS FOR TRANSPORTATION OF GOODS AND NOT FOR THE RENTING OUT OF MACHINERIES OR EQUIPMENT, SUCH PAYMENTS COULD NO T BE TERMED AS RENT PAID FOR THE USE OF MACHINERY AND THE PROVISIONS OF SECTION 194-I OF THE ACT WOULD NOT BE APPLICABLE. THE TRIBUNAL WAS, THER EFORE, JUSTIFIED IN UPHOLDING THE ORDER PASSED BY THE COMMISSIONER (APP EALS). IN VIEW OF THE ABOVE DISCUSSION, IT IS NOT POSSIBLE TO STATE THAT THE TRIBUNAL HAS COMMITTED ANY LEGAL ERROR SO AS TO WAR RANT INTERFERENCE. NO QUESTION OF LAW, MUCH LESS, A SUBSTANTIAL QUESTION OF LAW CAN BE STATED TO ARISE OUT OF THE IMPUGNED ORDER OF THE TRIBUNAL. THE APPEAL IS, ACCORDINGLY, DISMISSED. 18.1 WE FIND THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SWAYAM SHIPPING SERVICES (P) LTD. (SUPRA) HAS HELD AS UNDE R (SHORT NOTES) : HELD, DISMISSING THE APPEAL, THAT THERE WAS NOTHIN G TO INDICATE THAT THE ASSESSEE HAD TAKEN TRAILERS/CRANES ON RENT SO AS TO ATTRACT THE PROVISIONS OF SECTION 194-I OF THE ACT. THE ASSESSE E HAD GIVEN SUB- CONTRACTS FOR TRANSPORTATION OF GOODS. THEREFORE, T HE TRANSACTIONS WOULD FALL WITHIN THE PURVIEW OF SECTION 194C OF THE ACT AS THE ASSESSEE WAS RESPONSIBLE FOR PAYING THE AMOUNT IN QUESTION FOR C ARRYING OUT WORK IN PURSUANCE OF CONTRACTS BETWEEN THE ASSESSEE AND THE TRANSPORTERS AND AS SUCH THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE AT THE RATE PRESCRIBED UNDER THAT SECTION. THE COMMISSIONER (AP PEALS) WAS, THEREFORE, JUSTIFIED IN HOLDING THAT THE ASSESSEE W AS NOT AN ASSESSEE IN DEFAULT WITHIN THE MEANING OF THE EXPRESSION AS CON TEMPLATED UNDER SECTION 201 OF THE ACT AND, CONSEQUENTLY, THE TRIBU NAL WAS JUSTIFIED IN CONFIRMING THE ORDER PASSED BY THE COMMISSIONER (AP PEALS). 18.2 SINCE THE FACTS IN THE INSTANT CASE ARE IDENTI CAL TO THE CASES DECIDED BY HONBLE GUJARAT HIGH COURT, THEREFORE, RESPECTFU LLY FOLLOWING THE SAME WE HOLD THAT PROVISIONS OF SECTION 194C ARE ONLY AP PLICABLE FOR SUCH PAYMENTS AND NOT PROVISIONS OF SECTION 194I . THE ORDER OF THE CIT(A) ON THIS ISSUE IS ACCORDINGLY SET-ASIDE AND THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 10. THUS, IN THE FACTS AND CIRCUMSTANCES OF THE PRESEN T CASE AND THE DECISION OF CO-ORDINATE BENCH ON SIMILAR SET OF FACTS, WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). THE 8 ITA NO. 1457/PN/2013, A.Y. 2009-10 IMPUGNED ORDER IS CONFIRMED AND THE APPEAL OF THE REVENUE IS DISMISSED BEING DEVOID OF ANY MERIT. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 09 TH DAY OF MARCH, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 09 TH MARCH, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-V, PUNE 4. ' / THE CIT(TDS), PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE