METRO SHOES LTD, MUMBAI V. ITO (TDS) 2(2), MUMBAI

ITA 1460/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9692 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 04-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 03-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D V LAKHANI
• Assessee Lawyers: V VIDHYADHAR
• Keywords: Opportunity of being heard; Bonafide belief; Additional evidence
• Section: 133A; 194C; 201(1)

Judgement Text

P A G E | 1 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI G.S. PANNU , AM AND SHRI RAVISH SOOD, JM ./ I.T.A(S). NO. 1460 TO 1462/MUM/2014 & I.T.A. NO. 3528/MUM/2015 ( / ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13 ) METRO SHOES LTD. METRO HOUSE, 3 RD FLOOR, SHAHID BHAGAT SINGH MARG, COLABA CAUSEWAY, COLABA, MUMBAI - 400 001 / VS. INCOME TAX OFFICER (TDS) - 2(2) MUMBAI ./ ./ PAN/GIR NO. AAACM47 54 E ( / APPELLANT ) : ( / RESPONDENT ) ./ I.T.A (S) . NO. 1263 TO 1 265/MUM/2014 & I.T.A. NO.4015/MUM/2014 ( / ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13 ) DCIT (TDS)1(3) R. NO. 703, 7 TH FLOOR, SMT. K.G. MITTAL AYURVEDIC HOSPITAL BLDG, CHARNI ROAD, MUMBAI - 4000 02 / VS. M/S METRO SHOES LTD., METRO HOUSE, 3 RD FLOOR, S.B.S ROAD, COLABA CAUSEWAY MUMBAI: 400 001 ./ ./ PAN/GIR NO. AAACM4954M ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI V. VIDHYADHAR (D.R) / RESPONDENT BY : SHRI D.V. LAKHANI (A .R.) / DATE OF HEARING : 04/07 /2017 / DATE OF PRONOUNCEMENT : 31 /07 /2017 P A G E | 2 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER THE PRESENT CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE ARE DIRECTED AGAINST THE ORDER S PASSED BY THE CIT(A) - 14, MUMBAI FOR A.Y. 2009 - 10 TO A.Y. 2011 - 12, DATED 10.12.2013, 18.12.2013 AND 18.12.2013, RESPECTIVELY AND THE ORDER PASSED BY THE CIT(A) - 59, MUMBAI FOR A .Y. 2012 - 13, DATED 13.04.2015, WHICH IN ITSELF ARISES FROM THE RESPECTIVE ORDERS PASSED BY THE A.O U/S. 201(1)/201(1A) OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT). THAT AS CERTAIN COMMON ISSUES ARE INVOLVED IN THE AFOREMENTIONED APPEALS, THEREFORE, THE SAME ARE BEING TAKEN UP AND DISPOSED OF BY WAY OF A CONSOLIDATE ORDER. WE FIRST T AKE UP THE APPEAL OF THE ASSESSEE FOR A.Y. 2009 - 10, WHEREIN THE LATTER ASSAILING THE ORDER OF THE CIT(A) HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN CONFIRMING THAT THE PROVISIONS OF SECTION 201(1 ) OF INCOME TAX ACT, 1961 IS APPLICABLE AND TREATING THE APPELLANT AS ASSESSEE IN DEFAULT BY INVOKIN G THE PROVISIONS OF SECTION 194 J IN RESPECT OF THE PAYMENT FOR WEB H OSTING CHARGES AMOUNTING TO R S. 2. 07,500/ - . THE APPELLANT PRAYS THAT THE CONCLUSION REACHED BY THE LEARNED ASSESSING OFFICER IS ERRONEOUS AS THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE U/ S 194 J ON THE PAYMENT OF ANNUAL MAINTENANCE CONTRACTS. 2. ON THE FACTS & CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THA T THE PROVISIONS OF SECTION 201 (1) OF INCOME TAX ACT, 1961 AND TREATING THE APPELLANT AS ASSESSEE IN DEFAULT BY INVOKIN G THE PROVISIONS OF SECTION 194 J IN RESPECT OF THE PAYMENT FOR RENEWAL O F SAP LICENCE OF RS. 2,23,004/ - . THE APPELLANT PRAYS THAT THE CONCLUSION REACHED BY THE LEARNED ASSESSING OFFICER IS ERRONEOUS AS THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE U/ S 194 J ON THE PAYMENT OF ANNUA L MAINTENANCE CONTRACTS. 3. ON THE FACTS & CIRCUMSTANCE S OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CO NFIRMING THE LEVY OF INTEREST U/ S 201(1A) OF INCOME TAX ACT, 1961. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED CO NFIRMING THE LEVY OF INTEREST U/ S. 201(1A) FOR A PERIOD OF 39 MONTHS IN RESPECT OF THE TAX DETERMINE D U/ S. 201 IN RESPECT OF THE TWO ITEMS REFERRED TO THE GROUND NO. 1 & 2 P A G E | 3 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 ABOVE. THE APPELLANT PRAYS THAT THE LEVY OF INTEREST AS COMPUTED BY THE ASSESSING OFFICER IS NOT JUSTIFIED AND BE DELETED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND THE GROUNDS OF APPEAL WHICH ARE WITHOUT PREJUDICE TO ONE OTHER. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF SALE OF SHOES, BAGS AND OTHER LEATHER PRODUCT S . THE ASSESSEE COMPANY WHICH HAS A COUNTRYWIDE NETWORK OF EXCLUSIVE METRO SHOWROOMS AT MORE THAN 72 LOCATIONS ACROSS 32 CITIES IN INDIA, PROCURE S GOODS FROM VARIOUS PARTIES WHICH ARE SOLD AFTER LA B ELLING AND PACKAGING THE SAME. 3. THAT SURVEY ACTION U/S. 133A OF THE ACT WAS CARRIED OUT ON 04.08.2011 AT THE PREMISES OF THE ASSESSEE COMPANY, VIZ. METRO HOUSE, 3 RD FLOOR, S.B.S. ROAD, COLABA CAUSEWAY, MUMBAI, IN ORDER TO VERIFY THE COMPLIANCE OF THE TDS PROVISIONS BY THE LATTER. THAT DURING THE COURSE OF THE SURVEY PROCEEDINGS IT WAS OBSERVED THAT THE ASSESSEE COMPANY HAD EITHER FAILED TO DEDUCT OR HAD SHORT DEDUCTE D TAX AT SOURCE IN RESPECT OF CERTAIN AMOU NTS. THE A.O THEREAFTER ON THE BASIS OF THE INFORMATION GATHERED DURING THE COURSE OF THE SURVEY PROCEEDINGS, THEREIN HOLDING THE ASSESSEE AS BEING IN DEFAULT IN RESPECT OF THE AFORESAID FAILURE TO DEDUCT AND/OR SH ORT DEDUCTION OF TAX AT SOURCE, HELD THE LATTER AS BEING IN DEFAULT IN RESPECT OF CERTAIN TRANSACTION S , WHICH ARE BRIEFLY CULLED OUT AS UNDER: - SR. NO. PARTICULARS NATURE OF DEFAULT (AS PER A.O) DEMAND TOWARDS TAX U/S.201(1) INTEREST U/S 201(1A) 1 AMOUNT RETURNED BY BANKS FOR PROVIDING FACILITY OF SALES THROUGH CREDIT CARDS FAILURE TO DEDUCT TDS U/S. 194H RS.10,69,228/ - RS.3,84,921/ - 2 SHORT D EDUCTION OF TAX AT SOURCE ON PAYMENTS MADE TOWARDS AMC OF COMPUTER SOFTWARE, A.C. AND PEST CONTROL ETC, WRONGLY MADE BY THE ASSESSEE U/S.194C, AS AGAINST SECTION 194J SHORT DEDUCTION OF TDS ON ACCOUNT OF RATE DIFFERENCE (194J ( - ) 194C ) AT THE RATE OF 8%. RS.2,10,874/ - RS.82,241/ - 3 SHORT DEDUCTION OF TDS ON PAYMENTS MAD E TOWARDS SHORT DEDUCTION OF TDS ON ACCOUNT OF RS.20,66,550/ - RS.8 , 05,955/ - P A G E | 4 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 HOARDING CHARGES WRONGLY M ADE BY THE ASSESSEE U/S. 194C, AS AGAINST SECTION 194I. RATE DIFFERENCE (194 I ( - ) 194C AT THE RATE OF 8%. 4 DEDUCTION OF TAX AT SOURCE ON PAYMENTS MADE TOWARDS RETAIN ER SHIP FEES PAID TO M/S. MAKANI CREATIVE PVT. LTD. WRONGLY MADE BY THE ASSESSEE U/S. 194C AS AGAINST SECTION 194J. ( THE ASSESSEE DUE TO PAYMENT OF TAXES BY THE PAYEE WAS THUS NOT HELD TO BE IN DEFAULT AS REGARDS TAX U/S.201(1)) SHORT DEDUCTION OF TDS ON ACCOUNT OF RATE DI FFERENCE (194J ( - ) 194C) AT THE RATE OF 8%. RS.1,87,514/ - RS.73,130/ - THE A.O THUS DELIBERATING ON THE AFORESAID DEFAULTS ON THE PART OF THE ASSESSEE FOR HAVING FAILED TO DEDUCT AND/OR CARRIED OUT SHORT DEDUCTION OF TAX AT SOURCE, THEREIN RAISED AN ADDITIONAL DEMAND AGGREGATING TO RS.47,92,899/ - U/S. 201(1)/201(1A) IN THE HANDS OF THE ASSESSEE COMPANY. 4. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE A.O PASSED U/S S . 201(1)/201(1A) , THEREIN ASSAILED THE SAME BEFORE THE CIT(A) . THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS RAISED BY THE ASSESSEE BEFORE HIM IN THE BACKDROP OF THE FACTS OF THE CASE , THEREIN CONCLUDED IN RESPECT OF THE VARIOUS ISSUES BEFORE HIM, AS UNDER: - (A) . TDS ON COMMISSION PAID TO BANK FOR CREDIT CARD SALES FACILITY: - T HE CIT(A) TAKING SUPPORT FROM THE ORDER PASSED BY A COORDINATE BENCH OF THE ITAT , MUMBAI IN THE CASE OF M/S KOT A K SECURITIES LTD. IN ITA NO. 6657/MUM/2011, DATED 03.02.2012 FOR A.Y. 2004 - 05, WHEREIN THE TRIBUNAL HAD OBSERVED AS UNDER: - IN THE CASE BEFORE US, THERE IS NO PRINCIPAL AGENT RELATIONSHIP BETWEEN THE BANK ISSUING THE BANK GUARANTEE AND THE ASSESS EE. WHEN BAN K ISSUE S THE BANK GUARANTEE, ON BEHALF OF THE AS S ESSEE, AL L IT DOES IS TO ACCEPT THE COMMITMENT OF MAK ING PAYMENT OF A SPECIFIED AMOUNT TO, ON DEMAND, THE BENEFICIARY A ND IT IS IN CONSIDERATION OF THIS COM MITMENT, THE B ANK CHARGES P A G E | 5 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 A FEES WHICH IS CUSTOMARILY TERMED AS 'BANK GUARANTEE COM MISSION. WHILE IT IS TERMED AS 'GUARANTEE COMMIS SION ' IT IS NOT THE NATURE OF CO MMISSION' AS IT IS UNDERSTOOD IN 'COMMON 'BUSINESS PARLANCE AND IN THE CONTEXT OF THE SECTION 194H . THIS TRANSACTION, IN OUR CON SIDERED VIEW, IS NOT A TRANSACT ION BET WEEN PRINCIPAL AND AGE NT SO AS TO ATTRACT THE TAX DEDU CTION REQUIREMENTS U/S. 194H . WE AR E , TH EREFORE, OF THE CONSID ERED VIEW THAT THE CIT(A) INDEED, ERRED IN HOLDING THAT THE AS SESSEE WAS INDEED UNDER OBLIGATIO N TO DEDUCT TAX AT SOURCE U/S 1 94H FROM PAYMENTS MADE BY T HE ASSES S EE TO VAR IOUS BAN KS . AS WE HAVE HELD THAT THE ASSES SEE W AS NOT REQUIRED TO DEDUCT TAX AT SOURCE U/S. 194H, THE QUESTION OF LEVY OF INTEREST U/S. 201 (1A) CANNOT ARISE. IN VIEW OF THE ABOVE DISCUSSION, WE QUA SH THE IMPUGNED DEMANDS U/S. 201(1) AND 201(1A) R.W.S. 194H. W E THEREFORE ALSO SEE NO NEED TO DE AL WITH OTHER PE RIPHERAL LEGAL ISSUES RAISED BY THE ASSESSEE. , THUS BEING OF THE CONSIDERED VIEW THAT AS SIMILAR FACTS WERE INVOLVED IN THE CASE OF THE ASSESSEE COMPANY, THEREFORE CONCLUDED THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE IN RESPECT O F PAYMENTS MADE TO THE ACQUIRING BANK FOR THE FACILITY OF ITS CREDIT CARD INTERNET GATEWAY PROVIDED TO THE ASSESSEE COMPANY . THE CIT(A) THUS ON THE BASIS OF HIS AFORESAID CONVICTION HELD THAT THE ASSESSEE COULD NOT BE CONSIDERED AS BEING IN DEFAULT U/S. 20 1(1) , AND RESULTANTLY DELETED THE AGGREGATE DEMAND OF RS.14,54,149/ - RAISED BY THE A.O IN THE HANDS OF THE ASSESSEE COMPANY U/SS. 201(1)/201(1A). (B) . AS REGARDS DEDUCTION OF TAX AT SOURCE IN RESPECT OF PAYMENT ON A NNUAL MAINTENANCE CONTRACTS , (AMC) : - (I) . THE CIT(A) BEING OF THE CONSIDERED VIEW THAT WHILE FOR THE WEB HOS T ING CHARGES OF RS. 2,07,500/ - (OUT O F TOTAL AMOUNT OF RS.3,97,476/ - ) WERE PAID BY THE ASSESSEE TO A PERSON WHO WAS TECHNICALLY QUALIFIED, THEREFORE , THE SAME WAS INESCAPABL Y COVERED WITHIN THE MEANING OF FEES FOR TECHNICAL SERVICES AS PROVIDED IN E XPLANATION 2 OF SECTION 9(1)(VII) . THE CIT(A) IN THE BACKDROP OF HER AFORESAID OBSERVATIONS CONCLUDED THAT THE A.O HAD RIGHTLY HELD THAT THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SO URCE U/S. 194J IN RESPECT OF THE AFORESAID PAYMENTS , AND THUS UPHELD THE ORDER OF THE A.O TREATING THE ASSESSEE AS BEING IN DEFAULT U/S S . 201(1)/201(1A) IN RESPECT OF THE PAYMENTS MADE TOWARDS W EB H OSTING C HARGES. (II) THE CIT(A) FURTHER OBSERVED THAT AS THE BALANCE PAYMENT OF RS.1,84,236/ - WAS MADE BY THE ASSESSEE FOR PURCHASE OF COMPUTER PARTS , P A G E | 6 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 THEREFORE , THERE WAS NO OBLIGATION ON ITS PART T O HAVE DEDUCTED TAX AT SOURCE IN RESPECT OF THE SAID AMOUNT. THE CIT(A) THUS ON THE BASIS OF HER AFORESAID OBSERVATIONS SET ASIDE THE ORDER OF THE A.O TREATING THE ASSESSEE AS BEING IN DEFAULT U/S S . 201(1)/201(1A) IN RESPECT OF THE AFORESAID PAYMENTS. (III) THAT AS REGARDS THE AMOUNT OF RS.2,23,004/ - PAID BY THE ASSESSEE FOR RENEWAL OF SAP LICENCE, IT WAS OBSERVED BY THE CIT(A) THAT AS THE SAME WAS CLEARLY IN THE NATURE OF PAYMENT TOWARDS TECHNICAL SERVICES/ROYALTY, THEREFORE , THE A.O HAD RIGHTLY HELD THAT THE ASSESSEE WAS UNDER A STATUTORY OBLIGATION TO DEDUCT TAX AT SOURCE U/S. 194J IN VIEW OF THE MEANING OF THE TERM FEES FOR TECHNICAL SERVICES / ROYALTY PROVIDED IN E XPLANATION 2 OF SECTION 9(1)(VII)/SECTION 9(1)(VI) OF THE ACT . THE CIT(A) THUS ON THE BASIS OF H ER AFORESAID OBSERVATIONS UPHELD THE ORDER OF THE A.O TREATING THE ASSESSEE AS BEING IN DEFAULT U/S S . 201(1)/201(1A) IN RESPECT OF THE AFORESAID PAYMENTS. (IV) THAT AS REGARDS THE AMOUNT PAID BY THE VARIOUS RETAIL DEALERS OF THE ASSESSEE COMPANY TOWARDS COMPUTER AMC, IT WAS OBSERVED BY THE CIT(A) THAT AS EACH OF THE RESPECTIVE PAYMENT WAS FOUND TO BE LOWER THAN RS.20,000/ - , THEREFORE , THE ASSESSEE REMAINED UNDER NO OBLIGATION FOR DEDUCTING TAX AT SOURCE IN RESPECT OF THE SAID AMOUNT S . THE CIT(A) THUS ON THE BASIS OF HER AFORESAID OBSERVATIONS SET ASIDE THE ORDER OF A.O TREATING THE ASSESSEE AS BEING IN DEFAULT U/S S . 201(1)/201(1A) IN RESPECT OF PAYMENTS MADE BY TH E RETAIL OUTLETS FOR COMPUTER AMC. (V) THAT THE CIT(A) REFERRING TO THE PAYMENTS MADE BY THE ASSESSEE COMPANY IN RESPECT OF AMC FOR PEST CONTROL, THEREIN OBSERVED THAT AS THE SAME COULD NOT BE CATEGORIZED AS PROFESSIONAL OR TECHNICAL SERVICES, BUT WERE DE FINITELY IN THE NATURE OF A CONTRACT WORK, THEREFORE , THE ASSESSEE HAD RIGHTLY DEDUCTED TAX AT SOURCE U/S. 194C AND WAS UNDER NO OBLIGATION TO HAVE CARRIED OUT THE DEDUCTION U/S. 194J. THE CIT(A) THUS ON THE BASIS OF HER AFORESAID OBSERVATIONS SET ASIDE THE ORDER OF THE A.O TREATING THE ASSESSEE AS BEING IN DEFAULT U/S S . 201(1)/201(1A) IN RESPECT OF SHORT/DEFICIT DEDUCTION OF TAX AT SOURCE IN RESPECT OF THE AFORESAID PAYMENTS. P A G E | 7 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 (VI) THAT AS REGARDS THE AMOUNT PAID BY THE ASSESSEE COMPANY IN RESPECT OF THE AMC FOR AIR CONDITIONE RS , IT WAS OBSERVED BY THE CIT(A) THAT AS THE SAME WAS CLEARLY BACKED BY A COMPOSITE CONTRACT FOR SUPPLY OF SPARE PARTS AND SERVICES, THEREFORE , THE ASSESSEE HAD RIGHTLY DEDUCTED THE TAX AT SOURCE U/ S. 194C AND WAS UNDER NO STATUTORY OBLIGATION T O HAVE TAKEN RECOURSE TO DEDUCTION OF TAX AT SOURCE U/S. 194J. THE CIT(A) ON THE BASIS OF HER AFORESAID OBSERVATIONS THUS SET ASIDE THE ORDER OF THE A.O HOLDING THE ASSESSEE COM PANY AS BEING IN DEFAULT IN RESP ECT OF SHORT/DEFICIT DEDUCTION OF TAX AT SOURCE U/S S . 201(1)/201(1A) IN RESPECT OF THE AFORESAID PAYMENTS. (C) TDS ON HOARDING CHARGES : THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT AS THE PAYMENTS FOR ADVERTISEMENT S ON HOARDING S /BILL BOARDS AGGREGATING TO RS.1,09,50,477/ - , WERE MADE PURSUANT TO CONTRACTS WITH THE RESPECTIVE PARTIES, VIZ. INDIVIDUALS OR SOCIETY/OWNER OF BUILDING/LAND FOR PROVIDING THE RIGHT OF DISPLAY ON THE HOARDING SITE S , AND WERE NOT FOR USE OF ANY LAND OR BUILDING, THEREFORE , THE PAY MENTS MADE THEREIN COULD NOT BE CHARACTERIZED AS BEING IN THE NATURE OF AMOUNTS PAID TOWARDS RENT FOR TAKING ON LEASE, SUB - LEASE, TENANCY OR ANY OTHER AGREEMENT OR ARRANGEMENT FOR IN RESPECT OF LAND OR BUILDING, PURSUANT WHERETO NO OBLIGATION WAS CAST UPO N IT TO DEDUCT TAX AT SOURCE U/S. 194I. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE CIT(A) THAT AS THE RESPECTIVE PAYMENTS WERE MADE TO THE PARTIES FOR FACILITATING DISPLAY OF ADVERTISEMENTS ON SUCH HOARDING/BILL BOARDS, THEREFORE, THE ASSESSEE COMPANY HAD RIGHTLY DEDUCTED TAX AT SOURCE U/S. 194C. 5. THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS RAISED BY THE ASSESSEE BEFORE HER IN THE BACKDROP OF THE FACTS OF THE CASE, THEREIN REFERRING TO CBDT CIRCULAR NO. 715, DATED 08.08.1995 , WHICH CLEARLY PROVIDED THAT AS THE CONTR ACT FOR PUTTING UP OF A HOARDING WAS IN THE NATURE OF AN ADVERTISING CONTRACT, THEREFORE , THE PROVISIONS OF SECTION 194C WOULD BE APPLICABLE IN RESPECT OF THE AMOUNTS PAID TOWARDS HOARDING/BILL BOARD CHARGES. THE CIT(A) FURTHER OBSERVED THAT THE AFORESAID CBDT CIRCULAR NO. 715 (SUPRA ) FURTHER PROVIDED THAT IF THERE WAS A SUB - LETTING OF HOARDING BY THE ASSESSEE , P A G E | 8 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 THEN THE LATTER WOULD REMAIN UND ER A STATUTORY OBLIGATION TO DEDUCT TAX AT SOURCE U/S. 194I. THE CIT(A) IN THE BACKDROP OF THE AFORESAID SETTLED POSITION OF LAW, THEREIN BEING OF THE CONSIDERED VIEW THAT AS THE ASSESSEE HAD NOT INDULGED IN SUB - LET TING OF HOARDING RIGHTS ACQUIRED BY IT, T HEREFORE CONCLUDED THAT THE PAYMENTS MADE BY THE ASSESSEE WERE TOWARDS A WORKS CONTRACT , AND THE TAX WAS LIABLE TO BE DEDUCTED U/S.194C. THE CIT(A) ON THE BASIS OF HER AFORESAID OBSERVATIONS THEREIN SET ASIDE THE ORDER OF THE A.O TREATING THE ASSESSEE COMPANY AS BEING IN DEFAULT U/S S . 201(1)/201(1A) FOR SHORT/DEFICIT DEDUCTION OF TAX AT SOURCE IN RESPECT OF THE PAYMENTS MADE TOWARDS HOARDING CHARGES, AND RESULTANTLY SET ASIDE THE AGGREGATE DEMAND OF RS.28,72,505/ - RAISED BY THE A .O IN THE HANDS OF THE ASSESSEE COMPANY ON THE SAID COUNT. (D) . TDS ON RETAINERSHIP FEES PAID T O M/S. MAKANI CREATIVE PVT. LTD : THAT THE ASSESSEE ASSAIL ED BEFORE THE CIT(A) THE ORDER OF THE A.O TREATING IT AS BEING IN DEFAULT U/S S . 201(1)/201(1A) FOR HAVING CARRIED OUT SHORT/DEFICIT DEDUCTION OF TAX AT SOURCE IN RESPECT OF RETAINERSHIP FEES PAID TO M/S MAKANI CREATIVE PVT. LTD. , BY WRONGLY CARRYING OUT THE DEDUCTION UNDER SEC 194C, AS AGAINST SEC. 194J. T H E ASSESSEE SUBMITTED BEFORE THE CIT(A) T HAT AS THE PAYMENT TO THE AFORESAID CONCERN, VIZ. M/S. MAKANI CREATIVE PVT. LTD. (SUPRA) WAS IN RESPECT OF THE WORK WHI CH WAS ACTUALLY EXECUTED BY THEM , AND THE ASSESSEE COMPANY HAD NOT AVAILED ANY PROFESSIONAL OR TECHNICAL SERVICES OF THE SAID CONCERN , THEREFORE , THE DEDUCTION OF TAX AT SOURCE WAS RIGHTLY MADE UNDER SECTION 194C, WHILE FOR THE APPLICABILITY OF SECTION 194J STOOD CLEARLY EXCLUDED . 6. THE CIT(A) AFTER GIVING A THOUGHTFUL CONSIDERATION TO THE CONTENTIONS RAISED BY THE ASSESSEE BEFORE HER IN THE BAC KDROP OF THE FACTS OF THE CASE , THEREIN CONCLUDED THAT AS THE AFORESAID CONCERN, VIZ. M/S MAKANI CREATIVE PVT. LTD. , (SUPRA) HAD PROVIDED PROFESSIONAL SERVICES TO THE ASSESSEE COMPANY IN RESPECT OF VARIOUS ACTIVITIES , VIZ. ART WORK, A DVERTISEMENT, VISUAL MERCHANDISER, THEREFORE , IT WAS CLEARLY ESTABLISHED THAT THE ASSESSEE WAS AVAILING THE PROFESSIONAL SERVICES OF THE AFORESAID CONCERN. THE CIT(A) FURTHER P A G E | 9 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 OBSERVED THAT EVEN THE BILL RAISED BY THE SAID CONCERN, VIZ. M/S MAKANI CREATIVE PVT. LTD. (SUPRA) ON THE ASSESSEE COMPANY WAS IN RESPECT OF RETAINERSHIP FEES. THE CIT(A) THUS CONCLUDED THAT THE A.O WAS PRINCIPALLY RIGHT IN CONCLUDING THAT THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE U/S. 194J, AND AS SUCH WAS TO BE TREATED AS BEING IN DEFAUL T U/S S . 201(1)/201(1A) FOR THE SHORT/DEFICIT DEDUCTION OF TAX AT SOURCE U/S. 194C . 7. THE CIT(A) HOWEVER FINDING HERSELF TO BE IN AGREEMENT WITH THE CONTENTION OF THE ASSESSEE THAT AS THE AFORESAID PAYEE, VIZ. M/S. MAKANI CREATIVE PVT. LTD. (SUPRA) HA D P AID THE TAX IN RESPECT OF THE AMOUNT RECEIVED FROM THE ASSESSEE COMPANY, THEREFORE , THE LATTER IN THE BACKDROP OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES LTD. (SUPRA) VS. CIT ( 2007 ) 293 ITR 226 (SC) WAS THEREFORE NOT TO BE TREATED AS BEING IN DEFAULT IN RESPECT THE TAX LIABILITY U/S. 201(1). IT WAS HOWEVER OBSERVED BY THE CIT(A) THAT THE ASSESSEE WOULD CONTINUE TO BE LIABLE FOR INTEREST U/S. 201(1A) FROM THE DA TE ON WHICH SUCH TAX WAS DEDUCTI BLE, TILL TH E DATE ON WHICH SUCH TAX WAS PAID BY THE PAYEE. 8. THAT THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) PARTLY SUSTAINING THE ORDER OF THE A.O TREATING THE ASSESSEE AS BEING IN DEFAULT U/S S .201(1)/201(1A) FOR SHORT /DEFICIT DEDUCTION OF TAX AT SOU RCE, HAD THEREIN CARRIED THE MATTER IN APPEAL BEFORE US . 9. THAT THE AUTHORIZED REPRESENTATIVE (FOR SHORT A.R.) FOR THE ASSESSEE AT THE VERY OUTSET OF THE HEARING OF THE APPEAL SUBMITTED THAT THE CIT(A) HAD ERRED IN SUSTAINING THE ORDER OF THE A.O HOLDING THE ASSESSEE AS BEING IN DEFAULT U/S S . 201(1)/201(1A ), FOR THE REASON THAT THE LATTER HAD FAILED TO DEDUCT TAX AT SOURCE U/S. 194J IN RESPECT OF THE PAYMENTS MADE TOWARDS WEB HOSTING CHARGES AMOUNTING TO RS.2,07,500/ - (OUT OF EXPENSES AGGREGATING TO RS. 3,97,476/ - BOOKED BY THE ASSESSEE UNDER THE HEAD PURCHASE OF COMPUTER PARTS & ACCESSORIES) . IT WAS SUBMITTED BY THE LD. A.R THAT THE CIT(A) HAD WRONGLY CONCLUDED THAT WEB HO STING CHARGES CAME WITHIN THE PURVIEW OF THE DEFINITION OF FEES FOR TECHNICAL SERVICES CONTEMPLATED IN THE EXPLANATION 2 OF SECTION 194J , THEREIN RENDERING THE P A G E | 10 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 ASSESSEE LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER THE AFORESAID STATUTORY PROVISION. THE LD. A.R. IN ORDER TO DRIVE HOME HIS CONTENTION THAT THE PAYMENTS MADE TOWARDS WEB HOSTING CHARGES DID NOT CALL FOR ANY DEDUCTION OF TAX AT SOURCE UNDER SEC. 194J , THEREIN RELIED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: - 1. DDIT VS. SAAVIS COMMUNICATION CORPORATION (69 TAXMANN.COM 106) ( MUMBAI, ITAT ). 2. ITO VS. RIGHT FLORISTS (P.) LTD. (32 TAXMANN.COM 99) (K O L K ATA, ITAT ). 3. YAHOO INDIA (P.) LTD. VS. DCIT (11 TAXMANN.COM 431) ( MUMBAI , ITAT ) 4. PINSTORM TECHNOLOGIES (P.) LTD. VS. ITO (24 TAXMANN.COM 345) ( MU MBAI ). THE LD. A.R. T AKING SUPPORT OF THE AFORESAID JUDICIAL PRONOUNCEMENT S, THEREIN SUBMITTED THAT THE ORDER OF THE LOWER AUTHORITIES HOLDING THE ASSESSEE AS BEING IN DEFAULT U/SS. 201(1)/201(1A) FOR HAVING FAILED TO DEDUCT TAX AT SOURCE U/S. 194J IN RESPECT OF THE PAYMENTS MAD E TOWARDS WEB HOSTING CHARGES COUL D NOT BE SUSTAINED AND WAS LIABLE TO BE VACATED. ALTERNATIVELY, IT WAS AVERRED BY THE LD. A.R THAT AS AN AMOUNT OF ONLY RS. 17,292/ - OUT OF THE TOTAL WEB HOSTING CHARGES OF RS.2,07,500/ - PERTAINED TO THE YEAR UNDER CONSIDERATION, THEREFORE, EVEN OTHERWISE THE LIABILITY AS REGARDS DEDUCTION OF TAX AT SOURCE WAS LIABLE TO BE RESTRICTED TO THE LATTER AMOUNT, VIZ. RS. 17,292/ - . PER CONTRA, T HE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R.) PLACED RELIANCE ON THE ORDERS OF THE LOWER AUTHORITIES , AND THEREIN SUBMITTED THAT AS THE PAYMENTS MADE BY THE ASSESSEE TOWARDS WEB HOSTING CHARGES SQUARELY FELL WITHIN THE SCOPE AND GAMUT OF TECHNICAL SERVICES, THEREF ORE , THE ASSESSEE WAS LIABLE TO DEDUCT T AX AT SOURCE U/S. 194J . IT WAS THUS AVERRED BY THE LD. D.R THAT THE ASSESSEE HAVING FAILED TO DEDUCT TAX AT SOURCE UNDER SEC. 194J , HAD THUS RIGHTLY BEEN HELD BY THE LOWER AUTHORITIES AS BEING IN DEFAULT U/SS. 201(1)/201(1A) . 10 . WE HAVE HEARD THE AUTHORIZED REPRESENTATIVE S FOR BOTH THE PARTIES ON THE AFORESAID ISSUE UNDER CONSIDERATION, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PRODUCED BEFORE US. WE FIND THAT THE TERM FEES P A G E | 11 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 FOR TECHNICAL SE RVICES DEFINED IN EXPLANATION 2 OF SECTION 9(1)(VII), THEREIN READS AS UNDER: - EXPLANATION [2]. FOR THE PURPOSES OF THIS CLAUSE, 'FEES FOR TECH NI CAL SERVICES' MEANS ANY CONSIDERATION (INCLUDING ANY LUMP SUM CONSI DERATION) FOR THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SERVICES OF TECHNI CAL OR OTHER PERSONNEL) BUT DOES NOT INCLUDE CONSIDERATION F OR ANY CONSTRUCTION , ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPI ENT CHARGE ABLE UNDER THE HEAD 'SALARIES'. THUS , A PERUSAL OF THE AFORESAID DEFINITION OF THE TERM FEES FOR TECHNICAL SERVICES CLEARLY REVEALS THAT ANY CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDERATION) PAID BY AN ASSESSEE FOR THE RENDERING OF ANY MANAGERIAL , TECHNICAL OR CONSULTANCY SERVICES (INCLU DING PROVISION OF SERVICES OF TECHNICAL OR OTHER PERSON NEL) HAD BEEN BROUGHT WITHIN THE SWEEP OF THE AFORESAID TERM . WE FIND T HAT THE ASSESSEE DURING THE YEAR HAD INCURRED THE AFORESAID CHARGES FOR FACILITATING HOSTING OF ITS ECOMMERCE WEBSITE ON THE PARTN ER SERVERS (I.E CLOUD BASED SERVER HOSTING), AND AS STANDS GATHERED FROM A PERUSAL OF PAGE 88 OF APB, HAD MADE THE AFORESAID PAYMENT TO M/S INFOTON SYSTEMS & SERVICES (P) LTD, MUMB AI . WE FIND THAT OUR INDULGENCE IN THE PRESENT CASE HAD BEEN SOUGHT FOR ADJUDICATION OF THE ISSUE AS TO WHETHER OR NOT THE AMOUNT PAID BY THE ASSESSEE TOWARDS WEB HOSTING CHARGES COULD BE CHARACTERIZED AS PAYMENTS MADE TOWARDS FEES FOR TECHNICAL SERVICES , THEREIN CASTING A STATUTORY OBLIGATION ON THE A SSESSEE TO DEDUCT TAX AT SOURCE U/S. 194J. WE ARE OF THE CONSIDERED VIEW THAT THE ADJUDICATION OF THE AFORESAID ISSUE WOULD REQUIRE UNDERSTANDING OF THE SCOPE AND GAMUT OF THE TERM TECHNICAL SERVICES. WE FIND THAT THE TERM TECHNICAL SERVICES HAD BEEN D ELIBERATED UPON AND ADJUDICATED BY THE HONBLE HIGH COURT OF MADRAS IN ITS LANDMARK JUDGMENT PASSED IN THE CASE OF SKYCELL COMMUNICATION LTD. AND ANOTHER VS. DCIT AND O THERS (2001) 251 ITR 53 (MAD). THE HONBLE HIGH COURT ON THE BASIS OF A CONJOINT READING OF SECTION 194J R.W.S. SECTION 9(I)(VII), EXPLANATION 2 HAD OBSERVED THAT THE LEGISLATURE IN ALL ITS WISDOM HAD NOT SET OUT WITH PRECISI ON AS TO WHAT WOULD CONSTITUTE TECHNICAL SERVICE TO RENDER IT TECHNICAL SERVICE . THE HIGH COURT OBSERVED THAT THE P OPULAR MEANING ASSOCIATED WITH TECHNICAL IS INVOLVING OR CONCERN ING APPLIED AND INDUSTRIAL SCIENCE , BUT HOWEVER MERE COLLECTION OF A FEE FOR USE OF STANDARD P A G E | 12 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 FACILITY PROVIDED TO ALL THOSE WILLING TO PAY FOR IT DOES NOT AMOUNT TO THE FEE HAVING BEEN RECEIVED FOR TECHNICAL SERVICE S . THAT DEMONSTRATING THE AFORESAID VIEW ON THE BASIS OF AN EXEMPLARY SITUATION, IT WAS OBSERVED BY THE HIGH COURT THAT WHERE A PERSON DECIDES TO SUBSCRIBE TO A CELLULAR TELEPHONE SERVICE IN ORDE R TO HAVE THE FACILITY OF BEING ABLE TO COMMUNICATE WITH OTHERS, HE DOES NOT CONTRACT TO RECEIVE A TECHNICAL SERVICE. WHAT HE DOES AGREE TO IS TO PAY FOR THE USE OF AIRTIME FOR WHICH HE PAYS A CHARGE. TH E FACT THAT THE TELEPHONE SERVICE PROVIDER HAD INSTALLED SOPHISTICATED TECHNICAL EQUIPMENT IN THE EXCHANGE TO ENSURE CONNECTIVITY TO ITS SUBSCRIBER , DOES NOT ON THAT SCORE , MAKE IT PROVISION OF A TECHNICAL SERVICE TO THE SUBSCRIBER. WHAT APPLIES TO CELLULAR MOBILE SERVICE IS ALSO APPLICABLE IN FIXED TELEPHONE SERVICE , AND NEITHER OF THE SAID SERVICES COULD BE CATEGORIZED AS TECHNICAL SERVICE FOR THE PURPOSE OF SECTION 194J. WE THUS FIND THAT THE HONBLE HIGH COURT AFTER DELIBERATING ON THE SCOPE OF THE TER M TECHNICAL SERVICE HAD THEREIN CONCLUDED THAT COLLECTION OF FEES BY A PERSON FOR USE OF A STANDARD FACILITY WHICH IS PROVIDED BY HIM TO ALL THOSE WILLING TO PAY FOR IT, IRRESPECTIVE OF THE FACT THAT THE PROVISION OF SUCH SERVICES INVOLVED USAGE OF TECHN ICAL EQUIPMENT ON THE PART OF SAID PERSON TO FACILITATE PROVIDING OF THE SERVICES, CANNOT BE CHARACTERIZED AS AVAILING OF TECHNICAL SERVICE ON THE PART OF THE CONSUMER. 11. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE IN THE BACKDROP OF THE SETTLED POSITION OF LAW. WE ARE OF THE CONSIDERED VIEW THAT THOUGH THE PROVISION OF WEB HOSTING CHARGES BY THE SERVICE PROVIDER WOULD INVOLVE INSTALLATION OF SOPHISTICATED EQUIPMENT ON HIS PART TO FACILITA TE RENDERING OF SUCH SERVICES TO THE CUSTOMERS, HOWEVER THE COLLECTION OF A FEE BY HIM FOR USE OF SUCH STANDARD FACILITY PROVIDED TO ALL THOSE WILLING TO PAY FOR IT CANNOT BE CHARACTERIZED AND THEREIN BROUGHT WITHIN THE SWEEP OF THE TERM FEE FOR TECHNICAL SERVICES . WE FURTHER FIND THAT A COORDINATE BENCH OF THE TRIBUNAL, VIZ. ITAT, MUMBAI BENCH D IN THE CASE OF PACIFIC INTERNET (INDIA) PVT. LTD. VS. ITO (2009) 125 TTJ 966 (MUM), RELYING ON THE AFORESAID JUDGMENT OF THE HONBLE HIGH COURT OF MADRAS IN TH E CASE OF SKYCELL COMMUNICATION LTD. (SUPRA) HAD ALSO HELD THAT MERE COLLECTION OF A P A G E | 13 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 FEE FOR USE OF STANDARD FACILITY PROVIDED TO ALL THOSE WILLING TO PAY FOR IT DOES NOT AMOUNT TO THE FEE HAVING BEEN RECEIVED FOR TECHNICAL SERVICES. WE THUS ARE OF THE CONSIDERED VIEW THAT AS WEB HOSTING CHARGES CAN SAFELY BE CONSTRUED AS A FACILITY WHICH IS PROVIDED TO FACILITATE HOSTING OF A WEBSITE, THEREFORE, THE FEE PROVIDED BY THE ASSESSEE FOR AVAILING SUCH SERVICE CANNOT BE CHARACTERIZED AS A AS A FEE FOR TECH NICAL SERVICE. WE THUS IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS ARE OF THE CONSIDERED VIEW THAT NOW WHEN WEB HOSTING CANNOT BE HELD TO BE IN THE NATURE OF TECHNICAL SERVICE, THEREFORE THE AMOUNT PAID BY THE ASSESSEE AS REGARDS THE SAME WOULD NOT BE LIABLE FOR DEDUC TION OF TAX AT SOURCE U/S. 194J . WE THUS SET ASIDE THE ORDER OF THE CIT(A), WHEREIN THE LATTER HAD UPHELD THE ORDER OF THE A.O TREATING THE ASSESSEE AS BEING IN DEFAULT FOR HAVING FAILED TO DEDUCT TAX AT SOURCE U/S. 194J. THE GROUND OF APP EAL NO. 1 RAISED BY THE ASSESSEE IS ALLOWED. 1 2 . THE LD. A.R HAD FURTHER ASSAILED BE FORE US THE ORDER OF THE CIT(A) , W HEREIN THE LATTER HAD UPHELD THE ORDER OF THE A.O TREATING THE ASSESSEE AS BEING IN DEFAULT U/S S . 201(1)/201(1A) IN RESPECT OF THE AMOUNTS OF RS.2,23,0 0 4/ - PAID TOWARDS RENEWAL OF SAP LICENCE . IT WAS AVERRED BY THE LD. A.R THAT THE CIT(A) HAD WRONGLY CONCLUDED THAT THE PAYMENT BY THE ASSESSEE TOWARDS RENEWAL OF SAP LICENCE WAS IN THE NATURE OF PAYMENT TOWARDS TECHNICAL SERVICES / ROYALTY , AS PROVIDED IN EXPLANATION 2 OF SECTION 9(1) (VII)/SECTION 9 (1)(VI), AND THUS RENDERED THE ASSESSEE LIABLE FOR DED UCTION OF TAX AT SOURCE U/S. 194 J. THE LD. A.R. IN SUPPORT OF HIS AFORESAID SUBMISSIONS PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENT S : - (I) SMC DEMAG (P.) LTD. V. DCIT (38 SOT 496) ( ITAT, DELHI ) (II) DIT VS. INFRASOFT LTD. (39 TAXMANN.COM 88) (HIGH COURT OF DELHI ). (III) DIT VS. ERICSSON A.B., NEW DELHI (16 TAXMANN.COM 371) (HIGH COURT OF DELHI ). (IV) DIT VS. NOKIA NETWORKS OY (25 TAXAMANN.C OM 225) (HIGH COURT OF DELHI). (V) ADIT VS. BAAN GLOBAL BV (71 TAXMANN.COM 213) ( ITAT MUMBAI ). PER CONTRA, THE LD. D.R SUBMITTED THAT A STATUTORY OBLIGATION WAS CAST UPON THE ASSESSEE TO DEDUCT TAX AT SOURCE UNDER SEC. 194J AT THE TIME OF MAKING THE PAYMENTS TOWARDS RENEWAL OF SAP LICENCE, FAILING WHICH THE LOWER P A G E | 14 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 AUTHORITIES HAD RIGHTLY HELD THE ASSESSEE AS BEING IN DEFAULT U/S S . 201(1)/201(1A) IN RESPECT OF THE AFORESAID AMOUNT. 1 3 . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT AS PER THE EXPLANATION 4 OF SECTION 9(1)(VI) , AS HAD BEEN MADE AVAILABLE ON THE STATUTE VIDE THE FINANCE ACT, 2012, W .R.E.F 01.06.1976, IT HAS BEEN CLARIF IED THAT ROYALTY TAKES WITHIN ITS SWEEP ANY AMOUNT PAID IN LIEU OF TRANSFER OF ALL OR ANY RIGHTS IN RESPECT OF ANY RIGHT, PROPERTY OR INFORMATION , WHICH SHALL INCLUDE AND HAS ALWAYS INCLUDED TRANSFER OF ALL OR ANY RIGHT FOR USE OR RIGHT TO USE A COMP UTER SOFTWARE (INCLUDING GRANTING OF A LICENCE) , IRRESPECTIVE OF THE MEDIUM THROUGH WHICH SUCH RIGHT IS TRANSFERRED . WE FIND THAT THE ASSESSEE HAD DURING THE YEAR UNDER CONSIDERATION MADE A PAYMENT TOWARDS RENEWAL OF SAP LICENCE FOR TWO YEARS , BUT HOWEVER HAD NOT DEDUCTED TAX AT SOURCE IN RESPECT OF THE SAME. WE FIND THAT THE FEES PAID BY THE ASSESSEE FOR RENEWAL OF THE SAP LICENCE FOR A PERIOD OF TWO YEARS, THEREIN ONLY VEST ED WITH IT THE RIGHTS WHICH WERE LIMITED TO THOSE NECESSARY TO ENABLE IT TO USE THE SOFTW ARE ONLY FOR ITS OWN BUSINESS , FOR THE AFORESAID PERIOD OF TWO YEARS, AND IN NO WAY VESTED WITH IT ANY RIGHT TO LOAN/RENT/SALE/SUB - LICENCE OR TRANSFER THE COPY OF SOFTWARE TO ANY THIRD PARTY. THUS TO BE BRIEF AND EXPLICIT, THE GRANT OF THE AFORESAID LICENCE TO THE ASSESSEE SPECIFICALLY PROHIBIT ED THE LATTER FROM COPYING , DECOMPILING, DE - ASSEMBLING OR REVERSE ENGINEERING THE SOFTWARE. THAT ALL THE INCORPOREAL RIGHTS IN RESPECT OF THE SOF TWARE REMAINED WITH THE OWNER AND WERE NOT TRANSFER RED TO THE ASSESSEE. W E HAVE DELIBERATED ON THE ISSUE UNDER CONSIDERATION AND ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE WHILE MAKING THE PAYMENT TOWARDS RENEWAL OF SAP LICENCE , HAD ONLY ACQUIRED A COPY OF THE COPYRIGHT ED ARTICLE , WHEREAS THE COPYRIGHT REMAINED WITH THE OWNER . WE ARE OF THE CONSIDERED VIEW THAT AS THE ASSESSEE COMPANY BY MAKING THE PAYMENT TOWARDS RENEWAL OF LICENSES FEES HAD MERELY ACQUIRED A COMPUTER PROGRAMME FOR BEING USED IN ITS BUSI NESS , AND NO RIGHT IS GRANTED TO IT TO UTILIZE THE COPYRIGHT IN RESPECT OF THE AFORESAID PROGRAMME, THEREFORE , WHAT HAD BEEN ACQUIRED BY THE ASSESSEE CANNOT BE CHARACTERIZED AS BEING IN THE NATURE OF ROYALTY. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO T HE ISSUE P A G E | 15 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 BEFORE US, AND ARE OF THE VIEW THAT PURSUANT TO THE PAYMENT OF THE AFORESAID AMOUNT FOR RENEWAL OF SAP LICENCE, WHAT IS TRANSFERRED TO THE ASSESSEE IS NEITHER THE COPYRIGHT IN THE SOFTWARE, NOR THE USE OF THE COPYRIGHT IN THE SOFTWARE, BUT WHAT IS TRANSFERRED IS THE RIGHT TO USE THE COPYRIGHT ED MATERIAL OR ARTICLE , WHICH IS CLEARLY DISTINCT FROM THE RIGHTS IN A COPYRIGHT. THUS, NOW WHEN THE RIGHT THAT IS TRANSFERRED TO THE ASSESSEE COMPANY IS NOT A RIGHT TO USE THE COPYRIGHT , BUT IS ONLY LIMITED TO THE RIGHT TO USE THE COPYRIGHTED MATERIAL, THEREFORE , THE SAME CANNOT BE CHARACTERIZED AS A PAYMENT TOWARDS ROYALTY BY THE ASSESSEE COMPANY. WE FIND THAT OUR AFORESAID VIEW STAND S FORTIFIED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF DIT VS. INFRASOFT LTD. (2013) 39 TAXMANN.COM 88 (DEL) . 14 . WE FURTHER FIND THAT THE COORDINATE BENCH OF ITAT, MUMBAI , IN THE CASE OF DDIT VS. RELIANCE INDUSTRIES LTD. [ITA(S). NOS.1980 - 1982,1884,1986,2523,2529/MUM/2008 , DATED 26.05.2016 , HAD FURTHER OBSERVED THAT AS THE EXPLANATION 4 OF SECTION 9(1)(VI) HAD BEEN INSERTED BY THE FINANCE ACT, 2012 W.R.E.F 01.06.1976, VIDE WHICH CONSIDERATION PAID FOR THE RIGHT FOR USE OR RIGHT TO USE A COMPUTER SOFTWARE ( INCLUD ING GRANTING OF A LICENCE ) IS T O BE DEEMED TO FALL WITHIN THE SWEEP OF THE TERM ROYALTY U/S. 9(1)(VI) OF THE ACT , BEING CLARIFICATORY IN NATURE IS TO BE TAKEN AS HAD ALWAYS BEEN AVAILABLE ON THE STATUTE, HOWEVER , THE FACT THAT THE AFORESAID POSITION OF LAW WAS NOT A VAILABLE AT THE T IME WHEN THE ASSESSEE HAD MADE THE PAYMENTS TOWARDS PURCHASE OF THE SOFTWARE, NOR THERE WAS A NY SUCH JUDGMENT OF ANY COURT ON THE BASIS OF WHICH A PAYMENT MADE BY AN ASSESSEE TOWARDS PURCHASE OF SOFTWARE COULD BE CONSTRUED AS ROYALTY U/S. 9(1)(VI) AND SUBJECTED TO DEDUCTION OF TAX AT SOURCE, THEREFORE , THE ASSESSEE WHO REMAINED UNDER A BONAFIDE BELIEF THAT NO TAX AT SOURCE WAS DEDUCTIBLE I N RESPECT OF THE SAID AMOUNT, THUS COULD NOT BE HELD AS BEING IN DEFAULT FOR HAVING FAILED TO HAVE DEDUCTED TAX AT SOURCE U/S. 194J AT THE TIME OF MAKING OF THE AFORESAID PAYMENT . WE RESPECTFULLY FOLLOW THE AFORESAID JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF INFRASOFT LTD. (SUPRA) , AND FINDING OURSELVES AS BEING IN AGREEMENT WITH THE AFORESAID VIEW ARRIVED AT BY THE COORDINATE BENCH OF TRIBUNAL IN THE CASE OF RELIANCE INDUSTRIES LTD. P A G E | 16 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 ( S UPRA), ARE THUS OF THE CONSIDERED VIEW THAT THE AMOUNT PAID BY THE ASSESSEE TOWARDS RENEWAL OF SAP LICENCE FOR A PERIOD OF TWO YEARS, CA N NEITHER BE CHARACTERIZED AS A PAYMENT FOR TRANSFER OF A COPYRIGHT, NOR THE ASSESSEE BE HELD AS BEING IN DEFAULT FOR HAVING FAILED TO DEDUCT TAX AT SOURCE AS PER EXPLANATION 4 OF SEC. 194J, WHICH WAS NOT AVAILABLE AT THE TIME OF MAKING OF THE SAID PAYMENT . WE THUS IN LIGHT OF OUR AFORESAID OBSERVATIONS SET ASIDE THE ORDER OF THE CIT(A), WHEREIN THE LATTER HAD UPHELD THE ORDER OF THE A.O TREATING THE ASSESSEE AS BEING IN DEFAULT U/S S . 201(1)/201(1A) FOR HAVING FAILED TO DEDUCT TAX AT SOURCE IN RESPECT OF PAYMENT MA DE TOWARDS RENEWAL OF SAP LICENCE. THE GROUND OF APPEAL NO. 2 RAISED BY THE ASSESSEE BEFORE US IS ALLOWED. 1 5 . THE LD. A.R HAD FURTHER AVERRED BEFORE US THAT THE CIT(A) HAD ERRED IN CONFIRMING THE LEVY OF INTEREST U/S. 201(1A) IN RESPECT O F TAX DEDUCTIB L E AT SOURCE ON WEB HOSTING CHARGES AND FEES PAID FOR RENEWAL OF SAP LICENSE FOR A PERIOD OF 39 MONTHS. WE ARE OF THE CONSIDERED VIEW THAT AS WE HAVE ALREADY HELD THAT THE ASSESSEE WAS UNDER NO OBLIGATION TO DEDUCT TAX AT SOURCE U/S 194J, IN RESPECT OF PAYMENT MADE TOWARDS WEB HOSTING CHARGES AND FEES FOR RENEWAL OF SAP LICENSE FEE, THEREFORE, THE PRESENT GROUND OF APPEA L WOULD BE RENDERED AS INFRUCTUOUS . THE GROUND OF APPEAL NO. 3 IS DISMISSED AS HAVING BEEN RENDERED AS INFRUCTUOUS . THE GROUND OF APPEAL NO. 4 BEING GENERAL IN NATURE IS THUS DISMISSED. 1 6 . THE APPEAL OF THE ASSESSEE FOR A.Y. 2009 - 10, MARKED AS ITA NO. 1460/MUM/2014, IS PARTLY ALLOWED I N TERMS OF OUR AFORESAID OBSERVATIONS. ITA NO. 1263/MUM/2014 A.Y. 2009 - 10 1 7 . WE NOW ADVERT TO THE APPEAL OF THE REVENUE FOR A.Y. 2009 - 10, WHEREIN THE LATTER HAD ASSAILED THE SETTING ASIDE BY THE CIT(A) OF THE ORDER OF THE A.O TREATING THE ASSESSEE AS BEING IN DEFAULT U/SS. 201(1)/201(1A) FOR HAVING FAILED TO DEDUCT OR CARRYING OUT SHORT/DEFICIT DEDUCTION OF TAX AT P A G E | 17 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 SOURCE , IN RESPECT OF CERTAIN PAYMENTS . THE REVENUE HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: - 1 GROUNDS OF APPEAL: (I) ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE ID. CIT (A) HAS ERRED BY HOLDING THAT PROVISIONS OF SEC. 194C ARE APPLICABLE AND NOT THE PROVISIONS OF SECTION 194H AS HELD BY THE A . O WITHOUT APPRECIATING THE FACT THAT SUCH PAYMENTS MADE FOR THE USE OF THE CREDIT CARD IS SQUARELY COVERED BY THE DEFINITION OF 'COMMISSION OR BR OKERAGE' GIVEN IN EXPLANATION (I ) BELOW THE THIRD PROVISO TO SECTION 194H OF THE I.T. ACT, AND THEREBY ERRED IN DELETING THE SHORT DEDUCTION U/S.201 (1) . (II) ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE ID. CIT (A) HAS ERRED IN NOT APPRECIATING THE FACT THAT ANNUAL MAINTENANCE CONTRACT FOR COMPUTER SOFTWARE, AIR CONDITIONER AND PEST CONTROL REQUIRE TECHNICAL SKILL AND HUMAN ELEMENT AND ARE SUBJECTED TO TDS U/S. 19 4J AND NOT U/S. 194C OF THE ACT . (III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT (A) HAS ERRED IN DELETING THE SHORT DEDUCT ION ON HOARDING CHARGES U/S.194I OF THE ACT AND NOT CONSIDERING THE SAME AS 'RENT' BUT A 'WORK CONTRACT' U/S. 194C OF THE A CT . (IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE INTEREST U/S 201(1A) OF THE I. T . ACT, 1961, DETERMINED BY THE A . O AS THE TAX DETERMINED HAS ALREADY BEEN DELETED BY HER AND INTEREST DELETION IS CONSEQUENTIAL TO THE QUANTUM DELETION FOR WHICH FURTHER APPEAL HAS BEEN RECOMMENDED VIDE GROUND NOS. (I), (II) & (III). 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR MODIFY ANY GROUND WHICH MAY BE NECESSARY AT THE TIME OF THE HEARING O F THE CASE OR THEREAFTER. 3. THE ORDER OF THE CIT(A) BEING ERRONEOUS BE SET AS IDE AND A.O'S ORDER BE RESTORED. 1 8 . THE LD. D.R HAD ASSAILED BEFORE US THE ORDER OF THE CIT(A) , WHEREIN THE LATTER HAD SET ASIDE THE ORDER OF THE A.O HOLDING THE ASSESSEE AS BEING IN DEFAULT U/S S . 201(1)/201( 1A) FOR HAVING FAILED TO DEDUCT TAX A T SOURCE U/S. 194H IN RESPECT OF THE AMOUNT OF RS.1,03,80,808/ - RETAINED BY THE BANKS FOR FACILITATING SALE OF GOODS THROUGH CREDIT CARDS DURING THE YEAR UNDER CONSIDERATION . IT WAS AVERRED BY THE LD. D.R. THAT THE AMOUNTS RETAINED BY THE RESPECTIVE BANKS FOR PROVIDING THE FACILITY OF USE OF CREDIT CARD INTERNET P A G E | 18 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 GATEWAY TO THE ASSESSEE WAS SQU A RELY COVERED BY THE DEFINITION OF COMMISSION OR BROKERAGE CONTEMPLATED IN E XPLANATION (I) OF THE 3 RD PROVISO TO SECTION 194H . PER CONTRA, THE LD. A.R RELIED ON THE ORDER OF THE CIT(A) AND THEREIN SUBMITTED THAT THE LATTER HAD RIGHTLY HELD THAT THE AMOUNTS RETAINED BY THE RESPECTIVE BANKS FOR FACIL ITATING USE OF CREDIT CARD INTERNET GATEWAY COULD NOT BE CHARACTERIZED AS COMMISSION OR BROKERAGE, AND THUS THE ASSESSEE REMAINED UNDER NO OBLIGATION TO DEDUCT TAX AT SOURCE U/S. 194H. THE LD. A.R IN SUPPORT OF HIS AFORESAID CONTENTION RELIED ON AN ORD ER PASSED BY A COORDINATE BENCH OF ITAT, HYDERABAD , B ENCH B , IN THE CASE OF DCIT, HYDERABAD VS. M/S. VA H MAGNA RETAIL (P) LTD., HYD (ITA NO. 905/MUM/2011, DATED 10.04.2012, W HEREIN THE TRIBUNAL UPHOLD ING THE ORDER OF THE CIT(A) , HAD THEREIN CONCURRED WITH THE LATTERS VIEW THAT THE ASSESSEE WAS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S. 194H IN RESPECT OF THE COMMISSION RETAINED BY THE CREDIT CARD COMPANY, AND OBSERVED AS UNDER: - 1.8 ON GOING THROUGH THE NATURE OF TRANSACTIONS, I FI ND CO NSIDERABLE MERIT IN THE CONTENTION OF THE APPELLANT THAT COMM ISSION PAID TO THE CREDIT CARD COMPANIES CANNOT BE CON SIDERED AS FALLING WIT H IN THE PURVIEW OF S.194H. EVEN THOUGH THE DEFINITION OF THE TERM 'COMMISSION OR BROKERAGE' USED IN THE SA ID SECTION IS AN INCLUSIVE DEFINITION, IT IS CLEAR THAT THE LIABILITY TO M AKE TDS UNDER THE SAID SECTION ARISES ONLY WHEN A PERSON ACTS BEHALF OF ANOTHER PERSON. IN THE CASE OF COMMISSION RETAINED BY THE CREDIT CARD COMPANIES HOWEVER, IT CANNOT BE SAID THAT THE BA NK ACTS ON BEHALF OF THE MERCHANT ESTABLISHMENT OR THAT EVEN TH E MERCHANT ESTABLISHMENT CONDUCTS THE TRANSACTION FOR THE BANK. THE SALE MADE ON THE BASIS OF A CRED IT CARD IS CLEARLY A TRANSACTION THE MERCHANTS ESTABLISHMENT ONLY AND THE CREDIT CARD COMPANY ON LY FACILITATES THE ELECTRONIC PAYM ENT, FOR A CERTAIN CHARGE. THE COMMI SSION RETAINED BY THE CREDIT CARD COMPANY IS THEREFORE IN THE NATURE OF NORMAL BANK CHARGES AND NOT IN THE NATURE OF COMMISSION/BROKERAGE FOR A CTING ON BEHALF OF THE MERCHANT ESTABLISHMENT. ACCORDINGLY, CONCLUDING THAT THERE WAS NO REQUIREMENT FOR MAKING TDS ON THE 'COMMISSION RETAINED BY THE CREDIT CARD COMPANIES, T HE DISALLOWANCE OF RS.16,34,000 / - IS DELETED....... 1 9 . WE HAVE HEARD THE AUTHORIZED REPRESENTATIVE S FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PLACED ON RECORD IN RESPECT OF THE ISSUE UNDER CONSIDERATION. WE FIND THAT THE CIT(A) BY DRAWING AN ANALOGY FROM THE ORDER OF A COORDINATE BENCH OF THE TRIBUNAL VIZ. ITAT, MUMBAI IN THE CASE OF M/S. KOTA K SECURITIES LTD. (SUPRA) , HAD P A G E | 19 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 THEREIN CONCLUDED THAT ON THE FOOTING THAT AN ASSESSEE REMAINED UNDER NO OBLIGATION TO DEDUCT TAX AT SOURCE U/S. 194H IN RESPECT OF BANK GUARANTEE CHARGES, IT COULD THEREFORE SAFELY BE CONCLUD ED THAT NO SUCH LIABILITY WAS ALSO CAST ON THE ASSESSEE IN RESPECT OF THE AMOUNTS RETAINED BY THE CREDIT CARD COMPANY/BANKS FOR FACILITATING THE USE CREDIT CARD INTERNET GATEWAY TO THE ASSESSEE. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ISSUE UNDER CONSIDERATION AND FIND THAT THE SAME IS SQUARELY COVERED BY THE ORDER OF THE C OORDINATE BENCH OF THE ITAT, HYDERABAD IN THE CASE OF M/S VA H MAGNA RET AIL (P) LTD. ( S UPRA). WE THUS FINDING OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE TRIBUNAL IN THE AFORESAID CASE , AND FINDING NO INFIRMITY IN THE ORDER OF THE CIT(A) O N THE ISSUE UNDER CONSIDERATION THU S DISMISS THE G ROUND OF APPEAL NO. 1 (I) RA ISED BY THE DEPARTMENT BEFORE US. 20 . THE LD. D.R. FURTHER SUBMITTED THAT THE CIT(A) HAD ERRED IN CONCLUDING THAT THE PAYMENTS MADE BY THE ASSESSEE TOWARDS ANNUAL MAINTENANCE CONTRACT (AMC) FOR COMPUTER SOFTWARE, AIR CONDITIONER AND PEST CONTROL HAD RIGHTLY BEEN SUBJECTED TO DEDUCTION OF TAX AT SOURCE U/S. 194C, AND NO OBLIGATION WAS CAST UPON IT TO HAVE CARRIED OUT THE SAID DEDUCTION BY TAKING RECOURSE TO SECTION 194J. PER CONTRA, THE LD. A.R RELIED ON THE ORDER OF THE CIT(A) AND T HEREIN SUBMITTED THAT THE LATTER HAD RIGHTLY CONCLUDED THAT THE ASSESSEE WAS LIABLE FOR A DEDUCTION OF TAX AT SOURCE U/S. 194C AND THE APPLICABILITY OF THE PROVISIONS OF SECTION 194J STOOD EXCLUDED. 21 . WE HAVE HEARD THE A UTHORIZED REPRESENTATIVE S FOR BOT H THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PRODUCED BEFORE US IN RESPECT OF THE ISSUE UNDER CONSIDERATION . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE CONTENTION RAIS ED BY THE RESPECTIVE PARTIES AS REGARDS THE PAYMENTS MADE BY THE ASSESSEE TOWARDS AMC CHARGES IN RESPECT OF COMPUTER SOFTWARE, AIR CONDITIONER AND PEST CONTROL, AND RECORD OUR OBSERVATIONS AS REGARDS THE SAME , AS UNDER: - (I) AMC FOR COMPUTERS: - P A G E | 20 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 WE FIND THAT THE CIT(A) OBSERVING THAT AS EACH OF T HE RESPECTIVE PAYMENTS MADE BY THE VARIOUS RETAIL DEALERS OF THE ASSESSEE COMPANY IN RESPECT OF COMPUTER AMC WAS LOWER THAN RS.20,000/ - , THEREFORE , NO LIABILITY WAS CAST UPON IT FOR DEDUCTING TAX AT SOURCE. THAT DURING THE COURSE OF THE HEARING OF THE APPE AL NOT H ING WAS SUBMITTED BEFORE US BY THE LD. D.R TO DISLODGE THE AFORESAID FACTUAL OBSERVATIONS OF THE CIT(A). WE THUS , FINDING NO INFIRMITY WITH THE ORDER OF THE CIT(A) ON THE ISSUE UNDER CONSIDERATION , THEREFORE, UPHOLD THE SAME. (II) AMC FOR PEST CONTROL: - WE FIND THAT THE CIT(A) BEING OF THE CONSIDERED VIEW THAT THE PAYMENTS MADE BY THE ASSESSEE TOWARDS AMC FOR PEST CONTROL DID NOT INVOLVE ANY PROFESSIONAL OR TECHNICAL SERVICES, BUT AS DEFINITELY THERE WAS A CONTRACT OF WORK, THEREFORE , THE ASSESSEE HAD RIGHTLY DEDUCTED TAX AT SOURCE U/S. 194C , AND COULD NOT BE BROUGHT WITHIN THE SWEEP OF SECTION 194J. THE LD. D.R COULD NOT CONTROVERT THE AFORESAID OBSERV ATIONS OF THE CIT(A). WE FIND NO INFIRMITY IN THE AFORESAID OBSERVATIONS OF THE CIT( A) AND ARE PERSUADED TO BE IN AGREEMENT WITH HIM. WE THUS UPHOLD THE ORDER OF THE CIT(A) IN RESPECT OF THE AFORESAID ISSUE UNDER CONSIDERATION AND THEREIN HOLD THAT THE ASSESSEE COULD NOT BE HELD TO BE IN DEFAULT IN RESPECT OF SHORT/DEFICIT DEDUCTION OF TA X AT SOURCE IN RESPECT OF THE PAYMENTS MADE TOWARDS AMC FOR PEST CONTROL. (III) AMC FOR AIR CONDITIONER S : - WE FIND THAT THE CIT(A) HAD OBSERVED THAT AS THE PAYMENTS MADE TOWARDS THE AMC FOR AIR CONDITIONERS WAS BACKED BY A COMPOSITE CONTRACT OF SUPPLY OF SPARE PARTS AND SERVICES, THEREFORE, THE CASE OF THE ASSESSEE WAS SQUARELY COVERED BY THE PROVISIONS OF SECTION 194C AND COULD NOT BE BROUGHT WITHIN THE SWEEP OF SECTION 194J. THAT DURING TH E COURSE OF THE HEARING OF THE APPEAL THE LD. D.R. COULD NOT DISLODGE THE VALIDITY OF THE AFORESAID OBSERVATIONS. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ISSUE BEFORE US, AND ARE OF THE CONSIDERED VIEW THAT NOW WHEN THE AMC CHARGES FOR AIR CONDITIO NER S PAID BY THE ASSESSEE WERE IN TERM WITH THE CONT ENTS OF THE P A G E | 21 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 COMPOSITE CONTRACT FOR SUPPLY OF SPARE PARTS AND SERVICES, THEREFORE, AS OBSERVED BY THE CIT(A) , THE ASSESSEE HAD RIGHTLY D EDUCTED TAX AT SOURCE U/S. 194C AND COULD NOT BE HELD TO BE LIABLE FO R DEDUCTION OR TAX AT SOURCE U/S. 194J. WE THUS FINDING NO INFIRMITY IN THE ORDER OF THE CIT(A), THUS UPHOLD THE SAME IN RESPECT OF THE ISSUE UNDER CONSIDERATION. 2 2 . WE THUS IN LIGHT OF OUR AFORESAID OBSERVATIONS , FINDING OURSELVES AS BEING IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A) IN RESPECT OF THE AFOREMENTIONED RESPECTIVE PAYMENTS, VIZ. AMC FOR COMPUTERS, PEST CONTROL AND AIR CONDITIONERS, THUS UPHOLD HIS ORDER. THE G ROUND OF APPEAL NO. 1 (II) OF THE REVENUE IS DISMISSED. 2 3 . THAT THE REVENUE HAD FURTHER ASSAILED BEFORE US THE SETTING ASIDE BY THE CIT(A) OF THE ORDER OF THE A.O TREATING THE ASSESSEE AS BEING IN DEFAULT U/SS. 201(1)/201(1A) FOR SHORT/DEFICIT DEDUCTION OF TAX AT SOURCE UNDER SECTION 194C IN RESPECT OF HOARDING CHARGES PAID BY IT , AS THE SAME ATTRACTED THE PROVISIONS OF SECTION 194I. THAT AT THE VERY OUTSET OF THE HEARING OF THE APPEAL ON THE ISSUE UNDER CONSIDERATION, THE LD. A.R DREW OUR ATTENTION TO THE COPY OF THE CBDT C IRCULAR NO. 715 , DATED 08.08.1995 ( P AGE 1 - 3 OF APB), WHEREIN THE CBDT HAD HELD THAT AN ASSESSEE WOULD BE LIABLE TO DEDUCT TAX AT SOURCE IN RESPECT OF HOARDING CHARGES U/S. 194C AND NOT U/S. 194I OF THE ACT. THE LD. A.R. DREW OUR ATTENTION TO Q UESTION NO. 6 REPRODUCED IN THE AFORESAID CBDT CIRCULAR NO. 715 ( S UPRA) , WHICH READS AS UNDER: - QUESTION 6: WHETHER A CONTRACT FOR PUTTING UP A HOARDING WOULD BE COVERED UNDER SECTION 194C OR 194I OF THE ACT? ANSWER: THE CONTRACT FOR PUTTING UP A HOARDING IS IN THE NATURE OF ADVERTISING CONTRACT AND PROVISIONS OF SECTION 194C WOULD BE APPLICABLE. IT MAY, HOWEVER, BE CLARIFIED THAT IF A PERSON HAS TAKEN A PARTICULAR SPACE ON RENT AND THEREAFTER SUB L ETS THE SAME FULLY OR IN PART FOR PUTTING UP A HOARDING, HE WOUL D BE LIABLE TO TDS UNDER SECTION 194I AND NOT UNDER SECTION 194C OF THE ACT . IT WAS FURTHER SUBMITTED BY THE LD. A.R THAT THE CBDT IN ITS AFORESAID CIRCULAR HAD FURTHER OBSERVED THAT IF IN CASE THE ASSESSEE HAD FURTHER SUB - LET P A G E | 22 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 HIS RIGHT TOWARDS THE HOARDING, IT WAS ONLY THEN THE PROVISIONS OF SECTION 194I WOULD BE ATTRACTED. PER CONTRA, THE LD. D .R. THOUGH RELIED ON THE ORDER OF TH E A.O, BUT COULD NOT CONTROVERT THE AFORESAID CONTENTIONS OF THE ASSESSEE. WE FIND THAT THE CIT(A) WHILE ADJUDICATING THE AFORESAID ISSUE HAD SPECIFICALLY REFERRED TO AND RELIED UPON THE CBDT CIRCULAR NO. 715 (SUPRA), AND THEREIN OBSERVING THAT AS THE ASSESSEE HAD NOT SUB - LET THE HOARDING RI GHTS ACQUIRED BY IT , HAD THEREFORE HELD THAT THE ASSESSEE WAS NOT LIABLE FOR DEDUCTI ON OF TAX AT SOURCE UNDER SECTION 194C. 24 . WE HAVE HEARD THE A UTHORIZED R EPRESENTATIVE S FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE ARE NOT OBLIVIOUS OF THE FACT THAT THE BENEVOLENT CIRCULARS ISSUED BY THE CBDT ARE BINDING ON THE DEPARTMENT, AND THERE CAN BE NO ESCAPE ON THE PART OF THE DEPARTMENT TO GIVE E FFECT TO THE SAME. WE THUS ARE OF THE CONSIDERED VIEW THAT NOW WHEN THE C BDT ITSELF HAD HELD THAT THE ASSESSEE WOULD BE LIABLE FOR DEDUCTION OF TAX AT SOURCE IN RESPECT OF HOARDING CHARGES U NDER SEC. 194C, WITH THE SOLE EXCEPTION THAT WHERE SUCH HOARDING RIGHTS ARE SUB - LET BY THE ASSESSEE, THE DEDUCTION OF TAX AT SOURCE IN SUC H CASES WOULD BE UNDER SEC. 194I . WE ARE OF THE CONSIDERED VIEW THAT NOW WHEN THE ASSESSEE HAD PAID THE HOARDING CHARGES IN RESPECT OF ADVERTISEMENTS CARRIED OUT IN RESPECT OF ITS PRODUCTS, AND HAD AT NO STAGE SUB - LET ITS HOARDING RIGHTS, THEREFORE , TH E CASE OF THE ASSESSEE DOES NOT FALL IN THE AFORESAID EXCEP TION AND IT WOULD REMAIN LIABLE FOR DEDUCTION OF TAX AT SOURCE IN RESPECT OF THE PAYMENTS MADE TOWARDS HOARDING CHARGES U/S. 194C. WE THUS FINDING NO INFIRMITY IN THE ORDER OF THE CIT(A) , THUS UPHOLD THE SAME. THE GROUND OF APPEAL NO. 1 (III) RAISED BY THE REVENUE IS DISMISSED. 2 5 . THAT THE REVENUE HAD FURTHER BY WAY OF RAISING G ROUND OF APPEAL NO. 1 (IV) ASSAILED THE ORDER OF THE CIT(A) , ON THE GROUND THAT THE LATTER HAD ERRED IN DELETING THE INTEREST U/S. 201(1A) DETERMINED BY THE A.O . I T WAS AVERRED BY THE LD. D.R. TH AT NOW WHEN THE TAX LIABILITY DETERMINED U/S. 201(1) HAD ALREADY BEEN DELETED BY THE CIT(A) , THEREFORE, DELETION OF INTEREST CHARGED U/S. 201(1 A) WOULD MERELY BE CONSEQUENTIAL IN NATURE. WE ARE UNABLE TO P A G E | 23 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 AGREE WITH THE AFORESAID CONTENTION SO RAISED BEFORE US, AS WE FIND THAT IT IS ONLY WHERE THE CIT(A) HAD DELETED THE DEMAND TOWARDS TAX RAISED IN THE HANDS OF THE ASSESSEE U/S. 201(1), THAT A FURTHER DIRECTION FOR DELETION OF TH E CONSEQUENTIAL INTEREST CHARGED U/S. 201(1A) HAD BEEN GIVEN BY HER . WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) HAD SEPARATELY GIVEN A DIRECTION FOR DELETION OF INTE REST U/S. 201(1A) FOR THE REASON THAT WHILE GIVING EFFECT TO HER ORDER , THE OFFICE OF THE A.O MAY NOT RESTRICT THE RELIEF ONLY WITH RESPECT TO THE DEMAND RAISED TOWARDS TAX U/S. 201(1). WE FIND NO INFIRMITY IN THE AFORESAID FINDINGS OF THE CIT(A) IN ISSUING A CLEAR AND SPECIFIC DIRECTION FOR DELETION OF INTEREST U/S. 201(1A), BECAUSE IN C ASE THE DEMAND TOWARDS TAX LIABILITY RAISED U/S. 201(1) WOULD BE REVIVED AT ANY STAGE , THEN THE CHARGE OF THE INTEREST U/S. 201 (1A) , BEING CONSEQUENTIAL IN NATURE , WOULD ALSO STAND REVIVED. WE THUS DISMISS THE G ROUND OF APPEAL NO. 1 (IV) RAISED BY THE REVENUE. 2 6 . THE G ROUND S OF APPEAL NO. 2 AND 3 RAISED BY THE REVENUE ARE GENERAL IN NATURE, THEREFORE , THE SAME ARE TREATED AS NOT PRESSED. THE APPEAL OF THE REVENUE IS THUS DISMISSED. 2 7 . THAT WHILE FOR THE APPEAL OF THE ASSESSEE FOR A.Y. 2009 - 10 , MARKED AS ITA NO. 1460/MUM/2014 IS PARTLY ALLOWED, THE APPEAL OF THE REVENUE, MARKED AS ITA NO. 1263 /MUM/2014 IS DISMISSED. A.Y. 2010 - 11 ITA NO. 1461/MUM/2014 2 8 . WE NOW ADVERT TO THE APPEAL OF THE ASSESSEE FOR A.Y. 2010 - 11. THE ASSESSEE HAD ASSAILED BEFORE US THE ORDER OF THE CIT(A) , WHEREIN THE LATTER HAD UPHELD THE ORDER OF THE A.O TREATING THE ASSESSEE AS BEING IN DEFAULT U/S S . 201(1)/201(1A) IN RESPECT OF CERTAIN PAYMENTS. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) , HAD THEREIN RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL : - 1. ON THE FACTS & CIRCUMSTANCE S OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THAT THE PROVISIONS OF SECTION 201(1) OF INCOME TAX ACT, 1961 IS APPLICABLE AND TREATING THE APPELLANT AS ASSESSEE IN DEFAULT BY INVOKIN G THE PROVISIONS OF P A G E | 24 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 SECTION 194 J IN RESPECT OF THE PAYMENT FOR WEB POSTING CHARGES AMOUNTING TO RS. 6,88,53 5/ - . THE APPELLANT PRAYS THAT THE CONCLUSION REACHED BY THE LEARNED ASSESSING OFFICER IS ERRONEOUS AS THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE U/S 194 J ON THE PAYMENT OF ANNUAL MAINTENANCE CONTRACTS. 2 . ON THE FACTS & CIRCUMSTANC ES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THAT THE PROVISIONS OF SECTION 201(1 ) OF INCOME TAX ACT, 1961 AND TREATING THE APPELLANT AS ASSESSEE IN DEFAULT BY INVOKIN G THE PROVISIONS OF SECTION 194 J IN RESPECT OF THE P AYMENT F OR RENEWAL OF SAP LICENS E OF RS. 4,13,764/ - . THE APPELLANT PRAYS THAT THE CONCLUSION REACHED BY THE LEARNED ASSESSING OFFICER IS ERRONEOUS AS THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE U/S 194 J ON THE PAYMENT OF ANNUAL MAINTENANCE CONTRACTS. 3. ON THE FACTS & CIRCUMSTANCE S OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE LEVY OF INTEREST U/S 201(1A) OF INCOME T AX ACT, 1961. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED CONFIRMING THE LEVY OF IN TEREST U/S. 201(1A) FOR A PERIOD OF 39 MONTHS IN RESPECT OF THE TAX DETERMINE U/ S. 201 IN RESPECT OF THE TWO ITEMS REFERRED TO THE GROUND NO. 1 & 2 ABOVE. THE APPELLANT PRAYS THAT THE LEVY OF INTEREST AS COMPUTED BY THE ASSESSING OFFICER IS NOT JUSTIFIED AND BE DELETED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND THE GROUNDS OF APPEAL WHICH ARE WITHOUT PREJUDICE TO ONE OTHER . 2 9 . THAT AT THE VERY OUTSET OF THE HEARING OF THE APPEAL IT WAS AVERRED BY THE LD. A.R THAT THE G ROUND S OF APPEAL NO. 1 TO 4 RAISED IN THE PRESENT APPEAL OF THE ASSESSEE ; THEREIN INVOLVED THE SAME ISSUE S AS HAD BEEN RAISED BY THE ASSESSEE IN ITS APPEAL FOR A.Y. 2009 - 10, MARKED AS ITA NO. 1460/ MUM/2014, VIDE G ROUND S OF APPEAL NO. 1 TO 4 RAISED IN THE SAID A PPEAL. THE LD. D.R HAD NOT CONTROVERTED THE AFORE SAID FACTUAL POSITION. 30 . WE HAVE PERUSED THE RECORDS AND FIND THAT AS THE ISSUE S INVOLVED IN THE PRESENT APPEAL OF THE ASSESSEE ARE THE SAME AS THOSE INVOLVED IN ITS APPEAL FOR A.Y. 2009 - 10, MARKED AS ITA NO. 1460/MUM/2014, THEREFORE , THE ORDER PASSED BY US WHILE DISPOSING OF THE G ROUND S OF APPEAL NO. 1 TO 4 IN THE APPEAL OF THE ASS ESSEE FOR A.Y . 2009 - 10 , MARKED AS ITA NO. 1460/MUM/2014, SHALL APPLY MUTATIS MUTANDIS IN THE PRESENT APPEAL. TH AT IN TERMS OF OUR AFORESAID OBSERVATIONS, TH E P A G E | 25 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 G ROUND OF APPEAL NO. 1 IS ALLOWED , G ROUND OF APPEAL NO. 2 IS ALLOWED, G ROUND OF APPEAL NO. 3 IS DISMISSED AS BEING RENDERED INFRUCTUOS AND T HE GROUND OF APPEAL NO. 4 BEING GENERAL IN NATURE IS DISMISSED. 31 . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. A.Y.2010 - 11 ITA NO. 1264 /MUM/2014 32 . WE NO W TAKE UP THE APPEAL FILE D BY THE REVENUE FOR A.Y. 2010 - 11. THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) SETTING ASIDE THE ORDER OF THE A.O TREATING THE ASSESSEE AS BEING IN DEFAULT U/S S . 201(1)/201(1A) , IN RESPECT OF CERTAIN AMOUNTS, HAD THEREIN CARRIED THE MATTER IN APPEAL BEFORE US. THE REVENUE ASSAILING THE OR DER OF THE CIT(A) HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: - 1. GROUNDS OF APPEAL (I ) ON T HE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT (A) HAS ERRED BY HOLDING THAT PROVISIONS OF SEC. 194C ARE APPLICABLE AND NOT THE PROVISIONS OF SECTION 194H AS HELD BY THE A . O WITHOUT APPRECIATING THE FACT THAT SUCH PAYMENTS MADE FOR THE USE OF THE CREDIT CARD IS SQUARELY COVERED BY THE DEFINITION OF 'COMMISSION OR BROKERAGE' GIVEN IN EXPLANATION (I) BELOW THE THIRD PROVISO TO SECTION 194H OF THE I . T. ACT, AND THEREBY ERRED IN DELETING THE SHORT DEDUCTION U/S.201 (1) . (II) ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE ID. CIT (A) HAS ERRED IN NOT APPRECIATING THE FACT THAT ANNUAL MAINTENANCE CONTRACT FOR COMPUTER SOFTWARE, AIR CONDITIONER AND PEST CONTROL REQUIRE TECHNICAL SKILL AND HUMAN ELEMENT AND ARE SUBJECTED TO TDS U/S. 19 4J AND NOT U/S. 194C OF THE ACT . (III) ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE ID. CIT (A) HAS ERRED IN DELETING THE SHORT DEDUCTION ON HOARDING CHARGES U/S.194I OF THE ACT AND NOT CONSIDERING THE SAME AS 'RENT' BUT A 'WORK CONTRACT' U/S. 194C OF THE ACT . (IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE INTEREST U/S 201(1 A) OF THE I . T . ACT, 1961, DETERMINED BY THE A . O AS THE TAX DETERMINED HAS P A G E | 26 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 ALREADY BEEN DELETED BY HER AND INTEREST DELETION IS CONSEQUENTIAL TO THE QUANTUM DELETION FOR WHICH FURTHER APPEAL HAS BEEN RECOMMENDED VIDE GROUND NOS. (I), (II) & (III). 2. THE APPELLANT CRAVES LEAVE TO ADD, AM END, ALTER OR MODIFY ANY GROUND WHICH MAY BE NECESSARY AT THE TIME OF THE HEARING OF THE CASE OR THEREAFTER. 3. THE ORDER OF THE CIT(A) BEING ERRONEOUS BE SET AS IDE AND A.O'S ORDER BE RESTORE. 3 3 . THAT IT WAS SUBMITTED BY THE LD. AUTHORIZED R EPRESENTATIVES FOR BOTH THE PARTIES THAT THE G ROUND S OF APPEAL NO. 1 TO 3 RAISED BY THE REVENUE IN THE PRESENT APPEAL WERE THE SAME AS WERE INVOLVED IN THE APPEAL OF THE REVENUE FOR A.Y. 2009 - 10, MARKED AS ITA NO. 126 3 /MUM/2014. 3 4 . WE HAVE PERUSED THE RECORDS AND FIND THAT AS THE ISSUE S INVOLVED AND THE GROUNDS OF APPEAL NO. 1 TO 3 RAISED BEFORE US IN THE PRESENT APPEAL OF THE REVENUE ARE THE SAME AS WERE TH ERE BEFORE US IN THE APPEAL FILED BY THE REVENUE FOR A.Y. 2009 - 10, THEREFORE , THE ORDER PASSED BY US WHILE DISPOSING OF THE G ROUND S OF APPEAL NO. 1(I) TO (IV), G ROUND OF APPEAL NO.2 , AND G ROUND OF APPEAL NO. 3 , SHALL APPLY MUTATIS MUTANDIS FOR ADJUDICATING THE RESPECTIVE GROUND S OF APPEAL INVOLVED IN THE APPEAL OF THE REVENUE FOR A.Y. 2010 - 11,MARKED AS ITA NO. 1264/MUM/2014. THUS THE GROUNDS OF APPEAL NO. 1(I) TO (IV), GROUND OF APPEAL NO. 2 AND GROUND O F APPEAL NO 3 RAISED BY THE REVENUE BEFORE US IN THE PRESENT APPEAL ARE DISMISSED . 3 5 . THE APPEAL OF THE REVENUE FOR A.Y. 2010 - 11, MARKED AS ITA NO. 1264/MUM/2014 IS DISMISSED IN TERMS OF OUR AFORESAID OBSERVATIONS. 3 6 . THAT THE APPEAL OF THE ASSESSEE FOR A.Y. 2010 - 11, MARKED AS ITA NO. 1461/MUM/2014 IS PARTLY ALLOWED , THE APPEAL OF THE REVENUE, MARKED AS ITA NO. 1264/MUM/2014 IS DISMISSED. A.Y.2011 - 12 ITA NO. 1462/MUM/2014 P A G E | 27 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 3 7 . WE N OW TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y. 2011 - 12. THE ASSESSEE AS S AILING THE ORDER OF THE CIT(A) , WHEREIN THE LATTER HAD UPH E LD THE ORDER OF THE A.O TREATING THE ASSESSEE AS BEING IN DEFAULT U/S S . 201(1)/201(1A) IN RESPECT OF CERTAIN AMOUNTS, HAD THEREIN CARRIED THE MATTER IN APPEAL BEFORE US. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: - 1. ON FACTS & CIRCUMSTANC ES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THAT THE PROVISIONS OF SECTION 201(1) OF INCOME TAX ACT, 1961 IS APPLICABLE AND TREATING THE APPELLANT AS ASSESSEE IN DEFAULT BY INVOKIN G THE PROVISIONS OF SECTION 194 J IN RESPECT OF THE PAYMENT FOR WEB POSTING CHARGES AMOUNTING TO RS. 5,28,850/ - . THE APPELLANT PRAYS THAT THE CONCLUSION REACHED BY THE L EARNED ASSESSING OFFICER IS ERRONEOUS AS THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE U/S 194 J ON THE PAYMENT OF ANNUAL MAINTENANCE CONTRACTS. 2. ON THE FACTS & CIRCUMSTANCE S OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THAT THE PROVISIONS OF SECTION 201(1) OF INCOME TAX ACT, 1961 AND TREATING THE APPELLANT AS ASSESSEE IN DEFAULT BY INVOKIN G THE PROVISIONS OF SECTION 194 J IN RESPECT OF THE P AYMENT FOR RENEWAL OF SAP LICENS E OF RS. 5,27,240/ - . THE APPELLANT PRAYS THAT THE CONCLUSION REACHED BY THE LEARNED ASSESSING OFFICER IS ERRONEOUS AS THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE U/S 194 J ON THE PAYMENT OF ANNUAL MAINTENANCE CONTRACTS. 3. ON THE FACTS & CIRCUMSTANCE S OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THAT THE PROVISIONS OF SECTION 201(1 ) OF INCOME TAX ACT, 1961 AND TREATING THE APPELLANT AS ASSESSEE IN DEFAULT BY INVOKIN G THE PROVISIONS OF SECTION 194 J IN RESPECT OF THE PAYMENT FOR SAP RESOURCE DEPLOYMENT CH ARGES AMOUNTING TO RS. 25,000/ - . THE APPELLANT PRAYS THAT THE CONCLUSION REACHED BY THE LEARNED ASSESSING OFFICER IS ERRONEOUS AS THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE U/S 194 J ON THE PAYMENT OF ANNUAL MAINTENANCE CONTRACTS. 4. ON THE FACTS & CIRCUMSTANCE S OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE LEVY OF INTEREST U/S 201(1 A) OF INCOME TA X ACT, 196 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED CONFIRMING THE LEVY OF INTEREST U/S. 201 (1 A) FOR A PERIOD OF 39 MONTHS IN RESPECT OF THE TAX DETERMINE U/S. 201 IN RESPECT OF THE TWO ITEMS REFERRED TO THE GROUND NO. 1 ,2 &3 ABOVE. THE APPELLANT PRAYS THAT THE LEVY OF INTEREST AS COMPUTED BY THE ASSESSING OFFICER IS NOT JUSTIFIED AND BE DELETED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND THE GROUNDS OF APPEAL WHICH ARE WITHOUT PREJUDICE TO ONE OTHER. P A G E | 28 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 3 8 . WE FIND THAT THE G ROUND OF APPEAL NO.1, G ROUND OF APPEAL NO.2 , GROUND OF APPEAL NO. 4 AND G ROUND OF APPEAL NO.5 RAISED BY THE ASSESSEE IN ITS PRESENT APPEAL FOR A.Y 2011 - 12, MARKED AS ITA NO. 1462/ M UM/2014, ARE THE SAME AS WER E RAISED BY THE ASSESSEE AS G ROUND OF APPEAL NO. 1, G ROUND OF APPEAL NO. 2 , G ROUND OF APPEAL NO. 3 AND GROUND OF APPEAL NO. 4, RESPECTFULLY, IN ITS APPEAL FILED BEFORE US FOR A.Y. 2009 - 1 0 , MARKED AS ITA NO. 1460 / MUM/2014 . THAT IN LIGHT OF THE AFORESAID FACTUAL POSITION , OUR ORDER PASSED WHILE DISPOSING OF G ROUND OF APPEAL NO. 1, G ROUND OF APPEAL NO. 2 , GROUND OF APPEAL NO. 3 AND GROUND OF APPEAL NO. 4 , IN THE APPEAL OF THE ASSESSEE FOR AY : 2009 - 10, MARKED AS ITA NO. 1462/MUM/2014, SHALL APPLY MUTATIS MUTANDIS FOR ADJUDICATING THE G ROUND OF APPEAL NO. 1, G ROUND OF APPEAL NO. 2 , GROUND OF APPEAL NO. 4 A ND GROUND OF APPEAL NO. 5, RESPECTIVELY, I N THE PRESENT APPEAL OF THE ASSESSEE FOR A.Y. 2011 - 12, MARKED AS ITA NO. 1462/MUM/2014. THAT IN TERMS OF OUR AFORESAID OBSERVATIONS, THE GROUND OF APPEAL NO. 1 IS ALLOWED , GROUND OF APPEAL NO. 2 IS ALLOWED , GROUND OF APPEAL NO. 4 IS DISMISSED AS INFRUCTUO U S AND THE GROUND OF APPEAL NO. 5 BEING GENERAL IN NATURE IS DISMISSED. 3 9 . THE ASSESSEE VIDE G ROUND OF APPEAL NO. 3 RAISED IN THE PRESENT APPEAL , HAD ASSAILED THE ORDER OF THE CIT(A) , WHEREIN THE LATTER HAD SUSTAINED THE ORDER OF THE A.O TREATING THE ASSESSEE AS BEING IN DEFAULT U/S. 2 01(1) IN RESPECT OF THE PAYMENT MADE FOR SAP RESOURCE DEPLOYMENT CHARGES. IT HAD BEEN AVERRED BY THE LD. A.R THAT AS THE PAYMENT MADE TOWARDS SAP RESOURC E DEPLOYMENT CHARGES AMOUNTED TO RS.25,000/ - , THEREFORE, IT WAS NOT LIABLE FOR DEDUCTION OF ANY TAX AT SOURCE IN RESPECT OF THE AFORESAID AMOUNT U/S. 194J. 40 . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE AFORESAID CONTENTION SO RAISED BY THE LD. A .R . WE ARE OF THE CONSIDERED VIEW THAT NOW WHEN WE HAVE ALLOWED THE GROUND OF APPEAL NO. 2 RAISED BY THE ASSESSEE BEFORE US, AND THEREIN CONCLUDED THAT IT WAS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER SEC. 194J IN RESPECT OF THE FEE PAID FOR RENEWAL OF SAP LICENSE, THEREFORE, THE AFORESAID G ROUND OF APPEAL NO. 3 RAISED BY THE ASSESSEE P A G E | 29 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 WOULD BE RENDERED AS ACADEMIC. WE THUS HOLDING THAT THE GROUND OF APPEAL NO. 3 RAISED BY THE ASSESSEE BEFORE US IS RENDERED AS ACADEMIC IN NATURE, THEREFORE , REFRAIN FROM ADJUDICATING THE SAME. THE GROUND OF APPEAL NO. 3 IS DISMISSED IN TERMS OF OUR AFORESAID OBSERVATIONS. 41 . THE APPEAL OF THE ASSESSEE FOR A.Y. 2011 - 12, MARKED AS ITA NO. 1462/MUM/2014 IS PARTLY ALLOWED , IN TERMS OF OUR AFORESAID OBSERVATIONS . A.Y. 2011 - 12 ITA NO. 1265/MUM/2014 4 2 . WE N OW TAKE UP THE APPEAL OF THE REVENUE FOR A.Y. 2011 - 12 , MARKED AS ITA NO. 1265/MUM/2014 . THE R EVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A), WHEREIN THE LATTER HAD SET ASIDE THE ORDER OF THE A.O TREATING THE ASSESSEE AS BEING IN DEFAULT U/S S . 201(1)/201(1A) IN RESPECT OF CERTAIN AMOUNTS , HAD THEREIN CARRIED THE MATTER IN APPEAL BEFORE US. THE REVENUE HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: - 1. GROUNDS OF APPEAL: - (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) HAS ERRED BY HOLDING THAT PROVISIONS OF SEC. 194C ARE APPLICABLE AND NOT THE PROVISIONS OF SECTION 194H AS HELD BY THE A.O WITHOUT APPRECIATING THE FACT THAT SUCH PAYMENTS MADE FOR THE USE OF THE CREDIT CARD IS SQUARELY COVERED BY THE DEFINITION OF 'COMMISSION OR BROKERAGE' GIVEN IN EXPLANATION (I) BELOW THE THIRD PROVISO TO SECTION 194H OF THE I.T. ACT, AND THEREBY ERRED IN DELETING THE SHORT DEDUCTION U/S 201(1). (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT (A) HAS ERRED IN NOT APPRECIATING THE FACT THAT ANNUAL MAINTENANCE CONTRACT FOR COMPUTER SOFTWARE, AIR CONDITIONER AND PEST CONTROL REQUIRE TECHNICAL SKILL AND HUMAN ELEMENT AND ARE SUBJECTED TO TDS U/S. 19 4J AND NOT U/S. 194C OF THE ACT . (III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT (A) HAS ERRED IN DELETING THE SHORT DEDUCTION ON HOARDING CHARGES U/ S.1941 OF THE ACT AND NOT CONSIDERING THE SAME AS 'RENT' BUT A 'WORK CONTRACT' U/S.194C OF THE ACT. ( IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE INTEREST U/S 201(1 A) OF THE I . T . ACT, 1961, DETERMINED BY THE A . O AS THE TAX DETERMINED HAS ALREADY BEEN D ELETED BY HER AND INTEREST DELETION IS CONSEQUENTIAL TO THE P A G E | 30 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 QUANTUM DELETION FOR WHICH FURTHER APPEAL HAS BEEN RECOMMENDED VIDE GROUND NOS. (I), (II) & (III). 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR MODIFY ANY GROUND WHICH MAY BE NECESSARY AT THE TIME OF THE HEARING OF THE CASE OR THEREAFTER. 3. THE ORDER OF THE CIT(A) BEING ERRONEOUS BE SET AS IDE AND A.O'S ORDER BE RESTORED. 4 3 . WE FIND THAT THE G ROUND S OF APPEAL NO. 1 TO 3 RAISED BY THE REVENUE BEFORE US IN THE PRESENT APPEAL FOR A.Y. 2011 - 12, MARKED AS ITA NO.1265/MUM/2014 INVOLVE S TH E SAME ISSUE S AS WERE RAISED BEFORE US BY THE REVENUE IN ITS APPEAL FOR A.Y. 2009 - 10, MARKED AS ITA NO. 1263/MUM/2014 . THUS IN LIGHT OF THE AFORESAID FACTUAL POSITION, WE HEREIN DIRECT THAT OUR ORDER PASS ED WHILE DISPOSING OF THE G ROUND OF APPEAL NO. 1(I) TO (IV), G ROUND OF APPEAL NO. 2 AND G ROUND OF APPEAL NO.3 IN THE APPEAL OF THE REVENUE FOR A.Y. 2009 - 10, MARKED AS ITA NO. 1263/MUM/2014 , SHALL APPLY MUTATIS MUTANDIS FOR DISPOSING OF THE PRESENT APPEAL O F THE REVENUE FOR A.Y. 2011 - 12. THE G ROUN D OF APPEAL 1(I) TO (IV) , G ROUND OF APPEAL NO.2 AND G ROUND OF APPEAL NO. 3 RAISED BY THE REVENUE BEFORE US ARE DISMISSED . 4 4 . TH E APPEAL OF THE REVENUE FOR A.Y. 2011 - 12, MARKED AS ITA NO. 1265/MUM/2014 BEFORE US IS DISMISSED . 4 5 . THAT THE APPEAL OF THE ASSESSEE FOR AY: 2011 - 12, MARKED AS ITA NO. 1462/MUM/2014 IS PARTLY ALLOWED, THE APPEAL OF THE REVENUE, MARKED AS ITA NO. 1265/MUM/2014 IS D ISMISSED. A.Y. 2012 - 13 ITA NO. 3528/MUM/201 5 4 6 . WE SHALL NOW TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y. 2012 - 13, MARKED AS ITA NO. 3528/MUM/2015, WHEREIN THE LATTER HAD ASSAIL ED BEFORE US THE ORDER OF THE CIT(A) UPHOLDING THE ORDER PASSED BY THE A.O TREATING THE ASSESSEE AS BEING IN DEFAULT U/S S . 201( 1)/201(1A) IN RESPECT OF CERTAIN P A G E | 31 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 PAYMENTS . THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS & CIRCUM STANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CON FIRMING THAT THE PROVISIONS OF SECTION 201(1) OF INCOME TAX ACT, 1961 IS APPLICABLE AND TREATING THE APPELLANT AS ASSESSEE IN DEFAULT BY INVOKING THE PROVISIONS OF SEC TION 194 J IN RESPECT OF THE PAYMENT OF ANNUAL MAINTENANCE CHARGES . PN MAINTENANCE OF SOFTWARE AMOUNTING TO RS.9,91,912/ - . THE APPELLANT PRAYS THAT THE CONCLUSION REACHED BY THE LEARNED ASSESSING OFFICER IS ERRONEOUS AS THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE U/S 194 J ON THE PAYMENT FOR RENEWAL OF ANNUAL MAINT ENANCE CHARGES ON MAINTENANCE OF SOFTWARE . 2. WITHOUT PREJUDICE TO GROUND NO.1, THE APPELLANT PRAYS THAT THE PROVISIONS OF SECTION 201(1) OF THE INCOME TAX, 1961 MAY NOT BE INVOKED, AS THE RECIPIENT OF THE AMOUNT HAS PAID THE TAX ON THE PAYMENTS MADE TO THEM AND FOLLOWING THE RATIO OF THE HON BLE SUPREME COURT DECISION IN THE CASE OF HINDUSTAN COCA COLA V/S. CIT, NO LIABILITY BE CAST UPON THE APPELLANT U/S. 201(1). 3. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE LEVY OF INTEREST U/S. 201(1A) OF THE INCOME T AX ACT, 1961. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE LEVY OF INTEREST U/S. 201(1A) FOR A PERIOD OF 36 MONTHS IN RESPECT OF THE TAX DETERMINED U/S.201 IN RESPECT OF THE GROUND NO. 1 ABOVE. THE APPELLANT PRAYS THAT THE LEVY OF INTEREST AS COMPUTED BY ASSESSING OFFICER IS NOT JUSTIFIED AND BE DELETED. 4. ON THE FACTS & CIRCUMSTANCE S OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONF IRMING THAT THE PAYMENTS MADE M/ S. MAKANI CREATIVES PVT. LTD. ARE IN THE NATURE OF RETAINERSHIP FEES LIABLE TO DEDUCTION OF TAX UNDER SECTION 194J. THE APPELLANT PRAYS THAT ALL THE PAYMENTS MADE TO M/S. MAKANI CREATIVES PVT. LTD. INCLUDING MONTHLY LUMP SUM PAYMENTS ARE IN THE NATURE OF CONTRACTUAL PAYMENTS AND ARE NOT PROFESSIONAL FEES. THE APPELLANT FURTHER PRAYS THAT CONCLUSION REACHED BY LEARNED ASSESSING OFFICER IS ERRONEOUS AND CONTRARY TO THE FACTS. 5. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE LEVY OF INTEREST AT RS.12,53,145/ - U/S 201(1A) OF INCOME TAX ACT, 1961 BY INVOKING THE PR OVISIONS OF SECTION 194 J. THE APPELLANT PRAYS THAT THE DEMAND RAISED BY LEARNED ASSESSING OFFICER LEVYING THE INTEREST MAY BE DELETED. 6 . ON THE FACTS & CIRCUMSTANCES OF THE CASE AND WITHOUT PREJUDICE TO THE CLAIM THAT APPELLANT IS NOT LIABLE TO DEDUCT TAX AT SOURCE U/S.194J AND PAY INTEREST U/S 201(1A), TH E COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED IN CONFIRMING LEVY OF INTEREST FOR 18 MONTHS AMOUNTING TO RS.12,53,145/ - IN RESPECT OF PAYMENT TO M/S. MAKANI P A G E | 32 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 CREATIVES PVT. LTD. THE APPELLANT PRAYS THAT LEVY OF INTEREST IS NOT JUSTIFIED AND BE DELETED. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND THE GROUNDS OF APPEAL WHICH ARE WITHOUT PREJUDICE TO ONE OTHER . 4 7 . THE A.O TREATING THE ASSESSEE AS BEING I N DEFAULT U/S S . 201(1)/201(1A) FOR HAVING CARRIED OUT SHORT/DEFICIT DEDUCTION OF TAX AT SOURCE IN RESPECT OF PAYMENTS MADE TOWARDS AMC O F COMPUTERS BY WRONGLY RESORTING TO THE PROVISION S OF SECTION 194C, AS AGAINST THE STATUTORY OBLIGATION CAST UPON IT TO DEDUCT TAX AT SOURCE U/S. 194J, HAD THUS HELD THE LATTER AS BEING IN DEFAULT IN RESPECT OF PAYMENTS OF RS.9,91,912/ - (OUT OF TOTAL PAYMENT OF RS. 19,97,978/ - ) . THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE A.O , CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT AS IT HAD MADE PAYMENTS TOWARDS AMC OF COMPUTERS PURSUANT TO A COMPOSITE CONTRACT , WHICH INCLUDED SUPPLY OF MATERIAL AND SERVICES, THEREFORE, IT WAS LIABLE TO DEDUCT TAX AT SOURCE U/S. 194C AND DID NOT FALL WITHIN THE PURVIEW OF SECTION 194J , AS HELD BY THE A.O . ALTERNATIVELY, IT WAS SUBMITTED BEFORE THE CIT(A) THAT EVEN OTHERWISE AS THE RESPECTIVE PAYEE S HAD PAID THE TAXES ON THE AFORESAID AMOU NT S RECEIVED FROM THE ASSESSEE COMPANY, THEREFORE , IN LIGHT OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD. (SUPRA) , T HE ASSESSEE COULD NOT BE TREATED AS BEING IN DEFAULT U/S. 201(1) IN RESPECT OF THE AF ORESAID AMOUNT OF RS.9,91,912/ - (SUPRA) SO PAID BY IT TOWARDS AMC OF COMPUTERS. THE LD. CIT(A) HOWEVER DID NOT FIND HIMSELF TO BE IN AGREEMENT WITH THE SUBMISSIONS OF THE ASSESSEE AND UPHELD THE ORDER OF THE A.O ON THE ISSUE UNDER CONSIDERATION . 4 8 . THE A SSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD THEREIN CARRIED THE MATTER IN APPEAL BEFORE US. THAT AT THE VERY OUTSET IT WAS SUBMITTED BY THE ASSESSEE THAT AS IT HAD MADE PAYMENTS TOWARDS AMC FOR COMPUTERS ON THE BASIS OF A COMPOSITE CONTRACT FOR SUPPLY OF SPARE PARTS AND SERVICES , THEREFORE, IT WAS LIABLE FOR DEDUCTION FOR TAX AT SOURCE U/S. 194C , AND THE APPLICABILITY OF THE PROVISIONS OF SECTION 194 J STOOD CLEARLY EXCLUDED. ALTERNATIVELY, IT WAS SUBMITTED BY THE LD. A.R T HAT EVEN OTHERWISE P A G E | 33 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 AS THE RESPECTIVE PAYEES TO WHOM PAYMENTS HAD BEEN MADE TOWARDS AMC CHARGES HAD DULY INCLUDED THE SAME IN THEIR RETURN OF INCOME AND PA ID TAXES ON THE SAME, THEREFORE , IN LIGHT OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F HINDUSTAN COCA COLA BEVERAGES PVT. LTD.(SUPRA), THE SAID TAX LIABILITY COULD NOT ONCE AGAIN BE RECOVERED FROM THE ASSESSEE COMPANY. PER CONTRA, THE LD. D.R. RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND THEREIN SUBMITTED THAT AS THE ASSESSEE HAD FAIL ED TO DEDUCT TAX AT SOURCE U/S. 194J, THEREFORE , IT HAD RIGHTLY BEEN HELD AS BEING IN DEFAULT IN RESPECT OF SHORT/DEFICIT DEDUCTION OF TAX AT SOURCE . 4 9 . WE HAVE HEARD THE AUTHORIZED R EPRESENTATIVE S FOR BOTH THE PARTIES , PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD . W E FIND THAT THE CIT(A) AFTER REPRODUCING THE STATEMENTS OF THE ASSESSEE , HAD HOWEVER FAILED TO ADJUDICATE THE ISSUE UNDER CONSIDERATION BY WAY OF A SPEAKING ORDER, AND HAD RATHER SUMMARILY DISMISSED THE AP PEAL OF THE ASSESS EE ON THE ISSUE UNDER CONSIDERATION. WE ARE OF THE CONSIDERED VIEW THAT THE CBDT IN ITS C IRCULAR NO. 715, DATED 08.08.1995 , HAD THEREIN HELD AS UNDER : - QUESTION 29: WHETHER A MAINTENANCE CONTRACT INCLUDING SUPPLY OF SPARES WOULD BE COV ERED UNDER SECTION 194C OR 194J OF THE ACT: ANSWER: - ROUTINE, NORMAL MAINTENANCE CONTRACTS WHICH INCLUDE SUPPLY OF SPARES WILL BE COVERED UNDER SECTION 194C. HOWEVER WHERE TECHNICAL SERVICES ARE RENDERED, THE PROVISION OF SECTION 194J WILL APPLY IN REGARD TO TAX DEDUCTION AT SOURCE . WE THUS IN THE BACKDROP OF THE AFORESAID VIEW TAKEN BY THE CBDT, ARE THUS OF THE CONSIDERED VIEW THAT IN CASE THE ASSESSEE HAD MADE PAYMENTS TOWARDS AMC FOR COMPUTERS ON THE BASIS OF NORMAL MAINTENANCE CONTRACTS , WHICH INCLUDES SUPPLY OF SPARES, THEN IN THAT SITUATION ITS CASE WOULD BE COVERED BY THE PROVISION OF SECTION 194C. HOWEVER, IN CASE THE PAYMENTS ARE MADE BY THE ASSESSEE IN LIEU OF TECHNICAL SERVICES SO RENDERED TO IT , THEN IT SHALL STAND LIABLE FOR D EDUCTION OF TAX AT SOURCE U/S. 194J. THAT AS THE AMC CONTRACT FOR THE COMPUTERS ENTERED INTO BY THE ASSESSEE, ON A PERUSAL OF WHICH ALONE THE FACT THAT AS TO WHETHER THE SAME WAS IN THE NATURE OF NORMAL MAINTENANCE CONTRACT INCLUDING SUPPLY OF SPARES, OR OTHERWISE , P A G E | 34 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 COULD BE DISCERNED , IS NOT AVAILABLE BEFORE US, WE THEREFORE IN ALL FAIRNESS RESTORE THE MATTER TO THE FILE OF THE A.O TO READJUDICATE THE LIABILITY OF THE ASSESSEE AFTER DULY TAKING COGNIZANCE OF THE PARAMETERS CONTEMPLATED BY THE CBDT IN ITS A FORESAID CIRCULAR NO. 715, DATED 08.08.1995 . NEEDLESS TO SAY, THE A.O WHILE RE - ADJUDICATING THE AFORESAID ISSUE SHALL AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, WHO SHALL REMAIN AT A LIBERTY TO ADDUCE ADDITIONAL EVIDENCE TO SUBSTANTIATE ITS CONTENTION. 50 . WE FIND THAT THE LD. A.R HAD FURTHER AVERRED BEFORE US THAT AS THE PAYEE S WHO WERE IN RECEIPT OF THE AMC CHARGES HAD INCLUDED THE SAME IN THEIR RESPECTIVE RETURN S OF INCOME AND PAID TAXES ON IT, THEREFORE, THE ASSESSEE CANNOT BE HE LD TO BE IN DEFAULT U/S. 201(1) IN RESPECT OF THE SAID TAX LIABILITY. WE ARE OF THE CONSIDERED VIEW THAT IN LIGHT OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD. (SUPRA) , THE AFORESAID CONTENTION OF THE ASSESSEE IS FOUND TO BE WELL PLACED. WE THUS DIRECT THE A.O TO VERIFY THE FACTUAL POSITION AS TO WHETHER THE PAYEE S (SUPRA) HAD PAID THE TAXES IN RESPECT OF THE AMC CHARGES RECEIVED FROM THE ASSESSEE COMPANY, AND IF THAT BE SO, THE ASSESSEE COMPANY WOULD NOT BE HELD AS BEING IN DEFAULT IN RESPECT OF THE CORRESPONDING TAX LIABILITY U/S. 201(1) . IT MAY HOWEVER BE CLARIF IED THAT IN CASE THE ASSESSEE IS PRINCIPALLY HELD LIABLE TOWARDS TAX LIABILITY DETERMINED U/S 201(1) IN RES PECT OF THE AFORESAID PAYMENTS, THEN THE LATTER WOULD CONTINUE TO REMAIN LIABLE IN RESPECT OF INTEREST LIABILITY U/S. 201(1A ) PERTAINING TO THE AFORESAID TAX LIABILITY , FOR THE PERIOD STARTING FROM THE DATE ON WHICH THE TAX WAS LIABLE TO BE DEDUCTED , TILL THE DATE OF PAYMENT OF TAX BY THE PAYEE S . THE GROUND S OF APPEAL NO. 1 AND 2 SO RAISED BY THE ASSESSEE BEFORE US ARE THUS ALLOWED FOR STATISTICAL PURPOSES. 5 1 . THE LD. A.R HAD FURTHER AVERRED BEFORE US THAT THE CIT(A) HAD ERRED IN CONFIRMING THE LEVY OF IN TEREST U/S. 201(1A) FOR A PERIOD OF 36 MONTHS IN RESPECT OF THE TAX DETERMINED U/S. 201(1) PERTAINING TO THE PAYMENT S MADE BY THE ASSESSEE TOWARDS AMC FOR COMPUTERS. WE FIND THAT AS THE SAID CONTENTION OF THE ASSESSEE CAN ONLY BE ADJUDICATED AFTER REFERRING TO THE P A G E | 35 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 FACTS AVAILABLE ON RECORD , WHICH ARE NOT THERE BEFORE US, THEREFORE , NOW WHEN WE HAVE PURSUANT TO OUR AFORESAID DIRECTIONS CALLED UPON THE A.O TO CARRY OUT A FRESH ADJUDICATION IN RESPECT OF THE LIABILITY OF THE ASSESSEE AS REGARDS DEDUCTION OF TAX AT SOURCE U/S 194J, AS WELL AS DIRECTED HIM TO VERIFY THE LIABILITY OF THE ASSESSEE TOWARDS TAX U/S. 201(1) , IN THE BACKDROP OF THE CLAIM RAISED BEFORE US THAT THE PAYEES HAD ALREADY PAID THE TAXES ON THE AFORESAID AMOUNT, WE THEREFORE FURTHER DIRECT THE A.O TO ALSO VERIFY THE AFORESAID CONTENTION OF THE ASSESSEE THAT INTEREST U/S. 201(1A) HAD WRONGLY BEEN LEVIED U/S 201(1A) FOR A PERIOD OF 36 MONTHS , IN RESPECT OF THE AFORESAID PAYMENTS. THE G ROUND OF APPEAL NO. 3 RAISED BY THE ASSESSEE BEFORE US IS ALLOWED FOR STATISTICAL PURPOSES. 52 . THE LD. A.R HAD FURTHER ASSAILED BEFORE US THE ORDER OF THE CIT(A) HOLDING THE ASSESSEE AS BEING IN DEFAULT U/SS. 201(1)/201(1A) FOR SHORT/DEFICIT DEDUCTION OF TAX AT SOURCE BY TAKING RECOURSE TO THE PROVISION S OF SECTION 194C , AS AGAINST ITS STATUTORY OBLIGATION OF HAVING DEDUCTED THE SAME U/S. 194J , IN RESPECT OF THE PAYMENTS MADE TO M/S. MAKANI CREATIVE PVT. LTD. IT WAS AVERRED BY THE LD. A.R THAT AS T HE PAYMENTS MADE TO M/S MAKANI CREATIVE PVT. LTD. (SUPRA) WERE IN RESPECT OF THE WORK EXECUT ED BY THEM, AND NO PROFESSIONAL OR TECHNICAL SERVICES OF THE SAID LATTER CONCERN HAD BEEN AVAILED BY THE ASSESSEE , THEREFORE , IT HAD RIGHTLY DEDUCTED TAX AT SOURCE U/S.194C AND THE APPLICABILITY OF THE PROVISIONS OF SECTION 194J STOOD CLEARLY EXCLUDED. THE LD. A.R HAD FURTHER AVERRED THAT EVEN OTHERWISE THE CIT(A) HAD ERRED IN CONFIRMING THE LEVY OF INTEREST IN THE HANDS OF THE ASSESSEE COMPANY U/S. 201(1A) FOR A PERIOD OF 18 M ONTHS. PER CONTRA, THE LD. D.R RELYING ON THE ORDERS OF THE LOWER AUTHORITIES SUBMITTED THAT AS THE PAYMENTS MADE TO M/S. MAKANI CREATIVE PVT. LTD. (SUPRA) WERE CLEARLY IN RESPECT OF THE LATTERS PROFESSIONAL SERVICES, THEREFORE, THE ASSESSEE WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S. 194J. 5 3 . WE HAVE HEARD THE AUTHORIZED REPRESENTATIVE S FOR BOTH THE PARTIES , PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND FROM RECORD THAT THE ASSESSEE WAS AVAILING MULTIPLE SERV ICES P A G E | 36 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 OF M/S MAKANI CREATIVE PVT. LTD. (SUPRA), WHICH CAN BE BRIEFLY CULLED OUT AS UNDER: - (I) SHOOT PRODUCTION. (II) ADVERTISING CAMPAIGN. (III) MEDIA RELEASES. WE FURTHER FIND THAT EVEN THE BILLS RAISED BY M/S. MAKANI CREATIVE PVT. LTD (SUPRA) ON THE ASSESSEE COMPANY WERE CLEARLY IN RESPECT OF RETAINERSHIP FEES . WE THUS IN LIGHT OF THE AFORESAID FACTS , ARE THUS OF THE CONSIDERED VIEW THAT THE ASSESSEE WAS CLEARLY AVAILING THE PROFESSIONAL SERVIC ES OF THE AFORESAID CONCERN, VIZ. M/S MAKANI CREATIVE PVT. LTD. (SUPRA). WE FIND THAT THE NATURE OF SERVICES RENDERED BY M/S. MAKANI SERVICES PVT. LTD. (SUPRA) AS ELABORATED BY US HEREINABOVE, SQUARELY FALLS WITHIN THE SWEEP OF THE DEFINITION OF P ROFESSIONA L SERVICES AS STAND S CONTEMPLATED IN THE EXPLANATION (A) OF SECTION 194J OF THE ACT . WE THUS IN LIGHT OF OUR AFORESAID OBSERVATIONS ARE NOT PERSUADED TO ACCEPT THE CONTENTION OF THE LD. A.R. THAT IT WAS UNDER NO OBLIGATION TO DEDUCT TAX AT SOURCE U/S 1 94J IN RESPECT OF PAYMENTS MADE TO THE AFORESAID CONCERN, VIZ. M/S MAKANI CREATIVE (P) LTD. , AND BEING OF THE CONSIDERED VIEW THAT T HE ASSESSEE HAD AVAILED THE PROFESSIONAL SERVICES OF M/S MAKANI CREATIVE PVT. LTD. (SUPRA) , THEREFORE , H O LD THAT THE LATTER WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S. 194J . WE THOUGH ARE NOT OBLIVIOUS OF THE FACT THAT THE CIT(A) HAD HELD THAT AS THE AFORESAID CONCERN, VIZ. M/S MAKANI CREATIVE PVT. LTD (SUPRA) HAD PAID THE TAX ON THE AMOUNTS RECEIVED FROM THE ASSESSEE COMPAN Y, THEREFORE , THE ASSESSEE CANNOT BE HELD AS BEING IN DEFAULT AS REGARDS THE TAX DETERMINED U/S 201(1), AND HAD ALLOWED THE CONSEQUENTIAL RELIEF TO THE LATTER ON THE SAID COUNT. HOWEVER, THE ASSESSEE HAD NOT BEEN PRINCIPALLY ABSOLVED BY THE CIT(A) OF ITS STATUTORY OBLIGATION FOR DEDUCTING TAX AT SOURCE UNDER SEC.194J, AS A RESULT WHEREOF , THE LATTER REMAIN S LIABLE FOR INTEREST U/S 201(1A) FOR THE SAID TAX LIABILITY, I.E FROM THE DATE THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE, TILL THE DATE OF DEPOSI TING OF THE TAX BY THE AFORESAID PAYEE, VIZ. M/S MAKANI CREATIVE PVT. LTD.(SUPRA). WE THUS IN LIGHT OF OUR AFORESAID OBSERVATIONS, FINDING OURSELVES AS BEING IN AGREEMENT WITH THE VIEW ARRIVED P A G E | 37 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 AT BY THE CIT(A), THEREFORE , UPHOLD THE SAME. THE GROUND S OF AP PEAL NO. 4 AND 5 RAISED BY THE ASSESSEE BEFORE US ARE DISMISSED. 5 4 . THE LD. A.R HAD FURTHER SUBMITTED BEFORE US THAT THE CIT(A) HAD ERRED IN CONFIRMING THE LEVY OF INTEREST U/S. 201(1A) OF RS.12,53,145/ - IN RESPECT OF PAYMENTS MADE TO M/S. MAKANI CREATI VE PVT. LTD (SUPRA), BY CALCULATING THE SAME FOR A PERIOD OF 18 MONTHS. WE ARE OF THE CONSIDERED VIEW THAT AS THE AFORESAID ISSUE CAN ONLY BE ADJUDICATED AFTER REFERRING TO THE RECORDS, WHICH ARE NOT BEFORE US, WE THEREFORE RESTORE THE SAME TO THE FILE OF THE A.O WITH A DIRECTION TO VERIFY THE FACTUAL POSITION . THAT IN CASE IF THE CLAIM OF THE ASSESSEE IS FOUND T O BE IN ORDER, THE A.O SHALL GIVE EFFECT THE SAME. NEEDLESS TO SAY , THE A.O WHILE ADJUDICATING THE AFORESAID ISSUE SHALL AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE G ROUND OF APPEAL NO. 6 IS ALLOWED FOR STATISTICAL PURPOSES. 5 5 . THAT AS THE G ROUND OF APPEAL NO. 7 RAISED BY THE ASSESSEE BEFORE US IS GENERAL IN NATURE, THEREFORE , THE SAME IS DISMISSED A S NOT PRESSED. 56 . THE APPEAL OF THE ASSESSEE FOR A.Y. 2012 - 13, MARKED AS ITA NO. 3528/MUM/2015 BEFORE US IS PARTLY ALLOWED FOR STATISTICAL PURPOSES, IN TERMS OF OUR AFORESAID OBSERVATIONS. A.Y. 2012 - 13 ITA NO. 4015/MUM/2015 5 7 . THE REVENUE ASSAILING THE ORDER OF THE CIT(A) , WHEREIN THE LATTER HAD SET ASIDE THE ORDER OF THE A.O TREATING THE ASSESSEE AS BEING IN DEFAU L T U/SS. 201(1)/201(1A) IN RESPECT OF CERTAIN AMOUNTS, HAD THEREIN FILE D AN APPEAL BEFORE US, R AISING THE FOLLOWING GROUNDS OF APPEAL: - 1. GROUNDS OF APPEAL : (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) HAS ERRED BY HOLDING THAT PROVISIONS OF SEC. 194C ARE APPLICABLE AND NOT THE PROVISIONS OF SECTION 194H AS HELD BY THE A.O WITHOUT APPRECIAT ING THE FACT THAT SUCH PAYMENTS MADE FOR THE USE OF THE CREDIT CARD IS SQUARELY COVERED BY THE DEFINITION OF 'COMMISSION OR BROKERAGE' GIVEN IN EXPLANATION P A G E | 38 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 (I) BELOW THE THIRD PROVISO TO SECTION 194H OF THE I.T. ACT, AND THEREBY ERRED IN DELETING THE SHORT DEDUCTION U/S. 201(1) OF THE/. I.T. ACT. (II) ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE ID. CIT (A) HAS ERRED IN NOT APPRECIATING THE FACT THAT ANNUAL MAINTENANCE CONTRACT FOR AIR CONDITIONER AND PEST CONTROL REQUIRES TECHNICAL SKILL AND HUMAN ELEMENT AND ARE SUBJECTED TO TDS U/S. 194J AND NOT U/S. 194C OF THE ACT . (III) ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE ID. CIT (A) HAS ERRED IN DELETING THE SHORT DEDUCTION ON HOARDING CHARGES U/S.1941 OF THE AC T AND NOT CONSIDERING THE SAME AS 'RENT' BUT 'WORK CONTRACT' U/S. 194C OF THE ACT . (IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE INTEREST U/S 201(1 A) OF THE I . T . ACT, 1961, DETERMINED BY THE A . O AS THE TAX DETERMINED HAS ALREADY BEEN DELETED BY HER AND INTEREST DELETION IS CONSEQUENTIAL TO THE QUANTUM DELETION FOR WHICH FURTHER APPEAL HAS BEEN RECOMMENDED VIDE GROUND NOS. (I), (II) & (III). 2. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY AT THE TIME OF THE HEARING OF THE CASE OR THEREAFTER. 3. THE ORDER OF THE CIT(A) BEING US BE SET ASIDE AND LD. A.OS ORDER BE R ESTORED . 5 8 . WE FIND THAT THE G ROUND OF APPEAL NO. 1(I) TO (IV) , G ROUND OF APPEAL NO. 2 AND G ROUND OF APPEAL NO. 3 RAISED IN THE PRESENT APPEAL OF THE REVENUE FOR A.Y. 2012 - 13, MARKED AS ITA NO. 4015/MUM/2015, ARE THE SAME AS WERE INVOLVED IN THE APPEAL OF THE REVENUE FOR A.Y. 2009 - 10, MARKED AS ITA NO. 1263/MUM/2014, THEREFORE, OUR ORDER PASSED WHILE DISPOSING OF THE AFORESAID G ROUND OF APPEAL NO. 1(I) TO (IV), GROUND OF APPEAL NO. 2 AND GROUND OF APPEAL NO. 3 IN A.Y. 2009 - 10 , SHALL APPLY MUTATIS MUTANDIS FOR ADJUDICATING THE GROUND OF APPEAL NO. 1(I) TO (IV), GROUND OF APPEAL NO. 2 AND GROUND OF APPEAL NO. 3 IN THE PRESENT APPEAL OF THE REVENUE FOR A.Y. 2012 - 13. WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS DISMISS THE G ROUND OF APPEAL NO. 1(I) TO (IV), G ROUND OF APPEAL NO. 2 AND GROUND OF APPEAL NO. 3 RAISED BY THE REVENUE BEFORE US . 5 9 . THE APPEAL OF THE REVENUE FOR A.Y. 2012 - 13, MARKED AS ITA NO. 4015/MUM/2015 IS DISMISSED. P A G E | 39 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13 60 . THE APPEAL OF THE ASSESSEE FOR A.Y. 2012 - 13, MARKED AS ITA NO. 3528/MUM/2 015 IS PARTLY ALLOWED , AND THE APPEAL OF THE REVENUE , MARKED AS ITA NO. 4015/MUM/2015 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 / 07/2017 SD/ - SD/ - (G.S. PANNU) (RAVISH SOOD) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 31 .07 .2017 PS . ROHIT KUMAR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI P A G E | 40 METRO SHOES LTD. VS. ITO A.YS. 2009 - 10 TO 2012 - 13