ITO (TDS), Ghaziabad V. M/s. Yamuna Pollution Control, Ghaziabad

ITA 1485/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2765 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: misc
• Appeal Filed On: 13-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Assessee Lawyers: MEETANSHU SINGHAL
• Section: 133A; 194C; 201(1); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DLEHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. NO.1485/DEL/2015 ASSESSMENT YEAR: 2010-11 INCOME-TAX OFFICER (TDS), VS YAMUNA POLLUTION CON TROL, ROOM NO.307, CGO-1, HAPUR CHUNGI, UNIT-1, UP JAL NIGAM, GHAZIABAD. R-1, RAJ NAGAR, GHAZIABAD. (PAN: MRTY00055G) CROSS OBJECTION NO.303/DEL/2015 (IN I.T.A. NO.1485/DEL/2015) ASSESSMENT YEAR: 2010-11 YAMUNA POLLUTION CONTROL, VS INCOME-TAX OFFICER ( TDS), UNIT-1, UP JAL NIGAM, GHAZIABAD. R-1, RAJ NAGAR, GHAZIABAD. (PAN: MRTY00055G) (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI MEETANSHU SINGHAL DEPARTMENT BY: SHRI RAVI KANT GUPTA, SR. DR ORDER DATE OF HEARING: 19.03.2018 DATE OF PRONOUNCEMENT: .22.03.2018 PER BENCH CHALLENGING THE ORDER DATED 19.12.2004 IN APPEAL NO .383/2013-14/GZB PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS), GHAZIABAD (FOR 2 SHORT LD. CIT(A)), REVENUE PREFERRED THIS APPEAL . ASSESSEE FILED THE CROSS OBJECTION SUPPORTING THE ORDER OF THE LEARNED CIT ( A). 2. BRIEF FACTS OF THE CASE ARE THAT THE YAMUNA POLL UTION CONTROL IE., ASSESSEE IS A CORPORATION CONSTITUTED BY THE GOVT. OF UTTAR PRAD ESH AND IS ENGAGED IN SEVERAL KINDS OF CIVIL CONTRACT WORK LIKE SEWERAGE, WATER S UPPLY LINE, CONSTRUCTION OF OVER HEAD TANK, BOUNDARY WALL, CONSTRUCTION OF MAIN PUMPI NG STATION AND PUMP HOUSE ETC. THE SAID WORK WAS COMPLETED BY THE SAID CORPOR ATION UNDER THE POLICY AND GUIDELINES OF THEIR HEAD OFFICE/U.P. GOVT. ONLY FOR WHICH FUND WAS ALSO RECEIVED TO THE CORPORATION FROM THE U.P. GOVT. UNDER VARIOUS S CHEMES. THE SAID CORPORATION BEING PROJECT MANAGER, YAMUNA POLLUTION CONTROL UNI T-1, U.P. JAL NIGAM, GHAZIABAD COMPLETED SAID CIVIL WORKS THROUGH VARIOU S CONTRACTORS, REGISTERED WITH THE SAID JAL NIGAM. ALL SUCH WORK COVERED U/S 194C OF THE INCOME-TAX ACT, 196 (THE ACT) AND TDS @ 2% WAS APPLICABLE ON SUCH CIV IL WORKS AND SAME WAS REGULARLY DEDUCTED AND DEPOSITED IN TIME BY THE SAID CORPORATION AND THERE WAS NO KINDS OF SHORTFALL OF TDS AT THE PART OF THE ABO VE CORPORATION, BEING ASSESSEE. 3. ACCORDING TO THE ASSESSEE, NO KIND OF TECHNICAL SERVICES/PROFESSIONAL SERVICES WAS PROVIDED BY THE CONTRACTORS TO THE SAID CORPORATION ASSESSEE AND AS SUCH, THERE WAS NO TDS LIABILITY U/S 194J OF THE ACT ON THE ASSESSEE. TOTAL WORK EXECUTED BY SEVERAL CONTRACTORS FOR THE CORPORATION ASSESSEE WAS CIVIL CONTRACT WORK ONLY FOR THE AYS 2008-09, 2009-10 AND 2010-11. THE NATURE OF CIVIL WORK FOR THE ABOVE ASST. YEARS BEING LIKE SEWERAGE, WATER SUP PLY LINE, CONSTRUCTION OF OVER HEAD TANK, BOUNDARY WALL, CONSTRUCTION OF MAIN PUMPI NG STATION AND PUMP HOUSE ETC., AND THE SAME MAY BE VERIFIED FROM THE CONTRAC T BOND OF EACH CONTRACT IN WHICH DETAIL SPECIFICATION WITH NATURE OF WORK WAS DULY MENTIONED. 3 4. LEARNED AO ISSUED SUMMONS U/S 131 OF THE ACT ON 15.12.2009 FOR VERIFICATION OF TDS ON VARIOUS HEADS. IN COMPLIANC E OF AOS NOTICE NO. DCIT/TDS/GZB/VERIFICATION/2009-10/1280 DATED 20.1.2 010 FOR VERIFICATION OF TDS, THE ASSESSEE FILED WRITTEN REPLY DATED 2.2.2010 REL ATING TO AY 2008-09, 2009-10 AND 2010-11, WHICH WAS RECEIVED BY THE OFFICE OF AO , TDS ON 2.2.2010. ON GOING THROUGH THE DETAILS, LEARNED AO FOUND THAT THE TDS RATES OF 10.3% SHOULD BE CHARGED AS AGAINST 2.25% ON THE PAYMENTS TO SPECIALI ZED CONTRACTORS FOR WATER TREATMENT. LD. AO ISSUED A SHOW CAUSE NOTICE ON 25 .1.2010. ASSESSEE SUBMITTED POWER OF ATTORNEY OF ITS COUNSEL ALONG WITH AN APPLI CATION SEEKING 15 DAYS ADJOURNMENT. AS THE ASSESSEE DID NOT FILED ANY REPL Y TILL 17.3.2011 AND THE MATTER IS GOING TO THE TIME BARRED SHORTLY, LD. AO ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE REQUIRING THEM TO FILE REPLY ON OR BEFORE 2 1.3.2011 EXPLAINING AS TO WHY THE SHORT CHARGE SHOULD NOT BE LEVIED AT RS.3,05,60 ,544/- FOR THE FYS 2007-08, 2008-09 AND 2009-10 @ 10.3% AS AGAINST 2.25% ON THE PAYMENTS TO THE SPECIALIZED CONTRACTORS FOR WATER TREATMENT. ASSES SEE CLAIMS TO HAVE FILED A REPLY DATED 2.2.2010, BUT, HOWEVER, RECORDING THAT THERE WAS NO REPRESENTATION FOR THE ASSESSEE AND NO COOPERATION, LD. AO PASSED AN ORDER DATED 23.3.2011 U/S 201(1) AND 201(1A) READ WITH SECTION 133A OF THE ACT IN RE SPECT OF ASSTT. YEARS 2008-09, 2009-10 AND 2010-11. IN SO FAR AS THIS APPEAL IS C ONCERNED, IT RELATES TO AY 2010- 11 IN RESPECT OF WHICH RS.1,86,30,546/- WAS LEVIED AS A SHORT CHARGE. 5. DURING THE APPELLATE PROCEEDINGS, LD. CIT(A) SOU GH REMAND REPORT FROM THE AO AND SATISFIED HIMSELF THAT THE ASSESSEE FILED A LETTER DATED 2.2.2010 BEFORE THE AO TO VERIFY THEIR CONTENTIONS BUT PERHAPS BY OVERSIG HT THE SAME WAS NOT CONSIDERED BY THE LD.AO. ON MERITS, LEARNED CIT(A) RECORDED THAT A REMAND REPORT OF THE AO CLEARLY SHOWS THAT PROVISIONS OF SE CTION 194C ARE APPLICABLE IN 4 ASSESSEES OWN CASE AND NOT THAT OF SECTION 194J. HE, THEREFORE, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 6. REVENUE IS, THEREFORE, AGGRIEVED BY SUCH AN ORDER AND PREFERRED THIS APPEAL STATING THAT THE LD. CIT(A) IGNORED THE FACTS THAT TECHNICAL AND PROFESSIONAL PERSONS WERE EMPLOYED BY THE CONTRACTOR, CERTIFICATE OF WHICH WAS GIVEN BY THE CONTRACTOR AT THE TIME OF AWARDING THE CONTRACT, AS SUCH, THE ASSESSEE WAS LIABLE TO DEDUCTION TDS U/S 194J OF THE ACT AT 10.3% ON PA YMENT TO VARIOUS CONTRACTORS FOR WATER TREATMENT. AS STATED EARLIER, ASSESSEE P REFERRED THE CROSS OBJECTION IN SUPPORT OF THE IMPUGNED ORDER. 7. IT IS THE ARGUMENT OF THE LEARNED DR THAT BEFORE PASSING THE IMPUGNED ORDER, THE LD. CIT(A) SHOULD HAVE VERIFIED WHETHER ANY CERTIFICATE WAS GIVEN BY THE CONTRACTORS AD TO THEIR EMPLOYING THE TECHNICAL OR P ROFESSIONAL PERSONS AT THE TIME OF AWARDING OF THE CONTRACT. HE SUBMITS THAT WITHOUT SUCH VERIFICATION, HIS JUMPING TO THE CONCLUSION THAT THE PROVISIONS OF SE CTION 194C OF THE ACT ARE APPLICABLE BUT NOT SECTION 194J IS BAD IN LAW. HE HEAVILY RELIED UPON THE ASSESSMENT ORDER. 8. PER CONTRA, IT IS THE ARGUMENT OF THE LEARNED AR THAT THE LEARNED CIT(A) SOUGHT THE REMAND REPORT FROM THE AO AND SOLELY BASI NG ON THE REMAND REPORT, HE PASSED THE IMPUGNED ORDER AND THE AO HAVING ADMI TTED IN HIS REMAND REPORT IN CLEAR TERMS THAT WHERE THE CONTRACTOR HAS EMPLOYE D ENGINEERS FOR THE PROCUREMENT OF THE CONTRACTS TAKEN BY HIM, THE NATUR E OF WHICH AS PER THE CONTRACT BONDS COMES WITHIN THE PURVIEW OF CONTRACT , THE CONTRACT ITSELF MAY NOT BE TERMED AS PROFESSIONAL CONTRACTOR OR TECHNICAL C ONTRACTOR ON WHICH THE PROVISIONS OF SECTION 194J ARE APPLICABLE BUT IN SO FAR AS THE CONTRACT RELATES TO 5 THIS CASE IS CONCERNED, THE CONTRACTOR HAS UNDERTAK EN THE CONTRACTS AS PER CONTRACT BONDS AND HAS NOT RENDERED ANY PROFESSIONA L OR TECHNICAL SERVICES TO THE ASSESSEE, IT IS NOT OPEN FOR THE REVENUE TO PREFER THIS APPEAL, WHICH IS CONTRARY TO THE CONTENTS OF THE REMAND REPORT. 9. WE HAVE CAREFULLY GONE THROUGH THE RECORD IN THE LIGHT OF THE CONTENTIONS ON EITHER SIDE. LEARNED CIT(A) IN HIS ORDER EXTRAC TED THE REMAND REPORT DATED 28.2.2014 AND FOR THE SAKE OF CLARITY, WE DEEM IT JU ST AND NECESSARY TO EXTRACT PARA 6 WHICH CLINCHES THE ISSUE. PARAGRAPH 6 OF TH E REMAND REPORT READS AS FOLLOWS: THE EXPLANATION OFFERED AND THE DOCUMENTARY EVIDEN CES PUTFORTH BY THE ASSESSEE IN THE FORM OF CONTRACT BOND. SCHEDULE G O F THE CONTRACT BOND, IN WHICH PAYMENT DETAILS HAVE BEEN MENTIONED HAVE BEEN GONE THROUGH WHICH GOES TO SHOW THAT THE CONTRACTS AWARDED RELATED TO CONSTRUCTION OF SEWERAGE SYSTEM, WATER SUPPLY LINE, CONSTRUCTION OF O.VER HE AD TANK, BOUNDARY WALL CONSTRUCTION OF MAIN PUMPING STATION AND PUMP HOUSE ETC. WHICH IS VERIFIABLE FROM THE CONTRACT BOND OF EACH CONTRACT IN WHICH DE TAILED SPECIFICATION OF WORK IS MENTIONED. THE THEN A.O. WHILE PASSING ORDE RS UNDER SECTION 201(1 )/201(1 A) PERHAPS THROUGH AN OVERSIGHT HAS NOT CON SIDERED THE WRITTEN REPLY OF THE ASSESSEE DATED 02.02.2010, WHICH WAS FILED B Y THE ASSESSEE BEFORE HIM. IN VIEW OF THE EVIDENCE PLACED ON THE RECORD, THE R EQUIREMENT OF U.P. JAL NIGAM OF HAVING ONE QUALIFIED ENGINEER WITH THREE Y EARS EXPERIENCE AND ONE QUALIFIED GRADUATE ENGINEER COMPUTER/IT OR MCA WITH THREE YEARS EXPERIENCE A QUALIFIED ENGINEER WAS THE INGREDIENT FOR THE REG ISTRATION AND ENLISTMENT OF THE CONTRACTORS AS CLASS-A, CLASS-B AND CLASS- C CO NTRACTORS. ON GOING THROUGH THE REGULATION 6 OF THE REGULATIONS FOR CLASSIFICAT ION AND ENLISTMENT OF CONTRACTORS IN UTTAR PRADESH JAL NIGAM, 2001, IT IS SEEN THAT TO FULFIL THE SAID QUALIFICATION FOR REGISTRATION OF THE CONTRACTOR, T HE CONTRACTOR HAS TO GIVE A CERTIFICATE NAMING THE PROFESSIONAL/TECHNICAL PERSO NS EMPLOYED WITH HIM AND ONLY AFTER GIVING THIS CERTIFICATE, THE CONTRACTORS ARE CLASSIFIED BY U.P. JAL NIGAM AS CLASS-A, CLASS-B AND CLASS-C CONTRACTORS. IT IS ON RECORD THAT THE CONTRACTORS TO WHOM THE WORKS WERE AWARDED WERE REG ISTERED BY THE U.P. JAL NIGAM IN ACCORDANCE WITH THE PRESCRIBED QUALIFICATI ONS. A PERUSAL OF THE NATURE OF WORK AS PER CONTRACT BONDS WITH VARIOUS C ONTRACTORS AND SCHEDULE G MEANT FOR THE DETAILS OF PAYMENT REVEALS THAT THE PAYMENTS WERE IN THE 6 NATURE OF CONTRACTS AND NOT IN THE NATURE OF TECHNI CAL OR PROFESSIONAL SERVICES RENDERED BY SUCH CONTRACTORS. FURTHER, EMPLOYMENT O F THE ENGINEER WAS THE REQUIREMENT FOR REGISTRATION AND CLASSIFICATION OF THE CONTRACTORS ON THE BASIS OF WHICH THE CONTRACTOR WAS REGISTERED WITH U.P. JA L NIGAM. REGULATION 6 OF THE REGULATIONS FOR CLASSIFICATION AND ENLISTMENT O F CONTRACTORS IN U.P. JAL NIGAM, 2001 CLEARLY SPEAKS THAT FOR REGISTRATION AN D CLASSIFICATION OF A CONTRACTOR IN THE SPECIFIED CLASS, THE CONTRACTOR S HALL EMPLOY PROFESSIONAL/TECHNICAL PERSONS AND IN THAT CASE AFT ER EMPLOYING SUCH PERSONS, THE CONTRACTOR IS SUPPOSED TO PAY SALARY/REMUNERATI ON FOR THE SERVICES RENDERED BY THEM. IN SUCH A CASE, WHERE THE CONTRAC TOR HAS EMPLOYED ENGINEERS FOR THE PROCUREMENT OF THE CONTRACTS TAKE N BY HIM, THE NATURE OF WHICH AS PER CONTRACT BONDS AND AS PER THE FORM G C ONTAINING THE DETAILS OF PAYMENTS, CONIES WITHIN THE PER-VIEW OF CONTRACT, T HE CONTRACT ITSELF MAY NOT BE TERMED AS PROFESSIONAL CONTRACTOR OR TECHNICAL C ONTRACTOR ON WHICH THE PROVISIONS OF SECTION 194J ARE APPLICABLE, SINCE TH E CONTRACTOR HAS UNDERTAKEN THE CONTRACTS AS PER CONTRACT BONDS AND HAS NOT REN DERED ANY PROFESSIONAL OR TECHNICAL SERVICES TO THE YAMUNA POLLUTION CONTROL UNIT. 10. HAVING EXTRACTED THIS PORTION OF THE REMAND REP ORT, LEARNED CIT(A) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE ON THIS ASPECT. IT COULD BE SEEN FROM THE ABOVE THAT IN REMAND REPORT, THE LEARNED AO CLE ARLY HELD THAT A PERUSAL OF THE NATURE OF WORK AS PER CONTRACT WORKS WITH VARIOUS C ONTRACTORS AND SCHEDULE G MEANT FOR THE DETAILS OF PAYMENT REVEALS THAT THE PA YMENTS WERE IN THE NATURE OF CONTRACTS AND NOT IN THE NATURE OF TECHNICAL OR PRO FESSIONAL SERVICES RENDERED BY SUCH CONTRACTORS. HE FURTHER HELD THAT THE LEARNED AO STATED THAT WHERE THE CONTRACTOR HAS EMPLOYED ENGINEERS FOR THE PROCUREMEN T OF THE CONTRACTS TAKEN BY HIM, THE NATURE OF WHICH AS PER THE CONTRACT BONDS COMES WITHIN THE PURVIEW OF CONTRACT, THE CONTRACT ITSELF MAY NOT BE TERMED AS P ROFESSIONAL CONTRACTOR OR TECHNICAL CONTRACTOR ON WHICH THE PROVISIONS OF SEC TION 194J ARE APPLICABLE BUT IN SO FAR AS THE CONTRACT RELATES TO THIS CASE IS CONC ERNED, THE CONTRACTOR HAS UNDERTAKEN THE CONTRACTS AS PER CONTRACT BONDS AND HAS NOT RENDERED ANY PROFESSIONAL OR TECHNICAL SERVICES TO THE YAMUNA PO LLUTION CONTROL BOARD. BASING 7 ON THESE AVERMENTS, LEARNED CIT(A) REACHED THE CONC LUSION THAT TO THE CASE OF THE ASSESSEE, PROVISIONS OF SECTION 194J HAVE NO APPLIC ATION BUT ONLY PROVISIONS OF SECTION 194C ARE APPLICABLE, AS SUCH, THE ASSESSEE IS LIABLE FOR TDS AT 2.25% U/S 194C ONLY AND NOT AT 10.3% U/S 194J, AS HELD BY THE LD. AO. 11. IN VIEW OF THIS FACTUAL POSITION, WE DO NOT FIN D ANY ILLEGALITY OR IRREGULARITY IN THE IMPUGNED ORDER AND THE PROCEDURE AND REASONING ADOPTED BY THE LEARNED CIT(A) ARE IMPECCABLE. THE IMPUGNED ORDER DOES NOT WARRANT ANY INTERFERENCE AND HAS TO BE UPHELD. WE, THEREFORE, ACCORDINGLY UP HOLD THE SAME AND DISMISS THE REVENUES APPEAL. IN VIEW OF DISMISSAL OF REVE NUES APPEAL ON MERITS, NOTHING SURVIVES IN CROSS OBJECTION TO BE CONSIDERED, IT BE COMES INFRUCTUOUS AND THE SAME IS ALSO DISMISSED. 12. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE A S WELL AS CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 MARCH, 2018. SD/- SD/- (G.D. AGARWAL) (K. NARASIMHA CHARY ) PRESIDENT JUDICIAL MEMBER DATED: 22 ND MARCH, 2018 VJ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) BY ORDER 5. DR, ITAT ASSTT. REGISTRA R, ITAT