Idea Cellular Limited, Ahmedabad V. The Income tax Officer, TDS-4, Ahmedabad

ITA 1624/AHD/2011

• Counselvise Citation: 162420514 RSA 2011
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 12-04-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 14-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D P GUPTA
• Assessee Lawyers: RONAK G DOSHI
• Keywords: Opportunity of being heard; Non-deduction of tax
• Section: 194C; 201(1); 11

Judgement Text

, D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . . , , ! ! ! ! '# '#'# '# , #$ #$ #$ #$ % % % % # ## # BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO.1624, 1625 AND 1626/AMD/2011 [ASSTT.YEAR : 2008-2009, 2009-10 AND 2010-11] IDEA CELLULAR LTD. 4 TH FLOOR, ABHIJEET III, NR. MITHAKHALI 6 TH ROAD ELLISBRIDGE AHMEDABAD 380 006. PAN:AACB2100P /VS. ITO, TDS-4 AHMEDABAD. ( &' &' &' &' / APPELLANT) ( ()&' ()&' ()&' ()&' / RESPONDENT) *' + , # / ASSESSEE BY : SHRI RONAK G. DOSHI, AR % + , # / REVENUE BY : SHRI. D.P. GUPTA CIT-DR - + '.$ / DATE OF HEARING : 12 TH APRIL, 2012 /01 + '.$ / D ATE OF PRONOUNCEMENT : 20.04.2012 #2 / O R D E R PER T.R. MEENA, ACCOUNTANT MEMBER: THESE ARE THREE APPEALS BY THE ASSESSEE AGAINST ORDER OF THE CIT(A) -XXI, AHMEDABAD DATED 18.4.2011 FOR THE ABOVE THREE ASSESSMENT YEAR S. SINCE COMMON ISSUES ARE RAISED IN ALL THESE YEARS UNDER APPEALS, FOR THE SAKE OF CONVENIENCE, WE DISPOSE OF ALL THE APPEALS BY THIS CONSOLIDATED ORDER. 2. IT IS ADMITTED BY BOTH THE PARTIES THAT THE FACT S IN ALL ABOVE THREE YEARS ARE IDENTICAL EXCEPT QUANTUM. THEREFORE, WE PROCEE D TO DISPOSE OF THE APPEALS BY TAKING FACTS AS STATED IN ITA NO.1624/AH D/2011. THE GROUND NO.1 OF THE APPEAL OF THE ASSESSEE READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, CIT(A) ERRED NEITHER PROVIDING THE REMAND REPORT TO THE APPELLANT NOR PROVIDING OPPORTUNITY TO THE APPELLANT TO RESPO ND TO THE REMAND REPORT PROVIDED BY THE A.O. 2 3. THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT PRE SSED THIS GROUND, HENCE DISMISSED. 4. GROUND NO.2 READS AS UNDER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN HOLDING THAT PAYMENT OF ROAMING CHARGES TO OTHER TELECOM OPERATO RS IS SUBJECT TO TDS U/S.194J OF THE ACT AND ACCORDING TREATING THE APPELLANT AS AN ASSESSEE IN DEFAULT U/S.201(1) READ WITH SECTION 194J OF THE ACT. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING CELLULAR MOBIL E TELEPHONE SERVICES TO ITS CUSTOMER IN GUJARAT THROUGH NETWORK OF DISTRIBUTORS . ONE OF THE SERVICES RENDERED BY THE ASSESSEE TO ITS CUSTOMERS IS THAT O F ROAMING. THIS SERVICE IS IN THE NATURE OF USE OF FACILITIES AND THEREFORE DO ES NOT AMOUNT TO TECHNICAL SERVICES AND NOT LIABLE TO DEDUCT TAX. THE ASSESS EE SUBMITTED BEFORE THE REVENUE AUTHORITIES THAT IN ASSESSEES OWN CASE IN THE A.Y.2003-2004 AND 2004-2005, ITAT, DELHI BENCHES AFTER FOLLOWING THE ORDER OF SKY CELL COMMUNICATIONS PVT. LTD., ESCOTEL MOBILE COMMUNICAT IONS LTD. AND HFCL INFOTELS DECISION HELD THAT PAYMENT MADE FOR INTER CONNECT CHARGES TO THE OTHER OPERATORS CANNOT BE TREATED AS PAYMENT FOR TECHNICA L SERVICES AS PROVIDED UNDER SECTION 194J OF THE IT ACT. THE LEARNED COUN SEL FOR THE ASSESSEE ALSO DRAWN TO OUR ATTENTION TO THE SUBMISSIONS MADE BEFO RE THE AO THAT IN ASSESSEES OWN CASE FOR A.Y.2006-2007, ITAT, PUNE B ENCH HAS HELD THAT PAYMENT MADE FOR ROAMING CHARGES TO OTHER OPERATORS ARE OUT OF THE PURVIEW OF THE PROVISION OF SECTION 194J OF THE ACT. HE SU BMITTED THAT IT IS A PAYMENT FOR USE OF STANDARD FACILITY PROVIDED BY THE ASSESS EE TO ITS CUSTOMERS AND HENCE FALLING OUTSIDE THE AMBIT OF SECTION 194J REA D WITH EXPLANATION 2 TO SECTION 9(1)(VII) OF THE ACT AND THEREFORE NO TAX I S DEDUCTIBLE UNDER SECTION 194J ON THE ROAMING CHARGES. THE LEARNED COUNSEL FOR THE ASSESSEE HAS STRONGLY RELIED ON THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF CIT VS. BHARATI CELLULAR LTD., 193 TAXMAN 97 (SC) WHERE IN THE HONBLE APEX COURT HAS GIVEN DIRECTION TO THE DEPARTMENT TO EXAM INE THE MATTER FROM A TECHNICAL EXPERT FROM THE SIDE OF THE DEPARTMENT AN D TO DECIDE THE MATTER WITHIN THE STIPULATED TIME. VARIOUS OTHER JUDGMENT S WERE ALSO RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE TO SUPPORT ITS CAS E. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AO AND THE CIT(A) AND REFERRED TO RELEVANT PARAS OF THE IMPUGNED ORDERS TO SUPPORT IT S CASE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE AO AND THE CIT(A) AND ALSO MATERIAL PLACED ON RECORD. WE FIND THAT THE ISSUE UNDER CONSIDERATION HAS DIRECT EFFECT FROM THE RATIO OF T HE DECISION OF THE HONBLE 3 SUPREME COURT IN THE CASE OF BHARATI CELLULAR LTD., (SUPRA) WHEREIN THE APEX COURT HAD TO EXAMINE THE MEANING OF THE WORDS FEES FOR TECHNICAL SERVICES UNDER SECTION 194J. THE HONBLE COURT FOUND THAT I T WAS NECESSARY TO FIND OUT IF HUMAN INTERVENTION IS INVOLVED ANY STAGE, INCLUD ING THE STAGE WHEN THE EXITING CAPACITY IS EXHAUSTED AND ADDITIONAL CAPACI TY IS URGENTLY REQUIRED. THE APEX COURT ACCORDINGLY DIRECTED THE AO TO EXAMINE A TECHNICAL EXPERT FROM THE SIDE OF THE DEPARTMENT AND TO DECIDE THE MATTER WIT HIN A PERIOD OF FOUR MONTHS. THE MUMBAI TRIBUNAL IN CASE OF VODAFONE ESSAR LTD. V. DCIT 45 SOT 82 (MUM) (URO) HAS RESTORED THE SIMILAR ISSUE TO AO WI TH SIMILAR DIRECTION. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE M ATTER SHOULD REQUIRE FRESH CONSIDERATION FROM THE END OF THE AO ON THE APPLICA BILITY OF SECTION 194J OF THE ACT IN VIEW OF THE ABOVE DIRECTIONS CONTAINED IN TH E DECISION OF THE HONBLE SUPREME COURT. ACCORDINGLY, WE SET ASIDE THIS ISSU E BACK TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH THE D IRECTIONS OF THE HONBLE APEX COURT PROVIDED IN THE CASE OF BHARATI CELLULAR LTD. (SUPRA) AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. WE DIRECT ACCORDINGLY. 7. THE GROUND NO.3 OF THE ASSESSEES APPEAL READS A S UNDER: 1. THE CIT(A) ERRED IN HOLDING THAT EVEN IF THE PA YMENT OF ROAMING CHARGES WOULD NOT FALL WITH FEES FOR TECHNICAL SER VICES U/S.194J OF THE ACT, IT WOULD FALL U/S.194I OF THE ACT. 2 THE APPELLANT PRAYS THAT THE EFFECTIVE DOMAIN AND CONTROL OF ENTIRE FACILITY IS ALWAYS WITH OTHER TELECOM OPERAT ORS AND, HENCE IT DOES NOT FALL U/S.194I OF THE ACT AND THEREFORE, IT BE H ELD THAT NO TDS U/S.194I IS DEDUCTIBLE. 8. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT NO TAX IS DEDUCTIBLE UNDER SECTION 194J ON ROAMING CHARGES PA ID TO OTHER TELECOM OPERATORS MAINLY ON TWO COUNTS, I) ANY PAYMENT FOR THE USE OF STANDARD FACILITY DOES NOT AMOUNT TO FEES FOR TECHNICAL SERVICES AND (II) IN THE ABSENCE OF ANY HUMAN INTERVENTION DURING THE ACTUAL ROAMING PROCES S, PAYMENT WOULD NOT BE FEES OR TECHNICAL SERVICES. THE LEARNED COUNSEL R ELIED ON THE DECISION OF ITAT, MUMBAI BENCH IN THE CASE OF VODAFONE ESSAR LT D. VS. DCIT, 45 SOT 82 (MUM.) WHEREIN THE TRIBUNAL HAS HELD THAT PAYMENT O F ROAMING CHARGES COULD NOT BE CONSIDERED AS RENT WITHIN THE MEANING OF T HE EXPLANATION BELOW SECTION 194-I. THEREFORE, THERE WAS NO LIABILITY O N THE PART OF THE ASSESSEE TO DEDUCT TAX FROM THE SAME. THE LEARNED DR, ON THE O THER HAND, RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ISSUE UNDER CO NSIDERATION IS DIRECTLY 4 COVERED BY THE DECISION OF THE ITAT, MUMBAI BENCH I N THE CASE OF VODAFONE ESSAR LTD. (SUPRA) WHEREIN IT HAS HELD THAT PAYMENT OF ROAMING CHARGES BY THE ASSESSEE TO OTHER SERVICE PROVIDERS CANNOT BE CONSI DERED AS RENT WITHIN THE MEANING OF EXPLANATION BELOW SECTION194-I, THEREFORE, THERE WAS NO LIABILI TY ON THE PART OF THE ASSESSEE TO DEDUCT TAX FROM THE SAM E UNDER THAT SECTION. ACCORDINGLY, GROUND OF APPEAL NO.3 IS ALLOWED IN FA VOUR OF ASSESSEE. 10. THE GROUND NO.4 OF THE ASSESSEE READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN HOLDING THAT THE TAX IS DEDUCTIBLE UNDER SECTION 194J INSTEAD OF 194 C AS DEDUCTED BY THE APPELLANT AT THE TIME OF MAKING PAYMENT TO M/S. I-GATE INDIA PVT. LTD. TOWARDS CALL CENTRE CHARGES AND ACCORDINGLY HE LD APPELLANT AS ASSESSEE IN DEFAULT FOR ALLEGED SHORT DEDUCTION O F TAX UNDER SECTION 201 READ WITH SECTION 194J OF THE ACT. 2. THE APPELLANT PRAYS THAT IT BE HELD THAT THE APPELL ANT HAS RIGHTLY DEDUCTED TDS U/S.194C AND THE ACTION OF THE AO IN H OLDING THE APPELLANT AS ASSESSEE IN DEFAULT ON THE ALLEGED SH ORT DEDUCTION UNDER SECTION 201 READ WITH SECTION 194J OF THE ACT BE SE T ASIDE/QUASHED. 11. THE BRIEF FACTS IS THAT THE AO NOTICED THAT THE ASSESSEE HAS MADE PAYMENT TO CALL CENTRE WHICH WAS FOR CONTRACT FOR M ANAGING CALL CENTRE BY HIRING SKILLED PERSONAL WHICH THE AO CONSIDERED TO BE TECHNICAL SERVICES. THE ASSESSEE HAS CONSIDERED THIS TO BE FALLING UNDER SE CTION 194J WHEREAS THE AO HELD THAT IT IS LIABLE TO DEDUCTION OF TAX U/S.194C . THE CIT(A) CONFIRMED THE ACTION OF THE AO. BEFORE US, THE LEARNED COUNSEL F OR THE ASSESSEE RELIED ON THE SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES AND THE LEARNED DR RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE ARE OF THE CONSIDERED VIEW THAT THE MATTER REQUIRES RE- ADJUDICATION AT THE END OF THE AO. THE AO IS DIREC TED TO VERIFY THE TERMS AND CONDITIONS OF THE AGREEMENT BETWEEN THE PARTIES AND ACTUAL SERVICES PROVIDED AND DECIDE THE CASE ON MERIT AFTER GIVING REASONABL E OPPORTUNITY OF HEARING TO THE ASSESSEE. 13. THE GROUND NO.5 READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN HOLDING THAT THE TAX IS DEDUCTIBLE UNDER SECTION 194J INSTEAD OF 194 C AS DEDUCTED BY THE APPELLANT AT THE TIME OF MAKING PAYMENT OF ERIC CSSON TOWARDS INSTALLATION AND COMMISSIONING OF EQUIPMENT PURCHAS ED FROM M/S.ERICSSON INDIA LTD. AND ACCORDINGLY HELD APPELL ANT AS ASSESSEE IN 5 DEFAULT FOR ALLEGED SHORT DEDUCTION OF TAX UNDER S ECTION 201 READ WITH SECTION 194J OF THE ACT. 2. THE APPELLANT PRAYS THAT IT BE HELD THAT THE APP ELLANT HAS RIGHTLY DEDUCTED TDS U/S.194C AND THE ACTION OF THE AO IN H OLDING THE APPELLANT AS ASSESSEE IN DEFAULT ON THE ALLEGED S HORT DEDUCTION UNDER SECTION 201 READ WITH SECTION 194J OF THE ACT BE SE T ASIDE/QUASHED. 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE DECISIONS RELIED ON BY THE LEARN ED COUNSEL FOR THE ASSESSEE. IT IS THE CASE OF THE ASSESSEE THAT IN T HE ABSENCE OF ANY INTELLECTUAL ASPECT, THE WORK DONE BY THE ERICSSION CANNOT BE CL ASSIFIED AS SERVICES AND THEREFORE PAYMENT TO ERICSSON TOWARDS INSTALLATION AND COMMISSIONING OF THE EQUIPMENT PURCHASED FROM ERICSSON AS ALSO FOR EXPAN SION OF THE NETWORK AND DEDUCTED TDS U/S.194C OF THE ACT. THE LOWER AUTHOR ITIES HAVE NOTICED THAT THERE WERE SHORT DEDUCTIONS OF TAX UNDER SECTION 20 1(1) IN RESPECT OF VARIOUS PAYMENTS MADE TO ERICSSON LTD. THESE PAYMENTS WERE MADE TO M/S ERICSSON INDIA LTD FOR INSTALLATION AND COMMISSIONING OF EQU IPMENT ARE HIGHLY SKILLED AND TECHNICAL IN NATURE. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE AO AND THE CIT(A) ON THIS ISSUE, WHICH IS CONFIRMED AND THIS GROUND OF THE ASSESSEE IS DISMISSED. 15. GROUND NO.6 OF THE ASSESSEE READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN HOLDING THAT THE TAX IS DEDUCTIBLE UNDER SECTION 194J INSTEAD OF 194 C AS DEDUCTED BY THE ASSESSEE AT THE TIME OF MAKING PAYMENT TO M/S.Z EPLIN MOBLE SYSTEMS INDIA LTD. TOWARDS INSTALLATION OF PREFABRI CATED SHELTERS AND ANTENNA AND ACCORDINGLY HELD APPELLANT AS ASSESSEE IN DEFAULT FOR ALLEGED SHORT DEDUCTION OF TAX UNDER SECTION 201 RE AD WITH SECTION 194J OF THE ACT. 2. THE APPELLANT PRAYS THAT IT BE HELD THAT THE APP ELLANT HAS RIGHTLY DEDUCTED TDS U/S.194C AND THE ACTION OF THE AO IN H OLDING THE APPELLANT AS ASSESSEE IN DEFAULT ON THE ALLEGED S HORT DEDUCTION U/S.201 READ WITH SECTION 194J OF THE ACT BE SET AS IDE/QUASHED. 16. THE AO OBSERVED THAT THE ASSESSEE HAS MADE PAYM ENT TO M/S GEPLIN MOBILE SYSTEMS INDIA LTD. AT RS.26.24 LAKHS IN F.Y. 0708/-, RS.11.74/- LAKHS IN F.Y. 2008-09 AND RS.3.45 LAKHS IN F.Y,.2009-10 FOR FEES FOR PROFESSIONAL OR TECHNICAL SERVICES AND LIABLE TO BE DEDUCTED T.D.S. @ 11.33% WHEREAS THE ASSESSEE DEDUCTED T.D.S. U/S 194 C @ 2.66 PER CENT AS PAYMENT TO 6 CONTRACTOR. THE CI.T (A) HELD THE ACTION OF THE A. O. JUSTIFIABLE AND CONFIRMED THE ORDER OF THE A.O. 17. BEFORE US THE LD. A.R. FOR THE ASSESSEE CLAIME D THAT THESE PAYMENTS WERE MADE AGAINST CONTRACT AND LIABLE TO B E DEDUCTED TDS U/S 194 C OF I.T. ACT. THE LD. D.R. VEHEMENTLY ARGUED THAT THE PAYMENT MADE TO THE COMPANY ARE HAVING NATURE OF FEES FOR TECHNICAL SER VICES AND HE RELIED UPON THE ORDER OF C.I.T.(A) AND ORDER OF THE A.O. 18. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE A.O. AND THE CIT(A) AND THE DECISIONS RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE. WE FIND THAT THE ASSESSEE HAS DEDUCTED T AX AT SOURCE @ 2.66% WHILE THE SAME WAS TO BE DEDUCTED @ 11.33% U/S 194J OF THE ACT. THE LOWER AUTHORITIES HAVE NOTICED THAT THERE WERE SHORT DEDU CTIONS OF TAX UNDER SECTION 201(1) IN RESPECT OF VARIOUS PAYMENTS MADE TO THE P ARTY. BEING PAYMENT TOWARDS INSTALLATION OF PRE-FABRICATED SHELTER AND ANTENNA ARE HIGHLY SKILLED AND TECHNICAL. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE A.O. AND THE C.I.T.(A) ON THIS ISSUE, WHICH IS CONFIRMED AND THIS GROUND OF THE ASSESSEE IS DISMISSED. 19. GROUND NO.7 OF THE ASSESSEE READS AD UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN UPHOLDING PAYMENTS MADE TO M/S GTL INFRASTRUCTURE LTD. (GTL) IS SUBJECT TO TDS U/S 194 J EVEN AFTER PRODUCING LOWER DEDUCTION CERTIFICATES TO HIM. 2. THE APPELLANT PRAYS THAT THE LOWER DEDUCTION CE RTIFICATES OBTAINED BY THE RECIPIENT BE CONSIDERED, AND CONSEQ UENTLY THE ACTION OF AO IN HOLDING THE APPELLANT AS ASSESSEE IN DEFAULT ON THE ALLEGED SHORT DEDUCTION U/S 201 OF THE ACT BE SET ASIDE/QUA SHED. 20. THE AO OBSERVED THAT THE ASSESSEE HAD MADE PAY MENT TO IDEA CELLULAR SERVICES LTD. SISTER CONCERN OF TH E ASSESSEE IN F.Y. 2007-08 RS.88.71 LAKHS, IN F.Y. 2008-09 RS.5.57 CRO RE AND IN F.Y. 2009-10 RS.4.41 CRORE AND DEDUCTED TDS @ 2.66% FOR F.Y. 2007-08 AND 2008-09 AND FOR F.Y. 2009-10 UP TO JULY, 2010 AND FOR THE OTHER PERIOD @ 2%. THE SAME SHOULD BE DEDUCTED @ 10% U/S 194J OF THE 7 I.T. ACT. THE CIT(A) HELD THE ACTION OF THE AO AS PER LAW AND TREATED THIS PAYMENT FOR FEES FOR TECHNICAL SERVICES. 21. BEFORE US THE LD. A.R. FOR THE ASSESSEE HAS CO NTENDED THAT THESE PAYMENTS WERE MADE TO THE SISTER CONCERN ED M/S IDEA CELLULAR SERVICES LTD FOR PROVIDING OF MEN POWER TO THE APPELLANT. THE MEN POWER WAS NOT HIGHLY QUALIFIED PERSONNEL. THEY HAD EDUCATION ONLY UP TO 12 OR HARDLY B.A. THEY HELPED THE APPEL LANT IN ADVERTISING AS WELL AS GETTING CUSTOMERS FOR THE COMPANY. THUS, T HIS WAS THE PAYMENT AGAINST THE CONTRACT MADE BETWEEN THEM. 22. THE LD D.R. OPPOSED THE ARGUMENT MADE BY THE L D. A.R. FOR THE APPELLANT AND HE DREW OUR ATTENTION ON THE ORDER OF THE A.O. AS WELL AS C.I.T.(A) AND CLAIMED THAT THIS IS PAYMENT FOR FEES FOR TECHNICAL SERVICES AND LIABLE TO BE DEDUCTED T.D.S. U/S 194J OF THE I.T. ACT. 23. WE HEARD BOTH THE SIDES AND GONE THROUGH THE ASSESSMENT ORDER AS WELL AS THE C.I.T.(A) ORDER AND FACTUAL PAPER BOOK SUBMITTED BY THE A.R. FROM SL. NO.194 TO 197 WHICH SHOW THAT THESE PAYMENTS WERE FOR EXECUTION OF CONTRACT FOR MEN POW ER PROVIDED BY THE SISTER COMPANY I.E. IDEA CELLULAR SERVICES LTD. & W ERE NOT HIGHLY QUALIFIED PERSONNEL. THEREFORE, THERE IS NO LIABIL ITY ON THE PART OF THE ASSESSEE TO DEDUCT TAX FROM THE SAME U/S 194J OF TH E I.T. ACT. THE APPEAL ON THIS GROUND IS ALLOWED. 24. GROUND NO.8 OF THE ASSESSEE READS AD UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN UPHOLDING THE ACTION OF TH E AO IN HOLDING THAT THE TAX IS DEDUCTIBLE U/S 194J INSTEAD OF 194C AS D EDUCTED BY THE APPELLANT AT THE TIME OF MAKING PAYMENT TO M/S IDEA CELLULAR SERVICES LTD. FOR PROVIDING MANPOWER TO THE APPELLANT AND AC CORDINGLY HELD APPELLANT AS ASSESSEE IN DEFAULT FOR ALLEGED SHOR T DEDUCTION OF TAX U/S 201 READ WITH SECTION 194J OF THE ACT. 2. THE APPELLANT PRAYS THAT IT BE HELD THAT THE AP PELLANT HAS RIGHTLY DEDUCTED TDS U/S 194C AND THE ACTION OF AO IN HOLDING THE APPELLANT AS ASSESSEE IN DEFAULT ON THE ALLEGED S HORT DEDUCTION U/S 201 READ WITH SECTION 194J OF THE ACT BE SET ASIDE/ QUASHED. 8 25. THE ASSESSEE MADE PAYMENT TO THE S.O.I. EVENT MANAGEMENT IN F.Y. 2007-08 AT RS.1.07 CRORES AND IN F.Y. 2008-09 RS.4.67 LAKHS FOR CONDUCTING BUSINESS PROMOTION ACT IVITY AND SUPPLYING OF PAMPHLET FOR NEW TOWN LAUNCHES. THE A.O. HAD TRE ATED THESE PAYMENTS AS FEES FOR TECHNICAL SERVICE AND LIABLE T O BE DEDUCTED TDS U/S 194J OF THE I.T. ACT @ 10.33% WHEREAS THE ASSES SEE HAD DEDUCTED TDS U/S 194C @ 2%. THE CIT(A) HELD THE ACTION OF T HE A.O. JUSTIFIABLE AND CONFIRMED THE FINDINGS. 26. BEFORE US THE LD. AR FOR THE ASSESSEE SUBMITTE D THAT THESE SERVICES ARE COVERED U/S 194C AS CONTRACT MAD E WITH S.O.I. EVENT MANAGEMENT. HE SUBMITTED PAPER BOOK FROM SL. NO.198 TO 207 OF FACTUAL PAPER BOOK IN WHICH THE COPY OF BILLS WI TH DETAILED DESCRIPTION OF WORK EXECUTED BY THE S.O.I. EVENT MANAGEMENT WHI CH SHOW THAT THIS PAYMENT IS FOR BUSINESS PROMOTION AND SUPPLY OF THE PAMPHLETS WHICH DID NOT INCLUDE ANY TECHNICAL EXPERTISE AS REQUIRED FOR THE TELECOMMUNICATION WORK. THUS, THERE IS NO LIABILIT Y OF THE ASSESSEE TO DEDUCT TDS U/S 194J OF THE I.T. ACT. THE LD. DR REL IED UPON THE ORDER OF THE AO AND THE CIT (A). PRIMA-FACIE THE EVIDENCE S UBMITTED BY THE ASSESSEES AR SHOWS THE NATURE OF PAYMENT FOR CONTR ACT FOR BUSINESS PROMOTION. ACCORDINGLY, APPEAL ON THIS POINT IS A LLOWED. 27. GROUND NO.9 OF THE ASSESSEE READS AD UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN UPHOLDING THE ACTION OF TH E AO IN HOLDING THAT THE TAX IS DEDUCTIBLE U/S 194J INSTEAD OF 194C AS D EDUCTED BY THE APPELLANT AT THE TIME OF MAKING PAYMENT TO M/S ARTH INTERIOR FOR INSTALLATION OF FURNITURE AND FIXTURES AND ACCORDIN GLY HELD APPELLANT AS ASSESSEE IN DEFAULT FOR ALLEGED SHORT DEDUCTION O F TAX U/S 201 READ WITH SECTION 194J OF THE ACT. 2. THE APPELLANT PRAYS THAT IT BE HELD THAT THE AP PELLANT HAS RIGHTLY DEDUCTED TDS U/S 194C AND THE ACTION OF AO IN HOLDING THE APPELLANT AS ASSESSEE IN DEFAULT ON THE ALLEGED S HORT DEDUCTION U/S 201 READ WITH SECTION 194J OF THE ACT BE SET ASIDE/ QUASHED. 28. THE ASSESSEE MADE PAYMENT TO M/S ARTH INTERIOR IN FY. 2007-08 AT RS.34.36 LAKHS, IN F.Y. 2008-09 RS.1.06 LAKHS AND IN F.Y. 9 2009-10 RS.4.14 LAKH AND DEDUCTED TDS @ 2% U/S 194C OF THE I.T. ACT BEING CONTRACT WHEREAS THE A.O. FOUND THE PAYME NT FOR INSTALLATION OF FURNITURE AND PICTURE AS FEES FOR TECHNICAL SERV ICES U/S 194J OF THE I.T. ACT. THE LD C.I.T.(A) HAD CONFIRMED THE ACTION OF THE A.O. 29. BEFORE US THE LD. AR FOR THE ASSESSEE HAS CONT ENDED THAT THESE PAYMENTS WERE FOR FURNITURE AND FIXTURE AS PER CONTRACT BETWEEN THEM AND ARE NOT TECHNICAL SERVICES DEFINED IN SECTION 194J OF THE I.T. ACT. HE ALSO FILED THE FACTUAL PAPER BOOK AT PAGE 208 TO 214 WHICH SHOWS THAT THESE PAYMENTS PERTAINED TO FIXING OF FURNITURE AND FIXTURE AND THE ASSESSEE HAS RIGHTLY DEDUCTED TDS U /S 194C OF THE I.T. ACT WHEREAS LD. D.R. FOR THE REVENUE RELIED UPON ON THE ORDER OF THE C.I.T. (A) AND THE ORDER OF THE A.O. 30. WE HAVE PERUSED THE ORDER OF THE A.O., ORDER O F THE C.I.T.(A) AND PAPER BOOK SUBMITTED BY THE A.R. AND ALSO HEARD THE ARGUMENT OF BOTH THE SIDES. IT IS REASONABLY CONCL UDED BY US THAT THERE IS NO HIGHLY TECHNICAL KNOWLEDGE IS REQUIRED AS ENV ISAGED IN EXECUTING THE WORK OF INSTALLATION OF FURNITURE AND FIXTURE IN ITS PROJECT. THIS IS SIMPLE FIXING OF FURNITURE. THEREFORE, THE ASSESSEE HAD RIGHTLY DEDUCTED TDS U/S 194C OF THE I.T. ACT. ACCORDINGLY, APPEAL ON THIS GROUND IS ALLOWED. 31. GROUND NO.10 OF THE ASSESSEE READS AD UNDER:- 1. THE LD. CIT(A) ERRED IN NOT CONSIDERING GROUND NO.VII RAISED BEFORE HIM, WHEREIN IT WAS CONTENDED BY THE APPELLANT THAT IF THE RECIPIENT HAS PAID TAXES ON INCOME WHICH IS ALLEGED TO BE THE SUBJECT MATTER OF TDS U/S 194J, THE SAME CANNOT ONCE AGAIN BE RECOVERED FROM THE APPELLANT ON THE GROUND THAT NO DETAILS HA S BEEN FILED BY THE APPELLANT IN THIS REGARDS. 2. HE FAILED TO APPRECIATE AND OUGHT TO HAVE HELD THAT: THE APPELLANT HAD FILED ALL THE PRIMA FACIE DETAI LS AS TO SHOW THAT RECIPIENT HAD PAID TAXES ON INCOME WHICH IS ALLEGED TO BE THE SUBJECT MATTER OF TDS U/S 194J. WITHOUT PREJUDICE, EVEN OTHERWISE, BASED ON THE A BOVE DETAILS FILED, THE CIT(A) AN DIRECT AO TO MAKE AN E NQUIRY FROM THE RECIPIENT OF THE INCOME TO VERIFY AS TO WHETHER THE TAXES HAVE BEEN PAID BY THE RECIPIENT FULLY OR NOT. 10 3. THE APPELLANT PRAYS THAT IT BE HELD THAT IF THE RECIPIENT HAS PAID TAXES ON THE INCOME WHICH IS ALLEGED TO BE SUBJECT MATTER OF TDS U/S 194J, THE SAME CANNOT BE ONCE AGAIN BE RECO VERED FROM THE APPELLANT AND ACCORDINGLY, THE A.O. BE DIRECTED TO RECOMPUTED THE DEMAND U/S 201 AFTER CONSIDERING THE TAXES PAID BY THE RECIPIENTS. 32. THE APPELLANT HAD TAKEN GROUND BEFORE THE CIT( A) THAT RECIPIENT HAD PAID TAXES ON RECEIPTS AND PRODUCED T HE EVIDENCES BEFORE HIM BUT CIT(A) HAS DISMISSED THE GROUND. TH E ASSESSEE RELIED UPON THE APEX COURT DECISION IN CASE OF HINDUSTAN COCA-COLA BEVERAGE (P) LTD. VS. C.I.T.(2007) 163 TAXMEN 355 (SC) WHERE HONBLE SUPREME COURT HELD THAT WHEN RECIPIENT OF I NCOME HAS ALREADY PAID TAXES ON AMOUNT RECEIVED FROM DEDUCTER. THE D EPARTMENT ONCE AGAIN CANNOT RECOVER TAX FROM DEDUCTER ON SAME INCO ME BY TREATING DEDUCTOR TO BE ASSESSEE IN DEFAULT FOR SHORTFALL IN ITS AMOUNT OF TAX DEDUCTED AT SOURCE AFTER CONSIDERING THE CIRCULAR N O.275/201/95 I.T. (B) DATED 29.01.1997. THE AO IS DIRECTED TO VERIFY TH E FACT FROM THE RECIPIENT AND GIVE REASONABLE OPPORTUNITY BEING HEA RD. IF THE RECIPIENT HAD PAID THE TAX ON FULL RECEIPTS, THEN THE DEPARTM ENT CAN CHARGE INTEREST U/S 201(1) OF THE I.T. ACT UP TO DATE OF P AYMENT OF TAX BY THE RECIPIENT FROM THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO COOPERATE WITH THE AO AND PRODUCE ALL THE EVIDENCES FOR HIS SATISFACTION. ACCORDINGLY, THIS GROUND OF APPEAL I S SET ASIDE. 33. GROUND NO.11 OF THE ASSESSEE READS AD UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN UPHOLDING THE ACTION OF TH E AO IN LEVYING THE INTEREST U/S 201(1A) ON THE ALLEGED SHORT DEDUCTION OF TAXES U/S 194J OF THE ACT. 2. THE APPELLANT PRAYS THAT IT BE ABSOLVED FROM TH E LIABILITY TO PAY THE INTEREST U/S 201(1A) OF THE ACT OR BE AP PROPRIATELY REDUCED. 34. THE AO CHARGED INTEREST U/S 201(1A) AT RS.5,20,05,131/- FOR SHORT DEDUCTION OF TAX ON VARI OUS PAYMENT UP TO DATE OF PAYMENT OF TAX BY THE ASSESSEE. THE ACTION OF THE AO WAS CONFIRMED BY THE CIT (A). THE AR OF THE ASSESSEE AR GUED THAT INTEREST 11 U/S 201(1A) IS NOT LEVIABLE AS THERE WAS NO LIABILI TY U/S 194J OF THE I.T. ACT. HE FURTHER RELIED ON THE DECISION OF CIT VS. RISHIKESH APPARTMENTS CO-OPERATIVE HOUSING SOCIETY LTD. (2001 ) 119 TAXAMAN 239 (GUJ.) WHERE HONBLE GUJARAT HIGH COURT HAS HEL D THAT THE ASSESSEE FAILED TO DEDUCT AMOUNT OF TAX FROM AMOUNT PAID TO THE CONTRACTOR, WHICH IT WAS REQUIRED TO DEDUCT UNDER P ROVISIONS OF SECTION 194C. HOWEVER, THE CONTRACTOR HAD PAID SUFFICIENT ADVANCE TAX AND ALSO TAX ON SELF ASSESSMENT ON DUE DATE. THERE WAS NO LOSS HAVING BEEN CAUSED TO REVENUE ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE BY THE ASSESSEE, NO INTEREST COULD BE LEVELED U/S 2 01(1A) OF THE I.T. ACT. WE RESPECTFULLY FOLLOW THE DECISION OF GUJARA T HIGH COURT BUT FACTS OF THE DEDUCTEE ARE NOT AVAILABLE ON RECORD, THEREF ORE, THE AO IS DIRECTED TO VERIFY THE FACT AND FOLLOW THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CIT VS. RISHIKESH APPARTMENTS CO-OPER ATIVE HOUSING SOCIETY LTD. (SUPRA) AND CALCULATE THE INTEREST U/S 201(1A) OF I.T. ACT UP TO DATE OF PAYMENT OF TAX BY THE DEDUCTEE. ACCORDI NGLY, THIS ISSUE IS SET ASIDE TO THE AO WITH DIRECTION TO GIVE REASONAB LE OPPORTUNITY TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO COOPERAT E WITH THE AO AND PRODUCE REQUIRED EVIDENCE FOR HIS SATISFACTION. 35. GROUND NO.12 OF THE ASSESSEE READS AD UNDER:- 1. THE LD. CIT(A) ERRED IN NOT ADJUDICATING GROUND NO.X RAISED BEFORE HIM, WHEREIN IT WAS CONTENDED BY THE APPELLANT THAT THE AO ERRED IN CALCULATING THE INTEREST AMOUNT U/S 201 (1A) ON THE ALLEGED SHORT DEDUCTION OF TAXES U/S 194J OF THE ACT. 2. THE APPELLANT PRAYS THAT THE AO BE DIRECTED TO CALCULATE THE INTEREST LIABILITY U/S 201(1A) FROM THE DUE DAT E OF ALLEGED SHORT DEDUCTION TO THE DATE OF PAYMENTS OF TAXES BY THE R ECIPIENT OF INCOME. 36. THE LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESS ED THIS GROUND, HENCE DISMISSED. 37. GROUND NO.13 OF THE ASSESSEE READS AD UNDER:- 1. THE LD. CIT(A) ERRED IN NOT ADJUDICATING GROUND NO.XI RAISED BEFORE HIM, WHEREIN IT WAS CONTENDED BY THE APPELLANT THAT THE AO ERRED IN CALCULATING THE INTEREST AMOUNT U/S 201 (1) AND INTEREST U/S 201(1A) AT RS,9,08,13,232/- AND RS.5,20,05,131/- RE SPECTIVELY. 12 2. THE APPELLANT PRAYS THAT THE AO BE DIRECTED TO CALCULATE THE CORRECT DEMAND AND INTEREST AMOUNT TO R.,9,08,1 3,232/- AND RS.5,20,05,131/- RESPECTIVELY FOR THE CAPTIONED ASS ESSMENT YEARS. 38. THE LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESS ED THIS GROUND, HENCE DISMISSED. 39. IN THE RESULT, APPEALS IN ALL THE THREE YEARS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 20.04.2012 SD/- SD/- (G.C. GUPTA) (T.R. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER COPY OF THE ORDER FORWARDED TO: : APPELLANT : RESPONDENT : CIT(A) : CIT CONCERNED : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD 1. DATE OF DICTATION : 12 - 04 - 2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER. : 12 - 04 - 2012 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S : 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT. : 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER : 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. : 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK. : 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. : 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER. : 10. DATE OF DESPATCH OF THE ORDER :