ITO (TDS-3), Pune V. UB Engineering Limited, Pune

ITA 2025/PUN/2012

• Counselvise Citation: 202524514 RSA 2012
• Duration Of Justice: 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 18-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIB JAIN
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS. 2025 & 2026/PN/2012 (FINANCIAL YEARS : 2007-08 & 2008-09) INCOME TAX OFFICER, (TDS-3), PUNE . APPELLANT VS. UB ENGINEERING LIMITED SAHYDRI SADAN, TILAK ROAD, PUNE 411 030 TAN : PNEUO5807E . RESPONDENT DEPARTMENT BY : MR. RAJIB JAIN ASSESSEE BY : NONE DATE OF HEARING : 19-09-2013 DATE OF PRONOUNCEMENT : 30-09-2013 ORDER PER G. S. PANNU, AM THE CAPTIONED TWO APPEALS HAVE BEEN PREFERRED BY T HE REVENUE. IN BOTH THE APPEALS, THE ISSUE RAISED BY THE REVENUE I S IDENTICAL AND THEREFORE, THEY HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CON SOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. ITA NO.2025/PN/2012 PERTAINING TO ASSESSMENT YEAR 2008-09 (F.Y. 2007-08) IS TAKEN AS A LEAD CASE. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DATED 16.07.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 24.03.2010 PASSED BY THE ASSESSING OFFICER, UNDER SECTIONS 201(1) AND 201(1A) OF THE INCOME- TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO T HE FINANCIAL YEAR 2007-08. 3. IN BRIEF, THE FACTS ARE THAT THE RESPONDENT-ASS ESSEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS INTER-ALIA ENGAGED IN THE BUSINESS OF ERECTION AND COMMISSIONI NG OF INDUSTRIAL PLANTS (I.E. POWER PLANTS, PETROCHEMICALS COMPLEXES, OIL R EFINERIES, ETC.) AND ALSO ITA NOS. 2025 & 2026/PN/2012 A.YS. 2008-09 & 2 009-10 UNDERTAKES MAINTENANCE OF OPERATIONAL PLANTS. THE A SSESSEE UNDERTAKES SUCH WORKS ON CONTRACTUAL BASIS. IN THE PROCESS OF EXECU TING SUCH-LIKE CONTRACTS, ASSESSEE IS FACED WITH HEAVY DEVELOPMENT OF MAN POW ER AND MACHINERY AT SEVERAL SITES AND FOR THE EXECUTION OF WORK IT DIVI DES THE WHOLE CONTRACT WORK INTO SMALLER AND MORE MANAGEABLE WORKS CONTRACTS. A MONGST THE MACHINERY DEPLOYED, IT INCLUDES CRANES WHICH ARE MOBILIZED FOR MOVEMENT OF HEAVY MACHINERY, COMPONENTS, ARTICLES, ETC. BETWEEN THE S TORAGE AREA TO THE PLACE OF ERECTION, FABRICATION SHOP AND OTHER DEPOTS AND ALS O FOR ERECTION OF PLANT MATERIAL. APART FROM THE DEPLOYMENT OF MACHINERY, A SSESSEE ALSO ALLOCATED SPECIFIC ACTIVITIES TO LABOUR CONTRACTORS. IN THE C ASE OF SUCH ACTIVITIES, ASSESSEE INCURRED EXPENDITURE OF RS.1,21,14,506/- FOR MOBILI ZATION OF CRANES. THE ASSESSEE COMPANY DEDUCTED TAX AT SOURCE ON SUCH PAY MENTS TREATING THE SAME TO BE CONTRACTUAL PAYMENTS AND APPLYING THE PR OVISIONS OF SECTION 194C OF THE ACT. ACCORDINGLY, THE ASSESSEE DEDUCTED TAX AT SOURCE UNDER SECTION 194C @ 1% WHEREAS AS PER THE ASSESSING OFFICER THE TAX WAS LIABLE TO BE DEDUCTED IN TERMS OF THE PROVISIONS OF SECTION 194I OF THE ACT @ 10% PLUS SURCHARGE TREATING THE PAYMENTS AS RENTAL PAYMENTS. FOR THE SAID REASON, THE ASSESSING OFFICER TREATED THE ASSESSEE AS AN ASSESS EE IN DEFAULT IN TERMS OF SECTION 201(1) OF THE ACT FOR SHORT DEDUCTION OF TA X TO THE EXTENT OF RS.12,39,043/- AND ALSO HELD THE ASSESSEE LIABLE FO R THE PAYMENT OF INTEREST ON SUCH SHORT DEDUCTION IN TERMS OF SECTION 201(1A) AMOUNTING TO RS.4,46,055/-. 4. AGAINST THE AFORESAID ORDER OF THE ASSESSING OFF ICER, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) CONSIDERED THE FACTS OF THE CASE AND CONCLUDED THAT ASSESSEE HAD CORRECTLY APPL IED THE PROVISIONS OF SECTION 194C OF THE ACT WHILE DEDUCTING THE TAX AT SOURCE ON THE IMPUGNED PAYMENTS. THE CIT(A) HAS NOTICED THAT ASSESSEE HIRE D SERVICES OF CRANES FOR WHICH ENTIRE MAINTENANCE, REPAIRS, DRIVERS SALARIE S ETC. WAS BORNE BY THE SUPPLIER. THE CIT(A) RELIED UPON THE DECISION OF TH E PUNE BENCH OF THE ITA NOS. 2025 & 2026/PN/2012 A.YS. 2008-09 & 2 009-10 TRIBUNAL IN THE CASE OF M/S WINGS TRAVELS, ITA NO. 1136/PN/2009 DATED 30.08.2011 AND ALSO THE JUDGEMENT OF THE HONBLE GU JARAT HIGH COURT IN THE CASE OF SWAYAM SHIPPING SERVICES (P) LTD., 339 ITR 647 (GUJARAT) AND CONCLUDED THAT THE ASSESSING OFFICER WAS NOT JUSTIF IED IN INVOKING THE PROVISIONS OF SECTION 194I OF THE ACT IN RESPECT OF THE CRANE HIRE CHARGES. ACCORDINGLY, HE DIRECTED THE ASSESSING OFFICER TO D ELETE THE DEMAND OF RS.12,39,043/- RAISED UNDER SECTION 201(1) OF THE A CT AND ALSO THE CONSEQUENTIAL DEMAND OF RS.4,65,055/- RAISED UNDER SECTION 201(1A) OF THE ACT. AGAINST THE AFORESAID DECISION OF THE CIT(A), REVENUE IS IN FURTHER APPEAL BEFORE US. 5. AT THE TIME OF HEARING, THE LEARNED DEPARTMENTAL REPRESENTATIVE WHILE REITERATING THE STAND OF THE ASSESSING OFFICER, FAI RLY SUBMITTED THAT THERE WAS NO DECISION CONTRARY TO THE DECISION OF THE PUNE BE NCH OF THE TRIBUNAL IN THE CASE OF M/S WINGS TRAVELS (SUPRA) AND THAT OF THE H ONBLE GUJARAT HIGH COURT IN THE CASE OF SWAYAM SHIPPING SERVICES (P) LTD. (S UPRA), WHICH HAVE BEEN FOLLOWED BY THE CIT(A) IN TREATING THE IMPUGNED PAY MENTS AS BEEN COVERED UNDER SECTION 194C OF THE ACT AND NOT UNDER SECTION 194I OF THE ACT. 6. WE HAVE PERUSED THE ORDER OF THE AUTHORITIES BEL OW AND ALSO THE SUBMISSIONS PUT-FORTH BY THE LEARNED DEPARTMENTAL R EPRESENTATIVE, WHICH ARE PRIMARILY IN LINE WITH THE DISCUSSION MADE BY THE A SSESSING OFFICER IN THE ASSESSMENT ORDER. IN OUR CONSIDERED OPINION, THE IS SUE STANDS FULLY COVERED IN FAVOUR OF THE ASSESSEE IN TERMS OF THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S WINGS TRAVELS (SUPRA), WHICH HAS BEEN FOLLOWED BY THE CIT(A). FACTUALLY SPEAKING, IT IS NOT IN DISPUT E THAT THE CRANE OWNER NOT ONLY PROVIDES THE SERVICES OF A CRANE BUT IS ALSO R ESPONSIBLE TO PROVIDE THE OPERATOR AND INCUR MAINTENANCE & REPAIRS COSTS, ETC .. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SWAYAM SHIPPING SERVICES (P) LTD. (SUPRA) HELD THAT THE PAYMENTS FOR HIRING CRANES AND TRAILERS WERE LI ABLE FOR DEDUCTION OF TAX AT ITA NOS. 2025 & 2026/PN/2012 A.YS. 2008-09 & 2 009-10 SOURCE IN TERMS OF SECTION 194C OF THE ACT AND NOT IN TERMS OF SECTION 194I OF THE ACT. FURTHER, IT IS ALSO PERTINENT TO OBSERVE T HAT IN A RECENT DECISION, THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF BHARAT FO RGE LTD. VS. ADDL.CIT VIDE ITA NO.1357/PN/2010 DATED 31.01.2013 HAS ALSO TAKEN A SIMILAR VIEW TO THE EFFECT THAT IN CASES WHERE THE CRANE OWNER PROVIDES THE OPERATOR AS ALSO IS RESPONSIBLE FOR DAY-TO-DAY MAINTENANCE AND OPERATIN G COSTS, THE PAYMENTS MADE FOR HIRING OF CRANES WOULD BE LIABLE FOR DEDUC TION OF TAX AT SOURCE UNDER SECTION 194C OF THE ACT AND NOT UNDER SECTION 194I OF THE ACT, AS CONTENDED BY THE REVENUE. 7. FOLLOWING THE AFORESAID PRECEDENTS AND IN THE AB SENCE OF ANY DECISION TO THE CONTRARY BROUGHT OUT BY THE LEARNED DEPARTME NTAL REPRESENTATIVE, WE HEREBY AFFIRM THE ORDER OF THE CIT(A) TO THE EFFECT THAT THE CRANE HIRE CHARGES ARE LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER SEC TION 194C OF THE ACT AND NOT UNDER SECTION 194I OF THE ACT. ACCORDINGLY, THE ORD ER OF THE CIT(A) IS HEREBY AFFIRMED. 8. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO.2 025/PN/2012 FOR FINANCIAL YEAR 2007-08 IS DISMISSED 9. SINCE THE FACTS AND CIRCUMSTANCES IN BOTH THE AP PEALS ARE IDENTICAL, OUR DECISION IN ITA NO.2025/PN/2012 PERTAINING TO THE F INANCIAL YEAR 2007-08 WOULD APPLY MUTATIS-MUTANDIS TO THE APPEAL IN ITA NO.2026/PN/2012 PERTAINING TO FINANCIAL YEAR 2008-09. 10. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 2026/PN/2012 FOR FINANCIAL YEAR 2008-09 IS ALSO DISMISSED. 11. RESULTANTLY, BOTH THE CAPTIONED APPEALS OF THE REVENUE ARE DISMISSED, AS ABOVE. ITA NOS. 2025 & 2026/PN/2012 A.YS. 2008-09 & 2 009-10 ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 30 TH SEPTEMBER, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR, A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE