DCIT (TDS-1), Pune V. Serum Institute of India Limited, Pune

ITA 2170/PUN/2012

• Counselvise Citation: 217024514 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 02-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Assessee Lawyers: R D ONKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.2170/PN/2012 A.Y. 2007-08 DCIT (TDS-1), PUNE APPELLANT VS. SERUM INSTITUTE OF INDIA LIMITED SAROSH BHAVAN, 16-B/1, DR. AMBEDKAR ROAD, PUNE - 411001 PAN: AABCS4225M RESPONDENT APPELLANT BY : SHRI P.L. P ATHADE RESPONDENT BY : SHRI R.D . ONKAR DATE OF HEARING: 12.12.2013 DATE OF ORDER : 24.12.2013 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-V, [SHORT CI T(A)-V] PUNE, DATED 13.08.2012 FOR A.Y. 2007-08 ON THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT (A) ERRED IN HOLDING THAT P ROVISIONS OF SECTION 194I ARE NOT APPLICABLE IN RESPECT OF AI RCRAFT HIRE CHARGES WITHOUT APPRECIATING THE FACTS THAT AS PER THE AMENDED PROVISIONS OF SECTION 194I W.E.F. 13.07.200 6, THE RENT IN RESPECT OF MACHINERY, PLANT OR EQUIPMENT ET C. WERE BROUGHT INTO THE AMBIT OF SECTION 194 I. 2. THE APPELLANT CRAVES LEAVES TO AMEND OR ALTER ANY O R ALL THE GROUNDS OF APPEAL OR ADD A NEW GROUND WHICH MAY BE NECESSARY AT THE TIME OF THE HEARING OF THE CASE TH EREAFTER. 2 3. THE ORDER OF THE LEARNED CIT (A) BEING ERRONEOUS BE SET ASIDE AND A.O'S ORDER RESORTED ON THIS ISSUE. 2. THE ASSESSEE IS A COMPANY ENGAGED IN MANUFACTURE OF DRUGS AND VACCINES. THE ISSUE IS WITH REGARD TO DE MAND U/S.201(1) OF IT ACT AT RS.36,38,494/- AND INTEREST THEREON U/S.201(1A) AT RS.21,83,096/- IN RESPECT OF PAYMENT MADE TO M/S. POONAWALLA AVIATION PVT. LTD., FOR CHARTERING OF AIRCRAFT. DURING THE COURSE OF TDS PROCEEDINGS, THE DCIT(TDS) , PUNE NOTICED THAT THE ASSESSEE COMPANY HAS MADE PAYMENT OF RS.1,65,91,398/- TO M/S. POONAWALLA AVIATION PVT. L TD. FOR HIRING OF AIRCRAFT. HOWEVER, THE TAX WAS DEDUCTED @ 2% U/ S.194C OF INCOME-TAX ACT, WHILE DCIT(TDS)-I, PUNE WAS OF THE VIEW THAT THE TAX WAS REQUIRED TO BE DEDUCTED U/S.1941 OF INCOME- TAX ACT AS THE PAYMENT WAS MADE FOR HIRING OF PLANT AND MACHIN ERY. ACCORDINGLY, DEMAND U/S.201(1) OF INCOME-TAX ACT AT RS.36,38,194/- AND INTEREST THEREON U/S.201(1A) OF INCOME-TAX. ACT AT RS.21,83,096/-WAS RAISED AGAINST THE ASSESSE E. 3. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AU THORITY, INTER ALIA STATED THAT THE ASSESSEE HAD HIRED THE AIRCRAF T FROM TIME TO TIME AND MADE PAYMENT ON HOURLY BASIS. THE ASSESSE E SUBMITTED COPIES OF BILLS RAISED WHEREIN THE INVOIC E WAS RAISED ON THE BASIS OF FLYING HOURS. IT WAS SUBMITTED THAT IN SUBSEQUENT YEAR CERTIFICATE FOR DEDUCTION U/S.197(1) OF INCOME -TAX ACT WAS GRANTED BY THE ITO(TDS)-2, PUNE AT THE RATE OF 0.5 %, TREATING THE PAYMENT AS CONTRACT PAYMENT. THE ASSESSEE ALSO RAI SED VARIOUS CONTENTIONS BEFORE CIT(A), WHO HAVING CONSIDERED TH E SAME, DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. SAME IS O PPOSED BEFORE US BY REVENUE, INTER ALIA, LEARNED DEPARTMENTAL REP RESENTATIVE SUBMITTED THAT CIT(A) ERRED IN HOLDING THAT PROVISI ONS OF SEC.194I ARE NOT APPLICABLE IN RESPECT OF AIRCRAFT HIRE CHAR GES AND SUBMITTED THAT ASSESSING OFFICER WAS JUSTIFIED IN I NVOKING THE PROVISIONS OF SEC.194I FOR RENT IN RESPECT OF PLANT AND MACHINERY 3 OR EQUIPMENT. ON THE OTHER HAND, LEARNED AUTHORIZE D REPRESENTATIVE SUPPORTED THE ORDER OF CIT(A) INTER ALIA SUBMITTED THAT THE ASSESSING OFFICER ERRED IN CONCLUDING THE TDS ON PAYMENT MADE BY ASSESSEE TO M/S. POONAWALLA AVIATIO N PVT. LTD. FOR CHARTERING AIRCRAFT SHOULD BE MADE @ 22.44 UNDE R HEAD AIRCRAFT HIRE CHARGES AS AGAINST DEDUCTION U/S.194C @ 2.24 BY ASSESSEE, ACCORDINGLY, ORDER OF CIT(A) BE HELD. 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT ISSUE BEFORE US IS WITH REGARD TO DEMAND U/S.201(1) OF IT ACT AT RS.36,38,494/- AND INTEREST THEREON U/S.201(1A) AT RS.21,83,096/- IN RESPECT OF THE PAY MENT MADE TO M/S. POONAWALLA AVIATION PVT. LTD. FOR CHARTERING A IRCRAFT. THE PAYMENT IS MADE FOR USE OF SERVICES OF AIRCRAFT AND NOT THE USE OF AIRCRAFT, AS SUCH AND THE PAYMENT WAS MADE ON HOURL Y BASIS. THEREFORE, THERE WAS CONTRACT FOR SERVICES OF THE A IRCRAFT AND NOT THE USE OF AIRCRAFT AS PLANT & MACHINERY AS DEFINED IN SEC.194I OF INCOME-TAX ACT ON RENTAL BASIS AS THE AIRCRAFT WAS NOT AVAILABLE AT THE DISPOSAL OF THE ASSESSEE. IT WAS MADE AVAIL ABLE TO THE ASSESSEE ONLY ON DEMAND FOR WHICH PAYMENT WAS MADE ON THE BASIS OF FLYING HOURS. THE CONCERNED ITO HAS ISSUE D CERTIFICATE FOR LOWER DEDUCTION OF TAX AT THE RATE OF 0.5% VIDE ORDER DATED 17.09.2009, ACCEPTING THE NATURE OF SERVICES AS CON TRACT. THE PROVISIONS OF SEC.194C APPLICABLE TO THE SERVICE PR OVIDERS WHILE HIRING HELICOPTERS / AIRCRAFT SERVICES. IN VIEW OF ABOVE, DCIT(TDS)-I, PUNE WAS NOT JUSTIFIED IN INVOKING OF PROVISIONS OF SEC.194I OF INCOME-TAX ACT IN RESPECT OF PAYMENT MA DE TO M/S. POONAWALLA AVIATION PVT. LTD., ACCORDINGLY, CIT(A) WAS JUSTIFIED IN DIRECTING THE CONCERNED DCIT(TDS)-I, PUNE DELETE AN AMOUNT OF RS.36,38,494/- U/S.201(1) AND RS.21,83,096/- U/S.20 1(1A). WE UPHOLD THE SAME. THIS VIEW IS FORTIFIED BY DECISIO N OF ITAT, MUMBAI IN ITA NO.3419 & 3420/MUM/2010 IN THE CASE O F M/S. SKIL INFRASTRUCTURE LTD. 4 5. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 24 TH OF DECEMBER, 2013. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 24 TH DECEMBER 2013 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 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// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE