The DCITTDS Circle, Ahmedabad V. IFFCO Ltd., Gandhinagar

ITA 2830/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67742 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 23-09-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 08-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: ASHWIN C SHAH
• Section: 194C; 201(1)

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , ,, , ! ! ! ! ' #$ ' #$ ' #$ ' #$, , , , % % % % BEFORE S/SHRI B.P. JAIN, ACCOUNTANT MEMBER AND KUL BHARAT, JUDICIAL MEMBER ITA NO.2830 AND 2831/AHD/2010 [ASSTT.YEAR : 2008-2009 AND 2009-2010] DCIT, TDS CIRCLE AHMEDABAD. /VS. IFFCO LTD. KALOL UNIT, P.O. KASTURINAGAR DIST. GANDHINAGAR. PAN : AAAAI 0050 M ( (( ('( '( '( '( / APPELLANT) ( (( ()*'( )*'( )*'( )*'( / RESPONDENT) +,$ - . / ASSESSEE BY : SHRI ASHWIN C. SHAH - . / REVENUE BY : SHRI K.C. MATHEWS, SR.DR ' 0 - $1/ DATE OF HEARING : 23 RD SEPTEMBER, 2013 234 - $1/ DATE OF PRONOUNCEMENT : 27.09.2013 5 / O R D E R PER B.P. JAIN, ACCOUNTANT MEMBER: THESE TWO APPEALS OF THE REVENUE ARISE FROM TWO DIFFERENT ORD ERS OF THE LD. CIT(A)-VI, AHMEDABAD BOTH DATED 29.7.2010 FOR THE A SSESSMENT YEAR 2008-2009 AND 2009-2010. 2. SINCE THE ISSUES IN BOTH THE APPEALS ARE IDENTIC AL, THEREFORE, BOTH THE APPEALS ARE BEING DISPOSED OF BY THIS CONS OLIDATED ORDER. ITA NO.2830 AND 2831/AHD/2010 -2- 3. THE REVENUE IN ITA NO.2830/AHD/2010 HAS RAISED T HE FOLLOWING GROUNDS: 1. THE LD.CIT(A) ERRED IN LAW AS WELL AS FACTS OF THE CASE IN DELETING THE INTEREST CHARGED U/S.201(1A) O F THE IT ACT OF RS.61,26,087/- BY THE AO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 4. THE GROUND IN THE REVENUES APPEAL IN ITA NO.28312/AHD/2010 IS IDENTICAL EXCEPT THE AMOUNT OF INTEREST U/S.201(1A) IS RS.39,18,004/-. 5. FIRST OF ALL, WE TAKE UP THE APPEAL OF THE REVEN UE IN ITA NO.2830/AHD/2010 AND OUR ORDER HEREINBELOW SHALL BE IDENTICALLY APPLICABLE IN ITA NO.2831/AHD/2010 BEING ON IDENTIC AL FACTS AS MENTIONED HEREINABOVE. 6. THE BRIEF FACTS ARE THAT DURING THE COURSE OF SU RVEY, IT WAS OBSERVED THAT THE ASSESSEE HAS MADE PAYMENT OF GAS TRANSPORTATION CHARGES TO GUJARAT STATE PETRONET LI MITED FOR F.Y.2007-2008 AT RS.22,81,69,361/-. ON VERIFICATIO N OF TDS DETAILS, IT WAS SEEN THAT THE ASSESSEE HAS MADE TDS U/S.194C AT THE RATE OF 2.266% ON THE ABOVE PAYMENT. HOWEVER, SINCE THE ABOVE PAYMENTS WERE IN THE NATURE OF RENT WITHIN TH E SEC.194J OF THE ACT, THE TAX WAS REQUIRED TO BE DEDUCTED AT THE RATE OF 11.33% UNDER SECTION 194-I OF THE ACT. ACCORDINGLY, SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE, WHO SUBMITTED THAT PAYM ENTS WERE ITA NO.2830 AND 2831/AHD/2010 -3- MADE IN PURSUANCE TO THE AGREEMENT ENTERED INTO WIT H GUJARAT STATE PETRONET LIMITED (GSPL FOR SHORT) TO PROVID E SERVICES FOR TRANSPORTATION OF NATURAL GAS. SINCE THERE IS NO C ONTROL OVER THE PIPELINE FROM TRANSPORTERS AND THE CONTRACT FOR TRA NSPORT BY ANY MODE OTHER THAN RAIL WAY, WAS SPECIFICALLY COVERED UNDER SECTION 194C OF THE ACT. THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, AND THEREFORE, THE AO IN VIEW OF A MENDED OF DEFINITION OF RENT UNDER THE PROVISION OF SECTION 194-I BY TAXATION LAW (AMENDMENT) ACT, 2006 W.E.F. 13.7.2006 OBSERVED AS UNDER: IN VIEW OF THE ABOVE AMENDED DEFINITION OF THE REN T IT IS CLEAR THAT THE TAX IS REQUIRED TO BE DEDUCTED U/S. 1941 OF THE IT ACT FOR THE USE OF EQUIPMENT SUCH AS USE OF GAS PIPE LINES. SINCE THE DEDUCTOR COMPANY HAS DEDUCTED THE TAX AT THE RATE OF 2.266 % U/S. 194C OF THE IT ACT INSTEAD OF TAX REQUIRED TO BE DEDUCTED AT THE RATE DO 11.33% U/S. 1941 OF THE ACT, IT HAS COMMITTED THE DEFAULT U/S. 201(1) O F THE IT ACT. HOWEVER, SINCE THE DEDUCTEE GUJARAT STATE PETR ONET LIMITED HAS FILED THEIR RETURN OF INCOME AND RELEVA NT RECEIPTS HAVE BEEN INCORPORATED IN COMPUTING THE IN COME, THE DEDUCTOR COMPANY CAN NOT BE TREATED AS DEEMED DEFAULTER U/S. 201 (I) IN VIEW OF THE DECISION OF H ON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD. (293 ITR 226) 2007. THE CERTIFI CATE IN THIS REGARD RECEIVED FROM GUJARAT STATE PETRONET LI MITED DATED 2.3.2010 HAS BEEN FURNISHED ALONGWITH REPLY D ATED 5.3.2010. BUT THE INTEREST U/S. 201(IA) IS CERTAINL Y CHARGEABLE ON THE DIFFERENCE OF THE AMOUNT OF THE F AX REQUIRED TO BE DEDUCTED AND ACTUALLY DEDUCTED BY TH E DEDUCTOR COMPANY. ACCORDINGLY, INTEREST UNDER SECTION 201(1A) ON THE DIFFERENCE OF AMOUNT OF RS.2,06,81,271/- WAS WORKED OUT AT RS.61, 26,087/-, ITA NO.2830 AND 2831/AHD/2010 -4- AND ACCORDINGLY, THE AO HELD THAT DEDUCTOR COMPANY IS CHARGEABLE FOR INTEREST UNDER SECTION 201(1A) OF TH E IT ACT. 7. THE LEARNED CIT(A) ACCEPTED SUBMISSIONS OF THE A SSESSEE AND HELD THAT THE PAYMENT OF GAS TRANSMISSION WILL NOT ATTRACT THE PROVISION OF SECTION 194I, AND THE ASSESSEE HAS NOT COMMITTED ANY DEFAULT UNDER SECTION 201(1), AND ACCORDINGLY, INTE REST U/S.201(1A) IS NOT PAYABLE BY THE ASSESSEE. 8. THE LEARNED DR RELIED UPON THE ORDER OF THE AO. THE LEARNED AR, ON THE OTHER HAND, AT THE OUTSET INVITE D OUR ATTENTION TO THE DECISION OF THE ITAT, AHMEDABAD, B BENCH I N THE CASE OF ACIT VS. GUJARAT STATE PETRONET LTD., ITA NO.331 7/AHD/2010 DATED 8.3.2013, WHEREIN, ON IDENTICAL ISSUE, IT HAS BEEN HELD THAT SUCH PAYMENTS WERE COVERED UNDER THE PROVISION OF S ECTION 194C AND NOT UNDER SECTION 194-I OF THE ACT. IT IS, THE REFORE, PRAYED THAT THE ISSUE BEING COVERED BY THE DECISION OF THE ITAT, SUPRA, THE APPEAL OF THE REVENUE BE DISMISSED. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET POINTED OUT AT THE PAGES NO.82 TO 83 OF THE PAPER B OOK, BEING THE CASE OF GUJARAT STATE PETRONET LTD., (SUPRA) WHERE FOLLOWING QUESTION WAS RAISED BEFORE THE ITAT, AHMEDABAD BENC H: 4. THE LD.CIT(A) ERRED IN NOT CONSIDERING THE FACT THAT AFTER 13.7.2006 THE PROVISION OF 194I IS APPLICABLE ON HI RING CHARGES OF GAS TRANSPORTATION CHARGES OF RS.3,58,44,097/- W HICH COVER ITA NO.2830 AND 2831/AHD/2010 -5- USES OF PLANT AND MACHINERY AND NOT THE PROVISION O F 194C OF THE IT ACT. 10. THE LEARNED CIT(A) IN THAT CASE HAS DECIDED THA T SUCH TYPE OF PAYMENTS ARE COVERED BY THE PROVISION OF SECTION 19 4C AND NOT UNDER SECTION 194I OF THE ACT, AND ACCORDINGLY, THE LEARN ED CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. THE ITAT, AHMEDABAD BE NCH, DISMISSED THE APPEAL OF THE REVENUE BY OBSERVING THAT THE SAI D ISSUE IS COVERED UNDER SECTION 194C OF THE ACT, AND LD. CIT(A) WAS R IGHT TO DECIDE THIS ISSUE AS A CONTRACT FOR THE TRANSPORTATION OF GAS, AND THE ASSESSEE CANNOT BE TREATED AS DEEMED DEFAULTER UNDER SECTION 201(1) OF THE IT ACT, AND ACCORDINGLY, THE REVENUES APPEAL WAS DISM ISSED. IN THE PRESENT CASE, THE FACTS ARE IDENTICAL TO THE FACTS IN THE CASE OF GUJARAT STATE PETRONET LTD. (SUPRA), AND THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VI EW THAT THE PRESENT APPEAL IS COVERED BY THE PROVISION OF SECTION 194C, AND NOT UNDER SECTION 194I OF THE ACT, AND THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A), WHO HAS RIGHTLY REVERS ED THE ORDER OF THE AO, AND HAS HELD THAT INTEREST UNDER SECTION 201(1A ) IS NOT PAYABLE BY THE ASSESSEE. ACCORDINGLY, THE GROUNDS OF THE ASSE SSEE ARE DISMISSED. 11. NOW WE TAKE UP THE REVENUES APPEAL IN ITA NO.2831/AHD/2010. 12. THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN REVENUES APPEAL IN ITA NO.2830/AHD/2010 FOR A.Y.20 08-2009 DECIDED BY US IN THE ORDER HEREINABOVE, AND THE SAM E IS APPLICABLE ITA NO.2830 AND 2831/AHD/2010 -6- IDENTICALLY TO THE PRESENT CASE ALSO. ACCORDINGLY, THE GROUNDS RAISED IN ITA NO.2831/AHD/2010 ARE ALSO DISMISSED. 13. IN THE RESULT, ITA NO.2830/AHD/2010 AND 2831/AH D/2010 OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( ' #$ ' #$ ' #$ ' #$ /KUL BHARAT) /JUDICIAL MEMBER ( . .. . . .. . / B.P.JAIN ) /ACCOUNTANT MEBER C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD