The ACIT,TDS Circle, Ahmedabad V. M/s. Gujarat State Petronet Ltd., Gandhinagar

ITA 3317/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0469 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-01-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 14-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI G.C.GUPTA , VICE PRESIDENT AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 3317/AHD/2010 ASSESSMENT YEAR :2009-10 & C.O. NO.17/AHD/2011 ASSESSMENT YEAR :2009-10 ACIT, TDS CIRCLE, AHMEDABAD AMRUT JAYANTHI BHAVAN, NAVNJIVAN TRUST COMPLEX, OFF. ASHRAM ROAD, AHMEDABAD GUJARAT STATE PETRONET LTD. GSPC BHAVAN, 5 TH FLOOR, SECTOR 11, GANDHINAGAR V/S . V/S . GUJARAT STATE PETRONET LTD. GSPC BHAVAN, 5 TH FLOOR, SECTOR 11, GANDHINAGAR ACIT, TDS CIRCLE, AHMEDABAD AMRUT JAYANTHI BHAVAN, NAVNJIVAN TRUST COMPLEX, OFF. ASHRAM ROAD, AHMEDABAD PAN NO. ADBPB4053E (APPELLANT) .. (RESPONDENT) BY REVENUE SHRI Y.P. VERMA, SR.D.R. /BY ASSESSEE SHRI YOGESH SHAH, A.R. /DATE OF HEARING 22.01.2013 /DATE OF PRONOUNCEMENT 08.03.2013 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE AND THE C.O. OF THE ASSE SSEE, EMANATED FROM THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (A PPEALS)-XXI, ITA NO. 3317/AHD/2010 & C.O. NO.17/AHD/2011 A.Y. 09-10 PAGE 2 AHMEDABAD, DATED 13.09.2010 FOR THE ASSESSMENT YEAR 2009-10. THE ISSUES AND ARGUMENTS IN REVENUES APPEAL AND ASSESSEES C. O. ARE SAME. THEREFORE, WE ARE DECIDING BOTH IN A CONSOLIDATE OR DER FOR THE SAKE OF CONVENIENCE. THE GROUNDS OF REVENUES APPEAL AND A SSESSEES C.O. ARE AS UNDER:- ITA NO. 3317/AHD/2010 (REVENUES APPEAL) 1. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACT S OF THE CASE IN DELETING THE ORDER PASSED U/S. 201(1) OF RS.1,32,48 2/- & INTEREST CHARGED U/S. 201(1A) OF THE IT ACT OF RS.23,76,350/ - RESPECTIVELY FOR A.Y. 2009-10 BY THE A.O. 2. 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 VEHICLE OF RS.1,50,70,235/- WHICH COVER USES OF PLA NT AND MACHINERY AND NOT THE PROVISION OF 194C OF I.T. ACT. 3. THE LD. CIT(A) ERRED IN NOT CONSIDERING THE FAC T THAT AFTER 13.7.2006 THE PROVISION OF 194I IS APPLICABLE ON HI RING CHARGES OF CONNECTING CHARGES OF RS.9,08,01,588/- WHICH COVER USES OF PLANT AND MACHINERY AND NOT THE PROVISION OF 194C OF I.T. ACT . 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/- WHICH CO VER USES OF PLANT AND MACHINERY AND NOT THE PROVISION OF 194C OF I.T. ACT. ASSESSEES C.O. NO. 17 /AHD/ 2011 1. THE APPELLANT SUBMITS THAT IN CASE IT IS FOUND T O BE AN ASSESSEE IN DEFAULT U/S 201(1) OF THE ACT, THE INTEREST CHARGEA BLE U/S 201(1A) SHOULD BE RESTRICTED FOR THE PERIOD FROM THE DATE ON WHICH TDS OUGHT TO HAVE BEEN DEPOSITED WITH THE GOVERNMENT TO THE DATE ON W HICH DUE TAXES ITA NO. 3317/AHD/2010 & C.O. NO.17/AHD/2011 A.Y. 09-10 PAGE 3 HAVE BEEN PAID BY THE PAYEES THEMSELVES IN RESPECT OF SUCH PAYMENTS MADE BY THE APPELLANT. 2. THE APPELLANT IS A PUBLIC LIMITED COMPANY ENGAGE D IN THE BUSINESS OF LAYING OPERATING OF NATURAL GAS TRANSMISSION NETWOR K DURING THE FINANCIAL YEAR 2008-09, SURVEY WAS CARRIED OUT AT THE BUSINESS PRE MISES OF THE APPELLANT ON 17 TH MARCH 2009 FOR THE PURPOSE OF VERIFICATION OF COMP LIANCES IN RELATION TO VARIOUS TAX DEDUCTION AT SOURCE (TDS) PROVISIONS OF THE ACT. IN RESPONSE TO THE REQUIREMENTS OF THE SURVEYING OFFICERS, DESIRED INFORMATION WAS DULY PROVIDED FOR VIDE VARIOUS REPLIES. THE ACIT (TDS) OBSERVED THAT DURING THE COURSE OF SURVEY, IT WAS FOUND THAT THE APPELLANT H AD MADE PAYMENT IN F.Y. 08-09 RELEVANT TO A.Y. 09-10 AS UNDER: I. VEHICLE HIRE CHARGES RS.1,50,70,235/- II. CONNECTIVITY CHARGES RS. 9,08,01,588/- III. GAS TRANSPORTATION CHARGES RS. 3,58,44,097/- ON VERIFICATION OF THE TDS DETAILS, IT WAS SEEN THA T THE APPELLANT HAD MADE TDS U/S.194C @ 2.266% ON THE ABOVE PAYMENTS. THE L D. A.O. FOUND THAT THESE PAYMENTS HAVING NATURE OF RENT WITHIN SECTION 194I OF THE IT ACT. THUS, TAX IS REQUIRED TO BE DEDUCTED @11.33% U/S. 194I OF THE IT ACT. LD. ACIT, TDS CIRCLE HAD GIVEN REASONABLE OPPORTUNITY OF BEIN G HEARD ON THIS ISSUE. THE APPELLANT ALSO REPLIED VIDE VARIOUS LETTERS BEF ORE THE ACIT, TDS CIRCLE. THE APPELLANT CLAIMED BEFORE THE ACIT THAT VEHICLE HIRING CHARGES WERE FOR CONTRACT ON FIXED CONTRACT, WAS FIXED BASIS ON RATE PER KM. VEHICLES AS WELL AS CHAUFFER DRIVERS WERE UNDER THE CONTROL OF THE CONT RACTOR. THEREFORE, THESE ITA NO. 3317/AHD/2010 & C.O. NO.17/AHD/2011 A.Y. 09-10 PAGE 4 SERVICES ARE COVERED U/S. 194C OF THE IT ACT. CONN ECTIVITY CHARGES WERE IN PURSUANT TO THE AGREEMENT ENTERED INTO THE GPSC PAY MENT IN THIS REGARD WAS CONNECTED WITH THE CONTENT TRANSPORTED AND NOT LUMP SUM. THUS, TDS WAS REQUIRED TO BE DEDUCTED U/S.194C OF THE IT ACT. GA S TRANSPORTATION CHARGES WERE PAID IN PURSUANT TO AGREEMENTS ENTERED IN TO G UJARAT GAS COMPANY LTD. TO PROVIDE SERVICES FOR TRANSPORTATION OF NATURAL G AS. SINCE, THERE IS NO CONTROL OVER THE PIPELINE FROM TRANSPORTER AND THE CONTRACT FOR TRANSPORT BY ANY MODE OTHER THAN REAL WAY IS COVERED U/S. 194C OF THE IT ACT. THE APPELLANT FURTHER ARGUED BEFORE THE A.O. THAT IT HAS SUBMITTED THE CO NFIRMATION LETTER FROM THE DEDUCTEE AND RESPECTIVE RECEIPTS HAVE BEEN BOOKED B Y THE DEDUCTEE IN THEIR INCOME. THUS, BY RELYING IN CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD. (293 ITR 226) (2007) (SC), THERE WAS NO DEFAULT OF THE APPELLANT BUT THE APPELLANT DID NOT FURNISH THE CONFIRMATION IN THREE CASES. THEREFORE, ACIT, TDS CRICLE COMPUTED TDS @ 11.33% U/S. 194I AND ALSO CHARGED INTEREST U/S. 201(1A) OF THE ACT. FINALLY, TOTAL DEMAND U/S. 201 (1) AT RS. 1,32,482/- AND INTEREST U/S. 201(1A) AT RS. 23,76,350/- IN TOTAL R S.25,08,832/- WAS CREATED. 3. BEING AGGRIEVED BY THE ORDER OF THE ACIT, TDS CI RCLE, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAS CONSID ERED THE APPELLANTS SUBMISSION, DETAILED DISCUSSION OF SECTION 194C, RE LIED UPON VARIOUS CASE LAWS AND CBDT CIRCULARS AND IT WAS HELD THAT SECTIO N 194C CATEGORICALLY COVERS TRANSPORTATION AND CONTRACTOR IS OBLIGED TO PROVIDE PARTICULAR TYPE OF VEHICLE BUT NOT THE SAME VEHICLE, CONTRACTOR HAS TO BEAR COST OF RUNNING AND MAINTENANCE, REPAIR AND INSURANCE ETC. AND OBLIGED TO PROVIDE ANOTHER SIMILAR ITA NO. 3317/AHD/2010 & C.O. NO.17/AHD/2011 A.Y. 09-10 PAGE 5 VEHICLE IN CASE OF BREAK DOWN. THE APPELLANT HAD T O MAKE PAYMENT BASED ON KM. USED AND NOT ON FIXED BASIS. THESE WERE UNCONT ROVERTED FACTS AND EVEN THE A.O. HAS ALSO NOT DISPUTED IN ALL THE MATERIAL FACTS STATED BY THE APPELLANT LIKE VEHICLE AT ALL THE TIMES BEING UNDER THE SUPER VISION AND CONTROL OF THE TRANSPORTER CHARGING OF CONSIDERATION BASED ON KMS. TRAVELED ETC. THEREFORE, THE CONTRACT IS FOR CARRYING OUT OF SOME WORK FOR T HE APPELLANT AND IT CANNOT BE CALLED A CONTRACT WHERE VEHICLE SIMPLICITOR HAS TAK EN ON HIRE BY THE APPELLANT. AFTER RELYING ON RAJKOT JUDGMENT IN CASE OF RELIANCE INDUSTRIES LIMITED VS. THE ACIT, TDS CIRCLE, RAJKOT (ITA NO. 387/RJT/2009) A.Y . 2007-08, WHEREIN ON SIMILAR FACTS, THE RAJKOT ITAT HAS DECIDED SUCH TYP E OF PAYMENTS ARE GOVERNED BY THE PROVISION OF SECTION 194C NOT U/S. 194I OF THE IT ACT. ACCORDINGLY, THE LD. CIT(A) ALLOWED THE APPEAL ON F IRST ITEM THAT VEHICLE HIRE CHARGES. SIMILAR FINDINGS WERE GIVEN BY THE LD. CI T(A) ON CONNECTIVITY CHARGES AND TRANSPORTATION CHARGES, WHICH IS REPRODUCED AS UNDER: 3.5 I HAVE HEARD THE LEARNED AUTHORIZED REPRESENTA TIVE AND CONSIDERED THE SUBMISSIONS ALONGWITH OTHER DOCUMENT S FILED BEFORE ME DURING THE COURSE OF HEARING OF APPEAL. ON PERU SAL OF THE RECORDS, I FIND THAT THE APPELLANT COMPANY IS HAVIN G ITS OWN NETWORK AND IT IS ENGAGED IN THE TRANSPORTATION OF THE GAS THROUGH THE PIPELINE. PURSUANT TO THE CONTRACT WITH THE CUSTOM ER IT CHARGES TO THEM BASED ON QUANTITY OF GAS SUPPLIED THROUGH THE PIPELINE. IN RESPECT OF PIPELINE WHICH IS NOT OWNED BY IT AND US ED FOR APPELLANTS BUSINESS, THE OWNER OF THE PIPELINE, NAMELY GSPC [O WNED BY GAIL], SABARMATI GAS AND GUJARAT GAS LEVY THE CHARGES BASE D ON QUANTITIES TRANSPORTED THROUGH THEIR PIPELINE. ITA NO. 3317/AHD/2010 & C.O. NO.17/AHD/2011 A.Y. 09-10 PAGE 6 4. NOW THE REVENUE IS BEFORE US. LD. SR. D.R. RELI ED UPON THE ORDER OF THE A.O. WHEREAS LD. COUNSEL FOR THE APPELLANT SUBMITTE D THE PAPER BOOK AND RELIED UPON THE FOLLOWING CASE: I. ITA NO. 1637/AHD/2010 FOR A.Y. 09-10 IN CASE OF AHMADABAD URBAN DEVELOPMENT AUTHORITY VS. ACIT, TDS CIRCLE, FOR HIR ING OF CAR ON FIXED RENT PAYMENT. II. ITA NO. 387/RJT/2009 FOR A.Y. 07-08 IN CASE OF RELIANCE INDUSTRIES LTD. VS. ACIT, TDS CIRCLE, FOR IMPORT DETENTION OR DEMUR RAGE CHARGES, HIRE CHARGES FOR VEHICLES, AIRCRAFT ETC. AND CHARGES FOR ANNUAL MAINTENANCE CONTRACT FOR PLANT AND MACHINERY. III. CIT (TDS) VS. SWAYAM SHIPPING SERVICES (P.) LT D. (2011) 11 TAXMANN.COM 137 (GUJ.) FOR FREIGHT AND TRANSPORTATI ON WORKS CONTRACTS. IV. CIT(TDS) VS. KRISHAK BHARATI CO-OPERATIVE LTD. [2012] 349 ITR 68 (GUJ.) FOR CHARGES FOR TRANSPORTATION OF NATURAL GAS TO SE LLER NOT LIABLE TO BE DEDUCTED TDS U/S. 194C. V. CHHATTISGARH STATE ELECTRICITY BOARD VS. ITO (TD S) [2012] 18 TAXMANN.COM 150 (MUM.) FOR TRANSMITTING POWER FROM NTPCS DELIVERY POINT TO ASSESSEES FACILITIES BY PGCIL IS COVERED U/S. 194I OR NOT. LD. COUNSEL ARGUED THAT ABOVE CASE LAWS SQUARELY AP PLICABLE IN CASE OF THE APPELLANT. HE ALSO HAD DRAWN OUR ATTENTION ON PAGE NOS. 60 TO 64 BY WHICH HE HAD PROVED THAT DEDUCTEE HAD SHOWN THESE RECEIPTS I N THEIR INCOME. THUS, THERE IS NO REVENUE LOSS. ITA NO. 3317/AHD/2010 & C.O. NO.17/AHD/2011 A.Y. 09-10 PAGE 7 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE MATERIAL ON RECORD. THE FIRST PAYMENT NAMELY VEHICLE HIRING CH ARGES HAS NOT BEEN PRESCRIBED U/S. 194I. VEHICLES AND CHAUFFERS SUPPL IED BY THE CONTRACTOR AND WAS UNDER THE COMPLETE CONTROL OF THE CONTRACTOR. THUS, WE CONFIRM THE ORDER OF THE CIT(A) ON THIS ISSUE. SIMILARLY, THE SECOND PAYMENT FOR CONNECTIVITY CHARGES WERE PAID TO GPSC AGAINST THE AGREEMENT FOR USING OF PIPELINE CONNECTION OF GAIL FOR GAS TRANSPORTATION. THIS PI PELINE WAS OWNED BY THE GAIL AND WAS OPENED TO SERVICE TO ITS OTHER CLIENTS ALSO, WHICH WAS IN NATURE OF CARRIAGE OF GOODS AND COVERED U/S.194C OF THE IT ACT. THUS, ON SECOND ISSUE ALSO, THE LD. CIT(A) FOUND JUSTIFIED AND WE D O NOT FIND THE REASON OF ANY INTERVENTION IN THE ORDER OF THE CIT(A) ON THIS ISS UE. THE THIRD AND LAST PAYMENT WAS GAS TRANSPORTATION CHARGES. THE APPELL ANT PAID THESE PAYMENTS FOR GAS TRANSPORTATION PURPOSES TO GUJARAT GAS COMP ANY LTD. AND AVAIL THEM FACILITY OF PIPELINE OF IT. THE OWNERSHIP AND COMP LETE CONTROL OF THIS PIPELINE IS OF GUJARAT GAS COMPANY LTD. THIS PIPELINE OWNED BY THE CONTRACTOR IS OPEN FOR USE FOR OTHER CLIENTS ALSO AND IT WAS A WORK PE RFORMED CARRIAGE OF GOODS AS PRESCRIBED U/S.194C OF THE IT ACT. THUS, IT IS COV ERED U/S. 194C AND LD. CIT(A) WAS RIGHT TO DECIDE THIS ISSUE IS AS A CONTRACT FOR THE TRANSPORTATION OF GAS. THE APPELLANT HAS ALSO SUBMITTED THE CONFIRMATION F ROM THE DEDUCTEE THAT THESE RECEIPTS HAVE BEEN DISCLOSED IN THEIR RESPECT IVE INCOME AND ALL THE DEDUCTEES ARE LIMITED COMPANY. THUS, IN VIEW OF THE HONBLE SUPREME COURT DECISION IN CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD (SUPRA) AND THE ASSESSEE CANNOT BE TREAT AS DEEMED DEFAULTER WITHIN U/S. 201(1) OF ITA NO. 3317/AHD/2010 & C.O. NO.17/AHD/2011 A.Y. 09-10 PAGE 8 THE IT ACT. ACCORDINGLY, WE DISMISS THE APPEAL OF THE REVENUE AND ALLOW THE C.O. OF THE APPELLANT. 6. IN THE COMBINED RESULT, THE REVENUES APPEAL IS DISMISSED AND THE ASSESSEES C.O. IS ALLOWED. THESE ORDERS PRONOUNCED IN OPEN COURT ON 08.03.2013 SD/- SD/- (G.C.GUPTA) (T.R. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. '#$ / APPELLANT 2. &'#$ / RESPONDENT 3. )*)+ ' ', / CONCERNED CIT 4. ' ',- ' / CIT (A) 5. 01'' +, ' ''' +, 34 * / DR, ITAT, AHMEDABAD 6. 167 89 / GUARD FILE. BY ORDER/ , :/3' )' ' ''' +, 34 * <