JM FINANCIAL INSTITUTIONAL SECURITIES LTD, MUMBAI V. ITO TDS 2(3), MUMBAI

ITA 4479/MUM/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5035 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 27-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL F BENCH MUMB AI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 4479/MUM/2014 (ASSESSMENT YEAR 2010-11 ) JM FINANCIAL INSTITUTIONAL SECURITIES LTD. (FORMERLY KNOWN AS JM FINANCIAL CONSULTANTS PVT. LTD., 7TTH FLOOR, CNERGY, APPASAHEB MARATHE MARG, PRABHADEVI, MUMBAI-400025. PAN: AAACM7079C VS. ITO(TDS) - 2(3) ROOM NO. 708, 7 TH FLOOR, K.G. MITTAL AYURVEDIC HOSPITAL PVT. BUILDING, CHARNI ROAD, MUMBAI-400002. APPELLANT RESPONDE NT APPELLANT BY : SHRI K. SHIVRAM WITH SHRI ADITYA AJGAONKER (AR) RESPONDENT BY : SHRI RAJEEV GUBGOTRA (DR) DATE OF HEARING : 10.10.2018 DATE OF PRONOUNCEMEN T : 10.10.2018 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME -TAX ACT IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-14, MUMBAI DATED 17 .04.2014 FOR ASSESSMENT YEAR 2010-11. THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL: A. ALLEGED SHORT DEDUCTION OF TAX AT SOURCE ON PAYMENTS TO PARTIES FOR ANNUAL MAINTAINENCE CONTRACTS OF RS. 1,38,174/- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE HONORABLE COMMISSIONER OF INCOME TAX (APPEALS) ('THE CIT(A)') , ERRED IN CONFIRMING THE ACTION OF THE INCOME TAX OFFICER (TDS) -2(3) (' LEARNED INCOME TAX OFFICER') WHO HELD THE APPELLANT AS DEEMED TO BE IN DEFAULT ON THE GROUND OF ALLEGED SHORT DEDUCTION OF TAX AT SOURCE ON CERTAIN CREDITS/PAYMENTS MADE TO PARTIES FOR ANNUAL MAINTENANCE CONTRACTS IN RESPECT OF ELECTRICAL SYSTEMS AND ITA NO. 4479 MUM 2014- JM FINANCIAL INSTITUTIONAL SECURITIES LTD. 2 COMPUTER SYSTEMS DEBITED UNDER THE HEAD REPAIRS & M AINTENANCE, BY HOLDING THAT TAX SHOULD HAVE BEEN DEDUCTED AT SOURCE AS PER THE PROVISIONS OF SECTION 194J OF THE INCOME TAX ACT, 1961 ('THE ACT') AND NO T AS PER THE PROVISIONS OF SECTION 194C OF THE ACT AS DONE BY THE APPELLANT; W ITHOUT CONSIDERING THE FACTS OF THE CASE AND THE SUBMISSION OF APPELLANT I N THIS RESPECT. 2. THE CIT (A) AND THE LEARNED INCOME TAX OFFICER F AILED TO APPRECIATE THE FACT THAT THE ANNUAL MAINTENANCE CONTRACTS ENTERED INTO WITH THE SAID PARTIES ARE ROUTINE MAINTENANCE CONTRACTS TO MAINTAIN THE E LECTRICAL AND COMPUTER SYSTEMS WHICH ARE COVERED UNDER SECTION 194C AND TH E SAID SERVICES ARE NOT COVERED UNDER THE PROVISIONS OF SECTION 9(VII) TO B E CLASSIFIED AS FEES FOR TECHNICAL SERVICES. 3. IN VIEW OF THE ABOVE, THE LD. INCOME TAX OFFICER BE DIRECTED TO HAVE THE DEMAND RAISED ON THE APPELLANT BE DELETED AS THE AP PELLANT HAS COMPLIED WITH THE PROVISIONS OF CHAPTER XVIIB. 2. AT THE OUTSET OF HEARING, THE LD. AUTHORIZED REPRES ENTATIVE (AR) OF THE ASSESSEE SUBMITS THAT THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE COVERED IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12 IN ITA NO. 3433/MUM/2015 DATED 10.07.2017 AND IN ASSESSEES GR OUP ENTITY (WHICH WAS MERGED WITH ASSESSEE) FOR ASSESSMENT YEAR 2010- 11 IN ITA NO. 2442/MUM/2015 DATED 20.07.2016, WHEREIN THE TRIBUNA L HELD THAT IN CASE OF ANNUAL MAINTENANCE CHARGES NO TECHNOLOGY WAS MAD E AVAILABLE, WHICH ARE FOR REGULAR MAINTENANCE OF OFFICE AND ELECTRICA L SYSTEM SHALL BE LIABLE FOR DEDUCTION OF TDS UNDER SECTION 194C AND NOT UND ER SECTION 194J. THE LD. AR OF THE ASSESSEE ALSO FURNISHED THE COPY OF D ECISION OF TRIBUNAL DATED 20.07.2016 IN ITA NO. 2442/MUM/2015 DATED 20. 07.2016 AND IN ITA NO. 3433/MUM/2015 DATED 10.07.2017. 3. ON GOING THROUGH THE GROUNDS OF APPEAL, DECISION OF TRIBUNAL, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AG REED THAT THE ITA NO. 4479 MUM 2014- JM FINANCIAL INSTITUTIONAL SECURITIES LTD. 3 GROUNDS OF APPEAL RAISED BY ASSESSEE ARE COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF TRIBUNAL AS REFERRED BY LD. AR OF T HE ASSESSEE. 4. WE HAVE CONSIDERED THE SUBMISSION OF THE PARTIES AN D HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NOTED THAT SIMILAR GROUNDS OF APPEAL WAS RAISED BY ASSESSEE IN APPEAL FOR ASSESSM ENT YEAR 2011-12 AND THE CO-ORDINATE BENCH OF TRIBUNAL WHILE CONSIDERING THE DECISION IN ASSESSEES OWN GROUP ENTITY (LATERON MANAGED WITH A SSESSEE) FOR ASSESSMENT YEAR 2010-11. THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12 PASSED THE FOLLOWING ORDER: 8. WE HAVE GONE THROUGH THE DECISIONS RELIED UPON B Y THE ASSESSEE AS MENTIONED ABOVE AND ALSO THE ORDER OF HON'BLE ITAT IN ASSESSEE'S OWN CASE, WE NOTICE THAT THE HON'BLE ITAT IN ASSESSEE'S OWN C ASE IN ITA NO.2442/MUM/2015 FOR A Y 2010-11 HAS HELD THAT THE PAYMENT FOR TECHNICAL SERVICES, IN ORDER TO B COVERED U/S 194J OF THE ACT SHOULD BE A CONSIDERATION FOR ACQUIRING OR USING TECHNICAL KNOWHOW SIMPLICITO R PROVIDED OR MADE AVAILABLE BY HUMAN CLEMENT. IN THE INSTANT CASE ALS O, THE PAYMENTS HAVE BEEN MADE FOR RENDERING SERVICES IN CONNECTION WITH MAIN TENANCE OF EQUIPMENTS. BY OFFERING THE SAID SERVICES, THE SERVICE PROVIDER HAS NOT IMPARTED ANY TECHNICAL KNOWLEDGE TO THE ASSESSEE NOR DID THE ASS ESSEE ACQUIRE ANY TECHNICAL INFORMATION. MERELY BECAUSE A TECHNICIAN HAVING KNO WLEDGE OF FUNCTIONING OF EQUIPMENTS RENDERS MAINTENANCE SERVICE, THE SAME SH ALL NOT RESULT IN RENDERING OF TECHNICAL SERVICES CONTEMPLATED U/S 194J OF THE ACT. ACCORDINGLY, FOLLOWING THE PRINCIPLE OF JUDICIAL CONSISTENCY AND JUDICIAL DISCIPLINE AND WHILE FINDING MERITS IN THE CONTENTIONS OF THE ASSESSEE, WE SET A SIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE TH E DEMAND RAISED U/S 201(1) OF THE ACT AS WELL AS THE INTEREST CHARGED U/S 201( 1) OF THE ACT. ITA NO. 4479 MUM 2014- JM FINANCIAL INSTITUTIONAL SECURITIES LTD. 4 5. CONSIDERING THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12, THE GROUNDS OF APPEAL RAIS ED BY ASSESSEE ARE ALLOWED IN FAVOUR OF ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/10/2018. SD/- SD/- G.S. PANNU PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 10.10.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR F BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI