ITO (TDS), Hisar V. Board of School Education Haryana, Bhiwani

ITA 5349/DEL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1296 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 18-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHIM SINGH
• Assessee Lawyers: M L KATARIA
• Section: 194C; 201(1)

Judgement Text

I.T.A. NOS. 5349-5352/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 5349, 5350, 5351 & 5352/DEL/2012 A.YRS. : 2008-09, 2009-10, 2010-11 & 2011-12 I.T.O. (TDS), AAYAKAR BHAVAN, SECTOR-14, HISAR VS. BOARD OF SCHOOL EDUCATION HARYANA, BHIWANI (TAN : RTKB03288G) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. M.L. KATARIA, ADV. DEPARTMENT BY : SH. BHIM SINGH, D.R. ORDER ORDER ORDER ORDER PER BENCH PER BENCH PER BENCH PER BENCH THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) , ROHTAK DATED 27.8.2012 PERTAINING TO FINANCIAL YEARS 2007-08, 20 08-09, 2009-10 & 2010-11. 2. THE COMMON GROUND RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (A) ERRED IN DELETING THE DEMAND WHICH WAS CREA TED FOR MAKING THE PAYMENT TO THE VARIOUS PAPER SETTERS AND PRINTING P RESSES TREATING THEM AS CONTRACTUAL PAYMENTS LIABLE TO TDS U/S. 194 C OF THE I.T. ACT, 1961 AND NOT SALES. 3. IN THIS CASE, SURVEY/INSPECTION WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 18.10.2011 DURING WHICH THE ASSESSING O FFICER NOTED THAT ASSESSEE MADE CONTRACT WITH CERTAIN PRINTERS/PAPER S ETTERS TO DO THE I.T.A. NOS. 5349-5352/DEL/2012 2 JOB WORK, BUT HAS NOT DEDUCTED TDS ON THE PAYMENTS MADE TO THEM. ASSESSING OFFICER FURTHER NOTED THAT ASSESSEE DID NOT INTIMATE THE NAME, ADDRESS, PAN AND MODE OF PAYMENT TO SUCH PARTIE S ON THE PLEA THAT SECRECY OF THE BOARD WILL BE DISCLOSED. ASS ESSEE STATED THAT SETTING OF QUESTION PAPERS AND THE PRINTING THEREOF IS DONE BY THE CONFIDENTIAL CELL OF THE BOARD IN A VERY CONFIDENTI AL MANNER AND THAT IS WHY SPECIFIC PROVISION EXIST IN THE EXAMINATION REGU LATIONS OF THE BOARD WHICH READS AS UNDER:- NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER REGULATIONS / RULES MADE THERE UNDER OR / AND IN AN Y RESOLUTION / ORDERS/ DIRECTIONS OF THE BOARD OR AN Y OFFICE, THE ENTIRE PROCESS AND ACTIVITIES INVOLVED IN THE PROCE SS OF SETTING OF QUESTION PAPERS, THEIR PRINTING, INVITI NG OFFERS FROM CONFIDENTIAL PRINTERS, MAKING PAYMENTS, APPOINT MENTS OF PAPER SETTERS ETC. SHALL BE KEPT TO SECRET AND N O ONE SHALL BE ALLOWED TO HAVE ACCESS ON THE RECORD RELATED TO IT. THE ASSESSEE FURTHER CONTENDED IN THE SAI D REPLY FILED STATING THAT NO TAX WILL BE DEDUCTED FROM YOUR BILL KEEPING IN VIEW THE SECRECY. WHILE RECEIVING PAYMENT YOU WILL HAVE TO FURNISH AN AFFIDAVIT ON A STAMP PAPER WORTH ` 10/- TO THE EF FECT THAT THE AMOUNT RECEIVED FROM THE BOARD HAS BEEN ENTERED I N YOUR ACCOUNT BOOK AND WILL BE SHOWN IN THE INCOME TA X RETURN. THE ASSESSEE HAS POINTED OUT THAT NOT DISCLOSING T HE NAMES OF SUCH CONCERNS IS ALSO BEING ADOPTED BY SOME OTHER BOARD / UNIVERSITIES TO MAINTAIN THE SECRECY. I.T.A. NOS. 5349-5352/DEL/2012 3 THE ASSESSING OFFICER OPINED THAT SUBMISSIONS MADE BY THE ASSESSEE ARE NOT SUPPORTED BY ANY PLAUSIBLE EXP LANATION AND IT FAILED TO DEDUCT TDS ON SUCH CONTRACTUAL PAYMENTS AS REQUIRED U/S. 194C OF THE ACT. HE REFERRED THAT CONTROLLER OF EXAMINATIONS, M.D. UNIVERSITY, ROHTAK MADE TDS ON SUCH PAYMENTS FOR THE JOB WORK OF PRINTING/ PAPER SETTINGS OF VARIOUS EXAMINAT IONS CONDUCTED BY THE UNIVERSITY. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER CALCULATED THE TDS @ 2% OF THE PAYMENTS U/S . 201(1) OF THE ACT AND LEVIED INTEREST U/S. 201(1A) OF THE ACT . 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (A) NOTED THAT THE ASSESSEE CONDUCTS EXAMINATION FOR ABO UT 13 LACS CANDIDATES IN EACH YEAR FOR VARIOUS COURSES OFFERE D BY IT. THE SETTING OF QUESTION PAPERS AND PRINTING THEREOF IS GOT DONE BY THE BOARD IN A VERY CONFIDENTIAL MANNER FOR WHICH A SPEC IFIC PROVISION EXISTS IN THE EXAMINATION REGULATION OF THE BOARD. THAT IT IS FOR THIS REASON THE NAME, ADDRESS AND PAYMENTS TO PRINTERS W AS NOT DISCLOSED. THAT IN ORDER TO PROTECT THE INTEREST OF REVENUE AN AFFIDAVIT IS TAKEN FROM THE PRINTER TO THE EFFECT THAT THE AMOUNT RECEI VED BY THE BOARD HAS BEEN ENTERED INTO THE BOOKS OF ACCOUNTS AND TH E SAME WILL BE SHOWN IN THE RETURN OF THEM. 4.1 LD. COMMISSIONER OF INCOME TAX (A) FURTHER REFE RRED TO SECTION 194C(1). HE FURTHER NOTED THAT SECTION 194C(1) SP ECIFIES THAT ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDE NT (CONTRACTOR) FOR CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT SH ALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH ETC., DEDUCT AN AMOUNT EQUIVA LENT TO 1% OR I.T.A. NOS. 5349-5352/DEL/2012 4 2%, AS THE CASE MAY BE. WORK HAS BEEN DEFINED IN THE EXPLANATION TO THE SUCH SECTION AS UNDER:- ( IV ) 'WORK' SHALL INCLUDE ( A ) ADVERTISING; ( B ) BROADCASTING AND TELECASTING INCLUDING PRODUCTIO N OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING; ( C ) CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TR ANSPORT OTHER THAN BY RAILWAYS; ( D ) CATERING; ( E ) MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING T O THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM SUCH CUSTOMER, BUT DOES NOT INCLUDE MANUFACTURING OR SUPPLYING A PR ODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM A PERSON, OTHER THAN SU CH CUSTOMER. LD. COMMISSIONER OF INCOME TAX (A) OBSERVED THAT IT IS SEEN THAT THE MATERIAL USED FOR PRINTING THE QUESTION PAPERS I S PROCURED BY THE PRINTER HIMSELF AS PER THE SPECIFICATIONS LAID DOWN BY THE ASSESSEE. THE PURCHASE OF PRE-PRINTED MATERIAL FROM THE PRINTE R THEREFORE AMOUNTS TO CONTRACT FOR SALE AND NOT WORK AS DEFIN ED IN SECTION 194C(1). I.T.A. NOS. 5349-5352/DEL/2012 5 4.2 LD. COMMISSIONER OF INCOME TAX (A) FURTHER REFER RED TO THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF C.I.T. VS. DY. CAO, MARKFED 304 ITR 18 AND HONBLE BOMBAY HIGH COURT DECISION IN THE CASE OF BDA LTD. VS. C.I.T. 28 1 ITR 99. LD. COMMISSIONER OF INCOME TAX (A) FURTHER NOTED THA T THE ABOVE CASE LAWS ARE APPLICABLE TO THE FACTS OF THE ASSESSEE. IN VIEW OF THE ABOVE, HE HELD THAT THE PRINTING OF QUESTION PAPERS BY TH E ASSESSEE FROM PRINTERS IS A CASE OF CONTRACT FOR SALE AND NOT WOR KS CONTRACT AND THEREFORE OUTSIDE THE PURVIEW OF SECTION 194C. HE A CCORDINGLY, HELD THAT ASSESSEE WAS NOT LIABLE FOR TDS ON THE PAYMENTS MADE TO THE PRINTERS. THE DEMAND RAISED BY THE ASSESSING OFFIC ER IN THIS REGARD FOR ALL THE YEARS WAS DELETED. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT ASSESSEE IN THIS CASE CONDUCTS EXAMINATION FOR ABOUT 13 LACS CANDIDAT ES IN EACH YEAR. IT IS THE CLAIM OF THE ASSESSEE THAT SETTING OF QUE STION PAPERS AND PRINTING THEREOF WAS GOT DONE BY THE BOARD IN A VER Y CONFIDENTIAL MANNER FOR WHICH A SPECIFIC PROVISION EXISTS IN THE EXAMINATION REGULATION OF THE BOARD. ASSESSEE FURTHER PLEADE D THAT SEVERAL OF THE EXAMINATION BODIES LIKE PUNJAB UNIVERSITY, PUNJAB S CHOOL EDUCATION BOARD AND HIMACHAL PRADESH SCHOOL EDUCATION BOARD ET C. FOLLOW THE SAME METHOD, IN ORDER TO MAINTAIN THE SECRECY AND S ANCTITY OF THE PROCESS INVOLVED IN THE SETTING AND PRINTING OF QUE STION PAPERS. IT HAS FURTHER BEEN CONTENDED THAT LIABILITY TO PAY TAX AL WAYS REMAINS WITH THE CONFIDENTIAL PRINTERS ONLY. IN ORDER TO ENSUR E AND TO SAFEGUARD THE INTEREST OF REVENUE, AN AFFIDAVIT FROM THE PRINTER I S OBTAINED AND PLACED I.T.A. NOS. 5349-5352/DEL/2012 6 ON RECORD WHICH SHALL BE PRODUCED BEFORE THE ASSESS ING OFFICER. IT HAS BEEN SUBMITTED THAT SUCH PRINTERS HAVE ALREADY F ILED THEIR INCOME TAX RETURNS INCLUDING THE PAYMENTS RECEIVED FROM THE ASSESSEE IN THEIR GROSS RECEIPTS. IT HAS FURTHER BEEN SUBMITTED THAT ALL THE MATERIAL USED FOR PRINTING OF QUESTION PAPERS I.E. HPC 60GSM P APER AND SUPERIOR QUALITY OF INK, INNER AND OUTER ENVELOPS, CARTONS AND PLASTIC BAGS FOR PACKING OF PAPERS, IS MANAGED BY THE PRINTER HIMSELF . AFTER DOING THE NEEDFUL, ALL THE BOXES CONTAINING SUCH QUESTION P APERS ARE TO BE SENT TO THE DESIGNATED HEAD QUARTERS IN A CONFIDENTIAL M ANNER AT THE COST AND RISK OF THE PRINTERS. THEREFORE, IT IS SUBMI TTED THAT IT IS THE PURCHASE OF PRINTED MATERIAL BY THE ASSESSEE AND TH US IT WAS A CONTRACT FOR SALE BY THE PRINTER AND OUTSIDE THE PU RVIEW OF SECTION 194C OF THE ACT. 6.1 IN THIS REGARD, WE CAN GAINFULLY REFER THE SECT ION 194C, WHEREIN WORK HAS BEEN DEFINED IN THE EXPLANATION TO THE SU CH SECTION AS UNDER:- ( IV ) 'WORK' SHALL INCLUDE ( A ) ADVERTISING; ( B ) BROADCASTING AND TELECASTING INCLUDING PRODUCTIO N OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING; ( C ) CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TR ANSPORT OTHER THAN BY RAILWAYS; ( D ) CATERING; I.T.A. NOS. 5349-5352/DEL/2012 7 ( E ) MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING T O THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM SUCH CUSTOMER, BUT DOES NOT INCLUDE MANUFACTURING OR SUPPLYING A PR ODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM A PERSON, OTHER THA N SUCH CUSTOMER. 6.2 ON EXAMINING THE PRESENT CASE ON THE TOUCHSTONE OF THE ABOVE DEFINITION, WE FIND THAT THE MATERIAL USED FOR PRIN TING THE QUESTION PAPERS IN THIS CASE IS PROCURED BY THE PRINTER HIM SELF AS PER THE SPECIFICATIONS LAID DOWN BY THE ASSESSEE. THE PURC HASE OF PRE-PRINTED MATERIAL FROM THE PRINTER THEREFORE AMOUNTS TO CONTRAC T FOR SALE AND NOT WORK AS DEFINED IN SECTION 194C(1). 6.3 WE FURTHER NOTE THAT HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF C.I.T. VS. DY. CAO, MARKFED (SUPRA) HELD THAT PURCHASE OF PARTICULAR PRINTED PACKING MATERIAL BY THE ASSESSE E WAS A CONTRACT FOR SALE AND OUTSIDE THE PURVIEW OF SECTION 194C OF T HE ACT. IN THE CASE OF BDA LTD. VS. C.I.T. (SUPRA), HONBLE BOMBAY HIGH C OURT HELD THAT IF A MANUFACTURER PURCHASES MATERIAL ON HIS OWN AND MANUF ACTURES A PRODUCT AS PER THE SPECIFIC REQUIREMENT OF A CUSTOME R, IT IS A CASE OF SALE AND NOT A CONTRACT FOR CARRYING OUT ANY WORK. 6.4 WE FIND THAT THE ABOVE CASE LAWS ARE APPLICA BLE TO THE FACTS OF THE CASE. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) WHEREIN PRINTING OF QUESTION PAPERS BY THE ASSESSEE FROM PRINTERS WAS TREATED AS CONTRACT FOR SALE AND NOT WORK CONTRACT AND THEREFORE, OUTSIDE THE PU RVIEW OF SECTION I.T.A. NOS. 5349-5352/DEL/2012 8 194C. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A). 7. IN THE RESULT, ALL THE APPEALS FILED BY THE REVE NUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/1/2013. SD/- SD/- [ [[ [RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 04/1/2013 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES