ITO(TDS)(OSD)-RG.2, MUMBAI V. NYK LINE INDIA LTD., MUMBAI

ITA 5496/MUM/2013

• Counselvise Citation: 549619914 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-06-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 19-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 133A; 194C; 131

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.5496/MUM/2013 ASSESSMENT YEAR: 2004-05 ITO(TDS)(OSD), RANGE-2, ROOM NO.704, 7 TH FLOOR, SMT. K.G. MITTAL AAYURVEDIC HOSPITAL BUILDING, CHARNI ROAD MUMBAI-400002 / VS. M/S NYK LINE INDIA LTD. TRADE VIEW, 3 RD FLOOR, KAMALA MILLS COMPLEX, LOWER PAREL, MUMBAI-400013 ( / REVENUE) ( !' # /ASSESSEE) P.A. NO. AAACT3273H C.O. NO.245/MUM/2014 (ARISING OUT OF ITA NO.5496/MUM/2013) ASSESSMENT YEAR: 2004-05 M/S NYK LINE INDIA LTD. TRADE VIEW, 3 RD FLOOR, KAMALA MILLS COMPLEX, LOWER PAREL, MUMBAI-400013 / VS. ITO(TDS)(OSD), RANGE-2, ROOM NO.704, 7 TH FLOOR, SMT. K.G. MITTAL AAYURVEDIC HOSPITAL BUILDING, CHARNI ROAD MUMBAI-400002 ( !' # /ASSESSEE) ( / REVENUE) P.A. NO.AAACT3273H M/S NYK LINE INDIA LTD 2 ITA NO.5497/MUM/2013 ASSESSMENT YEAR:2005-06 ITO(TDS)(OSD), RANGE-2, ROOM NO.704, 7 TH FLOOR, SMT. K.G. MITTAL AAYURVEDIC HOSPITAL BUILDING, CHARNI ROAD MUMBAI-400002 / VS. M/S NYK LINE INDIA LTD. TRADE VIEW, 3 RD FLOOR, KAMALA MILLS COMPLEX, LOWER PAREL, MUMBAI-400013 ( / REVENUE) ( !' # /ASSESSEE) P.A. NO.AAACT3273H C.O. NO.246/MUM/2014 (ARISING OUT OF ITA NO.5497/MUM/2013) ASSESSMENT YEAR: 2005-06 M/S NYK LINE INDIA LTD. TRADE VIEW, 3 RD FLOOR, KAMALA MILLS COMPLEX, LOWER PAREL, MUMBAI-400013 / VS. ITO(TDS)(OSD), RANGE-2, ROOM NO.704, 7 TH FLOOR, SMT. K.G. MITTAL AAYURVEDIC HOSPITAL BUILDING, CHARNI ROAD MUMBAI-400002 ( !' # /ASSESSEE) ( / REVENUE) P.A. NO.AAACT3273H / REVENUE BY SHRI YOGESH KAMAT !' # / ASSESSEE BY SHRI GIRISH DAVE $ % & # ' / DATE OF HEARING : 15/06/2015 & # ' / DATE OF ORDER: 15/06/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS IN APPEAL FOR ASSESSMENT YEARS 2004 - 05 (ITA NO.5496/MUM/2013) AND 2005-06 (ITA M/S NYK LINE INDIA LTD 3 NO.5497/MUM/2013), HOLDING THAT THE ASSESSEE WAS UN DER NO LIABILITY TO DEDUCT TAX U/S 194J OF THE INCOME T AX ACT AND DELETING THE DEMAND RAISED VIDE ORDER U/S 201(1)/201(1A) OF THE ACT, ON ACCOUNT OF SHORT DEDU CTION OF TAX ON THE PAYMENTS MADE TO NHAVA SHEVA INTERNATION AL CONTAINER TERMINAL PVT. LTD. WHEREAS, THE ASSESSEE HAS PREFERRED CROSS OBJECTIONS WHICH ARE ARISING OUT OF THESE APPEALS, I.E. C.O. NO.245/MUM/2014 AND C.O. NO.246/MUM/2014 RESPECTIVELY. 2. DURING HEARING OF THESE APPEALS/CROSS OBJECTIO NS, WE HAVE HEARD SHRI YOGESH KAMAT, LD. SR. DR, AND SH RI GIRISH DAVE, LD. COUNSEL FOR THE ASSESSEE. SHRI KAM AT DEFENDED THE CONCLUSION ARRIVED AT IN THE ASSESSMEN T ORDER BY CONTENDING THAT WHILE COMING TO A PARTICULAR CON CLUSION THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE PAYMENT MADE TO NSICT ARE NOT IN T HE NATURE OF FEES FOR PROFESSIONAL SERVICES BUT PAYMEN TS ARE FOR CARRIES OF GOODS WHICH ARE NOT COVERED UNDER TH E PROVISIONS OF SECTION 194J OF THE ACT. ON THE OTHE R HAND, THE LD. COUNSEL FOR THE ASSESSEE, SHRI GIRISH DAVE, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDERS, S O FAR AS; THE APPEALS OF THE REVENUE ARE CONCERNED. MR. DAVE DID NOT PRESS THE CROSS OBJECTIONS FILED BY THE ASSESSE E. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IF THE OB SERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION M ADE TO THE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, M/S NYK LINE INDIA LTD 4 MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY TH E LD. RESPECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND AN ALYZED, WE FIND THAT THE ASSESSEE FUNCTIONS AS A SHIPPING A GENT OF NYK (JAPAN), LTD. FOR ITS LINER BUSINESS ACTIVITIES IN THE METROPOLITAN CITIES OF INDIA FOR CONTAINER TRANSPOR T ALONG WITH CAR CARRIER VESSELS TO EUROPE, SOUTH AFRICA, E TC FROM INDIA. A SURVEY ACTION U/S 133A OF THE INCOME TAX A CT, 1921 (HEREINAFTER THE ACT) WAS CARRIED OUT IN THE C ASE OF M/S NYK LINE (INDIA) LTD. (FOR SHORT NYKLI) ON 09/0 3/2005 FOR VERIFICATION OF PROPER COMPLIANCE OF TDS BY THE ASSESSEE. DURING SURVEY, IT WAS DISCOVERED, THAT DU RING THE FINANCIAL YEAR 2003-04, THE ASSESSEE MADE PAYMENT O F RS.16,18,19,393/- TO M/S NAVA SHEVA INTERNATIONAL CONTAINER TERMINAL LTD. (IN SHORT NSICT) AND DEDUCT ED TAX AT THE RATE OF 2.09% AS PROVIDED U/S 194C OF THE AC T. THE STATEMENT OF ACCOUNTS MANAGER, SHRI SHIVSHANKARAN G . IYER, WAS RECORDED ON OATH U/S 131 OF THE ACT ON 09/03/2015. THE ASSESSEE MADE SUBMISSIONS VIDE COMMUNICATION DATED 05/09/2008, OFFERING FOLLOWING EXPLANATION:- NSICT WILL EMPLOY LABOURS, PROVIDE CRANES FOR DISCHARGE/LOADING OF OUR CONTAINERS AND TRUCKS FOR TRANSPORTING THE CONTAINERS WITHIN THE TERMINAL. TH US, THIS CONTRACT IS IN THE NATURE OF CARRYING OUT WORK INCL UDING TRANSPORT AND LABOUR. CIRCULAR NO.681 DATED 08/09/1 994 ISSUED BY CBDT STATES THAT THE PROVISION OF SEC. 19 4C SHALL APPLY TO ALL TYPES OF CONTRACTS FOR CARRYING OUT AN Y WORK INCLUDING TRANSPORT CONTRACTS, LABOUR CONTRACTS, MA TERIAL M/S NYK LINE INDIA LTD 5 CONTRACTS AND WORKS CONTRACT. THE TERMS SERVICE CO NTRACTS WOULD INCLUDE SERVICES RENDERED BY SUCH PERSONS AS LAWYERS, PHYSICIANS, SURGEONS, ENGINEERS, ACCOUNTANTS, ARCHI TECTS, CONSULTANTS, ETC. HOWEVER, SERVICES RENDERED FOR W HICH PAYMENT IS IN THE NATURE OF SALARIES WHICH IS CHARG EABLE UNDER THE HEAD OF INCOME. A SALARIES IN CHAPTER IV OF TH E INCOME TAX ACT, 1961 SHALL NOT BE COVERED BY SECTION 194C. THE TERM TRANSPORT CONTRACTS WOULD IN ADDITION TO CONTRACT FOR TRANSPORTATION AND LOADING/UNLOADING OF GOODS, ALSO COVER CONTRACTS FOR PLYING OF BUSES, FERRIES, ETC., ALON G WITH STAFF (E.G. DRIVER, CONDUCTOR, CLEANER, ETC.). THE CONTRACTS F OR SUPPLY OF MATERIAL WHERE THE PRINCIPAL CONTRACT IS FOR WORK A ND LABOUR AND NOT A CONTRACT FOR SALE OF MATERIAL. PURSUANCE TO NOTICE U/S 201(1)/201(1A) OF THE ACT, THE ASSESSEE VIDE LETTER DATED 23/03/2011 REITERATED IT S AFOREMENTIONED CLAIM AND THE REASON FOR TAX DEDUCTI ON U/S 194C OF THE ACT. AFTER CONSIDERING THE TOTALITY OF FACTS, AVAILABLE ON RECORD ALONG WITH SECTION 194J AND 194 C OF THE ACT, WE NOTE THAT A PLAIN READING OF SECTION 19 4J READ WITH EXPLANATION (B) STATES THAT FEE FOR TECHNICAL SERVICES SHALL HAVE THE SAME MEANING AS IN EXPLANATION-2 TO CLAUSE- VII) OF SECTION-9(1) OF THE ACT WHICH READS AS UNDE R:- FEES TECHNICAL SERVICES MEANS ANY CONSIDERATION (I NCLUDING ANY LUMP SUM CONSIDERATION) FOR THE RENDERING OF ANY MA NAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PR OVISION OF SERVICES OF TECHNICAL OR OTHER (PERSONNEL) BUT DOES NOT INCL UDE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBLY MINING OR LIKE PROJE CT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH BE INCOME OF T HE RECIPIENT CHARGEABLE UNDER THE HEAD SALARIES. M/S NYK LINE INDIA LTD 6 IF THE PROVISION OF THE ACT IS ANALYZED WITH RESPEC T TO THE FACTS OF THE PRESENT APPEAL, ADMITTEDLY, THE PAYMEN TS WERE MADE IN CONSIDERATION FOR SERVICES RENDERED NSICT T O THE ASSESSEE COMPANY. THE NATURE OF SERVICES CLEARLY IN DICATES THAT THESE ARE NOT FALLING UNDER A LABOUR OR WORK C ONTRACT AS MENTIONED IN SECTION 194C OF THE ACT. THE TRUE N ATURE OF THE SERVICES PROVIDED TO THE ASSESSEE HAS TO BE ANA LYZED BEFORE REACHING TO A PARTICULAR CONCLUSION. NSICT PLANS TO ACCOMPLISH THE OBJECT BY (A) ACHIEVING INTERNATIONAL STANDARD IN CONTAINER TERMI NAL OPERATION (B) ENSURING BUSINESS PHILOSOPHY RECOGNIZING THE INTERE ST OF ALL DP WORLD NHAVA SHEVA SHARE HOLDERS, THE COMMUNITY AND THE ENVIRONMENT. (C) SECURING A CONSISTENT, QUALITY SERVICE BY USING SAG E OPERATING PROCEDURES, HIGH TECHNOLOGICAL SYSTEMS AN D EQUIPMENT OPERATED BY A DISCIPLINED AND EFFICIENT WORK TEAM. (D) INVESTING IN ONGOING SKILL DEVELOPMENT IN WORK FOR CE AND CREATING OPPORTUNITIES TO PROVIDE A WORK ENVIRONMENT THAT FACILITATES SUPERIOR PRODUCTIVITY AND OTHER PERSONAL ACHIEVEMENT. THERE IS UNCOTROVERTED FINDING IN THE IMPUGNED ORDE R THAT NHABA SHEVA BECAME THE FIRST CONTAINER TERMINAL IN INDIA TO ACHIEVE ISO 28000 CERTIFICATION, WHICH IS A LEADING TERMINAL M/S NYK LINE INDIA LTD 7 IN IMPLEMENTATION OF SOFTWARE AND SYSTEMS TOWARDS O VER ALL MANAGEMENTS. THE SYSTEMS COVERS BUSINESS REQUIREMEN TS SUCH YARD OPERATION, RAIL OPERATION, GET OPERATION, CONTAINER INVENTORIES, EDI AND FINANCIAL BILLING THOROUGH BAT CH INVOICING WHICH IS INTEGRATED WITH REAL TIME PLANNI NG SYSTEM, VEHICLE TRACKING SYSTEM BASED ON GLOBAL POS ITIONING SYSTEM AND GENERAL PACKET RADIO SERVICE (GPRS) TO F ACILITATE THE EFFECTIVE MANAGEMENT OF THE INTER TERMINAL VEHI CLE AND TERMINAL BUSES. WE NOTE THAT THE TRIBUNAL IN ACIT VS MERCHANT SHIPPING SERVICES (P.) LTD. (2011) 135 TTJ (MUM) 589: 49 DTR 97, WHICH IS SPECIFICALLY ON THE SUBJEC T TO PAYMENTS TO NSICT, GALAXOSMITHKLINE PHARMACEUTICALS LTD. VS ITO-2011 TIOL-735-ITAT PUNE, HELD THAT THE PROVI SIONS OF PERSONNEL WOULD NOT BE CONSTITUTE AS PROVISION F OR PROFESSIONAL SERVICES OR FEE FOR TECHNICAL SERVICES ATTRACTING TDS U/S 194J OF THE ACT AND SAME SHOULD BE SUBJECT TO TAX DEDUCTION U/S 194C OF THE ACT. SINCE, THE ASSESSEE HAS BEEN RIGHTLY DEDUCTING TAX U/S 194C, THEREFORE, THE RE IS NO QUESTION OF HOLDING THE ASSESSEE IN DEFAULT U/S 201 (1) AND 201(1A) OF THE ACT. ANY WORK OCCURRING IN SECTION 1 94C MEANS ANY WORK AND NOT A WORK CONTRACT. OUR VIEW IS FORTIFIED BY THE DECISION IN ASSOCIATED CEMENT COMP ANY LTD. VS CIT 67 TAXMAN 346 (SC). THUS WE FIND NO I NFIRMITY IN THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). SINCE, THE FACTS/ISSUES ARE IDENTIC AL, THEREFORE, BOTH THE APPEALS OF THE REVENUE ARE DISM ISSED. 3. SO FAR AS, THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE CONCERNED, SINCE, THE LD. COUNSEL FOR THE M/S NYK LINE INDIA LTD 8 ASSESSEE, DID NOT PRESS THE CROSS OBJECTIONS, THERE FORE, BOTH THE CROSS OBJECTIONS ARE DISMISSED AS NOT PRESSED. FINALLY, THE APPEALS OF THE REVENUE AS WELL AS THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 15/06/2015. SD/ - (RAJENDRA) SD/ - (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $ # / JUDICIAL MEMBER MUMBAI; ( DATED : 15/06/2015 F{X~{T? P.S/. .. !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 1# ( *+ ) / THE CIT, MUMBAI. P4. 0 0 1# / CIT(A)- , MUMBAI 5. 34.# , 0 *+'* 5 , / DR, ITAT, MUMBAI 6. 6!7 / GUARD FILE. ! / BY ORDER, /3+#.# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI