Deputy Commissioner of Income-tax, V. M/s. City Corporation Ltd., Pune

ITA 593/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1282 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 27-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAVE
• Section: 133A; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NOS. 593 & 594/PN/2014 %' ( ')( / ASSESSMENT YEARS : 2008-09 & 2009-10 DEPUTY COMMISSIONER OF INCOME TAX, TDS 2, PUNE ....... / APPELLANT ' / V/S. M/S. CITY CORPORATION LTD., 917/19A, F.C. ROAD CITY CHAMBERS, PUNE 411004 PAN : AACCC2820K / RESPONDENT ASSESSEE BY : SHRI SUHAS BORA REVENUE BY : SHRI HITENDRA NINAVE / DATE OF HEARING : 06-08-2015 / DATE OF PRONOUNCEMENT : 12-08-2015 * / ORDER PER VIKAS AWASTHY, JM : THESE APPEALS FOR ASSESSMENT YEARS 2008-09 AND 2009-1 0 HAVE BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONE R OF INCOME TAX (APPEALS)-V, PUNE DATED 24-12-2013 PASSED U/S. 201(1 ) AND 201(1A) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE 2 ITA NOS. 593 & 594/PN/2014, A.YS. 2008-09 & 2009-10 ACT). THE IMPUGNED ORDER IS COMMON FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10. 2. THE ISSUE IN BOTH THE APPEALS IS THAT THE ASSESSEE H AD DEDUCTED TAX ON THE PAYMENTS MADE FOR HIRING OF JCB, PORKLAND, BREA KING AND BUCKET MACHINES ETC. U/S. 194C. THE ASSESSING OFFICER WAS OF THE VIEW THAT PAYMENT FOR HIRING THE SAID MACHINES IS IN THE FORM OF RENT, THEREFORE TAX SHOULD HAVE BEEN DEDUCTED U/S. 194I OF TH E ACT. THE ASSESSING OFFICER MADE ADDITION FOR SHORT DEDUCTION OF TAX A T SOURCE AND ACCORDINGLY, LEVIED INTEREST THEREON. IN FIRST APPEA L, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION BY HOLDING HIRING OF THE MACHINES AS WORKS CONTRACT. THE COMMISSIONE R OF INCOME TAX (APPEALS) FURTHER HELD THAT THE ASSESSEE HAS RIGHTLY DEDUCTED TAX AT SOURCE U/S. 194C ON THE PAYMENTS MADE. AGAINST THESE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. SHRI HITENDRA NINAVE REPRESENTING THE DEPARTMENT SUB MITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPM ENT OF TOWNSHIP IN THE NAME OF AMONARA PARK NEAR HADAPSAR, PUNE. A SURVEY U/S. 133A OF THE ACT WAS CONDUCTED AT THE BUS INESS PREMISES OF THE ASSESSEE. DURING THE COURSE OF SURVEY, IT WAS FOUND THAT THE ASSESSEE HAD DELAYED THE DEPOSIT OF TDS AMOUNT AND NO INTEREST WAS PAID FOR THE DELAY IN DEPOSIT OF THE SAID AMOUNT. IT WAS FO UND THAT THE ASSESSEE HAD PAID HUGE AMOUNT AS EXCAVATION CHARGES IN THE NATURE OF HIRING CHARGES OF JCB AND PORKLAND ETC. THE ASSESSEE HA D MADE PAYMENTS OF RS.73,68,490/- FOR THE ASSESSMENT YEAR 2008- 09 AND 3 ITA NOS. 593 & 594/PN/2014, A.YS. 2008-09 & 2009-10 RS.1,12,80,994/- IN ASSESSMENT YEAR 2009-10. ON THE SAI D PAYMENTS THE ASSESSEE DEDUCTED TAX AT SOURCE U/S. 194C, WHEREA S, THE MACHINES WERE HIRED BY THE ASSESSEE ON HOURLY BASIS AND THE PA YMENTS FOR SAME WERE IN THE NATURE OF RENT FOR THE HIRING THE MACHINES . THUS, THE PROVISIONS OF SECTION 194I(A) WERE APPLICABLE. THE ASSESSE E HAS ERRED IN DEDUCTING TDS AT LOWER RATE BY APPLYING THE PROVISIONS O F SECTION 194C OF THE ACT. THE LD. DR VEHEMENTLY DEFENDED THE ORDER O F ASSESSING OFFICER IN MAKING ADDITION ON ACCOUNT OF SHORT DEDUCTION OF T DS ON PAYMENTS MADE FOR HIRING OF JCB, PORK LAND, BREAKING AND BU CKET MACHINES ETC. 4. ON THE CONTRARY, SHRI SUHAS BORA APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD NOT HIRED TH E EXCAVATION MACHINERY WHICH INCLUDED JCB, PORKLAND, BREAKING AND BUCKE T MACHINES ON HOURLY BASIS. THE ASSESSEE HAD MADE COMPO SITE PAYMENT FOR EXCAVATION OF SOIL, WHICH INCLUDES MANUAL WORK BY UNSKILLED LABOUR, USE OF MACHINERY, TRANSPORTATION OF EXCAVATED MATERIAL ETC . THE ASSESSEE HAD MADE PAYMENT FOR EXCAVATION OF SOIL AND HAR D ROCK @ RS.55 AND RS.450 PER CUBIC METER. THUS, THE PAYMENTS MA DE FOR EXCAVATION WERE NOT SIMPLY FOR HIRING OF JCB, PORKLAND ETC. THE LD. AR FURTHER SUBMITTED THAT THE SUPPLIER OF MACHINERY WAS ALSO REQUIRED TO PROVIDE DIESEL, OPERATOR, AS WELL AS FOR REPAIR EXPENDITURE. IT WAS THE DUTY AND RESPONSIBILITY OF THE SUPPLIER OF THE MACHINERIES TO ENSURE THE UPKEEP AND MAINTENANCE OF THE MACHINERY, AS ALSO THAT TH E WORK ALLOTTED IS COMPLETED WITHIN A SPECIFIED TIME. THE LD. AR CONTE NDED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE D ECISION OF CO-ORDINATE BENCH RENDERED IN THE CASE OF BHARAT FORGE LTD. VS. ADDL. 4 ITA NOS. 593 & 594/PN/2014, A.YS. 2008-09 & 2009-10 CIT ITA NO. 1357 & 1358/PN/2010 FOR THE ASSESSMENT YE ARS 2007-08 AND 2008-09 DECIDED ON 31-01-2013. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED ORDERS OF THE AUTHORITIES B ELOW. THE ONLY ISSUE IN THE APPEALS IS; WHETHER ON THE PAYMENTS MADE BY THE ASSESSEE FOR HIRING OF JCB, PORKLAND ETC. FOR EXCAVATION, TDS IS TO BE DEDUCTED UNDER THE PROVISIONS OF SECTION 194C OR 194I OF THE ACT? THE PROVISIONS OF SECTION 194C DEALS WITH THE DEDUCTION OF TAX AT SOURCE ON THE PAYMENTS MADE TO CONTRACTORS, WHEREAS THE PROVISIONS OF SECTION 194I RELATES TO DEDUCTION OF TAX AT SOURCE ON T HE PAYMENTS MADE IN THE NATURE OF RENT. 6. IN THE PRESENT CASE, THE ASSESSEE HAD HIRED JCB, PO RKLAND, BREAKING AND BUCKET MACHINES FOR EXCAVATION OF SOIL. ON T HE PAYMENTS MADE FOR USE OF SAID MACHINES, THE ASSESSEE DEDUCTED TAX AT SOURCE U/S. 194C, WHEREAS THE CONTENTION OF THE REVENUE IS THAT THE PAYMENTS MADE FOR THE USE OF MACHINES IN THE NATURE OF RENT, THE REFORE, TDS SHOULD HAVE BEEN DEDUCTED UNDER THE PROVISIONS OF SECTIO N 194I(A). IT HAS FURTHER BEEN CONTENDED BY THE LD. DR THAT THE PAYM ENTS ARE MADE FOR THE USE OF MACHINES ON HOURLY BASIS. ON THE OTHER HAND THE LD. AR OF THE ASSESSEE HAS ASSERTED THAT THE PAYMENTS MADE FOR EXCAVATION OF SOIL IS A COMPOSITE CONTRACT WHICH INCLUDES PAYMENTS MADE FOR MANUAL WORK BY UNSKILLED LABOUR, USE OF MACHINERY AND TRANSPORTAT ION OF EXCAVATED MATERIAL. THE PAYMENTS ARE MADE ON THE BASIS OF EXCAVATION DONE IN THE UNITS OF PER CUBIC METER. BEFORE COMMISSIONE R OF INCOME TAX (APPEALS) THE ASSESSEE HAS PLACED ON RECORD RECEIPT S/INVOICES 5 ITA NOS. 593 & 594/PN/2014, A.YS. 2008-09 & 2009-10 RAISED BY THE CONTRACTOR TO SUPPORT THESE CONTENTIONS . THE REVENUE HAS NOT BEEN ABLE TO REFUTE THE CONTENTION OF THE LD. AR. IT IS NOT A CASE OF HIRING MACHINES SIMPLICITOR. THE MACHINES WERE PROVIDED BY THE CONTRACTOR WITH OPERATOR. IT WAS THE RESPONSIBILITY OF TH E CONTRACTOR TO PROVIDE FOR THE DIESEL, REPAIRS AND ENSURE THE UPKEEP AND MAINTENANCE OF THE MACHINES. 7. THE LD. AR HAS DRAWN STRENGTH FROM THE DECISION OF CO-O RDINATE BENCH IN THE CASE OF BHARAT FORGE LTD. VS. ADDL. CIT (SUP RA) TO SUPPORT HIS SUBMISSIONS. IN THE SAID CASE THE PAYMENTS WERE MADE FOR HIRING OF CRANES WITH DRIVER/OPERATOR FOR LOADING AND UNLOADING OF MA TERIAL IN THE FACTORY. THE ASSESSEE HAD DEDUCTED TAX AT SOURCE U/S . 194C. THE ASSESSING OFFICER OBJECTED TO THE SAME AND HELD THAT THE TAX SHOULD HAVE BEEN DEDUCTED UNDER THE PROVISIONS OF SECTION 194I . THE TRIBUNAL HELD THAT IN SUCH CIRCUMSTANCES WHERE THE CRANES ARE H IRED WITH DRIVER/OPERATOR, PETROL AND MAINTENANCE EXPENSES ARE ON ACCOUNT OF THE CONTRACTOR, THE PROVISIONS OF SECTION 194C ARE APPLICA BLE. THE TRIBUNAL WHILE HOLDING SO, HAS PLACED RELIANCE ON THE DECISION S OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF SHREE MAHALAXM I TRANSPORT CO. REPORTED AS 339 ITR 484 (GUJ.) AND SWAYAM SHIPPING SE RVICES (P) LTD. REPORTED AS 339 ITR 647 (GUJ.). WE FIND THAT THE FACTS IN THE PRESENT CASE ARE SIMILAR TO THE ISSUE DECIDED BY THE CO-ORDINATE BENCH IN THE CASE OF BHARAT FORGE LTD. VS. ADDL. CIT (SUPRA). 8. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS RIGHTLY DEDUCTED TAX AT SOURCE ON 6 ITA NOS. 593 & 594/PN/2014, A.YS. 2008-09 & 2009-10 THE PAYMENTS MADE FOR HIRING OF JCB, PORKLAND ETC. U/S. 194 C. THE PAYMENTS MADE FOR HIRING MACHINES ARE IN NATURE OF WORKS CONTRACT AND NOT RENT AS DEFINED IN EXPLANATION TO SECTION 194I OF THE ACT. WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS). 9. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DISMISSE D BEING DEVOID OF ANY MERIT. ORDER PRONOUNCED ON WEDNESDAY, THE 12 TH DAY OF AUGUST, 2015. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 12 TH AUGUST, 2015 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-V, PUNE 4. ' / THE CIT(TDS), PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- / ITAT, PUNE