Deputy Commissioner of Income-tax, V. M/s. Serum Institute of India Ltd., Pune

ITA 595/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1163 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 27-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARTHIK NATARAJAN; R S ABHYANKAR
• Section: 194C; 201(1)

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !, # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.595/PN/2014 ASSESSMENT YEAR : 2009-10 THE DY. COMMISSIONER OF INCOME TAX, (TDS-2), PUNE. . APPELLANT VS. M/S SERUM INSTITUTE OF INDIA LTD., 212/2, PUNE SHOLAPUR ROAD, HADAPSAR, PUNE 411 028. PAN : AABCS4225M . RESPONDENT / RESPONDENT BY : SHRI RAJESH DAMOR / APPELLANT BY : SHRI KARTHIK NATARAJAN & SHRI R.S. ABHYANKAR / DATE OF HEARING : 31.08.2015 / DATE OF PRONOUNCEMENT: 31.08.2015 % / ORDER PER PRADIP KUMAR KEDIA, AM : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-V, PUNE DATED 10.12.2013 RELATING TO ASSESSMENT YEAR 2009-1 0 PASSED UNDER SECTION 201(1) AND 201(1A) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT PROVISIONS OF S ECTION 194I ARE NOT APPLICABLE IN RESPECT OF AIRCRAFT HIRE CHARGES WITHO UT APPRECIATING THE FACTS THAT AS PER THE AMENDED PROVISIONS OF SECTION 194I W.E.F. 13.07.2006, THE RENT IN RESPECT OF MACHINERY, PLANT OR EQUIPMENT ETC. WERE BROUGHT INTO THE AMBIT OF SECTION 194I. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED IN APPRECIATING THE DEFINITION OF 'PLANT ' U/S 43(3) OF THE IT ACT, IN RESPECT OF AIR VEHICLE I.E. AIRCRAFT. 3) THE APPELLANT CRAVES LEAVES TO AMEND OR ALTER AN Y OR ALL THE GROUNDS 2 ITA NO.595/PN/2014` OF APPEAL OR ADD A NEW GROUND WHICH MAY BE NECESSAR Y AT THE TIME OF THE HEARING OF THE CASE THEREAFTER. 4) THE ORDER OF THE LEARNED CIT(A) BEING ERRONEOUS B E SET ASIDE AND AOS ORDER RESORTED ON THIS ISSUE. 3. THE ONLY ISSUE ARISING IN THE PRESENT APPEAL IS WHETHER THE ASSESSEE IS DEFAULTED IN DEDUCTING THE TAX AT SOURCE OUT OF AIR CRAFT HIRE CHARGES, IN TURN, THE ASSESSEE HAVING DEFAULTED UNDER SECTION 201(1) AND 201(1A) OF THE ACT. 4. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, SURVE Y UNDER SECTION 133 OF THE ACT WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 06 .11.2007. IN VIEW THEREOF, ORDER UNDER SECTION 201(1) AND 201(1A) OF THE ACT W AS PASSED RELATING TO ASSESSMENT YEAR 2007-08. ON THE SAME BASIS THE ISS UE WAS TAKEN UP FOR VERIFICATION IN THE FINANCIAL YEAR 2008-09 I.E. APP EAL BEFORE US. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD MADE PAYMENT OF RS.6,50,42,355/- TO POONAWALLA AVIATION PVT. LTD. FOR HIRING OF THE AIR CRAFT. THE ASSESSEE HAD DEDUCTED TAX AT THE RATE OF 2.27% UNDER SECTION 194C OF THE ACT TREATING THE SAME TO BE CONTRACTUAL PAYMENT. THE CLAIM OF THE ASSESSEE BEF ORE THE ASSESSING OFFICER WAS THAT THE SAID CHARGES PAID FOR AIRCRAFT HIRING WERE MAINLY FOR AVAILING THE SERVICES AND NOT FOR HIRING THE AIRCRAFT. IT WAS ALSO EXPLA INED THAT THE AGREEMENT WAS NOT FOR LEASING THE AIRCRAFT AND HENCE THE PROVISIONS OF SE CTION 194I OF THE ACT WERE NOT ATTRACTED. THE ASSESSING OFFICER, HOWEVER, IN VIEW OF AMENDMENT TO DEFINITION OF RENT UNDER SECTION 194I OF THE ACT HELD THAT THE AS SESSEE TO HAVE DEFAULTED IN DEDUCTING TAX AT SOURCE AND COMPUTED THE DEMAND UND ER SECTION 201(1) OF THE ACT FOR SHORT DEDUCTION OF TAX AT RS.17,60,717/- AND IN TEREST CHARGED UNDER SECTION 201(1A) OF THE ACT AT RS.6,33,858/-. 5. IN APPEAL, THE ASSESSEE FURNISHED WRITTEN SUBMIS SIONS WHICH ARE REPRODUCED UNDER PARA 4 AT PAGES 3 TO 10 OF THE APPELLATE ORDE R. THE CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE THAT IT HAD AVAILED THE SERVICES OF THE AIRCRAFT AND NOT FOR THE USE OF AIRCRAFT. THE CIT(A) FURTHER HELD THAT THE PAYMENT HAD BEEN MADE TO M/S 3 ITA NO.595/PN/2014` POONAWALLA AVIATION PVT. LTD. ON HOURLY BASIS AND T HE SAME ESTABLISHED THAT THERE WAS CONTRACT FOR THE SERVICES OF THE AIRCRAFT AND N OT THE USE OF AIRCRAFT AS PLANT & MACHINERY AS DEFINED IN SECTION 194I OF THE ACT. S INCE THE AIRCRAFT WAS NOT AVAILABLE AT THE DISPOSAL OF THE ASSESSEE AND THE SAME WAS MA DE AVAILABLE ONLY ON DEMAND, FOR WHICH PAYMENT WAS MADE ON THE BASIS OF FLYING H OURS, THE ASSESSEE WAS LIABLE TO DEDUCT THE TAX AT SOURCE UNDER THE PROVISIONS OF SECTION 194C OF THE ACT AND NOT BY INVOKING THE PROVISIONS OF SECTION 194I OF THE A CT. THE DEMAND RAISED BY THE ASSESSING OFFICER UNDER SECTION 201(1) AND THE INTE REST CHARGED UNDER SECTION 201(1A) OF THE ACT WAS THUS DELETED BY THE CIT(A). 6. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TH E CIT(A). 7. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE, AT THE OUTSET, POINTED OUT THAT THE ISSUE IN THE PRESENT APPEAL IS SQUAREL Y COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSM ENT YEAR 2007-08. 8. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE LIMITED ISSUE ARISING IN APPEAL BEFORE US IS IN RELATION TO THE DEMAND RAISED UNDER SECTION 201(1) AND INTEREST CHARGED UNDER SECTION 201(1A) O F THE ACT. THE ASSESSEE HAD MADE CERTAIN PAYMENTS TO M/S POONAWALLA AVIATION PV T. LTD. FOR AVAILING THE SERVICES OF THE AIRCRAFT. THE CASE OF THE ASSESSIN G OFFICER WAS THAT SINCE THE PAYMENTS WERE MADE FOR THE USE OF THE AIRCRAFT, THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE UNDER THE PROVISIONS OF SECTION 194I OF THE ACT. HOWEVER, THE ASSESSEE HAD DEDUCTED TAX AT SOURCE AT THE RATE OF 2% UNDER SECTION 194C OF THE ACT. IDENTICAL ISSUE AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA 4 ITA NO.595/PN/2014` NO.2170/PN/2012 RELATING TO ASSESSMENT YEAR 2007-08 AND THE TRIBUNAL VIDE ORDER DATED 24.12.2013 HELD AS UNDER :- 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL ON RECORD, WE FIND THAT ISSUE BEFORE US IS WITH REGARD TO DEMAND U/S.2 01(1) OF IT ACT AT RS.36,38,494/- AND INTEREST THEREON U/S.201(1A) AT RS.21,83,096/- IN RESPECT OF THE PAYMENT MADE TO M/S. POONAWALLA AVIATION PVT. LTD. FOR CHARTERIN G AIRCRAFT. THE PAYMENT IS MADE FOR USE OF SERVICES OF AIRCRAFT AND NOT THE USE OF AIRCRAFT, AS SUCH AND THE PAYMENT WAS MADE ON HOURLY BASIS. THEREFORE, THERE WAS CON TRACT FOR SERVICES OF THE AIRCRAFT AND NOT THE USE OF AIRCRAFT AS PLANT & MACHINERY AS DEFINED IN SEC.194I OF INCOME- TAX ACT ON RENTAL BASIS AS THE AIRCRAFT WAS NOT AVA ILABLE AT THE DISPOSAL OF THE ASSESSEE. IT WAS MADE AVAILABLE TO THE ASSESSEE ON LY ON DEMAND FOR WHICH PAYMENT WAS MADE ON THE BASIS OF FLYING HOURS. THE CONCERNED ITO HAS ISSUED CERTIFICATE FOR LOWER DEDUCTION OF TAX AT THE RATE OF 0.5% VIDE ORDER DATED 17.09.2009, ACCEPTING THE NATURE OF SERVICES AS CON TRACT. THE PROVISIONS OF SEC.194C APPLICABLE TO THE SERVICE PROVIDERS WHILE HIRING HELICOPTERS / AIRCRAFT SERVICES. IN VIEW OF ABOVE, DCIT(TDS)-I, PUNE WAS NOT JUSTIFIED IN INVOKING OF PROVISIONS OF SEC.194I OF INCOME-TAX ACT IN RESPECT OF PAYMENT MADE TO M/S. POONAWALLA AVIATION PVT. LTD., ACCORDINGLY, CIT(A) WAS JUSTIFIED IN DIRECTING THE CONCERNED DCIT(TDS)-I, PUNE DELETE AN AMOUNT OF RS. 36,38,494/- U/S.201(1) AND RS.21,83,096/- U/S.201(1A). WE UPHOLD THE SAME. T HIS VIEW IS FORTIFIED BY DECISION OF ITAT, MUMBAI IN ITA NO.3419 & 3420/MUM/2010 IN T HE CASE OF M/S. SKIL INFRASTRUCTURE LTD. 10. THE ISSUE ARISING BEFORE US IS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE AND FOLLOWING THE SAME PARITY O F REASONING, WE HOLD THAT THERE IS NO MERIT IN THE GROUNDS OF APPEAL RAISED BY THE REVENUE, WHERE THE PAYMENT WAS FOR USE OF SERVICES OF AIRCRAFT AND NOT THE USE OF AIRCRAFT, SINCE THE PAYMENTS WERE MADE ON HOURLY BASIS. UPHOLDING THE ORDER OF THE C IT(A) IN DELETING THE DEMAND RAISED UNDER SECTION 201(1) AND INTEREST CHARGED UN DER SECTION 201(1A) OF THE ACT, WE DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVE NUE. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON THIS 31 ST DAY OF AUGUST, 2015. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER PUNE ; DATED : 31 ST AUGUST, 2015. 5 ITA NO.595/PN/2014` % & '() *)' / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %+ / BY ORDER , ' # //TRUE COPY// $%& # '( / SR. PRIVATE SECRETARY ) '*, / ITAT, PUNE