Income-tax Officer, V. Sai Construction Pvt. Ltd., Pune

ITA 633/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1037 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 02-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Keywords: Recovery proceedings; Question of law
• Section: 194C; 201(1); 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , A M . / ITA NO S . 633 TO 635 /PN/20 1 4 / ASSESSMENT YEAR S : 20 1 0 - 11 TO 20 12 - 13 THE INCOME TAX OFFICER, (TDS) - 3, PUNE . / APPELLANT (TDS) - 3, PUNE . / APPELLANT VS. SAI CONSTRUCTION PVT. LTD., UNIT NO.605, SAI CHAMBERS, WAKDEWADI, PUNE 3. . / RESPONDENT PAN: AAECS6091E / APPELLANT BY : SHRI DHEERAJ KUMAR JAIN / RESPOND ENT BY : SHRI M.R. BHAGWAT / DATE OF HEARING : 1 6 .0 9 .2015 / DATE OF PRONOUNCEMEN T: 23 .0 9 .2015 / ORDER PER SUSHMA CHOWLA, JM: PER SUSHMA CHOWLA, JM: THIS BUNCH OF APPEAL S FILED BY THE REVENUE ARE AGAINST SEPARATE ORDER S OF CIT (A) - V , PUNE , DATED 1 8 . 1 2 .201 3 RELATING TO ASSESSMENT YEAR S 20 1 0 - 11 TO 20 12 - 13 AGAINST RESPECTIVE ORDER S PASSED UNDER SECT ION 201(1) / 201(1A) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . 2. THIS BUNCH OF APPEALS FILED BY THE REVENUE RELATING TO THE SAME ASSESSEE ON 2. THIS BUNCH OF APPEALS FILED BY THE REVENUE RELATING TO THE SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER ITA NO S. 633 TO 635 /PN/201 4 SAI CONSTRUCTION PVT. L TD. 2 FOR THE SAKE OF CO NVENIENCE. HOWEVER, REFERENCE IS BEING MADE TO THE FACTS AND ISSUE IN ITA NO. 633 /PN/201 4 TO ADJUDICATE THE ISSUE. 3. THE REVENUE IN ITA NO. 633 /PN/201 4 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRE D IN DELETING THE DEMAND RAISED OF RS.11,23,783/ - U/S 201(1) / 201(1A) OF THE INCOME TAX ACT, 1961 IN RESPECT OF PAYMENT MADE TOWARDS ANNUAL MAINTENANCE CONTRACT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE SAID PAYMENT WAS IN THE NATURE OF PROFESSIONAL / TECHNICAL SERVICES AND THEREFORE TDS IS REQUIRED TO BE DEDUCTED U/S 194J INSTEAD OF 194C OF THE INCOME - TAX ACT. 3 . THE APPELLANT CRAVES LEAVE S TO ADD , ALTER OR AMEND ANY OR ALL THE GROUNDS OF 3 . THE APPELLANT CRAVES LEAVE S TO ADD , ALTER OR AMEND ANY OR ALL THE GROUNDS OF APPEAL. 4 . THE ONLY ISSUE RAISED IN THE APPEALS FILED BY THE REVENUE IS AGAINST THE DELETION OF DEMAND RAISED UNDER SECTION 201(1) / 201(1A) OF THE ACT IN RESPECT OF PAYMENT MADE TOWARDS ANNUAL MAINTENANCE CONTRACT. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSE SSEE WAS THE OWNER OF COMMERCIAL BUILDING KNOWN AS SAI RADHE WHICH WAS LET OUT TO SEVERAL TENANTS. THE ASSESSEE OUTSOURCED THE MAINTENANCE OF BUILDING TO M/S. S. BALAN , FOR WHICH IT ENTERED INTO A COMPREHENSIVE AGREEMENT FOR MAINTENANCE OF VARIOUS AREAS LIKE POWER SUPPLY, LIFT, WATER MANAGEMENT, PARKING, ETC. THE ASSESSEE DEDUCTED TAX AT SOURCE UNDER THE PROVISIONS OF SECTION 194C OF THE ACT AND DEPOSITED THE S AME. HOWEVER, THERE WAS SPOT VERIFICATION BY THE TDS OFFICER AT THE PREMISES OF THE ASSESSEE ON 24.09.2012 AND DURING THE COURSE OF SPOT VERIFICATION, THE AGREEMENT ENTERED INTO BY THE ASSESSEE WAS ANALYZED BY THE OFFICERS OF TDS . THE OFFICERS WERE OF THE VIEW THAT THE SAID PAYMENT WAS IN THE NATURE OF PROFESSIONAL / TECHNICAL SERVICES AND THEREF ORE, TAX WAS REQUIRED TO BE DEDUCTED UNDER SECTION 194J OF THE ACT INSTEAD OF SECTION 194C OF THE ACT. CONSEQUENTLY, SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE, IN REPLY TO WHICH, THE ASSESSEE SUBMITTED THAT THE MAINTENANCE WAS CARRIED OUT BY THE CONTRA CTOR THROUGH THE SUB - CONTRACTOR S THROUGH VARIOUS SERVICE AGENCIES AND THE SERVICES WERE CARRIED OUT BY THE UNSKILLED WORKERS, WHO DO NOT HOLD ANY PROFESSIONAL OR TECHNICAL DEGREE. THE ITA NO S. 633 TO 635 /PN/201 4 SAI CONSTRUCTION PVT. L TD. 3 ASSESSING OFFICER HOWEVER, DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESS EE AND WAS OF THE VIEW THAT THE PROVISIONS OF SECTION 194J OF THE ACT WERE APPLICABLE AND SINCE THE ASSESSEE HAD SHORT DEDUCTED THE TAX AT SOURCE AT RS. 8,72,019 / - , DEMAND TO THAT EXTENT WAS RAISED AND FURTHER INTEREST UNDER SECTION 201(1A) OF THE ACT WAS C HARGED AT RS.2,51,764/ - . 6. THE CIT(A) NOTED THAT UNDER THE AGREEMENT , CONTRACT WAS AWARDED FOR PROVIDING COMMON MAINTENANCE SERVICES FOR THE PROPERTY IN QUESTION @ RS.5.50 PER SQ. FT. THE CIT(A) FURTHER NOTED THAT THE AGREEMENT WAS IN THE NATURE OF COMP OSITE CONTRACT, THROUGH WHICH, THE CONTRACTOR WAS TO PROVIDE SEVERAL SERVICES WHICH ALL WERE IN THE NATURE OF COMPOSITE CONTRACT AND WERE NOT TECHNICAL AND PROFESSIONAL SERVICES, BUT WERE F OR CARRYING OUT ROUTINE MAINTENANCE SERVICES. RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN BHARAT FORGE LTD. VS. ADDL.CIT AND IT WAS HELD THAT THE PROVISIONS OF SECTION 194C OF THE ACT WERE APPLICABLE AND THE PROVISIONS OF SECTION 194J OF THE ACT WERE NOT APPLICABLE. SINCE THE ASSESSEE HAD DED UCTED TAX AT SOURCE UNDER THE PROVISIONS OF SECTION 194C OF THE ACT, THE DEMAND RAISED UNDER SECTION 201(1) AND THE INTEREST CHARGED UNDER SECTION 201(1A) OF THE ACT WAS DELETED. 7. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 8. SHRI DHEERAJ K UMAR JAIN APPEARED FOR THE REVENUE AND SHRI M. BHAGWAT APPEARED FOR THE ASSESSEE AND PUT FORWARD THEIR CONTENTIONS. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE DEMAND CREATED UNDER SECTION 201(1) OF THE ACT AND INTEREST CHARGED UNDER SECTION 201(1A) OF THE ACT. THE ASSESSEE HAD ENTERED INTO A CONTRACT WITH M/S. S. BALAN FOR PROVIDING MAINTENANCE SERVICES. AS PER THE ANNUAL MAINTENANCE CONTRACT, THE CONTRACTOR WAS REQUIRED TO PROVI DE VARIOUS SERVICES INCLUDING MAINTENANCE OF TRANSFORMER, D.G. BACK - UP, COOLING TOWER , PROVIDING OF COMMON WATER AND ALSO MANAGEMENT OF PARKING SYSTEM. IN VIEW OF THE AFORESAID ITA NO S. 633 TO 635 /PN/201 4 SAI CONSTRUCTION PVT. L TD. 4 CONTRACT, THE ASSESSEE HAD DEDUCTED TAX AT SOURCE UNDER THE PROVISIONS OF SECT ION 194C OF THE ACT. THE ASSESSING OFFICER ON THE OTHER HAND, WAS OF THE VIEW THAT THE TAX AT SOURCE HAD TO BE DEDUCTED UNDER SECTION 194J OF THE ACT INSTEAD OF UNDER SECTION 194C OF THE ACT. 10. THE PROVISIONS OF SECTION 194C OF THE ACT ARE ATTRACTED WHERE THERE IS A CONTRACT BETWEEN THE PARTIES FOR CARRYING OUT ANY WORK OR FOR SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK IN PURSUANT TO CONTRACT BETWEEN THE CONTRACTOR AND SPECIFIED PERSON. FURTHER, THE PROVISIONS OF SECTION 194J OF THE ACT ARE ATTRACTED WHERE ANY PERSON IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY SUM BY WAY OF FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES. THE EXPLANATION UNDER THE SAID SECTION DEFINES PROFESSIONAL SERVICES BEING SERVICES RE NDERED BY A PERSON IN THE CO URSE OF CARRYING ON ANY LEGAL, MEDICAL, ENGINEERING OR ARCHITECTURAL PROFESSION OR THE PROFESSION OF ACCOUNTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DECORATION OR ADVERTISING, ETC. THE SERVICES PROVIDED BY THE CONTRACTOR IN THE APPEAL BEFORE US ARE NOT I N THE F IE LD OF PROFESSIONS AS ENLISTED IN EXPLANATION TO SECTION 194J OF THE ACT. HOWEVER, SERVICES PROVIDED BY THE ASSESSEE ARE FOR CARRYING OUT WORK OF MAINTENANCE ENTRUSTED BY THE ASSESSEE TO THE CONTRACTOR. THE SAID WORK IS BEING CARRIED OUT BY THE C ONTRACTOR THROUGH SUB - CONTRACTORS BY USING THE SERVICES OF UNSKILLED LABOURERS. IN VIEW OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, THE PROVISIONS OF SECTION 194C OF THE ACT ARE CLEARLY ATTRACTED AND APPLICABLE. 1 1 . WE FIND SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN BHARAT FORGE LTD. VS. ADDL.CIT IN ITA NOS.1357/PN/2010 AND 1358/PN/2010 AND ITO VS. BHARAT FORGE LTD. IN ITA NOS.1326/PN/2010 AND 1327/PN/2010, RELATING TO ASSESSMENT YEARS 2007 - 08 AND 2008 - 09, WHEREIN THE TRIBUNAL VIDE CONSOLIDATED ORDER DATED 31.01.2013 DECIDED THE ISSUE IN TURN RELYING ON THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN SHREE MAHALAXMI TRANSPORT CO. REPORTED IN 339 ITR 484 (GUJ) . THE RELEVANT FINDING S OF THE TRIBUNAL ARE AS UNDER: - 18. WE HAVE CONSIDERED THE RIVAL A RGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE. THE ONLY DISP UTE TO BE DECIDED IN THE INSTANT GROUND IS ITA NO S. 633 TO 635 /PN/201 4 SAI CONSTRUCTION PVT. L TD. 5 REGARDING THE APPLICABILITY OF PROVISIONS OF SECTION 194C OR 194I ON ACCOUNT OF PAYMENTS FOR HIRING OF CRANES FOR LOADING AND UNLOADING OF MATERIAL AT ITS FACTORY WHEN THE CRANES ARE PROVIDED BY THE PARTIES ALONG WITH DRIVER/OPERATOR AND ALL EXPENSES ARE BORNE BY THE OWNERS ONLY. WE FIND THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SHREE MAHALAXMI TRANSPORT COMPANY (SUPRA) HAS DISCUSSED AN IDENTICAL ISSUE AND HAS OBSERVED AS UNDER : CHAPTER XVII OF THE INCOME - T AX ACT, 1961, MAKES PROVISION FOR COLLECTION AND RECOVERY OF TAX. PART B THEREOF MAKES PROVISION FOR DEDUCTION AT SOURCE AND IS COMPRISED OF SECTIONS 192 TO 206AA. SECTION 194C BEARS THE HEADING PAYMENTS TO CONTRACTORS AND LAYS DOWN THAT ANY PERSON RES PONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT FOR CARRYING OUT ANY WORK INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED PERSON SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF T HE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OF BY ISSUE OF CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO THE PERCENTAGE SPECIFIED THEREUNDER OF SUCH SUM AS INCOME - TAX ON INCOME COMPRISED THEREIN. SECTION 194 - I OF THE ACT WHICH BEARS THE HEADING RENT PROVIDES THAT ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY INCOME BY WAY OF RENT, SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUN T OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF CHEQUE OR BY DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT INCOME - TAX THEREON AT THE RATE SPECIFIED THEREUNDER. THUS, SECTION 194C OF THE ACT MAKES PROVISION FOR DEDUCTION OF TAX AT SOURCE IN RESPECT OF PAYMENTS MADE TO CONTRACTORS WHEREAS SECTION 194 - I MAKES PROVISION FOR DEDUCTION OF TAX AT SOURCE IN RESPECT OF INCOME BY WAY OF RENT. EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE AFORESAID STATUTORY PROVISION S, FROM THE FINDINGS OF FACT RECORDED BY THE COMMISSIONER (APPEALS) IT IS APPARENT THAT THE ASSESSEE HAS NOT TAKEN THE DUMPERS ON HIRE/RENT FROM THE IS APPARENT THAT THE ASSESSEE HAS NOT TAKEN THE DUMPERS ON HIRE/RENT FROM THE PARTIES IN QUESTION. THE ASSESSEE HAS GIVEN CONTRACTS TO THE SAID PARTIES FOR THE TRANSPORTATION OF GOODS AND HAS NOT TAKEN MACHINERIES AND EQUIPMENT ON RENT. IN THE CIRCUMSTANCES, THE COMMISSIONER (APPEALS) WAS JUSTIFIED IN HOLDING THAT THE TRANSACTIONS IN QUESTION BEING IN THE NATURE OF CONTRACTS FOR SHIFTING OF GOODS FROM ONE PLACE TO ANOTHER WOULD BE COVE RED AS WORKS CONTRACTS, THEREBY ATTRACTING THE PROVISIONS OF SECTION 194C OF THE ACT. THAT SINCE THE ASSESSEE HAD GIVEN SUB - CONTRACTS FOR TRANSPORTATION OF GOODS AND NOT FOR THE RENTING OUT OF MACHINERIES OR EQUIPMENT, SUCH PAYMENTS COULD NOT BE TERMED AS RENT PAID FOR THE USE OF MACHINERY AND THE PROVISIONS OF SECTION 194 - I OF THE ACT WOULD NOT BE APPLICABLE. THE TRIBUNAL WAS, THEREFORE, JUSTIFIED IN UPHOLDING THE ORDER PASSED BY THE COMMISSIONER (APPEALS). IN VIEW OF THE ABOVE DISCUSSION, IT IS NOT POS SIBLE TO STATE THAT THE TRIBUNAL HAS COMMITTED ANY LEGAL ERROR SO AS TO WARRANT INTERFERENCE. NO QUESTION OF LAW, MUCH LESS, A SUBSTANTIAL QUESTION OF LAW CAN BE STATED TO ARISE OUT OF THE IMPUGNED ORDER OF THE TRIBUNAL. THE APPEAL IS, ACCORDINGLY, DISMI SSED. 18.1 WE FIND THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SWAYAM SHIPPING SERVICES (P) LTD. (SUPRA) HAS HELD AS UNDER (SHORT NOTES) : HELD, DISMISSING THE APPEAL, THAT THERE WAS NOTHING TO INDICATE THAT THE ASSESSEE HAD TAKEN TRAILERS/CRANES ON RENT SO AS TO ATTRACT THE PROVISIONS OF SECTION 194 - I OF THE ACT. THE ASSESSEE HAD GIVEN SUB - CONTRACTS FOR TRANSPORTATION OF GOODS. THEREFORE, THE TRANSACTIONS WOULD FALL WITHIN THE PURVIEW OF SECTION 194C OF THE ACT AS THE ASSESSEE WAS RESPONSIBLE FOR P AYING THE AMOUNT IN QUESTION FOR CARRYING OUT WORK IN PURSUANCE OF CONTRACTS BETWEEN THE ASSESSEE AND THE TRANSPORTERS AND AS SUCH THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE AT THE RATE PRESCRIBED UNDER THAT SECTION. THE COMMISSIONER (APPEALS) WAS, THEREFORE, JUSTIFIED IN HOLDING THAT THE ASSESSEE WAS NOT AN ASSESSEE IN DEFAULT WITHIN THE MEANING OF THE EXPRESSION AS CONTEMPLATED UNDER SECTION 201 OF THE ACT AND, CONSEQUENTLY, THE TRIBUNAL WAS JUSTIFIED IN CONFIRMING THE ORDER PASSED BY THE COMMISSI ONER (APPEALS). ITA NO S. 633 TO 635 /PN/201 4 SAI CONSTRUCTION PVT. L TD. 6 18.2 SINCE THE FACTS IN THE INSTANT CASE ARE IDENTICAL TO THE CASES DECIDED BY HONBLE GUJARAT HIGH COURT, THEREFORE, RESPECTFULLY FOLLOWING THE SAME WE HOLD THAT PROVISIONS OF SECTION 194C ARE ONLY APPLICABLE FOR SUCH PAYMENTS AND NOT PR OVISIONS OF SECTION 194I. THE ORDER OF THE CIT(A) ON THIS ISSUE IS ACCORDINGLY SET - ASIDE AND THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 1 2 . SINCE THE FACTS AND ISSUE RAISED IN THE PRESENT APPEAL ARE IDENTICAL TO THE FACTS AND ISSUE BEFORE PUNE BENCH OF TRIBUNAL IN BHARAT FORGE LTD. VS. ADDL.CIT (SUPRA) AND IN VIEW OF THE PROVISIONS OF THE ACT, WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 1 3 . THE FACTS AND ISSUES IN ITA NO S . 634 /PN/201 4 AND 635/PN/2014 ARE IDEN TICAL TO THE FACTS AND ISSUES IN ITA NO. 633 /PN/201 4 AND OUR DECISION IN ITA NO. 633 /PN/201 4 SHALL APPLY MUTATIS MUTANDIS TO ITA NO S . 634 /PN/201 4 AND 635/PN/2014 . 14. IN THE RESULT, ALL THE APPEAL S OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 23 RD DAY SEPTEMBER , 201 5 . SD/ - SD/ - (PRADIP KUMAR KEDIA ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 23 RD SEP TEMBER , 2015. GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - V , PUNE ; 4. / THE CIT (TDS) , PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE