THE ITO WARD -6(2), Visakhapatnam V. National Thermal Power Corporation Ltd.,, Visakhapatnam

ITA 657/VIZ/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1184 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 06-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K SETHI
• Assessee Lawyers: A V RAGHURAM
• Section: 194C; 201(1)

Judgement Text

ITA NO.657/VIZAG/2013 NATIONAL THERMAL POWER CORPN. LTD., VSKP 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.657/VIZAG/2013 ( / ASSESSMENT YEAR: 2010-11) ITO WARD - 6(2), VISAKHAPATNAM VS. NATIONAL THERMAL CORPORATION LTD., VISAKHAPATNAM [PAN: AAACN0255D ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI M.K. SETHI, DR / RESPONDENT BY : SHRI A.V. RAGHURAM, AR / DATE OF HEARING : 28.04.2016 / DATE OF PRONOUNCEMENT : 06.05.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), VISAKHAPATNAM DATED 28.8.2013 FOR THE ASSES SMENT YEAR 2009- 10. ITA NO.657/VIZAG/2013 NATIONAL THERMAL POWER CORPN. LTD., VSKP 2 2. FACTS ARE IN BRIEF THAT THE ASSESSEE COMPANY M/S . NATIONAL THERMAL POWER CORPORATION LTD. (NTPC) IS IN THE ACT IVITY OF GENERATION OF THERMAL POWER AT ITS UNIT, SIMHADRI SUPER THERMAL P OWER PROJECT (SSTPP), LOCATED AT PARAVADA IN VISAKHAPATNAM DISTR ICT. TDS INSPECTION WAS CARRIED OUT IN THE PREMISES OF THE SSTPP ON 9.3 .2009. DURING THE COURSE OF INSPECTION, IT WAS NOTICED THAT THE COMPA NY HAS UNDERTAKEN 1000 MW EXPANSION OF SSTPP STAGE-II. PURSUANT TO T HIS, BIDS WERE INVITED FOR VARIOUS PACKAGES OF WORK. AFTER EVALUA TION AND DISCUSSION AND ISSUE OF LETTERS OF INSTENT, NOTIFICATION OF AW ARD WAS ISSUED TO THE SUCCESSFUL BIDDERS. THE CONTRACT FOR VARIOUS PACKA GES OF WORK WAS FINALIZED WITH THE COMPANIES LIKE ABB, BHEL, DRIPLE X WATER ENGINEERING LTD., ETC. 3. A DIFFERENT PACKAGE OF WORK INCLUDING DESIGN ENG INEERING, MANUFACTURE, PACKAGING, FORWARDING, ERECTION AND CO MMISSIONING. AFTER FINALIZING THE CONTRACTOR, CONTRACT AGREEMENTS WERE EXECUTED IN TWO PARTS I.E. (A) FIRST CONTRACT AND (B) SECOND CONTRA CT. THE SCOPE OF WORK OF THE FIRST CONTRACT INCLUDES DESIGN, ENGINEERING, MANUFACTURING, SHOP FABRICATION, ASSEMBLY, INSPECTION AND TESTING AT SU PPLIERS WORKS, TYPE TESTING, PACKAGING, FORWARDING TO SITE OF ALL EQUIP MENTS/MATERIALS /SPECIAL TOOLS & TACKLES AND MANDATORY SPARES COVER ED UNDER COST ITA NO.657/VIZAG/2013 NATIONAL THERMAL POWER CORPN. LTD., VSKP 3 PACKAGE FOR A PRICE THAT IS NOTIFIED IN THE AWARD. THE SCOPE OF WORK UNDER SECOND CONTRACT INCLUDE TRANSPORTATION FROM M ANUFACTURERS WORK PLACE AND DESPATCH, PORT CLEARANCE AND PORT CHARGES , INLAND INSURANCE, DELIVERY AT SITE, RECEIPT, UNLOADING, HANDLING, STO RAGE, INSURANCE AND IN- PLANT TRANSPORTATION AT SITE, COMPLETE INSTALLATION , SUPERVISION PRE- COMMISSIONING, COMMISSIONING COMPLETION OF FACILIT IES, CONDUCTING PERFORMANCE AND GUARANTEE TESTS AND HANDING OVER TO NTPC OF ALL EQUIPMENTS MATERIAL SPECIAL MAINTENANCE OF TOOLS & TACKLES COVERED UNDER THE PACKAGE FOR PRICE THAT IS NOTIFIED IN THE AWARD. 4. IN THE ASSESSMENT ORDER, THE A.O. HAS NOTED THAT THE ASSESSEE HAS DEDUCTED TDS ON THE PAYMENTS MADE UNDER THE SECOND CONTRACT AND HAS NOT DEDUCTED TAX ON THE PAYMENTS MADE UNDER THE FIRST CONTRACT. THE A.O. AFTER CONSIDERING VARIOUS CLAUSES OF THE A GREEMENT AND OTHER RELATED DOCUMENTS AND AFTER CONSIDERING THE ASSESSE ES SUBMISSIONS CAME TO THE CONCLUSION THAT THE FIRST AND SECOND CO NTRACT TOGETHER CONSTITUTE A COMPOSITE CONTRACT ATTRACTING TDS U/S 194C OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') ON THE WHOLE AMOUNT. AS THE ASSESSEE HAS FAILED TO DEDUCT THE TDS ON THE SU M PAID UNDER THE FIRST CONTRACT, IT WAS HELD TO BE IN DEFAULT U/S 20 1 OF THE ACT. HOWEVER, SINCE THE RECEIPIENTS OF THE CONTRACT AMOUNT FILED THEIR INCOME TAX ITA NO.657/VIZAG/2013 NATIONAL THERMAL POWER CORPN. LTD., VSKP 4 RETURNS FOR THE ASSESSMENT YEAR 2010-11, NO DEMAND U/S 201(1) OF THE ACT WAS RAISED. HOWEVER, INTEREST U/S 201(1A) OF T HE ACT WAS CHARGED TO THE TUNE OF ` 11,87,433/- IN THE IMPUGNED ORDER. ON BEING AGGRI EVED ASSESSEE CARRIED MATTER IN APPEAL BEFORE THE CIT(A) . IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE ISSUE IS ALREADY COV ERED BY THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2008-09, 2009-10 & 2010-11 AND SAME MAY BE FOLLOWED. 5. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION S OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESS EES OWN CASE FOR THE ASSESSMENT YEAR 2008-09, 2009-10 & 2010-11, HE HAS DIRECTED THE A.O. TO DELETE THE IMPUGNED DEMAND. THE RELEVANT PORTIO N OF THE ORDER IS EXTRACTED AS UNDER: 6. DURING THE HEARING, IT WAS SUBMITTED THAT THE I MPUGNED DEMAND RELATED TO THE PART PERIOD FROM JANUARY, 2010 TO MA RCH, 2010. A COPY OF THE ORDER DATED 22.7.2013 OF THE HONBLE ITAT, VIZA G BENCH IN ITA NO.68, 69 & 101/VIZAG/2012 RELATING TO A.Y. 2008-09, 2009- 10 AND 2010-11 IN THE APPELLANTS CASE WAS FILED. IT WAS REPRESENTED THAT DEMAND WAS RAISED ON THE SAME SET OF FACTS AND CIRCUMSTANCES B Y THE AO U/S 201(1) AND 201(1A) OF THE I.T. ACT FOR THE EARLIER YEARS I .E., 2007-08 TO 2009-10. THE CIT(A) ALLOWED RELIEF IN REGARD TO DEMAND RAIS ED U/S 201(1) OF THE ACT AND UPHELD THE DEMAND RAISED U/S 201(1A) OF THE I.T. ACT. IT WAS SUBMITTED THAT ON FURTHER APPEAL BY THE APPELLANT B EFORE THE ITAT, THE HONBLE ITAT VIDE THE ABOVE REFERRED ORDER ALLOWED RELIEF TO THE ASSESSEE HOLDING THAT THERE IS NO REQUIREMENT TO DEDUCT TAX UNDER THE FIRST CONTRACT. ON THE BASIS, IT WAS REQUESTED THAT THE DEMAND RAIS ED FOR THE PART PERIOD I.E., JANUARY 2010 TO MARCH, 2010 MAY BE DELETED. IT WAS POINTED OUT THAT DEMAND RAISED UPTO JANUARY, 2010 WAS DIRECTED TO BE DELETED BY THE HONBLE ITAT. ITA NO.657/VIZAG/2013 NATIONAL THERMAL POWER CORPN. LTD., VSKP 5 6.1 I HAVE CONSIDERED THE SUBMISSIONS MADE AND I HAV E GONE THROUGH THE ORDER PASSED BY THE HONBLE ITAT IN THE APPELLA NTS CASE RELETING TO THE EARLIER YEARS. THE HONBLE ITAT HAS TAKEN THE VIEW THAT THE FIRST CONTRACT IS A SUPPLY CONTRADCT AND IS IN THE NATURE OF CONTRACT OF SALE AND HENCE THE PROVISIONS OF SECTION 194C SHALL NOT APPL Y TO IT. THE HONBLE ITAT HAS DIRECTED TEHA.O. TO DELETE THE DEMAND RAIS ED FOR THE 3 YEARS I.E. 2007-08 TO 2009-10. RESPECTFULLY FOLLOWING THE DEC ISION RENDERED BY THE JURISDICTIONAL ITAT IN THE ASSESSEES CASE FOR THE EARLIER YEARS, THE AO IS DIRECTED TO DELETE THE IMPUGNED DEMAND. 6. WE HAVE CAREFULLY CONSIDERED THE ORDER PASSED BY THE LD. CIT(A) AND WE FIND THAT THE LD. CIT(A) BY FOLLOWING THE DE CISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08 TO 2009-10, HE DIRECTED THE A.O. TO DELETE THE DEMAND WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DISMISS ED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 6 TH MAY16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 6.5.2016 VG/SPS ITA NO.657/VIZAG/2013 NATIONAL THERMAL POWER CORPN. LTD., VSKP 6 '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO WARD-6(2), VISAKHAPATNAM . 2. / THE RESPONDENT NATIONAL THERMAL POWER CORPORAT ION LTD., SIMHADRI SUPER THERMAL POWER PROJECT, PARAVADA, VISAKHAPATNA M 3. ) / THE CIT, VISAKHAPATNAM 4. ) ( ) / THE CIT(A), VISAKHAPATNAM 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM