DCIT, Jaipur V. M/S OSWAL CABLES P LTD., Jaipur

ITA 813/JPR/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7796 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 19-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH : JAIPUR BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NOS.811, 812 & 813/JP/2012 (ASSESSMENT YEARS : 2004-05, 2005-06 & 2008-09) ACIT (TDS), VS. M/S. OSWAL CABLES P. LTD., JAIPUR . GULAB NIWAS, M.I. ROAD, JAIPUR. (TAN : JPRO03590G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.C. PARWAL REVENUE BY : SHRI KAILASH MANGAL DATE OF HEARING : 01.12.2014 DATE OF PRONOUNACEMENT : 02.12.2014 O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : ALL THESE THREE APPEALS FILED BY THE REVENUE EMANAT E FROM THE ORDER OF CIT (APPEALS)-III, JAIPUR DATED 13.08.2012 FOR THE ASSESSMENT YEARS 2004-05, 2005-06 AND 2008-09. 2. IN ALL THESE APPEALS, THE ISSUE INVOLVED IS WHET HER THE ASSESSEE WAS LIABLE TO DEDUCT TAX FOR MAKING PAYMENTS FOR THE SUPPLY OF PLANT AND MACHINERY RELATED TO WINDMILL PROJECT. 2 ITA NOS.811 TO 813/JP/2012 3. THE ACIT (TDS), JAIPUR FOUND THAT THE ASSESSEE H AS MADE PAYMENTS FOR SUPPLY, ERECTION AND COMMISSIONING OF THE WINDMILL POWER GENERATION UNIT TO THE FOLLOWING PARTIES :- PERIOD (A.Y.) AMOUNT (RS.) PARTY TO WHOM PAYMENTS WERE MADE 2004-05 2,50,00,000 ENERCON INDIA LTD., MUMBAI 2005-06 3,00,00,000 AS ABOVE. 2007-08 3,08,200 SUZLON ENERGY LTD. (1,00,000/- SUZLON INFRASTRUCTURE SERVICES LTD. (RS.2,08,000/-) 2008-09 4,44,62,507 SUZLON ENERGY LTD. 2008-09 12,20,000 SUZLON INFRASTRUCTURE SERVICES LTD. 2008-09 88,40,000 SUZLON TOWERS & STRUCTURE LTD. IT WAS NOTICED THAT THE ASSESSEE HAS NOT DEDUCTED T DS FROM THESE PARTIES. WHEN ASSESSEE WAS ASKED WHY THE TDS WAS NOT DEDUCTED THE N IT WAS REPLIED THAT NO TDS WAS DEDUCTIBLE ON THE AMOUNTS OF PAYMENTS MADE FOR THE PURCHASE OF THE EQUIPMENTS AN INSTALLATION OF THE WINDMILL. IT WAS ALSO POINTED OUT THAT TDS U/S194C WAS DEDUCTED ON THE PAYMENTS MADE FOR INSTA LLATION, ERECTION AND COMMISSIONING OF THE WINDMILL AS THESE PAYMENTS WER E FOR THE WORK CONTRACTS. THE AO DID NOT ACCEPT THE ASSESSEES CONTENTION AND RAISED THE DEMAND. THE ASSESSEE WENT IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AND THE CIT (A) GRANTED THE RELIEF TO THE ASSESSEE BY HOLDING AS UN DER :- 2.3. I HAVE CAREFULLY CONSIDERED THE RIVAL STANDS OF THE AO AND THE LD. AR, VIZ. THE ISSUE UNDER CONSIDERATION. THE ADM ITTED FACTS OF THE PRESENT CASE ARE THAT THE ASSESSEE HAS BEEN FOUND M AKING PAYMENTS OF RS.2,50,00000, IN THE CURRENT YEAR, TO M/S ENERC ON INDIA LTD. I.R.O. THE TURNKEY PROJECT OF THE WINDMILL TO BE INSTALLED AT ITS PREMISES. OUT OF WHICH RS.2,30,00,000, IS PAID TOWARDS THE SU PPLY OF EQUIPMENT FOR INSTALLATION OF WINDMILL AND BALANCE PAYMENT OF 3 ITA NOS.811 TO 813/JP/2012 RS.20,00,000, IS MEANT FOR ERECTION AND COMMISSIONI NG OF SUCH PROJECT. IN THIS REGARD, THE ASSESSEE CONTENTED THA T THE ORDERS WERE RAISED SEPARATELY FOR SUPPLY FOR EQUIPMENTS AND INS TALLATION AND COMMISSIONING OF WINDMILL. AS, THE PROVISION OF SEC . 194C APPLIES TO CONTRACT WORK ONLY, THEREFORE, TDS WAS DEDUCTED ON THE SECOND PART OF THE PROJECT AND THE PAYMENT MADE TOWARDS AC QUIRING THE PLANT AND MACHINERY WERE NOT SUBJECTED TO THE TDS DEDUCTI ON U/S 194C OF THE ACT. HOWEVER, THE AO DID NOT AGREE WITH SUCH P REPOSITION AND HELD THAT EFFECTIVELY THE SUPPLIER WAS NOT ONLY TO PROVIDE THE EQUIPMENTS BUT ALSO HAD TO INSTALL THE TURNKEY PROJ ECT AND MADE IT OPERATIONAL, AS SUCH. THUS, THE TWO SEPARATE ORDERS ARE NOTHING BUT AMOUNTS TO A COMPOSITE CONTRACT, THEREFORE, THE PRO VISIONS OF SEC. 194C ARE APPLIED TO THE TOTAL PAYMENTS MADE IN THIS REGARD AND NOT ONLY TO THE PART PAYMENT MADE TOWARDS COMMISSIONING AND ERECTION OF SUCH PROJECT. HOWEVER, CONSIDERING THE FACT THAT THE RECIPIENTS OF THE CONTRACTUAL PAYMENT HAVE PAID THE TAX ON SUCH I NCOME, THEREFORE, THE AO, WHILE FOLLOWING THE DECISION GIVEN IN THE C ASE M/S COCA COLA BEVERAGES PVT. LTD. (226 ITR 167) BY THE HON'B LE SUPREME COURT, DID NOT CREATE ANY DEMAND U/S 201(1) AND ONL Y THE INTEREST LIABILITY OF RS.5,27,800, U/S 201(1A), IN THIS REGA RD, HAS BEEN IMPOSED. 2.3.1. REGARDING THE ISSUE OF APPLICABILITY OF SEC. 1G4C ON THE ENTIRE CONTRACTUAL PAYMENT OR OTHERWISE VIZ., THE PROJECT UNDER CONSIDERATION IS CONCERNED, THE LD. AR, SUBMITTED T HAT THE SIMILAR ISSUE, HAVING IDENTICAL FACTS AND CIRCUMSTANCES, HA S BEEN DECIDED BY THE HON'BLE ITAT, JAIPUR BENCH IN THE CASE OF M/S V IVEK PHARMACHEMS (INDIA) LTD. (ITA NO. 66 TO 69/JP/2012) AND M/S GEM CRAFT ENTERPRISES PVT. LTD. (ITA NO. 70 & 71/JP/201 2), WHEREIN IT HAS BEEN HELD THAT, I.R.O., A COMPOSITE CONTRACT OF WINDMILL, THE PROVISIONS OF SEC. 194C ARE NOT APPLICABLE ON THE P AYMENTS MADE TOWARDS SUPPLY OF THE EQUIPMENTS AND THE TDS IS REQ UIRED TO BE DEDUCTED ON THE REMAINING PART OF THE PROJECT I.E., THE PAYMENT MADE ON ACCOUNT OF SERVICES RENDERED BY THE SUPPLIER TOW ARDS ERECTION AND COMMISSIONING OF SUCH PROJECT. THUS, IT IS ARGUED T HAT THE ABOVE RATIO OF HON'BLE JAIPUR TRIBUNAL IS ALSO APPLICABLE TO TH E APPELLANT'S CASE, UNDER THE GIVEN CIRCUMSTANCES. ON PERUSAL OF THE AB OVE APPELLATE ORDERS OF THE JURISDICTIONAL TRIBUNAL, I FIND THE C ONTENTION OF LD. AR., AS FACTUALLY IN ORDER. FOR THE SAKE OF READY R EFERENCE, THE OPERATIVE PARA OF THE ORDER DATED 25.05.2012, RELEV ANT TO M/S VIVEK PHARMACHEMS (LNDIA) LTD. (SUPRA). IS BEING IS REPRO DUCED AS UNDER : 'IN THE CASE IN HAND, THE FACTS ARE IDENTICAL IN TH E CASE OF RAJASTHAN VIDHYUT UTPADAN NIGAM LTD. AND IN CASE OF KARNATAKA POWER TRANSMISSION CORPORATION LTD., BANG ALORE. IN THE PRESENT CASE THE ASSESSEE PURCHASED MACHINER Y AND THE 4 ITA NOS.811 TO 813/JP/2012 SUPPLIER WAS SUPPOSED TO ERECT THE MACHINERY AT THE FACTORY PREMISES OF THE ASSESSEE AFTER COMPLETING THE CIVIL WORK AND ERECTION WORK. THE ASSESSEE HAS ALREADY DEDUCTED TD S ON ACCOUNT OF SERVICES RENDERED FOR CIVIL WORK/ELECTRI CAL WORK AND ERECTION OF THE MACHINERY. THEREFORE, IN OUR VI EW THE PROVISIONS OF SECTION194C ARE NOT APPLICABLE ON ACC OUNT OF PURCHASE OF MACHINERY. THE CASES ON WHICH RELIANCE HAS BEEN PLACED BY AO AND LD. CIT(A) ARE DISTINGUISHABLE. IN THOSE CASES ALSO A COMPOSITE CONTRACT WAS THERE. HOWEVER , THE MATERIAL WAS SUPPLIED BY THE ASSESSEE ON WHICH THER E WAS NO QUESTION OF DEDUCTING ANY TDS OR ON THE REMAINING P ART OF SERVICE ETC. THIS WAS ON ACCOUNT OF CONTRACT WORK T HE TDS WAS DEDUCTIBLE. IN THE PRESENT CASE ITSELF, THE SU PPLIER OF THE MACHINERY IS A SEPARATE COMPONENT AND ON ACCOUNT OF SERVICES RENDERED FOR COMMISSIONING MACHINERY AFTER CIVIL WO RK AND ELECTRICAL WORK IS SEPARATE ON WHICH TDS HAS ALREAD Y BEEN DECLARED. THEREFORE, THE CASES ON WHICH RELIANCE HA S BEEN PLACED BY ASSESSING OFFICER OR LD. CIT(A) SUPPORT T HE CASE OF ASSESSEE. IN VIEW OF THESE FACTS AND CIRCUMSTAN CES, WE HOLD THAT PROVISIONS OF SECTION 194C ARE NOT APPLIC ABLE. THEREFORE, THE ASSESSEE HAS NOT COMMITTED ANY DEFAU LT IN VIEW OF PROVISIONS OF SECTION 201(1). SINCE WE HAVE ALRE ADY HELD THAT ASSESSEE WAS NOT IN DEFAULT IN VIEW OF PROVISI ONS OF SECTION 201(1). THEREFORE, CHARGING OF INTEREST UND ER SECTION 201(1A) DOES NOT ARISE.' CONSIDERING THE FACTS THAT THE ISSUE AND THE CIRCU MSTANCES OF THE APPEAL IN HAND ARE IDENTICAL TO THE ABOVE APPEA LS, DECIDED BY HON'BLE ITAT, JAIPUR BENCH (SUPRA), ARE IDENTICAL I N ALL MANNERS, THEREFORE, I FIND FORCE IN THE CONTENTION OF THE LD . AR THAT THE RATIO UPHELD IN THE ABOVE APPEALS IS SQUARELY APPLICABLE IN THE PRESENT CASE, AS SUCH. ACCORDINGLY, WHILE FOLLOWING THE 'PR INCIPLE OF JUDICIAL DISCIPLINE', IT IS HELD THAT THE PROVISIONS OF SEC. 194C ARE NOT APPLICABLE TO THE PAYMENT MADE TOWARDS THE SUPPLY O F PLANT & MACHINERY RELATED TO WINDMILL PROJECT AND TDS IS RE QUIRED TO BE DEDUCTED, ONLY ON THE BALANCE PAYMENT MADE, I.R.O., ERECTION AND COMMISSIONING OF SUCH PROJECT. IN THE LIGHT OF THE LIGHT OF THE ABOVE FACTUAL AND LEGAL POSITION, THE DEMANDS OF RS.5,27 ,800, RAISED U/S 201 (1A) IS HEREBY CANCELED AND THE AO IS DIRECTED TO ALLOW THE REQUISITE RELIEF, IN THIS REGARD. CONSEQUENTLY, THI S GROUND OF APPEAL IS UPHELD. 3. IN THE LAST GROUND OF APPEAL, THE APPELLANT HAS CRAVED LEAVE TO ADD, ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL. H OWEVER, AS NO SUCH REQUEST WAS MADE DURING THE APPELLATE PROCEEDI NGS, THIS GROUND OF APPEAL HAS BECOME INFRUCTUOUS. 5 ITA NOS.811 TO 813/JP/2012 AGAINST THAT ORDER, THE REVENUE IS IN APPEALS IN AL L THE THREE ASSESSMENT YEARS BEFORE US. 4. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE F IND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ITAT, JAIP UR BENCHS DECISIONS IN THE CASES OF M/S. VIVEK PHARMACHEMS (INDIA) LTD. (ITA N O.66 TO 69/JP/2012) AND M/S. GEM CRAFT ENTERPRISE PVT. LTD. (ITA NO.70 & 71 /JP/2012) AND THE CIT (A), RELYING ON THESE DECISIONS, GRANTED THE RELIEF TO THE ASSESSEE BEING IDENTICAL FACTS AND ISSUES. THEREFORE, WE FIND NO MERITS IN THE APPEALS OF THE REVENUE AND THE SAME ARE DISMISSED. 5. IN THE RESULT, ALL THE THREE APPEALS FILED BY TH E REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 ND DAY OF DECEMBER, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED : THE 2 ND DAY OF DECEMBER, 2014. 6 ITA NOS.811 TO 813/JP/2012 COPY FORWARDED TO: 1.ACIT (TDS), JAIPUR. 2.M/S. OSWAL CABLES P. LTD. 3.CIT 4.CIT(A) 5.DR, ITAT GUARD FILE (ITA NOS.811 TO 813/JP/2012) AR, ITAT NEW DELHI.