DCIT, Shimla V. M/s Bus Management & Development Authority, Shimla

ITA 939/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6789 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 07-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.939/CHD/2017 (ASSESSMENT YEAR : 2012-13) THE D.C.I.T., VS. M/S BUS MANAGEMENT CIRCLE SHIMLA. & DEVELOPMENT AUTHORITY, BUS STAND SHIMLA. PAN: AAALT0176C (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.ZEENIA HANDA, ADDL. CIT DR RESPONDENT BY : SHRI VISHAL MOHAN DATE OF HEARING : 04.10.2017 DATE OF PRONOUNCEMENT : 13.10.2017 ORDER PER ANNAPURNA GUPTA, A.M. : THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEAL S), SHIMLA DATED 29.3.2017 RELATING TO ASSESSMENT YEAR 2012- 13. 2. THE ONLY ISSUE IN THE PRESENT APPEAL PERTAINS TO DISALLOWANCE MADE BY THE ASSESSING OFFICER OF EXPEN SES U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 (IN SHORT TH E ACT) ON ACCOUNT OF NON DEDUCTION OF TAX AT SOURCE ON THE SA ME, WHICH WAS SUBSEQUENTLY ALLOWED IN APPEAL BY THE LD.CIT(APPEALS) FOLLOWING THE ORDER OF THE I.T.A.T. ON IDENTICAL ISSUE IN THE CASE OF THE ASSESSEE FOR ASS ESSMENT YEARS 2009-10 TO 2012-13. 3. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT THE A SSESSING OFFICER DURING ASSESSMENT PROCEEDINGS NOTICED THAT THE 2 ASSESSEE WAS MAKING HUGE PAYMENTS TO HIMACHAL PRADE SH ROAD TRANSPORT CO. (IN SHORT HRTC) ON PERIODICAL BASIS AND NO TAX WAS DEDUCTED ON THE SAME. THE ASSESSEE EXPLAINED THAT HRTC WAS PROVIDING IT MAN POWER AND INFRASTRUCTURE, THE EXPENDITURE FOR WHICH WAS INCUR RED BY HRTC AND WAS REIMBURSED BY THE ASSESSEE AND THEREFO RE NO TAX WAS BEING DEDUCTED ON THE SAME. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AN D HELD THAT THE PAYMENTS MADE TO HRTC WAS FOR SERVICE REND ERED BY THEM WHICH WAS IN THE NATURE OF MANAGERIAL AND TECHNICAL SERVICES AND WAS LIABLE TO TDS U/S 194J, BUT SINCE NO TAX WAS DEDUCTED ON THE SAME, THE EXPENSES SO INCURRED WERE LIABLE TO BE DISALLOWED U/S 40(A)(IA) OF THE ACT. 4. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(APPEALS) WHO DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWING THE ORDER OF THE I.T.A.T. IN THE CASE OF THE ASSESSEE RELATING TO ASSESSMENT YEARS 2009-10 T O 2012- 13 IN ITA NOS.761 TO 764/CHD/2012. 5. AGGRIEVED BY THE SAME, THE REVENUE HAS NOW COME UP IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES, THE LD. CIT(A ) HAS ERRED IN HOLDING THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE ON THE PAYMENT OF RS.2,00,00,0 00/- MADE BY IT TO HRTC FOR PROVIDING MANPOWER AND INFRASTRUCTURE SERVICES, IGNORING THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES, THE LD. CI T(A) 3 HAS ERRED IN LAW BY HOLDING THAT THE PAYMENTS MADE BY THE ASSESSEE I.E. HP BUS STAND MANAGEMENT DEVELOPMENT AUTHORITY, BUS STAND, SHIMLA TO HRTC ARE NOT COVERED U/S 194J OF THE I.T.ACT,1961 AS FAR AS THE LIABILITY OF THE ASSESSEE FOR DEDUCTION OF TAX A T SOURCE IS CONCERNED. 3. IT IS PRAYED THAT THE ORDER OF THE LD CIT(A) BE SET -ASIDE AND THAT OF THE A.O. RESTORED. 6. DURING THE COURSE OF HEARING BEFORE US, THE LD. DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER THOU GH HE FAIRLY CONCEDED THAT THE ISSUE WAS COVERED IN FAVOU R OF THE ASSESSEE BY THE ORDER OF THE I.T.A.T. IN ASSESSEES OWN CASE FOR PRECEDING YEARS. 7. THE LD. COUNSEL FOR ASSESSEE, ON THE OTHER HAND, POINTED OUT THAT THE ORDER OF THE I.T.A.T. IN ASSES SMENT YEARS 2009-10 TO 2012-13 WAS CARRIED IN APPEAL BY T HE REVENUE BEFORE THE HON'BLE HIGH COURT WHICH HAD UPH ELD THE ORDER OF THE I.T.A.T. THUS THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT THE ISSUE HAD BEEN DECIDED IN FAVO UR OF THE ASSESSEE BY THE HON'BLE HIGH COURT IN ITS ORDER IN ITA NO.26 OF 2015 ALONGWITH ITA NOS.27, 28 & 29 OF 2015 DATED 11.9.2017. COPY OF THE ORDER WAS PLACED BEFORE US. 8. WE HAVE HEARD BOTH THE PARTIES. WE HAVE ALSO PER USED THE ORDERS PLACED BEFORE US. WE FIND NO MERIT IN T HE PRESENT APPEAL OF THE REVENUE. ADMITTEDLY, THE ISS UE IN THE PRESENT CASE, BEING DISALLOWANCE OF EXPENDITURE U/S 40(A)(IA) OF THE ACT ON ACCOUNT OF NON DEDUCTION OF TAX AT SOURCE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE AS SESSEE BY THE HON'BLE HIGH COURT WHEREIN THE HON'BLE HIGH COURT HAS UPHELD THE FINDINGS OF THE I.T.A.T. THAT THE PA YMENTS TO 4 HRTC MERELY TANTAMOUNTED TO REIMBURSEMENT OF EXPENDITURE AND WAS NOT LIABLE TO TAX DEDUCTION AT SOURCE. THE HON'BLE HIGH COURT ALSO UPHELD THE FINDINGS OF THE I.T.A.T. THAT THE PAYMENTS DID NOT QUALIFY AS FEES FOR PROFESSIONAL AND TECHNICAL SERVICES AS HELD BY THE AO, AND WAS THEREFORE NOT LIABLE TO TAX DEDUCTION AT SOURCE U/S 194J OF THE ACT. THE RELEVANT FINDINGS OF THE HONBLE HI GH COURT AT PARA 13 & 14 OF THE ORDER ARE AS UNDER: 13. THE ARRANGEMENT INTERSE THE DEVELOPMENT AUTHORITY AND HRTC WAS CLEAR AND SIMPLE. IT WAS BY WAY OF A STOP GAP ARRANGEMENT. TILL SUCH TIME THE AUTHORITY DEVELOPED ITS INFRASTRUCTURE AND RECRUITED THE STAFF, THE WORK OF DEVELOPMENT AND MANAGEMENT WAS REQUIRED TO BE CARRIED OUT BY HRTC. HENCE EMPLOYEES OF HRTC WERE CALLED UPON TO CONTINUE TO DISCHARGE SUCH DUTIES. IT IS IN THIS BACKDROP, TWO ENTITIES DECIDED TO SHARE THEIR RESOURCES BY ARRIVING AT AN ARRANGEMENT, WHEREBY SALARIES OF CERTAIN STAFF AND OTHER EXPENDITURE INCURRED BY HRTC WAS TO BE SHARED PROPORTIONATELY. 14. SUCH AN ARRANGEMENT ARRIVED AT BETWEEN TWO ENTITIES CANNOT BE SAID TO BE THAT OF RENDERING PROFESSIONAL SERVICES. NO LEGAL, MEDICAL, ENGINEERING, ARCHITECTURAL CONSTANCY, TECHNICAL CONSULTANCY, ACCOUNTANCY, NATURE OF INTERIOR DECORATION OR DEVELOPMENT WAS TO BE RENDERED BY HRTC. SIMILARLY, NO SERVICE WHICH CAN BE TERMED TO BE TECHNICAL SERVICE, WAS PROVIDED BY HRTC TO THE DEVELOPMENT AUTHORITY, SO ALSO NO MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES WERE PROVIDED. THE ARRANGEMENT WAS PURELY SIMPLE. THE STAFF OF HRTC WAS TO CARRY OUT THE WORK OF DEVELOPMENT AND MANAGEMENT OF THE DEVELOPMENT AUTHORITY TILL SUCH TIME, THE SAID AUTHORITY DEVELOPED ITS INFRASTRUCTURE AND THE EXPENDITURE SO INCURRED BY HRTC WAS TO BE APPORTIONED ON THE AGREED TERMS. IT IS ONLY PURSUANT TO SUCH ARRANGEMENT, THE DEVELOPMENT AUTHORITY DISBURSED THE PAYMENT TO HRTC AND, AS SUCH, IN OUR CONSIDERED VIEW, NO AMOUNT OF TDS WAS REQUIRED TO BE DEDUCTED ON THE SAME. IT IS ONLY A REIMBURSEMENT OF AN EXPENSE SO INCURRED BY HRTC. 5 IN VIEW OF THE ABOVE, BOTH THE GROUNDS RAISED BY TH E REVENUE ARE LIABLE TO BE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 13 TH OCTOBER, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH