Dy. CIT, (TDS-1), Pune V. Thermax Limited (B & H) Division, Pune

ITA 997/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80058 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R D ONKAR
• Keywords: Recovery proceedings; Question of law
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS.996 TO 998/PN/2013 (A.YS. 2009-10, 2009-10 & 2010-11) DCIT (TDS-1), PUNE APPELLANT VS. THERMAX LIMITED THERMAX HOUSE, 14, MUMBAI PUNE ROAD, WAKDEWADI, PUNE 411003 PAN: AAACT3910D RESPONDENT ITA NOS.1787 TO 1790/PN/2012 (A.YS. 2007-08, 2007-08, 2008-09 & 2008-09) DCIT (TDS-1), PUNE APPELLANT VS. THERMAX LIMITED THERMAX HOUSE, 14, MUMBAI PUNE ROAD, WAKDEWADI, PUNE 411003 PAN: AAACT3910D RESPONDENT ASSESSEE BY : SHRI R.D. ONKAR DEPARTMENT BY : SHRI RAJESH DAMOR DATE OF HEARING : 31.07.2014 DATE OF PRONOUNCEMENT : 31.07.2014 ORDER PER BENCH : ALL THESE APPEALS HAVE BEEN FILED BY THE REVENUE PE RTAIN TO THE SAME ASSESSEE ON SIMILAR GROUNDS AGAINST THE RE SPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS)-V, PUNE. FOR THE SAKE ITA NOS.996 TO 998 OF 13 AND 1787 TO 1790 OF 12 THERMAX LIMITED OF CONVENIENCE, ALL THESE APPEALS ARE BEING DISPOSE D OF BY THIS CONSOLIDATED ORDER. 2. IN ITA NO.996/PN/2013, THE REVENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE P ROVISIONS OF SECTION 194I ARE NOT APPLICABLE IN RESPECT OF CR ANE HIRE CHARGES WITHOUT APPRECIATING THE FACT THAT AS PER T HE AMENDED PROVISIONS OF SECTION 194 I W.E.F. 13-7- 2006, THE RENT IN RESPECT OF MACHINERY, PLANT OR EQUIPMENT ET C. WERE BROUGHT INTO THE AMBIT OF SECTION 194I. 2. THE APPELLANT CRAVES LEAVES TO AMEND OR ALTER ANY O R ALL THE GROUNDS OF APPEAL OR ADD A NEW GROUND WHICH MAY BE NECESSARY AT THE TIME OF THE HEARING OF THE CASE OR THEREAFTER. 3. THE ORDER OF THE LD. CIT (A) BEING ERRONEOUS BE SET ASIDE AND A.O'S ORDER BE RESTORED ON THIS ISSUE. 3. THE ASSESSEE COMPANY IS MANUFACTURER OF ENERGY A ND ENVIRONMENTAL PRODUCTS AND SYSTEMS, WATER AND WASTE WATER TREATMENT PLANTS, ION EXCHANGE RESINS AND CHEMICALS , TRADING, EXPORT, LEASING TREASURY OPERATIONS AND SERVICES, D EVELOPMENT OF MARKETING OF SOFTWARE PRODUCTS. THE ASSESSEE WAS I SSUED VERIFICATION LETTER DATED 21.11.2001 FOR THE PURPOS E OF VERIFICATION OF COMPLIANCE TO THE VARIOUS PROVISIONS OF TAX DEDU CTED / COLLECTED AT SOURCE, WHICH WAS FOLLOWED BY SHOW CAUSE NOTICE ON 17.02.2012. AFTER PROVIDING OPPORTUNITY TO THE ASSESSEE, ORDER U/S.201(1) / 201(1A) OF INCOME TAX ACT WAS PASSED ON 28.03.2013 RAISING THE DEMAND OF RS.11,75,806/-. THE MATTER WAS CARRIED B EFORE FIRST APPELLATE AUTHORITY, WHEREIN THE VARIOUS CONTENTION S WERE RAISED ON BEHALF OF ASSESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE. THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE, INTER ALIA, SUBMITTED THAT THE CIT(A) WAS ITA NOS.996 TO 998 OF 13 AND 1787 TO 1790 OF 12 THERMAX LIMITED NOT JUSTIFIED IN HOLDING THAT THE PROVISIONS OF SEC TION 194I ARE NOT APPLICABLE IN RESPECT OF CRANE HIRE CHARGES WITHOUT APPRECIATING THE FACT THAT AS PER THE AMENDED PROVISIONS OF SECTION 194 I W.E.F. 13- 7-2006, THE RENT IN RESPECT OF MACHINERY, PLANT OR EQUIPMENT ETC. WERE BROUGHT INTO THE AMBIT OF SECTION 1941. ON TH E OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE HAS SUPPORTED THE ORDER OF CIT(A). 4. AT THE OUTSET OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE HAS POINTED OUT THAT THE ISSUE UNDER APPEAL HAS BEEN COVERED BY THE ORDER OF ITAT, PUNE A BENCH I N ITA NO.1357 & 1358/PN/2010 AND ANOTHER IN THE CASE OF BHARAT FO RGE LTD. VS ADDL.CIT, RANGE-1, PUNE, WHEREIN THE ISSUE OF DEDUC TIBILITY OF TDS IN RESPECT OF HIRE CHARGES TO CRANE UNDER THE PROVI SIONS OF SECTION 194I OF THE ACT HAS BEEN DECIDED IN FAVOUR OF THE A SSESSEE BY OBSERVING AS UNDER: 18. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFI CER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE AS SESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS RELIED O N BY THE LEARNED COUNSEL FOR THE ASSESSEE. THE ONLY DISPUTE TO BE DECIDED IN THE INSTANT GROUND IS REGARDING THE APPL ICABILITY OF PROVISIONS OF SECTION 194C OR 194I ON ACCOUNT OF PA YMENTS FOR HIRING OF CRANES FOR LOADING AND UNLOADING OF MATER IAL 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 COUR T IN THE CASE OF SHREE MAHALAXMI TRANSPORT COMPANY (SUPRA) H AS DISCUSSED AN IDENTICAL ISSUE AND HAS OBSERVED AS UN DER : CHAPTER XVII OF THE INCOME-TAX 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 LAY S DOWN THAT ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT FOR CARRYING OUT ANY WORK INCLUDING SU PPLY OF LABOUR FOR CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED PER SON ITA NOS.996 TO 998 OF 13 AND 1787 TO 1790 OF 12 THERMAX LIMITED SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACC OUNT OF THE 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 INCO ME- TAX ON INCOME COMPRISED THEREIN. SECTION 194-I OF THE ACT WHICH BEARS THE HEADING R ENT PROVIDES THAT ANY PERSON, NOT BEING AN INDIVIDUAL O R A HINDU UNDIVIDED FAMILY, WHO IS RESPONSIBLE FOR PAYI NG TO A RESIDENT ANY INCOME BY WAY OF RENT, SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYE E 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 SPEC IFIED THEREUNDER. THUS, SECTION 194C OF THE ACT MAKES PROVISION FOR DEDUCTION OF TAX AT SOURCE IN RESPECT OF PAYMENTS M ADE TO CONTRACTORS WHEREAS SECTION 194-I MAKES PROVISIO N FOR DEDUCTION OF TAX AT SOURCE IN RESPECT OF INCOME BY WAY OF RENT. EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGH T OF THE AFORESAID STATUTORY PROVISIONS, FROM THE FINDIN GS OF FACT RECORDED BY THE COMMISSIONER (APPEALS) IT IS APPARENT THAT THE ASSESSEE HAS NOT TAKEN THE DUMPER S ON HIRE/RENT FROM THE PARTIES IN QUESTION. THE ASS ESSEE HAS GIVEN CONTRACTS TO THE SAID PARTIES FOR THE TRANSPORTATION OF GOODS AND HAS NOT TAKEN MACHINERI ES AND EQUIPMENT ON RENT. IN THE CIRCUMSTANCES, THE COMMISSIONER (APPEALS) WAS JUSTIFIED IN HOLDING THA T THE TRANSACTIONS IN QUESTION BEING IN THE NATURE OF CON TRACTS FOR SHIFTING OF GOODS FROM ONE PLACE TO ANOTHER WOU LD BE COVERED 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 REN T 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 POSSIBLE TO STATE THAT THE TRIBUNAL HAS COMMITTED ANY LEGAL ERROR SO AS TO WARRANT INTERFERENCE. NO QUESTION OF LAW, MUCH LES S, A SUBSTANTIAL QUESTION OF LAW CAN BE STATED TO ARISE OUT OF ITA NOS.996 TO 998 OF 13 AND 1787 TO 1790 OF 12 THERMAX LIMITED THE IMPUGNED ORDER OF THE TRIBUNAL. THE APPEAL IS, ACCORDINGLY, DISMISSED. 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 NOTHIN G TO INDICATE THAT THE ASSESSEE HAD TAKEN TRAILERS/CRANE S 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 TRANSACTIO NS WOULD FALL WITHIN THE PURVIEW OF SECTION 194C OF TH E ACT AS THE ASSESSEE WAS RESPONSIBLE FOR PAYING THE AMOU NT 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 DE FAULT WITHIN THE MEANING OF THE EXPRESSION AS CONTEMPLATE D UNDER SECTION 201 OF THE ACT AND, CONSEQUENTLY, THE TRIBUNAL WAS JUSTIFIED IN CONFIRMING THE ORDER PASS ED BY THE COMMISSIONER (APPEALS). 18.2 SINCE THE FACTS IN THE INSTANT CASE ARE IDENT ICAL TO THE CASES DECIDED BY HONBLE GUJARAT HIGH COURT, THEREF ORE, RESPECTFULLY FOLLOWING THE SAME WE HOLD THAT PROVIS IONS OF SECTION 194C ARE ONLY APPLICABLE FOR SUCH PAYMENTS AND NOT PROVISIONS OF SECTION 194I. THE ORDER OF THE CIT(A ) ON THIS ISSUE IS ACCORDINGLY SET-ASIDE AND THE GROUND RAISE D BY THE ASSESSEE IS ALLOWED. 4.1 NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLE DGE ON BEHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLOWIN G THE SAME REASONING, WE ARE NOT INCLINED TO INTERFERE WITH TH E FINDING OF CIT(A) WHO HAS GRANTED RELIEF TO THE ASSESSEE BY HOLDING T HAT THE PROVISIONS OF SECTION 194I OF THE ACT ARE NOT APPLI CABLE IN RESPECT OF CRANE HIRE CHARGES. WE UPHOLD THE SAME. 4.2 A SIMILAR ISSUE AROSE IN OTHER ITA NOS.997, 998 /PN/13 AND ITA NOS.1787 TO 1790/PN/2012. FACTS BEING SIMILAR, SO FOLLOWING ITA NOS.996 TO 998 OF 13 AND 1787 TO 1790 OF 12 THERMAX LIMITED THE SAME REASONING, WE ARE NOT INCLINED TO INTERFER E WITH THE FINDING OF CIT(A) WHO HAS GRANTED RELIEF TO THE ASS ESSEE BY HOLDING THAT THE PROVISIONS OF SECTION 194I OF THE ACT ARE NOT APPLICABLE IN RESPECT OF HIRE CHARGES. WE UPHOLD THE SAME. 5. IN THE RESULT, ALL THE APPEALS FILED BY THE REVE NUE ARE DISMISSED AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY OF 31 ST JULY, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED THE 31 ST JULY, 2014 GCVSR COPY TO:- 1) THE DEPARTMENT 2) ASSESSEE 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// SENIOR PRIVATE SECRETARY, ITAT, PUNE.