The ACIT,TDS Circle,, Ahmedabad v. Hazira LNG Pvt.Ltd., Ahmedabad

ITA 104/AHD/2011 | 2008-2009
Pronouncement Date: 21-11-2014 | Result: Dismissed

Appeal Details

RSA Number 10420514 RSA 2011
Assessee PAN AAACH9143C
Bench Ahmedabad
Appeal Number ITA 104/AHD/2011
Duration Of Justice 3 year(s) 10 month(s) 7 day(s)
Appellant The ACIT,TDS Circle,, Ahmedabad
Respondent Hazira LNG Pvt.Ltd., Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 21-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 21-11-2014
Date Of Final Hearing 14-11-2014
Next Hearing Date 14-11-2014
Assessment Year 2008-2009
Appeal Filed On 13-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI A.M.) I. T. A. NO. 104 / AHD/ 20 1 1 (A SSESSMENT YEAR: 2008 - 09) ACIT TDS CIRCLE AHMEDABAD V/S HAZIRA LNG. PVT. LTD. ABHIJEET - II MITHAKHALI CIRCLE AHMEDABAD (APPELLANT) (RESPONDEN T) PAN: AAACH 9143C APPELLANT BY : SHRI ROOP CHAND SR. D.R. RESPONDENT BY : SHRI VIJAY RANJAN A.R. ( )/ ORDER DATE OF HEARING : 14 - 11 - 2014 DATE OF PRONOUNCEMENT : 21 - 11 - 2 014 PER SHRI ANIL CHATURVEDI A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - XXI AHMEDABAD DATED 15.10.2010 FOR A.Y. 2008 - 09. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY ENGAGED IN THE A CTIVITY OF IMPORTING OF LIQUID NATURAL GAS (LNG) AND SUPPLYING IT TO VARIOUS CUSTOMERS WITHIN AN D OUTSIDE THE STATE OF GUJARAT AFTER RE - GASIFY IT TO NAT URAL GAS. IN THIS CASE A SURVEY WAS CARRIED OUT ON 13.03.2008 AT THE BUSINESS PREMISES OF THE ASSESSEE FOR VERIFICATION OF THE COMPLIANCE OF VARIOUS T DS PROVISIONS. DURING THE COURSE OF SURVEY IT WAS NOTICED ITA NO 104/AHD/2011 . A.Y. 2008 - 09 2 THAT ASSESSEE HAD PAID RS. 6.59 CRORES AS TRANSPORTATION CHARGES TO GUJARAT STATE PETRONET LTD. (GSPL) AND HAD DEDUCTED TAX U/S 194C OF THE ACT. ON PER USING THE AGREEMENT ENTERED BY THE ASSESSEE WITH GSPL A.O NOTICED THAT ASSESSEE HAD ENTERED INTO AGREEMENT FOR HIRING OF GAS PIPELINE AND HAD MADE PAYMENT FOR UTILIZAT ION OF SUCH PIPELINE EQUIPMENTS THE HIRING OF PIPELINE WAS ON A REGULAR BASIS A.O WAS THEREFORE OF THE VIEW THAT THE PAYMENTS MADE FOR HIRING OF PIPELINES WAS COVERED U/S 194I OF THE ACT AND THE DEDUCTION MADE BY THE ASSESSEE U/S. 194C WAS NOT CORRECT. HE ACCORDINGLY WORKED OUT THE SHORT DEDUCTION OF TAX TO THE EXTENT OF RS. 1 43 90 073/ - A ND CONSIDERED THE ASSESSEE TO BE DEEMED DEFAULTER U/S 201(1) AND BEING LIABLE TO INTEREST OF RS. 31 65 816/ - U/S 201(1A) OF THE ACT. AGGRIEVED BY THE ORDER OF A.O ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSE SSEE HELD THAT ASSESSEE HAD CORRECTLY APPLIED THE PROVISIONS OF SECTION 194C WHILE MAKING PAYMENT OF TRANSPORTATION CHARGES TO GSPL BY HOLDING AS UNDER: - 7. I HAVE CAREFULLY CONSIDERED THE ORDER PASSED UNDER SECTION 201(1) R.W.S. 201 (1 A) OF THE ACT THE TERMS OF THE CONTRACT BETWEEN THE APPELLANT AND GSPL AND ALSO SUBMISSIONS AND ARGUMENTS FURNISHED BY APPELLANT BOTH ON FACTS AS WELL AS LAW.. THE VARIOUS CLAUSES OF THE AGREEMENT BETWEEN APPELLANT AND GSPL CLEARLY SHOWS THAT IT IS ONLY FOR TRANSMISSION OF GAS THROUGH PIPELINE AND IT DID NOT GIVE ANY EXCLUSIVE RIGHT OR INTEREST TO THE APPELLANT OR EVEN POSSESSION OF SUCH PIPELINE IN ANY SPECIFIC MANNER. ON PERUSAL OF THE PROVISIONS OF SECTION 1941 IT IS NOTED THAT THE RENT IS DEFINED TO MEANS ANY PAYMENT B Y WHATEVER NAME CALLED UNDER ANY LEASE SUB - LEASE TENANCY OR ANY OTHER ARRANGEMENT AND HENCE IT IS WIDELY DEFINED. FURTHER ON PERUSAL OF QUESTION NO. 23 OF CBDT CIRCULAR 715 DATED AUGUST 8 1995 IT IS ALSO NOTED THAT UNDER SECTION 1941 TAX IS TO BE D EDUCTED FROM RENT PAID BY WHATEVER NAME CALLED FOR HIRE OF PROPERTY. AS AGAINST THIS THE DEFINITION OF WORK GIVEN IN SECTION 194C INCLUDES CARRIAGE OF GOODS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS. ACCORDING TO ABOVE DEFINITION TRANSPORTATION O F GOODS IN MY VIEW WOULD OE CONSIDERED AS A WORKS CONTRACT AND ACCORDINGLY WOULD SUBJECT TO IDS UNDER SECTION 194C OF THE ACT. MOREOVER THE APPELLANT CORRECTLY POINTED OUT THAT EACH SECTION UNDER CHAPTER XVII DEALS WITH A PARTICULAR KIND OF PAYMENT TO T HE EXCLUSION OF ALL OTHER SECTIONS IN THE CHAPTER. ACCORDINGLY WHEN A PAYMENT IS TAXABLE UNDER A PARTICULAR SECTION IT CANNOT BE TAXABLE UNDER ANOTHER SECTION. THEREFORE WHEN THE APPELLANT HAS CORRECTLY APPLIED THE PROVISIONS OF SECTION 194C WHILE MAKING PAYMENT OF TRANSPORTATION CHARGES TO GSPL THE QUESTION OF APPLYING PROVISIONS OF SECTION 1941 TO THE SAME WOULD NOT ARISE. HENCE THE ACTION OF AO IS NOT JUSTIFIED AND THE APPEAL FILED BY THE APPELLANT COMPANY IS HEREBY ALLOWED. 4. AGGRIEVED BY THE ORDER O F CIT(A) REVENUE IS NOW IN APPEAL BEFORE US. ITA NO 104/AHD/2011 . A.Y. 2008 - 09 3 5. BEFORE US. LD. D.R TOOK US THROUGH THE ORDER OF A.O AND SUBMITTED THAT ASSESSEE SHOULD HAVE DEDUCTED TAX U/S 194I AND NOT U/S 194C AND THEREFORE THE A.O WAS FULLY JUSTIFIED IN HOLDING THE ASSESSEE TO BE IN DE FAULT. HE THUS SUPPORTED THE ORDER OF A.O. THE LD. A.R ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE A.O AND CIT(A) AND FURTHER PLACED RELIANCE ON THE DECISION IN THE CASE OF KRIBHCO SHYAM FERTILIZER LTD. VS. ITO 2013 (7) TMI - 1 ITAT LUCKNOW CIR CULAR NO. 9/2012 DATED 17.10.2012 ISSUED BY CBDT AND THE DECISION IN THE CASE OF ACIT VS. MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD. ITA NO. 2612 TO 2615 ORDER DATED 29.10.2014 AND ALSO PLACED ON RECORD THE COPY OF THE AFORESAID DECISIONS. HE THUS SUPPORTED THE ORDER OF CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT ASSESSEE HAS USED THE PIPELINE OWNED BY GSPL FOR THE TRANSPORTATION OF GAS. IT IS ALSO A FACT THAT THE OWNERSHIP OF THE PIPELINE ALWAYS REMAINED WITH GSPL AND IN POSSESSION OF GSPL. WE FIND THAT LD. CIT(A) WHILE ALLOWING THE APPEAL OF THE ASSESSEE HAS GIVEN A FINDING THAT THE PIPELINE WAS USED ONLY FOR TRANSMISSION OF GAS AND DID NOT GIVE ANY INCLUSIVE RIGHT OR INTEREST TO THE ASSESSEE. WE FURTHER FIND THAT CIRCULAR NO. 9/12 DATED 17.10.2012 ISSUED BY CBDT IN THE CONTEXT OF DEDUCTION OF TAX AT SOURCE ON PAYMENT OF GAS TRANSPORTATION CHARGES HAS CLARIFIED AS UNDER: - 4. IT IS CLARIFIED THAT IN CASE THE OWNER/SELLER OF THE GAS SELLS AS WELL AS TRANSPORTS THE GAS TO THE PURCHASER TILL THE POINT OF DELIVERY WHERE THE OWNERSHIP OF GAS TO THE PURCHASER IS SIMULTAN EOUSLY TRANSFERRED THE MANNER RAISING THE SALE BILL (WHETHER THE TRANSPORTATION CHARGES ARE EMBEDDED IN THE COST OF GAS OR SHOWN SEPARATELY) DOES NOT ALTER THE BASIC NATURE OF SUCH CONTRACT WHICH REMAINS ESSENTIALLY A CONTRACT FOR SALE AND NOT A WORKS CONTRACT AS ENVISAGED IN SECTION 194C OF THE ACT. HENCE IN SUCH CIRCUMSTANCES PROVISIONS OF CHAPTER XVII - B OF THE ACT ARE NOT APPLICABLE ON THE COMPONENT OF GAS TRANSPORTATION CHARGES PAID BY THE PURCHASER TO THE OWNER/SELLER OF THE GAS. THE USE OF DIFFERENT MODES OF TRANSPORTATION OF GAS BY OWNER/SELLER WILL NOT ALTER THE POSITION. ITA NO 104/AHD/2011 . A.Y. 2008 - 09 4 5. IT IS NEEDLESS TO MENTION THAT TRAN SPORTATION CHARGES PAID TO A THIRD PARTY TRANSPORTER OF GAS EITHER BY THE OWNER/SELLER OF THE GAS OR PURCHASER OF THE GAS OR ANY OTHER PERSON SHALL CONTINUE TO BE GOVERNED BY THE APPROPRIATE PROVISIONS OF THE ACT AND TDS SHALL BE DEDUCTIBLE ON SUCH PAYME NT TO THE THIRD PARTY AT THE APPLICABLE RATES. 7. IN THE CASE OF KRIBHCO SHYAM FERTILIZERS LTD. VS. ITO (ITA NOS. 78 79 & 80/LKW/2013 ORDER DATED 25.06.2013 THE CO - ORDINATE BENCH HAS HELD AS UNDER: - TAX DEDUCTION AT SOURCE PURCHASE OF GAS - TRANSMISSION CHARGES APPLICABILITY OF SECTIO N 194C ASSESSEE HAD PURCHASED NATURAL GAS FROM GAIL GAS WAS TRANSPORTED TO MANUFACTURING UNIT OF ASSESSEE THROUGH PIPELINE OF GAIL FOR WHICH ASSESSEE PAID TRANSMISSION CHARGES TO GAIL AO CONTENDED THAT ASSESSEE SHOULD HAVE DEDUCTED TAX FROM TRANSMISSION CH ARGES PAID TO GAIL U/S 1941 AO CALCULATED SHORT DEDUCTION OF TAX AND RAISED DEMAND CIT(A) DIRECTED AO TO RECOMPUTE SHORT DEDUCTION BY APPLYING SECTION 194C RATHER THAT SECTION 1941 HELD FROM CIRCULAR NO. 9 OF 2012 ISSUED BY CBDT IT WAS CLEAR THAT WHENEVE R GAS IS TRANSPORTED BY SELLER TO POINT OF DELIVERY TRANSPORTATION CHARGES OF GAS WOULD BE EMBEDDED IN COST OF GAS THOUGH TRANSPORTATION CHARGES ARE CLAIMED SEPARATELY OR ALONG WITH COST OF GAS IN SALE BILL AND NATURE OF SUCH CONTRACT ESSENTIALLY REMAINS A CONTRACT FOR SALE AND NOT A WORKS CONTRACT BUT WHEREVER TRANSPORTATION OF GAS IS MADE BY THIRD PERSON APART FROM SELLER OF GAS TRANSPORTATION CHARGES PAID BY BUYER TO TRANSPORTER SHALL BE GOVERNED BY PROVISIONS OF SECTION 194C TDS SHALL BE DEDUCTIBLE O N SUCH PAYMENT TO THIRD PARTY BY BUYER AT APPLICABLE RATES ASSESSEE HAD ADMITTED THAT IT HAD ALSO PURCHASED GAS FROM OTHER SELLERS APART FROM GAIL BUT SAME WAS TRANSPORTED BY GAIL ASSESSEE HAD PAID TRANSMISSION CHARGES TO GAIL AND ALSO DEDUCTED TDS ON PAYM ENT IN SUCH CASES TRANSMISSION CHARGES PAID BY ASSESSEE TO GAIL ATTRACTED PROVISIONS OF SECTION 194C AS PER CIRCULAR BUT THIS ASPECT HAD NOT BEEN CLARIFIED BY ANY OF LOWER AUTHORITIES AS THEY TREATED ENTIRE PAYMENT OF TRANSMISSION CHARGES AS HAD BEEN MADE U/S 1941 OR 194C - ORDER OF CIT(A) SET ASIDE - MATTER RESTORED TO FILE OF AO WITH DIRECTION TO RE - EXAMINE ISSUE AFRESH. ITA NO 104/AHD/2011 . A.Y. 2008 - 09 5 8. BEFORE US REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF CIT(A) NOR HAS BROUGHT ANY CONTRARY BINDING DECISIO N IN ITS SUPPORT. IN VIEW OF THE THESE FACTS WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 9. IN THE RESULT THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 2 1 - 11 - 201 4 . SD/ - SD/ - (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APP ELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHMEDABAD