Bharat Electronics Ltd., Ghaziabad v. DCIT (TDS), Ghaziabad

ITA 4750/DEL/2010 | 2009-2010
Pronouncement Date: 04-11-2011 | Result: Allowed

Appeal Details

RSA Number 475020114 RSA 2010
Assessee PAN AAACB5985C
Bench Delhi
Appeal Number ITA 4750/DEL/2010
Duration Of Justice 1 year(s) 5 day(s)
Appellant Bharat Electronics Ltd., Ghaziabad
Respondent DCIT (TDS), Ghaziabad
Appeal Type Income Tax Appeal
Pronouncement Date 04-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 04-11-2011
Date Of Final Hearing 31-10-2011
Next Hearing Date 31-10-2011
Assessment Year 2009-2010
Appeal Filed On 29-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI SHAMIM YAHYA ITA NOS. 4749 & 4750/DEL/2010 ASSESSMENT YEARS: 2008-09 & 2009-10 BHARAT ELECTRONICS LTD. VS. DEPUTY CIT(TDS) BHARAT NAGAR GHAZIABAD. GHAZIABAD. (PAN: AAACB5985C) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI P.K. S AHU ADV. RESPONDENT BY: MRS. SRUJANI MOH ANTY SR. DR DATE OF HEARING : 31.10.2011 DATE OF PRONOUNCEMENT : 04.11.2011 ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE PRESENT TWO APPEALS ARE DIRECTED AT THE INSTAN CE OF ASSESSEE AGAINST THE SEPARATE ORDERS OF EVEN DATE I.E. 31.8. 2010 PASSED BY THE LEARNED CIT(APPEALS) IN ASSESSMENT YEARS 2008-09 AND 2009-1 0. THE GROUNDS OF APPEALS TAKEN BY THE ASSESSEE IN BOTH THE ASSESSMEN T YEARS ARE NOT IN CONSONANCE WITH RULE 8 OF THE ITAT'S RULES THEY AR E DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF ITS GRIEVANCE I S THAT LEARNED CIT(APPEALS) HAS ERRED IN UPHOLDING THE ORDERS OF THE ASSESSING OFFICER IN BOTH THE ASSESSMENT YEARS WHEREBY THE ASSESSING OFFICER HAS HELD THAT ASSESSEE OUGHT TO HAVE DEDUCTED THE TDS UNDER SEC. 194-I ON THE PA YMENTS MADE TO THE 2 TRANSPORTERS FOR HIRING OF BUSSES INSTEAD OF TDS DE DUCTED @ 2% UNDER SEC. 194C OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A GOVERNMENT COMPANY UNDER THE ADMINISTRATIVE CONTROL OF MINISTR Y OF DEFENCE AND MANUFACTURES DEFENCE EQUIPMENTS FOR MINISTRY OF DEF ENCE. THE ASSESSEE COMPANY IS PROVIDING PICK AND DROPPING FACILITY TO ITS EMPLOYEES THROUGH BUSES FROM SELECTED POINT OF THEIR RESIDENCES. FOR THIS PURPOSE IT HAS ENGAGED TRANSPORT OPERATORS FOR CARRYING OUT THE WO RK OF TRANSPORTING THE EMPLOYEES OF THE ASSESSEE COMPANY. DURING FINANCIAL YEAR 2007-08 RELEVANT TO ASSESSMENT YEAR 2008-09 THE COMPANY HAD MADE TH E PAYMENT OF RS.369.80 LACS TO THE TRANSPORTS/CONTRACTORS ACCORD ING TO THE TERM OF CONTRACT. ACCORDING TO THE UNDERSTANDING OF THE ASSESSEE IT WAS A SERVICE CONTRACT WHICH COMES WITHIN THE AMBIT OF SEC. 194C FOR THE P URPOSE OF DEDUCTION OF TAX AT SOURCE ON THE PAYMENTS TO TRANSPORT OPERATOR S. ASSESSING OFFICER HOWEVER WAS NOT SATISFIED WITH THE DEDUCTION OF TA X BY THE ASSESSEE AT THE RATE PROVIDED IN SEC. 194C OF THE ACT. IN HIS OPINI ON THE HIRING OF BUSES IS AKIN TO TAKING OF PLANT AND MACHINERY ON LEASE AND THEREFORE THE TAX OUGHT TO HAVE BEEN DEDUCTED UNDER SEC. 194I WHERE THE RAT E OF TAX ON SUCH PAYMENT IS 10%. IN THIS WAY ASSESSING OFFICER HAS HELD THA T ASSESSEE HAS SHORT 3 DEDUCTED THE TAX. HE RAISED A DEMAND OF RS.30 10 34 9 IN ASSESSMENT YEAR 2008-09. HE HAS ALSO LEVIED INTEREST UNDER SEC. 201 A OF THE ACT. ON A SIMILAR ANALOGY A DEMAND HAS BEEN RAISED IN ASSESSMENT YEA R 2009-10. 3. DISSATISFIED WITH THE ORDER OF THE DEPUTY CIT(TD S) DATED 29.5.2009 ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LE ARNED CIT(APPEALS) IN BOTH THE ASSESSMENT YEARS. HOWEVER THE APPEALS DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT A SIMILAR ISSUE HAS COME UP BEFORE THE ITAT IN THE CA SE OF ACIT VS. ACCENTURE SERVICES (P) LTD. REPORTED IN 44 SOT 290 WHEREIN THE ITAT HAS HELD THAT IT IS A SERVICE CONTRACT FOR HIRING OF BU SES ALONGWITH DRIVERS COVERED UNDER SEC. 194C OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER POINTED OUT THAT ITAT DELHI BENCHES HAS ALSO CONSI DERED THIS ISSUE IN ITA NO. 5885/DEL/2010 IN THE CASE OF ACIT VS. NTPC LTD GAUTAMBUDH NAGAR (UP). LEARNED DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE LEARNED CIT(APPEALS). 4 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT AN IDENTICAL DISPUTE AROSE IN THE CASE OF NTPC. THE ITAT HAS CONSIDERED THE ISSUE AS UNDER: IN BRIEF THE SOLITARY ISSUE IS WHETHER ASSESSEE H AS TO DEDUCT TDS UNDER SEC. 194C OR 194I OF THE INCOME-TAX ACT 1961 ON THE PAYMENTS MADE TO THE TRANSPORTERS WHO HAVE PLIED TH EIR BUSSES FOR TRANSPORTING THE EMPLOYEES AND THEIR WARDS TO DIFFE RENT DESTINATION AS PER THE AGREEMENT BETWEEN THE ASSESSEE AND THE TRAN SPORTERS. 2. IN A VERY BRIEF ORDER PASSED UNDER SECTION 201(1 ) AND 201(1A) OF THE ACT ASSESSING OFFICER HAS OBSERVED THAT THE PAYMENTS MADE BY THE ASSESSEE TO TRAVEL AGENCIES FOR HIRING THE VEHI CLES WOULD BE SUBJECT TO DEDUCT OF TDS UNDER SEC. 194I OF THE ACT. THE BR IEF ORDER PASSED BY HIM READS AS UNDER: THE ACCOUNTS VERIFICATION OF TDS MATTER WAS CONDU CTED IN THE OFFICE OF NCPS NTPS LIMITED VIDYUT NAGAR DADRI DISTRICT G.B. NAGAR ON 21.1.2009. DURING THE COURSE OF SPOT VERIFICATION SH. HARJEET SINGH DGM(FINANCE) WAS PRESENT AT THE TIME OF SPOT VERIFI CATION. THE TAN OF THE ASSESSEE IS MRTNO0201F AND PAN NO. IS AAACN0255D WHICH COMES UNDER THE JURISDICTION OF IN COME- TAX OFFICER (TDS) NOIDA. THEY ARE DEDUCTING TAX AT SOURCE ON SALARY CONTRACT PAYMENT HIRING OF VEHICLES AND PA YMENT MADE TO PROFESSIONALS ETC. A SUMMON U/S. 131 OF THE IT A CT 1961 WAS ISSUED ON 21.1.2009 FOR FILING THE DETAILS OF P AYMENTS AND 5 TDS THEREON ALONG WITH EVIDENCE FIXING THE DATE FOR 28.1.2009. IN COMPLIANCE TO THIS LETTER ON 28.1.2009 SH. VIPI N KUMAR CA ATTENDED AND FILED THE POWER OF ATTORNEY PLACED ON FILE. HE IS REQUIRED TO SUBMIT THE COMPLETE REPLY/DOCUMENTS. ON 4.2.2009 SH. VIPIN KUMAR CA ATTENDED AND FILED THE REPLY. O N 5.3.2009 A SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE FIXING T HE DATE FOR COMPLIANCE ON OR BEFORE 13.3.2009. ON 13.3.2009 SH RI VIPIN KUMAR CA ATTENDED AND FILED THE REPLY. ON 5.3.2009 A SHOW- CAUSE NOTICE ISSUED TO THE ASSESSEE FIXING THE DATE FOR COMPLIANCE ON OR BEFORE 13.3.2009. ON 13.3.2009 SH RI VIPIN KUMAR ATTENDED CA. ATTENDED AND FILED THE REPLY T HE CASE WAS DISCUSSED WITH HIM. THE IRREGULARITIES WERE OBSERVE D AS UNDER: 1. TAX AT SOURCE HAS BEEN DEDUCTED U/S 194 J ON THE PAYMENT MADE TO PROFESSIONALS AT LOWER RATE IN F.Y. 2007-08 AS PER LIST ENCLOSED. 2. TAX AT SOURCE HAS BEEN DEDUCTED U/S. 194C ON THE PAYMENT MADE TO TRAVELLING AGENCIES FOR HIRING THE VEHICLE WHILE THE SAME WAS TO BE DEDUCTED U/S. 194 I FOR F.Y. 2007-08 AS PER LIST ENCLOSED. AFTER CONSIDERING ALL FACTS & CIRCUMSTANCES OF THIS CASE I BELIEVE THAT THE DDO WAS UNDER LEGAL OBLIGATION TO DEDUCT TAX U/S. 194 J AND 194 I OF THE INCOME-TAX ACT 1961 ON THE ABOVE PAYMENT. 6 THEREFORE I IMPOSE TAX U/S. 201(1) OF THE INCOME-T AX ACT 1961 AND INTEREST THEREON U/S. 201(1A) AS PER DETAIL. ISSUE PENALTY NOTICE U/S. 221 C OF THE I.T. ACT 19 61 AND ISSUE NOTICE OF DEMAND AND CHALLAN ACCORDINGLY. 3. ON APPEAL LEARNED CIT(APPEALS) HAS HELD THAT TH E PAYMENTS MADE TO TRAVEL AGENCIES ARE NOT COVERED BY SECTION 194 I RATHER THEY FALL WITHIN THE AMBIT OF SEC. 194 C OF THE ACT. HE MADE A REFERENCE TO SR. NO.(VI)(C) OF THE EXPLAN ATION APPENDED TO THIS SECTION. 4. LEARNED DR WHILE IMPUGNING THE ORDER OF THE LEAR NED CIT(APPEALS) CONTENDED THAT ASSESSEE HAS TAKEN THE BUSSES ON HIRE. IT MEANS THAT THE BUSES WERE TAKEN ON LEASE A ND SUCH BUSES ARE TO BE CONSTRUED AS PLANT. SINCE THE LEASE PAYME NT WAS MADE FOR THE HIRING OF THE PLANT ITS CASE COMES WITHIN THE AMBIT OF EXPLANATION APPENDED TO SEC. 194 I OF THE ACT. IT P ROVIDES THAT ANY RENT PAID FOR PLANT OR MACHINERY OR EQUIPMENT T HEN TDS IS TO BE DEDUCTED AT 10%. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HAND SUBMITTED THAT ASSESSING OFFICER HA S MISCONSTRUED THE PROVISIONS. THE ASSESSEE HAS NOT T AKEN THE BUSES ON LEASE. IT HAD ENTERED INTO A CONTRACT OF S ERVICE WHEREBY THE TRAVEL AGENCIES WERE REQUIRED TO SUPPLY THE BUS ES FOR TRANSPORTATION OF THE PASSENGERS. THE BUSES WERE TO BE PLIED FOR A FIXED NUMBER OF HOURS. THE VEHICLES WOULD REMAIN IN THE POSSESSION OF THE TRAVEL AGENCY. THE AGENCY WOULD P ROVIDE ITS DRIVER AND ALSO MAINTAIN THE VEHICLE IN GOOD SHAPE. IN OTHER 7 WORDS ALL RESPONSIBILITY FOR PLYING THE VEHICLES I S OF THE TRANSPORTERS. THUS ACCORDING TO THE ASSESSEE IT W AS A SERVICE CONTRACT OF TRANSPORTING THE PASSENGERS. IT HAS NOT TAKEN THE BUSS ON LEASE AND USED THEM AS PLANT IN BUSINESS. THE LE ARNED COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT A S IMILAR ISSUE IN SOMEWHAT DIFFERENT CONTEXT CAME UP BEFORE THE HON'B LE DELHI HIGH COURT IN THE CASE OF CIT VS. PRASAR BHARTI REP ORTED IN 292 ITR 580. IN THAT CASE THE FACTS ARE THAT ASSESSEE WAS MAKING CERTAIN PAYMENT TO OUTSIDE PRODUCER FOR PROGRAMS UN DER COMMISSIONED CATEGORY FOR WHICH THE ASSESSEE HAD BEEN DEDUCTING THE TAX AT SOURCE UNDER SEC. 194C BY TREA TING THEM AS CONTRACT PAYMENT. ASSESSING OFFICER ALLEGED THAT IT IS FEE FOR PROFESSIONAL SERVICES OR FEE FOR TECHNICAL SERVICE WITHIN THE AMBIT OF SEC. 194J AND THEREFORE ASSESSEE OUGHT T O HAVE DEDUCTED TDS UNDER SEC. 194J OF THE ACT. LEARNED CIT(APPEALS) DISMISSED THE APPEAL OF THE ASSESSEE. THE ISSUE TRAVELLED TO THE ITAT. THE ITAT HAS OBSERVED THAT E XPLANATION 3 OF SECTION 194C PROVIDES THE MEANING OF EXPRESSIO N WORK WHICH INCLUDES ADVERTISING BROADCASTING AND TELECA STING INCLUDING PRODUCTION OF PROGRAMMING FOR SUCH BROADC ASTING AND TELECASTING. ACCORDING TO THE ITAT A SPECIFIC PROV ISION HAS BEEN MADE IN SEC. 194C WHICH BRING WITHIN ITS AMBIT THE CONTRACTUAL WORK CONCERNING BROADCASTING AND TELECA STING THEREFORE REVENUE CANNOT APPLY SECTION 194J WHICH IS MORE GENERAL TERM. HON'BLE DELHI HIGH COURT HAS UPHELD T HIS VIEW OF THE ITAT. THE LEARNED COUNSEL FOR THE ASSESSEE POIN TED OUT IN THE PRESENT CASE ALSO AT SR. NO.4 OF THE EXPLANATIO N APPENDED TO 8 SEC. 194C MEANING OF EXPRESSION WORK HAS BEEN GI VEN WHICH PROVIDES (A) ADVERTISING; (B) BROADCASTING & TELECA STING INCLUDING PRODUCTION OF PROGRAMS FOR SUCH BROADCAST ING AND TELECASTING; (C) CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS; (D) X X X (E) X X X. ON THE STRENGTH OF HON'BLE DELHI HIGH COURTS DECISION HE POINTED OUT THAT ONCE SPECIFIC PROVISION HAS BEEN PROVIDED THEN THERE IS NO NEED TO APPLY SECTION 194 I OF THE ACT WHICH IS IN RELATION TO DEDUCTION OF TDS ON PAYMENT OF RENT. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. THE FIRST DISPUTED PO INT IS WHETHER IT IS A PAYMENT BEING CONTRACT OF SERVICE OR A RENT FOR HIRING A PLANT. THE EMPHASIS OF THE LEARNED DR WAS THAT ASSE SSEE HAS HIRED A BUS WHICH IS AKIN TO TAKING A PLANT ON LEAS E THEREFORE THE PAYMENT MADE BY THE ASSESSEE TO THE TRAVEL AGEN CY HAS TO BE CONSTRUED AS A RENT PAID FOR THE BUS. ON THE OTHER HAND CONTENTION OF THE ASSESSEE IS THAT IT HAS AVAILED T HE FACILITY OF TRANSPORTATION FROM THE TRAVEL AGENCY. IT HAS NOT T AKEN THE BUS IN ITS POSSESSION. ACCORDING TO THE CONTRACT THE TRAV EL AGENCY HAS TO PLY THE BUS FOR A FIXED NUMBER OF HOURS. THUS I T IS A SIMPLICITOR SERVICE CONTRACT FOR TRANSPORTATION OF THE PASSENGERS AND IT FALLS WITHIN THE AMBIT OF CLAUSE (C) SR. NO .(IV) OF EXPLANATION APPENDED TO SEC. 194C. THE ASSESSEE HAS PLACED ON RECORD COPY OF A LETTER OF AWARD FOR HIRING OF BUSS ES. IT HAS ALSO PLACED ON RECORD COPY OF THE CONTRACT ENTERED ON IS T OF FEBRUARY 2008. ON PERUSAL OF THESE DOCUMENTS IT REVEALS THA T ASSESSEE HAS JUST HIRED THE TRANSPORTATION FACILITIES WHICH IS AKIN TO HIRING 9 OF A TAXI THOUGH ON REGULAR BASIS FOR A FIXED NUMBE R OF HOURS. BEFORE THE LEARNED FIRST APPELLATE AUTHORITY ASSES SEE HAS MADE A REFERENCE TO CIRCULAR NO. 558 DATED 28.3.1 990 ISSUED BY THE CBDT. IN THE CIRCULAR BOARD HAS CONSIDERED THIS ASPECT AND WAS OF THE VIEW THAT WHERE A VEHICLE IS GIVEN O N HIRE ALONG WITH PROVISIONS OF A DRIVER FOR USE OF CARRYING OF THE PASSENGERS FOR FIXED HOURS THAN IT IS A SERVICE CONTRACT FOR C ARRYING OUT THE WORK. IT WILL BE COVERED UNDER SEC. 194C OF THE ACT BECAUSE THE VEHICLE HAS BEEN MADE AVAILABLE AS A MATTER OF SER VICE. LEARNED FIRST APPELLATE AUTHORITY HAS CONSIDERED THIS ASPEC T WHILE OBSERVING THAT IT IS A SERVICE CONTRACT AND ASSESSE E WAS TO DEDUCT TAX UNDER SEC. 194 C OF THE ACT. CONSIDERING THE OR DER OF LEARNED CIT(APPEALS) AND IN VIEW OF THE ABOVE DISCU SSION WE DO NOT FIND ANY MERIT IN THIS APPEAL. IT IS DISMISS ED. 6. IN THE PRESENT APPEALS WE FIND THAT THE ASSESSE E HAS PLACED ON RECORD COPY OF THE AGREEMENT WITH THE TRANSPORTERS AT PAGE 57 OF THE PAPER BOOK. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES WE HAVE GONE THROUGH THE AGREEMENT. ANNEXURE-2 WITH THE AGREEMENT PROVIDES G ENERAL CONDITIONS OF THE CONTRACT. AT SR. NO.3 SCOPE OF WORK HAS BEEN HA S BEEN PROVIDED. ON DUE CONSIDERATION OF THE AGREEMENT BETWEEN THE ASSESSE E AND THE TRANSPORTERS WE FIND THAT THERE IS NO DISPARITY BETWEEN THE FACT S OF THE PRESENT CASE VIS-- VIS THAT OF NTPC. THE ASSESSEE DID NOT TAKE POSSESS ION OF THE BUSES. THEY REMAINED WITH THE TRANSPORTERS. THE BUSES ARE TO BE KEPT IN GOOD CONDITIONS 10 BY THE TRANSPORTERS. THE TRANSPORTERS WOULD PROVIDE THE DRIVERS AND THE CONDUCTOR ON THE BUSES. THE BUSES WOULD RUN FOR FIX ED NUMBER OF HOURS. THUS IT INDICATES THAT THE HIRING OF THE BUSES WOU LD NOT BE AKIN TO TAKING OF ANY PLANT AND MACHINERY ON LEASE. THEREFORE RESPEC TFULLY FOLLOWING OUR ORDER IN THE CASE OF NTPC AS WELL AS IN THE CASE OF ACCENTURE SERVICES (P) LTD. (SUPRA) WE ALLOW BOTH THE APPEALS OF ASSESSEE AND QUASH THE ORDERS PASSED BY THE ASSESSING OFFICER UNDER SEC. 201 OF T HE ACT. THE ASSESSEE WOULD BE LIABLE TO DEDUCT THE TAX ON SUCH PAYMENT U NDER SEC. 194C OF THE ACT AND NOT UNDER SEC. 194I OF THE ACT. WE ORDER AC CORDINGLY. SD/- SD/- ( SHAMIM YAHYA ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04/11/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR