ACIT (TDS), Noida v. M/s National Capital Power Station, Uttar Pradesh

ITA 5885/DEL/2010 | 2008-2009
Pronouncement Date: 23-09-2011 | Result: Dismissed

Appeal Details

RSA Number 588520114 RSA 2010
Assessee PAN MRTNO0201F
Bench Delhi
Appeal Number ITA 5885/DEL/2010
Duration Of Justice 9 month(s)
Appellant ACIT (TDS), Noida
Respondent M/s National Capital Power Station, Uttar Pradesh
Appeal Type Income Tax Appeal
Pronouncement Date 23-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 23-09-2011
Date Of Final Hearing 25-08-2011
Next Hearing Date 25-08-2011
Assessment Year 2008-2009
Appeal Filed On 23-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE G.E. VEERABHADRAPPA HON'BLE VICE-PRESIDENT AND SHRI RAJPAL YADAV: HONBLE JUDICIAL MEMBER ITA NO.5885/DEL/2010 ASSESSMENT YEAR: 2008-09 ASSISTANT COMMISSIONER OF IT VS. M/S. NATIONAL CA PITAL POWER (TDS) NOIDA. STATION NTPC LTD. (UP). VODYUT NAGAR. DADRI GAUTAM BUDH NAGAR (UP). (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. SRUJAN I MOHANTY SR. DR RESPONDENT BY: SHRI VED JAIN & MRS. RANO JAIN CAS ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF LEARNED CIT(APPEALS) DATED 17.09.2010 PASSED FOR ASSESSMENT YEAR 2008-09. THE GROUNDS OF APPEALS TAKEN BY THE R EVENUE ARE NOT IN CONSONANCE WITH RULE 8 OF THE ITAT'S RULES THEY AR E DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF THE SOLITARY ISS UE IS WHETHER ASSESSEE HAS TO DEDUCT TDS UNDER SEC. 194C OR 194I OF THE INCOME-TA X 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 TRANSPORTERS . 2 2. IN A VERY BRIEF ORDER PASSED UNDER SECTION 201(1 ) AND 201(1A) OF THE ACT ASSESSING OFFICER HAS OBSERVED THAT THE PAYMEN TS MADE BY THE ASSESSEE TO TRAVEL AGENCIES FOR HIRING THE VEHICLES WOULD BE SUBJECT TO DEDUCT OF TDS UNDER SEC. 194I OF THE ACT. THE BRIEF 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 D ISTRICT 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 AAACN0 255D WHICH COMES UNDER THE JURISDICTION OF INCOME-TAX OF FICER (TDS) NOIDA. THEY ARE DEDUCTING TAX AT SOURCE ON SALARY CONTRACT PAYMENT HIRING OF VEHICLES AND PAYMENT MADE TO PROFESSIONAL S ETC. A SUMMON U/S. 131 OF THE IT ACT 1961 WAS ISSUED ON 21.1.200 9 FOR FILING THE DETAILS OF PAYMENTS AND TDS THEREON ALONG WITH EVID ENCE FIXING THE DATE FOR 28.1.2009. IN COMPLIANCE TO THIS LETTER O N 28.1.2009 SH. VIPIN KUMAR CA ATTENDED AND FILED THE POWER OF ATT ORNEY PLACED ON FILE. HE IS REQUIRED TO SUBMIT THE COMPLETE REPLY/D OCUMENTS. ON 4.2.2009 SH. VIPIN KUMAR CA ATTENDED AND FILED TH E REPLY. ON 5.3.2009 A SHOW CAUSE NOTICE ISSUED TO THE ASSESSE E FIXING THE 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 C OMPLIANCE ON OR BEFORE 13.3.2009. ON 13.3.2009 SHRI VIPIN KUMAR AT TENDED CA. 3 ATTENDED AND FILED THE REPLY THE CASE WAS DISCUSSE D WITH HIM. THE IRREGULARITIES WERE OBSERVED 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 ABOV E PAYMENT. 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 RA THER THEY FALL WITHIN THE AMBIT OF SEC. 194C OF THE ACT. HE MADE A REFERENCE TO SR. NO.(VI)(C) OF THE EXPLANATION APPENDED TO THIS SECTION. 4 4. LEARNED DR WHILE IMPUGNING THE ORDER OF THE LEAR NED CIT(APPEALS) CONTENDED THAT ASSESSEE HAS TAKEN THE BUSSES ON HIR E. IT MEANS THAT THE BUSES WERE TAKEN ON LEASE AND SUCH BUSES ARE TO BE CONSTR UED AS PLANT. SINCE THE LEASE PAYMENT 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 PROVIDES THAT ANY RENT PAID FOR PLANT OR MACHINERY OR EQUIPMENT THEN TDS IS TO BE DEDUCTED AT 10%. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OT HER HAND SUBMITTED THAT ASSESSING OFFICER HAS MISCONSTRUED THE PROVISIONS. THE ASSESSEE HAS NOT TAKEN THE BUSES ON LEASE. IT HAD ENTERED INTO A CON TRACT OF SERVICE WHEREBY THE TRAVEL AGENCIES WERE REQUIRED TO SUPPLY THE BUS ES FOR TRANSPORTATION OF THE PASSENGERS. THE BUSES WERE TO BE PLIED FOR A FI XED NUMBER OF HOURS. THE VEHICLES WOULD REMAIN IN THE POSSESSION OF THE TRAV EL AGENCY. THE AGENCY WOULD PROVIDE ITS DRIVER AND ALSO MAINTAIN THE VEHI CLE IN GOOD SHAPE. IN OTHER WORDS ALL RESPONSIBILITY FOR PLYING THE VEHI CLES IS OF THE TRANSPORTERS. THUS ACCORDING TO THE ASSESSEE IT WAS A SERVICE C ONTRACT OF TRANSPORTING THE PASSENGERS. IT HAS NOT TAKEN THE BUSS ON LEASE AND USED THEM AS PLANT IN BUSINESS. THE LEARNED COUNSEL FOR THE ASSESSEE FURT HER CONTENDED THAT A SIMILAR ISSUE IN SOMEWHAT DIFFERENT CONTEXT CAME UP BEFORE THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. PRASAR BHAR TI REPORTED IN 292 ITR 580. IN THAT CASE THE FACTS ARE THAT ASSESSEE WAS MAKING CERTAIN PAYMENT TO 5 OUTSIDE PRODUCER FOR PROGRAMS UNDER COMMISSIONED C ATEGORY FOR WHICH THE ASSESSEE HAD BEEN DEDUCTING THE TAX AT SOURCE UNDER SEC. 194C BY TREATING 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 TO HAVE DEDUCTE D 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 EXPLANATION 3 OF SECTION 194C PROVIDES THE MEANING OF EXPRESSION WO RK WHICH INCLUDES ADVERTISING BROADCASTING AND TELECASTING INCLUDING PRODUCTION OF PROGRAMMING FOR SUCH BROADCASTING AND TELECASTING. ACCORDING TO THE ITAT A SPECIFIC PROVISION HAS BEEN MADE IN SEC. 194C WHI CH BRING WITHIN ITS AMBIT THE CONTRACTUAL WORK CONCERNING BROADCASTING AND TE LECASTING THEREFORE REVENUE CANNOT APPLY SECTION 194J WHICH IS MORE GEN ERAL TERM. HON'BLE DELHI HIGH COURT HAS UPHELD THIS VIEW OF THE ITAT. THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT IN THE PRESENT CASE ALSO A T SR. NO.4 OF THE EXPLANATION APPENDED TO SEC. 194C MEANING OF EXPRE SSION WORK HAS BEEN GIVEN WHICH PROVIDES (A) ADVERTISING; (B) BROADCAST ING & TELECASTING INCLUDING PRODUCTION OF PROGRAMS FOR SUCH BROADCAST ING AND TELECASTING; (C) CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TRAN SPORT OTHER THAN BY RAILWAYS; (D) X X X (E) X X X. ON THE STRENGTH OF HON'BLE DELHI HIGH COURTS 6 DECISION HE POINTED OUT THAT ONCE SPECIFIC PROVISI ON 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 POINT IS WHETH ER IT IS A PAYMENT BEING CONTRACT OF SERVICE OR A RENT FOR HIRING A PLANT. T HE EMPHASIS OF THE LEARNED DR WAS THAT ASSESSEE HAS HIRED A BUS WHICH IS AKIN TO TAKING A PLANT ON LEASE THEREFORE THE PAYMENT MADE BY THE ASSESSEE TO THE TRAVEL AGENCY HAS TO BE CONSTRUED AS A RENT PAID FOR THE BUS. ON THE OTHER HAND CONTENTION OF THE ASSESSEE IS THAT IT HAS AVAILED THE FACILITY OF TRA NSPORTATION FROM THE TRAVEL AGENCY. IT HAS NOT TAKEN THE BUS IN ITS POSSESSION. ACCORDING TO THE CONTRACT THE TRAVEL AGENCY HAS TO PLY THE BUS FOR A FIXED NU MBER OF HOURS. THUS IT IS A SIMPLICITOR SERVICE CONTRACT FOR TRANSPORTATION OF THE PASSENGERS AND IT FALLS WITHIN THE AMBIT OF CLAUSE (C) SR. NO.(IV) OF EXPL ANATION APPENDED TO SEC. 194C. THE ASSESSEE HAS PLACED ON RECORD COPY OF A L ETTER OF AWARD FOR HIRING OF BUSSES. IT HAS ALSO PLACED ON RECORD COPY OF THE CONTRACT ENTERED ON IST OF FEBRUARY 2008. ON PERUSAL OF THESE DOCUMENTS IT RE VEALS THAT ASSESSEE HAS JUST HIRED THE TRANSPORTATION FACILITIES WHICH IS A KIN TO HIRING OF A TAXI THOUGH ON REGULAR BASIS FOR A FIXED NUMBER OF HOURS. BEFOR E THE LEARNED FIRST APPELLATE AUTHORITY ASSESSEE HAS MADE A REFERENCE TO CIRCULAR NO. 558 7 DATED 28.3.1990 ISSUED BY THE CBDT. IN THE CIRCULAR BOARD HAS CONSIDERED THIS ASPECT AND WAS OF THE VIEW THAT WHERE A VEHICL E IS GIVEN ON HIRE ALONG WITH PROVISIONS OF A DRIVER FOR USE OF CARRYING OF THE PASSENGERS FOR FIXED HOURS THAN IT IS A SERVICE CONTRACT FOR CARRYING OU T THE WORK. IT WILL BE COVERED UNDER SEC. 194C OF THE ACT BECAUSE THE VEHI CLE HAS BEEN MADE AVAILABLE AS A MATTER OF SERVICE. LEARNED FIRST APP ELLATE AUTHORITY HAS CONSIDERED THIS ASPECT WHILE OBSERVING THAT IT IS A SERVICE CONTRACT AND ASSESSEE WAS TO DEDUCT TAX UNDER SEC. 194 C OF THE ACT. CONSIDERING THE ORDER OF LEARNED CIT(APPEALS) AND IN VIEW OF THE AB OVE DISCUSSION WE DO NOT FIND ANY MERIT IN THIS APPEAL. IT IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 23.09.201 1 SD/- SD/- ( G.E. VEERABHADRAPPA) ( RAJPAL YAD AV ) VICE-PRESIDENT JUDICIAL MEMBER DATED: 23 /09/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR