TMI Blog2007 (6) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... le income, hence, no loss to revenue on account of tax or interest. 4. The facts, in brief, are that the assessee-company is engaged in the business of selling of online lottery, under license from State Government of Karnataka. A survey under section 133A was carried out at the business premises of the assessee for the TDS purpose, wherefrom, it was found that assessee had paid a sum of Rs. 54.89 crores to M/s. Playwin Infravest Pvt. Ltd. (hereinafter called as Playwin ) as operating fees and wherein, the assessee had not deducted tax-at-source. It was explained by the Company Secretary that the assessee had entered into two agreements with Playwin and in respect of commission payment to Playwin the TDS was deducted and deposited, however, in respect of impugned sum the tax was not deducted as the assessee was of the opinion that it was not liable to do so, because under section 194C, this payment did not fall. The Assessing Officer, however, analysed, clauses 2 and 3 of the Agreement dated 7-8-2002 and based upon those "clauses held that the payment made by the assessee to the Playwin" fell within the ambit of section 194C of the Act. The Assessing Officer, accordingly, trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory and the assessee was liable to pay the same for its default under section 201 rule with section 194J of the Act. The learned CIT(A), however, directed the Assessing Officer to verify the facts and accordingly decide whether demand under section 201(1) was to be raised or not, as the payee had paid the taxes and claimed the refund. Still aggrieved, the assessee is in appeal before us. 5. The learned Counsel narrated the factual matrix of the case, reiterated the submissions made before the revenue authorities and contended that Playwin had given only computers on hire and it was not providing any technical or professional services to the assessee company. It was also contended that Playwin was required to maintain its network in working condition and only for this purpose various provisions were made in agreement, but that would not mean that any professional or technical services were rendered by Playwin to the assessee-company. The learned Counsel also placed strong reliance on the decision of the Tribunal in the case of Gujarat State Electricity Corpn. Ltd. v. ITO [2004] 82 TTJ (Ahd.) 456 1 wherein it was held that payment by the company to Gujarat Electricity Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any tax, then, the assessee could have taken a certificate from the concerned Assessing Officer for non-deduction of tax as provided in law and failing to do so the assessee, withheld the money which was due to the Government, hence, it was liable for interest under section 201(1A) of the Act. The learned Departmental Representative further placed strong reliance on the order of learned CIT(A). 7. We have considered the submissions made by both the side materials on record and orders of the authorities below. Admittedly, assessee is engaged in the business of selling Online Lottery under licence from State Government of Karnataka. The assessee, after obtaining the license from State Government, has entered into two agreements with Playwin on 7-8-2002. Under one agreement, Playwin is authorised to sell Online Computerised Lottery directly or through retailers for a consideration in the form of commission @ 2 per cent of the total revenue. As per this agreement, among other responsibilities of marketing, collection of proceeds, Playwin is also entrusted with the responsibility of maintaining of books, records, etc., in accordance with generally accepted accounting principles. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness practices what would constitute rendering of technical services. In the present case, it is important to note that it is not merely the payment for user of equipments or machineries but all the personnel, consumables, spares, maintenance remains the responsibility of Playwin, hence, it is a Composite Contract. Assuming for a moment that all these activities, if would have been carried on by the assessee on its own, it would have employed the people, given the maintenance contracts, hired an office on rent, if not owned and in all this cases it would have required to deduct the TDS in respect of relevant transactions as per the provisions of the Act. If it would have owned the equipment and machineries and then hired the services for run and maintenance, therefore, the provision of section 194C might have been attracted. Hence, having regard to the extensive coverage of TDS provisions, a payer cannot normally escape from its responsibility from deducting tax-at-source, in respect of various transactions at the time of executing such transaction. We are further of the opinion that in the changed business circumstances, when service industry is gaining prominence, the term "Te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harging interest under section 201(1A) the Revenue would derive undue benefit or advantage by getting interest on the amount of tax it had already received on the due date and such a position could not be accepted. Similarly, in the case of CIT v. Rajasthan Rajya Vidyut Prasaran Nigam Ltd. [2006] 287 ITR 354 (Raj). The recipient of income had claimed refund, which had arisen due to tax-deducted-at-source and deposited on due dates. Thus, the crux of both these judgments is that where the due taxes have been paid by recipient of the income directly on time, the interest under section 201(1A) cannot be charged, because it is of compensatory nature and is levied for withholding the money belonging to the Government. Now, coming to the fact of this case, the assessee has submitted a chart, which does not establish the fact that all the taxes paid by the assessee have been paid on due dates, specially, when the assessee has not paid any taxes by way of advance tax/ self-assessment tax and all the credits have been taken from tax-deducted-at-source by payers. It is further noted that, even the assessee has been made liable to made interest under section 201(1A) for delay in deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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