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TMI Blog2011 (11) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... x has been paid by the payees on such income. (2) Ld.CIT(A) has erred on facts and law by treating the Pilotage Contract which is otherwise liable to TDS u/s 194C as liable under Technical Service U/s 194J. For the facts and circumstances of case, the Pilotage contract is liable to TDS u/s 194C of the Income Tax Act and TDS cannot be once again recovered where the proper tax has been paid by the payee on such income. (3) Ld.CIT(A) has erred on facts and law by treating the Taxi & Tug Hire Charges which is otherwise liable to TDS u/s 194C as liable under Rent u/s 194I of the Act. For the facts and circumstances of case, such payments are liable to TDS u/s 194C of the Act and TDS cannot be once again recovered where the proper tax has been paid by the payee on such income." 3. The appeal for assessment year 2009-09 in ITA No.771/Rjt/2010 has been earlier decided exparte vide order dated 10-02-2010. The assessee filed miscellaneous application in MA No.29/Rjt/2011 which has been allowed and the earlier order of the ITAT dated 10-02-2010 was recalled vide order dated 30-08-2011 in the miscellaneous application. 4. The brief facts of the case are that TDS survey u/s 133A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who is carrying out any work. The ld,.AR submitted that the expression "work" shall also include " advertising, broadcasting and telecasting including production of programmes for such broadcasting or telecasting, carriage of goods and passengers by any mode of transport other than by railways and catering. The term "work contract" includes contract for supply of labour for works contract. 8. The ld.AR, with reference to "fee for technical services" as defined in Explanation 2 to section 9(1)(vii) of the Act submitted that fee for technical services means "any consideration including any lumsum consideration for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "salaries". The ld.AR submitted that the assessee has made following contracts with respective parties: 1. Mukand Ltd & Mcnally Bharat Engg Co Ltd (for repairs & maintenance of cranes installed at port) 2. Avery India Ltd (for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was having simply AMCs with the deductees. The ld.AR submitted that the assessee has rightly deducted tax at source u/s 194C of the Act. 10. The ld.AR, in support of his contentions relied upon the decision of ITAT, Delhi Bench in the case of Dy. CIT v. Parasrampuria Synthetics Ltd. [2008] 20 SOT 248 and ITAT, Ahmedabad Bench in the case of Gujarat State Electricity Corpn. Ltd. v. ITO [2004] 3 SOT 468. He has also relied upon answer to question No.28 of circular No.715 dated 08th August, 1995 issued by CBDT wherein it is stated that the payments made to electrician or to a contractor which provides the services of an electrician will be in the nature of payment made in pursuance of a contract for carrying out any work. Accordingly provisions of section 194C will apply in such cases. The ld.AR submitted that the person who does the work of electrician also holds the technical degree or competence to do such work and the work of electrician is very much technical as compared to work of AMC contractor and still that work is classified as work contract liable to TDS u/s 194C of the Act. 11. In respect of payment to pilots Shri Ashok Singhal, Shri Ashok C Modi & Shri Bharat Modi on co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s concerned with fixed charges he is eligible to get. A contract to provide work is distinct from the contract of hiring property since it is not for use of plant and machinery or equipment. In a contract for right to use a property as envisaged in section 194-I, the effective control and possession of property must rest with the contractor party. The ld.AR in support of his contention has relied upon the order of ITAT, Mumbai Bench "F" in the case of Vodafone Essar Ltd. v. Dy. CIT [2011] 45 SOT 82/9 taxmann.com 31. The alternative contention of the ld.AR that recipients have paid the tax while filing their returns of income and therefore the action of the AO is not justified. 13. The ld.DR, on the other hand, relied upon the order of the CIT(A) and submitted that the CIT(A) has elaborately discussed the issue after covering all the aspects and contentions of the assessee. 14. We have heard the ld.representatives of the parties, record perused and gone have through the decisions cited. The issue under consideration is whether Annual maintenance contact, pilotage contract and vehicle hire contracts cover under section 194C or u/s 194J and 194-I of the Act. The assessee deducted ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for any construction, assembly, mining or like project undertaken by the Recipient or consideration which would be income of the recipient chargeable under the head "Salaries". From the above discussion we find that fee for technical services includes payment of consideration for rendering of following services: (a) managerial, (b) technical or consultancy services (c) provision of services of technical or other personnel. 16. 'Fee for technical services' does not includes following consideration - (i) Construction (ii) Assembly (iii) Mining or like project 17. A perusal of annual maintenance contract between assessee and M/s Mcnally Bharat Engineering Company Ltd, OTIS Elevators, we notice that the AM contractor shall carry out all repairs as per detailed description in the agreements. From these agreements we did not find that these contracts were in respect of managerial or technical or consultancy services. Thus, it is clear that these agreements were related to annual maintenance of machineries and not for technical services. The revenue in view of the fact that the contractors have utilized services of technical persons p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a resident any income by way of rent shall at the item of credit for such income to the account of the payee or at the time of payment thereof in cash or by issue of cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the prescribed rate. Explanation (i) to section 194-I defines "rent" as "payment for land or building including factory building or land appurtenant to the building including the factory building or machinery or plant or equipment or furniture or fittings whether or not any or whole of the above are owned by the payee. In the case under consideration. The assessee entered into agreement with Thakkar Travels for hiring of vehicles, Tata Indo, Diesel Tata Sumo, Tata Qualis, Honda City and Maruti, etc. In the said agreement it is provided that the rates at which the payments will be made for normal running of 12 hours from time of reporting and for deployment beyond 12 hours. In the agreement nowhere it is stated that the possession of the vehicles were given to the assessee. The ITAT, Mumbai Bench in the case of Vodafone Essar Ltd. (supra) while dealing with section 194I held that merely making use of the facility without himself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided the assessee with two-way transmission of voice and data through telecom bandwidth. The assessee had to pay fixed monthly recurring charges for the circuit between USA and Ireland and Ireland to India net of Indian taxes. There was no equipment of BT in the assessee's premises and the assessee had no right over any equipment held by BT for providing the bandwidth. The fiber link cables and other equipment were used for all customers of BT including the assessee. The bandwidth was provided through a huge network of optical fiber cables laid under seas across several countries of which BT used only a small fraction. The question arose as to the nature of the monthly recurring charges paid by the assessee to BT. The Department's case was that the payment fell under s.9(1)(vi) of the IT Act and was to be treated as royalty. The word "royalty" wa defined in Expln.2 below the section and cl.(iva) of the Explanation stipulated that any consideration for the "use or right to use" any industrial, commercial or scientific equipment would be considered as royalty. The question which the AAR was required to consider was whether the assessee could be said to have paid the monthly recurring ..... X X X X Extracts X X X X X X X X Extracts X X X X
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