TMI Blog2015 (6) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... h, we deem it just and proper to remit these matters to the file of the AO for verifying the fact to whom the lease rentals and services charges have been paid - Decided in favour of revenue for statistical purposes - ITA No.1261/Hyd/2014 - - - Dated:- 20-3-2015 - Shri P.M. Jagtap And Smt.Asha Vijayaraghavan JJ. For the Appellant : Shri Ramakrishna Bandi, DR For the Respondent : Shri S. Rama Rao ORDER Per Smt. Asha Vijayaraghavan, J.M. This appeal is preferred by the Revenue against the order of the CIT (A)-V Hyderabad dated 31.01.2014 passed for A.Y 2006- 07. 2. Brief facts of the case are that the assessee is a company incorporated with an object to carry on the business of power generation and allied activities and it has been in the process of setting up a Thermal Power Generating Station in Chhattisgarh. ITA No.1261 of 2014 Lanco Amarkantak Power Pvt Ltd Hyderabad The AO found that an amount of ₹ 1,23,51,998 is transferred to capital work-in-progress and is representing payment of service charges to Chhattisgarh State Industrial Development Corporation Ltd. According to the AO, the said payment should have been subjected to deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not relate to the CSIDC but relates to the state government of Chhatisgarh. The said CSIDC collected the amounts as a Trustee for the government. Therefore, the appellant submitted that the provisions of Sec. 194-1 have no application. The Assessing Officer, however, did not consider the explanation submitted. It is mentioned in the orders passed by him that as the appellant has not deducted tax, the company is treated in default. The Assessing Officer did not consider the fact that the amount was paid to government and no TDS need be made in view of the Sec. 196 of the Act. It is submitted that for the purpose of establishing the power plant in Chhattisgarh, the lands were to be allotted by the Govt. For this purpose the government allotted its own land, besides acquisition of private ITA No.1261 of 2014 Lanco Amarkantak Power Pvt Ltd Hyderabad lands. Compensation is paid towards the allotment all such lands belonging to others by the assessee to the government. The details of the lands acquired by the government from private parties and the land allotted by the government are submitted in an annexure. Wherever the acquisition was made from private parties by the governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indly cancel the orders passed by the Assessing Officer . 4. The CIT (Appeals)-II, Hyderabad, vide her letter dated 11-2- 2011 had called for a remand report from ITO 14(3)' Hyderabad. The AO, vide his letter dated 18-5-2011, after perusing Rule 10 of the Chattisgarh Industries (allotment of shed, plots and land) Rules, 1974, had opined that the services charges collected by the CSIDC from the assessee was for the acquisition of the private land/govt. Land. Since the CSIDC was facilitating the acquisition of the private land/govt. Land from the state govt, the services are akin to the technical consultancy and the same shall fall under Explanation of 194J of the Act. The AO stated that they were not charges of the nature of reimbursement. Further, CSIDC was independent entity as from that of Govt. Of Chhattisgarh. On the contention of the assessee that the above ITA No.1261 of 2014 Lanco Amarkantak Power Pvt Ltd Hyderabad services charges were shown separately under capital account, the AO opined that that would not in any way mitigate the liability of TDS on account of deductor as the deductee i.e. SCIDC had not offered the above service charges for income as it was held in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the CIT (A) is erroneous both on facts and in law. 2. The CIT (A) erred in holding that the service charges paid to Chattisgarh State Industrial Development Corporation (CSDIC) is not governed by the provisions u/s 194J of the I.T. Act by treating the same as payment to govt. 3. The CIT (A) erred in ignoring the fact that Chattisgarh State Industrial Development Corporation (CSIDC) is separate legal entity assessed to tax and not part of the State Govt. and hence the service charges paid to it are governed by the provisions u/s 194J of the I.T. Act . 9. We have heard both the parties and perused the record carefully. Similar issue was adjudicated by the Tribunal relating to the issue of demand raised u/s 201(1) and interest charged u/s 201(1A) of the Act for not deducting tax at source u/s 194I of the Act, wherein the Tribunal in ITA No.1775 to 1778 of 2012 in assessee s own case held as follows: 8. We have considered rival submissions of the parties and perused the material on record. The dispute in the present case is limited to the fact as to whether as per the claim of the assessee, the lease rentals were actually paid to the State Govt. of Chattisgarh and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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