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2016 (10) TMI 90 - ITAT MUMBAI

2016 (10) TMI 90 - ITAT MUMBAI - TM - TDS u/s 194C or 194J - services rendered by the contractor ULPL to the assessee in providing reachstacker and its operational personnel - short deduction of TDS - Held that:- We find from the order of the Ld. CIT(A) that the CIT(A) has accepted the contentions of the assessee that since the recipient has accounted for the contract receipts received from the assessee, no tax is required to be deducted. He also accepted the contention that owing to the losses .....

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x u/s. 201(1) or interest u/s. 201(1A) are existed. Therefore, we left open the issue of whether the payments made by the assessee to ULPL fall under fees for technical services u/s. 194J or fall under provisions of Sec. 194C of the Act as contract service. The assessee may raise its objections at appropriate stage. - Decided in favour of assessee for statistical purposes. - I.TA Nos.7056 & 7057/Mum/2014 - Dated:- 24-8-2016 - SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICI .....

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assessee has raised following common grounds in its appeals: 1. Tax is deductible u/s. 194C of the I.T. Act 1961 ( the Act ) on the payments made to M/s. Utsav Logistics Pvt. Ltd) and not u/s. 194J of the Act as alleged by the TDS Officer. 1.1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has legally erred in holding that payments to Utsav Logistics under a contract for movement of goods in the port premises is liable for deduction of tax at source under the provi .....

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d transfer (Boot) basis. During these Assessment Years, the assessee paid equipment hire charges to M/s. Utsav Logistics Pvt. Ltd. (ULPL) and deducted TDS @ 2% u/s. 194C of the Act. The assessee hired Reachstacker for the purpose of loading the containers into cargo ships. The contractor i.e. ULPL shall supply in accordance with the highest professional standards one empty stacker with the integrated telescopic streaders and all necessary spares and accessories and adequate number of suitable qu .....

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e Act and since the assessee has not deducted TDS @ 10% U/S. 194J of the Act and has deducted only 2% u/s. 194C of the Act. Show cause notice was issued as to why the assessee should not be treated as defaulter u/s. 201(1) for short deduction of tax u/s. 194J of the Act. 4. In response to the said notice, the assessee filed its reply dated 5.12.2012 submitting that assessee has engaged ULPL for moving containers from one place to another within port premises as is evident from the copy of invoic .....

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e has utilized carriage services rendered by ULPL i.e. loading/unloading and movement of containers with the use of equipment and manpower not availed any technical or professional services within the provisions of Sec. 194J of the Act. The assessee also relied on the circular of CBDT No. 558 dated 28.3.1990 and submitted that in case of service contracts, the provisions of Sec. 194J are not applicable. It was further contended that for a payment to be liable for TDS u/s. 194J of the Act such pa .....

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re, it was contended that the services rendered by ULPL by no stretch of imagination can be categorized as technical and professional services as it does not satisfies provisions of Sec. 194J r.w. Explanation 2 to section 9(i)(vii) of the Act. 5. However, the Assessing Officer did not accept the contentions of the assessee that the payments made to ULPL for hiring the equipment (reachstaker) is liable for TDS u/s. 194C and not under 194J of the Act. The Assessing Officer treated the payments mad .....

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ement of the Hon ble Supreme Court in the case of Hindustan Coca Cola Beverages (P) Ltd Vs CIT, he held that no further tax is to be recovered from the assessee company. However, the Assessing Officer held that the assessee is liable for interest u/s. 201(1A) of the Act on the amount of short deduction of tax at source of ₹ 73,79,898/- and ₹ 1,09,05,377/- and charged interest of ₹ 13,28,381/- and ₹ 19,62,967/- u/s. 201(1A) of the Act for the Assessment Years 2010-11 and 2 .....

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if there are loss returns by ULPL interest u/s. 201(1A) should not be charged. Against the order of the Ld. CIT(A) in accepting the contention of the Assessing Officer that the payments made by assessee are liable for TDS u/s. 194J as fees for technical services assessee is in appeal before us. 6. The Ld. Counsel for the assessee reiterated the submissions made before the authorities below. The Ld. Counsel for the assessee placing reliance on the decision of the Tribunal in the case of ACIT Vs M .....

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ontainers from trailers at the quay side on to the vessel with the operation of quay cranes, is not fees for managerial or technical services covered u/s. 194J of the Act. The Ld. Counsel for the assessee further placing reliance on the decision of the Rajkot Bench in the case of Kandla Port Trust Vs DCIT (16 Taxmann.com 273) submits that assessee running a port and in order to carry out its operations, machineries, heavy cranes, weigh bridge, elevator, EPBX systems were installed and payments m .....

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f the authorities below and the submissions made by the assessee and the case laws relied on . The assessee in this case which is engaged in the business of operating port entered into an agreement with ULPL for hiring empty reachstacker with the integrated telescopic streaders and all necessary spares and accessories and adequate number of suitable qualified and experienced personnel for the operation and monitoring and maintenance of the empty stacker which is a sort of crane to lift the conta .....

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ces as provided in Explanation-2 to clause (vii) of sub-section (1) of Sec. 9 of the Act. Therefore, since the assessee did not deduct TDS under section 194J of the Act, the Assessing Officer held the assessee as defaulter and passed order u/s. 201(1) for short deduction of TDS. However, since the recipient i.e. ULPL has offered the receipts from assessee as its income, the Assessing Officer following the decision of the Hon ble Supreme Court in the case of Hindustan Coca Cola Beverage (P) Ltd. .....

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erefore assessee is liable to deduct TDS u/s. 194J of the Act. However, since the recipient ULPL have already accounted for the receipts as income, he has accepted that no further tax is to be recovered from the assessee. The assessee further contended before the Ld. CIT(A) that even the interest is not liable to be charged for the reason that the recipient i.e. ULPL owing to the losses no tax was payable for the Assessment Years 2010-11 and 2011-12 and therefore no interest liability could be r .....

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