TMI Blog2017 (2) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... ) TMI 12 - SUPREME COURT OF INDIA ). The assessee is directed to appear before the AO and file necessary evidences to support its contentions, as per our above direction - I .T.A. No.6029/Mum/2014, I .T.A. No.6030/Mum/2014, I .T.A. No.5950/Mum/2014 - - - Dated:- 30-1-2017 - SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : Shri J.P. Bairagra For The Revenue : Shri Neil Philiph ORDER PER RAMIT KOCHAR, Accountant Member Out of these three appeals, one appeal, filed by the assessee, being ITA No. 6029/Mum/2014, is directed against the appellate order dated 16.07.2014 passed by learned Commissioner of Income-tax(Appeals)- 14,Mumbai (Hereinafter called the CIT(A) ) in second round of litigation which appeal before the learned CIT(A) has arisen against order dated 11-03- 2013 passed by the ITO (TDS)- 2(2) Mumbai for the assessment year 2008-09 in second round of litigation giving effect to CIT(A) orders dated 24.10.2012 passed in first round of litigation which set aside the matter to the file of the learned ITO(TDS)-2(2), Mumbai being Assessing Officer (hereinafter called the AO ) having passed orders u/s 201( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofessional / technical in nature . Accordingly, TDS liability it determined under section 194J @11.33% which works out to ₹ 28,04,294/- .Since the assessee has already deducted TDS amounting to ₹ 51,923/- balance amount determined at ₹ 27,52,371/- and interest u/s 201(1A) is worked at ₹ 12,11,043/- for 44 months. The dispute is in narrow range as to the deductibility of the tax at source by the assessee to the payments made to M/s DBM Geotechnics Construction Private Limited, i.e. whether the payments are covered for deductibility of tax at source u/s 194C of the Act as payments to contractors or u/s 194J of the Act being payment in the nature of professional or technical services . The assessee carried the matter before the ld. CIT(A) in appeal who decided the matter vide appellate orders dated 24.10.2012 by observing as under:- Since the facts, as stated by the AO and as stated by the appellant are opposite, the appellant is directed to furnish necessary evidence in support of the above facts, if any before the AO. After verifying the correctness of the facts pleaded by the appellant, the AO shall accordingly take a decision in this regard. If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mahim Causeway. Further reference is also seen on page no.3 of the tender document (enclosed to this order, marked as Annex 'B') published in the news paper. In this advertisement also, it is mentioned that tender was for Marine Geotechnical Investigation of Rock Excavation in Mithi River approach Channel. It is quite apparent that the nature of work was not that of simple contract works but requires special technical skills, knowledge and experience. On further observation of the tender document it is seen that page no. 12 has a title Indicative Check List for Informations from Consultants . On this page, the details of contract experience in carrying out Cadastral Survey under tidal condition as measurement and collection of Hydraulic and Physio-Chemical Parameters are given. It is further required that there shall be at least 3 Key personnel having Bachelor's degree in Civil Engineering/Diploma in Survey Technology/Master's in Science/Environment. Courses/Degree in Geographical Information Systems. This page no. 12 is annexed to this order marked as Annex. 'C'. On further examination of the tender document, it is seen in Chapter VII (e) Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty determined u/s 194J @ 11.33% works out to Rs.28,04,294 Less: TDS already deducted as per provision of Sec.194C ₹ 51,923 by the assessee ₹ 27,52,371 Add: Interest u/s 201(1A)@ 1% for 44 months Rs.12,11,043 Total amount payable by assessee Rs.39,63,414 Since the assessee did not submitted the details in compliance with the decision of Hon ble Apex Court in the case of M/s Hindustan Coca Cola Beverage (P) Ltd. v. CIT [2007] 293 ITR 226(SC) by adducing the necessary documentary evidence in support of assessee s submission of deductee having paid the due taxes and having filed its return of income with the Revenue, the A.O. held that the assessee s case is covered by the provisions of section 194J of the Act and accordingly the asessee was directed to pay the demand of ₹ 39,63,414/, vide orders dated 11-03-2013 in second round of litigation by the AO giving effect to the learned CIT(A) orders dated 24.10.2012. 4. Aggrieved by the order dated 11.03.2013 passed by the A.O. giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accessories into position at first borehole and from borehole to borehole including accurate mounting of craft and jacking up at each bore hold, hire of tugs, survey work etc. complete. Item No. 3: Boring 100mm/150 mm dia in all type of soils including boulders including use of all material such as ceasing pipe and accessories consumable etc. as required [including conveying the material to site of work] carrying out set at 1.5m. interval and taking undisturbed samples of cohesive soil, preparing the loose samples serially in glass/plastic jars, on site of work and conveying the same to Headquarters of concerned office as directed by Engineer-in-charge includes geotechnical logging of the samples and carrying Qout field tests using pocket penetro meter and handshear vane. Item No. 4: Coring 'NX' size using triple tube core barrel of 100/150mm as dia. In weathered and unweathered basalt rock by diamond drilling including preservation of cores in standard core box taking core photographs etc., complete. Item No. 5: Providing core boxes of jungle wood of size 1.25m x 0.55m x 0.15m for preserving core samples with all fixtures to fastening handles locking arrang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal. 6. Before the tribunal, the assessee has placed on record the copy of tender document of DBM Geotechnics Construction Pvt. Ltd..(pb/page 39- 145) . The learned counsel for the assessee reiterated its submissions as were made before the authorities below . Thus, the learned counsel for the assessee justified the deduction of tax at source u/s 194C of the Act on payments made to DBM Geotechnics Construction Pvt. Ltd..being payments towards work contract instead of deductibility of tax at source u/s 194J of the Act as contemplated by Revenue. The learned counsel for the assessee also drew our attention to the copy of Form 26A dated 31.10.2013 and 14.2.2014 ( pb/page 159/160 and also pb/174-176 in another pb) for furnishing the accountant certificate as per first proviso to sub-section (1) of section 201 of the Act to evidence that the DBM Geotechnics Construction Pvt. Ltd., has received the amount from the assessee and has duly paid the taxes to the Revenue. 7. The ld. D.R. has contended that this contract is not covered u/s 194C of the Act as these are services rendered by DBM Geotechnics Construction Pvt. Ltd. to the assessee which are technical services as are covered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 194J of the Act as applicable for impugned assessment year is reproduced below:- [ Fees for professional or technical services. 194J. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of- ( a ) fees for professional services, or ( b ) fees for technical services, [ or ] [ ( c ) royalty, or ( d ) any sum referred to in clause (va) of section 28,] shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to [ ten ] per cent of such sum as incometax on income comprised therein : Provided that no deduction shall be made under this section- ( A ) from any sums as aforesaid credited or paid before the 1st day of July, 1995; or ( B ) where the amount of such sum or, as the case may be, the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to, the payee, does not exceed- ( i ) twenty thousand rupe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation [ 2 ] . -For the purposes of this clause, fees for technical services means any consideration (including any lump sum 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 or like construction 72 , assembly, mining project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head Salaries .] In our considered view these are technical services rendered by the DBM Geotechnics Construction Pvt. Ltd. to the assessee for Marine Geo Technical Investigation for which payments were made by the assessee which are covered u/s 194 J of the Act for deductibility of tax at source. The decision of the Hon ble Gujarat High Court in the case of Essar Oil Ltd. V. ITO [2013] 30 taxmann.com 39 (Guj HC) as relied upon by the assessee is distinguishable and not applicable in the instant case as in that case three different agreements entered into by the tax-payer were held to be composite contract being held to be single integrated agreement for construction of refinery plant which was hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in holding that the payment made to M/s DBM Geotechnics Construction Pvt Ltd during AY 2011-12 was towards contract awarded for Marinee Geo Technical investigation for rock excavation in Mithi river while the payment was towards contract given for construction of retaining wall along the bank of Mithi river and therefore the provisions of section 194C of the Income tax Act 1961 are applicable for deduction of TDS and not the provisions of section 194J. 10. The brief facts of the case are that a survey action u/s 133A of the Act was conducted by Revenue on 04-07-2008 at the assessee s premises at Bandra Kurla Complex, Bandra (E), Mumbai. It was observed by the AO that the assessee has made payment of ₹ 31,32,05,876/- to M/s DBM Geotechnics Construction Pvt. Ltd. during the previous year relevant to the impugned assessment year with respect to the marine geographical investigation for rock excavation in Mithi river on which tax has been deducted at source u/s 194C of the Act. On enquiry, it was observed by the A.O. that the taxes should have been deducted at source u/s 194J of the Act as the nature of the services rendered by DBM Geotechnics Construction Pvt. Ltd. to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar relevant to the assessment year 2011-12 on which tax was deducted at source u/s 194C of the Act by the assessee. The assessee has contended that the authorities below have framed the orders based on evaluation of a wrong tenders/order which was also awarded to the assessee earlier being marine geotechnical investigation for rock excavation in Mithi river approach channel (2.14 Km) situated at sea side of Mahim causeway of which work was completed way back in the previous year relevant to the assessment year 2008-09. Thus, the assessee admitted its mistake of submitting wrong tender documents before the authorities below for evaluation of the applicability of Section 194C of the Act vis- -vis payments made. It is also seen that further fresh tenders were awarded by the assessee to M/s DBM Geotechnics Construction Pvt Ltd. for the construction of retaining wall along the bank of Mithi river from channel 3500.0m to channel 5883.0m towards LBS Marg including Service road and construction of retaining wall along the bank of Mithi river from channel 2600.0m to channel 5883.0m towards BKC side including service road , which are placed as additional evidences before the tribunal(page 22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he A.O and holding that the provisions of section 194C are applicable as claimed by the assessee, thereby deleting the consequent interest levied u/s. 201(1A) without appreciating the fact that to carry out the maintenance work of Air Conditioners, lifts, Electrical fittings, Fire hydrants and Pest Control requires highly qualified specialized technical competency which falls within the purview of section 194J not u/s. 194C of the I. T. Act, 1961 . 16. In this appeal, the Revenue has challenged the relief granted by the ld. CIT(A) in its appellate orders dated 21.07.2014 with respect to the annual maintenance work of air conditioners, lifts, electrical fittings, fire hydrants and pest control etc. The ld. CIT(A) allowed the appeal of the assessee by following the decision of his predecessor who allowed the claim of the assessee , observed as under vide appellate orders dated 21.07.2014:- I have considered the facts of the case, submission of the appellant and order u/s.201(1 )/201 (1A). This issue has already been decided by my Predecessor in his order dated 24.10.2012 for A.Y. 2008-09 8: 2009-10 holding inter-alia as under:- I hold that the expenditure on account of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not require any technical expertise. Respectfully following the afore-stated decision of the tribunal dated 10-04-2015 in assessee s own case in ITA No. 496 to 502/Mum/2013 for the assessment years 2008-09 and 2009-10 we dismiss the instant appeal of the Revenue , wherein the tribunal has held in the aforesaid orders dated 10-04-2015 as under:- The second issue relate to A. Yrs 2008-09 and 2009-10 wherein the AO has applied the provisions of Sec. 194J whereas the assessee has deducted tax u/s. 194C of the Act. We find that the payments have been made by the assessee only in respect of annual maintenance contract which relates to minor repairs, replacement of some spare parts, oiling and greasing of the machineries. In our understanding of the fact, these services do not require any technical expertise and therefore cannot be categorized under the head technical services . We, therefore, decline to interfere with the findings of the Ld. CIT(A). The appeal filed by the Revenue for this issue is also dismissed. Based on our above discussions and reasoning, we find no merit in the appeal filed by the Revenue, hence, we dismiss the appeal filed by the Revenue. We order accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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