TMI Blog2017 (10) TMI 768X X X X Extracts X X X X X X X X Extracts X X X X ..... for not deducting tax at source from payments made to U P Jal Nigam on the mobilisation fees paid (being reimbursement of expenses on actual cost) within meaning of section 273B, and accordingly no penalty under section 271C is exigible. Accordingly grounds raised by assessee on merits stands allowed. - ITA No. 3295 to 3297/Del/2014 And ITA No. 3298 & 3299/Del/2014 - - - Dated:- 24-5-2017 - SH. N. K. SAINI , ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER For The Appellant : Ms. Raj Rani Lakra, CA Ms. Priyanka Garg, CA For The Respondent : Sh. Rajesh Kumar, Sr.DR ORDER PER BEENA A. PILLAI, J.M : 1. The present appeals have been filed by assessee against separate orders each dated 03.03.2014 for rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal anytime upto the hearing of this appeal . 2. Brief facts of the case are as under: A survey verification exercise was carried out by ACIT (TDS) Noida, on 28.07.2009, during which it was unearthed that assessee had not deducted TDS on payments made to M/s. U.P Jal Nigam, and M/s U.P Rajkiya Nirman Ltd, Noida, during assessment years under consideration. Ld. ACIT(TDS) passed orders for each of the assessment years under consideration, u/s. 201(1), on the even date, whereby he concluded that there was no deduction of TDS made under head contract charges payment to various units services of M/s. U.P Jal Nigam, and M/s U.P Rajkiya Nirman Ltd; Noida. It was observed by Ld. ACIT (TDS) that assessee failed to fulfill its liability to dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld as under: In this regard of submission that the assessee filed an appeal before the Ld. CIT (A), it has been decided and order of the DCIT (TDS) Noida, has been confirmed on the issue of applicability of provision of section 194C vide Ld.CIT (A) order dated 15/03/10. It was concluded that AO, has been rightly observed the agreement executed by assessee to U P Jal Nigam, clearly shows that this is a civil contract work wherein provision of section 194C is clearly attracted. This view is also supported by the judicial pronouncements relied upon by the AO in his order under appeal. Since the assessee has failed to deduct tax at source on the payments made to U P Jal Nigam as per provisions of section 194C, it was held that AO has rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, assessee preferred appeal before Ld. CIT(A), who confirmed penalty levied. 6. Aggrieved by order of Ld. CIT(A), assessee is in appeal before us now for all above assessment years. As the issue involved relates to payments made by assessee from time to time under same contract with U.P Jal Nigam Ltd., these years are being disposed of by way of a common order. 7. Ld. AR submitted that assessee entered into agreement for construction and design services with U.P Jal Nigam, for laying peripheral sever line along Noida-Greater Noida Expressway. She submitted that as per agreement dated 23.09.2002 assessee was to pay percentage at the rate of 4.4% of actual expenditure on the work to C DS U.P. Jal Nigam which included expenses l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for execution of work on which certain percentage of fees over and above the amount of actual expenditure is decided. Ld. AR submitted that it was the belief of assessee that tax is to be deducted only on payment made for consultancy services and not on amount which was reimbursed on actual expenditure. Ld. AR submitted that there was a reasonable cause for assessee to deduct tax under section 194C only on consultancy charges paid. She placed reliance upon letter dated 03.10.2002 placed at page 16 of paper book where letter has been written by office of U.P Jal Nigam to assessee, requesting them not to deduct any TDS in respect of mobilisation charges (being reimbursement of expenses) paid to them, as they were deducting TDS while making pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing TDS on payments made to subcontractors. There is no material/evidences brought on record by the authorities below which was contrary to what has been stated in the letter dated 03.10.2002 and 17.03.2008. We are, therefore, of opinion that assessee had reasonable cause for not deducting TDS on mobilisation fees paid, being the reimbursement of expenses on actual cost. 13. It is also observed that Ld. DR has not disputed that no TDS has been deducted and deposited at all. The only dispute is that TDS has been deducted by assessee under 194J instead of section 194C as held by assessing officer in order passed under section 201(1) and 201(1A) of the Act. The penalty u/s 271C has been levied on entire amount paid by asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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