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TMI Blog2018 (2) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-Tax Appellate Tribunal, Mumbai (hereinafter called "the tribunal") in ITA no. 5186/Mum/2016 for assessment year 2012-13 read as under:- "1. The learned CIT (Appeals) erred in holding that contract to M/s. DBM Geotechnics Construction Pvt. Ltd. has not been given for simple rock excavation work but is given for Marine Geo Technical Investigation for rock excavation in Mithi River. Therefore, it is covered by the provisions of section 194J and not as per the provisions of section 194C for deduction of TDS on total payment amounting to Rs. 7,59,32,109/- made to M/s. DBM Geotechnics Construction Pvt. Ltd. 2. The appellant craves to add to, alter or amend the foregoing grounds, which are without prejudice to one another, at the time of hearing." 3. The assessee is a local authority created by the Government of Maharashtra by enacting MMRDA Act ,1974 and it is engaged in the business of planning, coordinating and supervising the development of the areas in the region and of executing plans, projects and schemes of such developments. The assessee has made payments to the tune of Rs. 7,59,32,109/- to M/s DBM Geotechnics and Construction Pvt. Ltd. on which income-tax was de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included the payments made by the assesse in their return of income as receipt and paid taxes on the same, no demand should be raised on account of being difference between the TDS as per provisions of section 194J and as per section 194C as per the first proviso to section 201 of the I.T. Act. However, the demand may be raised on account of interest u/s.201(1A) from the date of deduction to the date of filing return by the deductee as per the provisions of first proviso to section 201 (1A) of the Act. In A. Y. 2011-12 and 2008-09, the Ld. CIT(A) has also accepted the above contention of the assessee and directed to AO to reduce the demand by giving the relief on the same grounds." The AO after considering the submissions of the assessee held that the assessee has made payments amounting of Rs. 7,59,32,109/- to DBM Geotechnics Construction Pvt. Ltd. for marine geotechnical investigation for rock excavation in Mithi River on which TDS has been wrongly deducted u/s. 194C instead of Section 194J. The AO while passing order dated 25-03- 2015 u/s 201(1) and 201(1A) , held as under:- " 5.1 Payment made to DBM Geotechnics Construction Private Limited: During the year under consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Meter analysis 6) Consolidation 7) Direct Shear Test 8) Triaxial (UU) 9) UDS all about tests. Rock Samples 10) Specific Gravity 11) Water absorption 12) Porosity 13) Crushing Strength 14) Tensile Test 15) Modulus of Elasticity & Poission's ratio 16) Chemcial analysis of soil to determine chloride & sulphate content and 17) Chemical analysis of groundwater to determine chlorine and sulphate content and PH 5.2.4 From the above list of laboratory test and rock examination, it is crystal clear that the contract was not just a simple work contract, but was for providing highly technical services. The every entry in this list clearly speaks out the DBM was required to provide scientific and technical services coupled with consultancy. Such specialized services cannot be accomplished without involvement of professional caliber and merit. 5.2.5 It is worth to mention here that the assessee has conveniently not furnished the copy of technical bid, which may better describe the nature of services required. However on examination of limited information furnished by the assessee, it is seen that it was not a contract intended to be covered by the section 194C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view of the decision of the Hon'ble Apex Court in the case of Hindustan Coca Cola Beverage (p) Ltd. Vs. CIT [2007] 293 ITR 226. The AO is therefore directed accordingly.' 6.1 The assesse has also furnished the following details for claim of relief u/s. 201(1) in respect of Hon'ble Apex Court in the case of Hindustan Coca Cola Beverage (p) Ltd. Vs. CIT [2007] 293 ITR 226. In support of it, the assessee has submitted - 1. Audited Financial Statements of Accounts of DBM Geotechnics & Construction Pvt. Ltd. including Auditors Report under the Companies Act. 2. Acknowledgement of Income Tax return filed by the Company. 3. Computation of Total income. 4. Tax Audit Report under the Income Tax Act in Form 3CA and 3CD. 5. Copy of ledger account of MMRDA in the books of M/s. DBM Geotechnics & Construction Pvt. Ltd. 6. Form 26A issued by the Chartered Accountant of the deductee certifying that the amount received from MMRDA amounting to Rs. 7,59,32,109/- is already included in the income of M/s. DBM Geotechnics & Construction Pvt. Ltd in their return of income. 7. In the backdrop of discussion, the undersigned is fully convinced and satisfied that the payments made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmined to be Rs. 60,74,569/-, but since however the assessee filed certificate from auditors of DBM Geotechnics and Construction Private Limited to the effect that it filed its return of income including the payment received from the assessee company and paid due taxes to the Revenue, the liability u/s 201(1) was determined by the AO against the assessee was computed at NIL u/s 201(1) but interest u/s. 201(A) was workout by the AO to be Rs. 9,71,931/- , vide order passed by the AO u/s. 201(1)/201(A) dated 25.03.2015. 4. Aggrieved by the order dated 25-03-2015 passed by the AO u/s 201(1) and 201(1A), the assessee carried the matter in appeal before the learned CIT-A who dismissed the appeal of the assessee by holding as under, vide appellate order dated12-05-2016:- " 5. Ground No. 2 for the AYs 2012-13 & 2013-14 is raised as under:- The learned Assessing Officer further erred in holding that on the payment made to M/s DBM Geotechnics Construction Pvt. Ltd., TDS should have been deducted as per provisions of section 194J and not as per the provisions of section 194C of the Act. 5.1 It is observed by the AO that the contract was not simple works contract but was providing scien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the A.O. shall not treat the appellant to be in default and shall accordingly delete the demand raised. However, if as observed by the A.O. the contract is for marine geo-technical investigation for the purposes of rock excavation in Mithi river, the AO's decision in this regard shall be upheld" 4.4 I have perused the contract document filed by the appellant. The name of work for the contract is "Marine Geotechnical Investigation for Rock Excavation in Mithi River Approach Chanel". The nature of work defined in Schedule B is as under:- * Item No. 1 : Establish on site rotary core drilling rig and other equipments with mounted a floating craft, for sinking marine bore hole complete with all accessories and transport to the site fixing laying in position etc. complete and including demobilization. * Item No.2 : Move core drilling rig and other equipments mounted on floating craft with all accessories into position at first bore hole and from borehole to bore hole including accurate mounting of craft and jacking up at each bore hold, hire of tugs, survey work etc. complete. * Item NO.3 : Boring 1OOmm/ 150mm dia In all type of soils including boulders including use of all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & 2013-14, the appellant has taken alternative ground vide Ground No. 3. Since it is held that the appellant was required to deduct the tax u/s 194J as against the 194C for the payments made towards M/s DBM Geotechnics Constructions Pvt. Ltd., the alternative ground taken by the appellant that the Interest u/s 201 (1A) should levied from the date of deduction to the date of filing return of income merits consideration. 6.1 It is evident from the provision of Section 201 (1A) itself that the interest is to be levied from the date on which such tax was deductible/ deducted to the date on which such tax is deducted/actually paid as the case may be. Hence, the interest u/s 201 (1A) is to be calculated from the date of deduction of tax till the date of deposit in government treasury and not from the beginning of the financial year and till the date of passing the order. The appellant is directed to file the copies of the challan of the tax deducted before the AO and the AO is directed to re-compute the interest u/s 201 (1A) of the Act. Ground is allowed." 5. Aggrieved by the appellate order dated 12-05-2016 passed by the learned CIT(A), the assessee has come in an appeal before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struction Private Limited. The Ld. DR raised no objection if the matter is restored to the file of the AO for necessary verifications on merits as to the nature of the payments having been made to the tune of Rs. 7.59 crore to DBM Geotechnics Construction Pvt. Ltd. during relevant period for construction of retaining wall alongwith bank of Mithi River. 6. We have considered rival contentions and perused the material on record . We have observed that tribunal has taken a view to which one of us was a party (Ld. Accountant Member) in the appeals in ITA no. 6029/Mum/2014 for AY 2008-09, 6030/Mum/2014 and 5950/Mum/2014 for AY 2011-12 respectively wherein the tribunal has discussed and analysed both the types of tenders awarded by the assessee to DBM Geotechnics and Construction Private Limited in details on merits viz. Firstly tender/contract awarded by the assessee to DBM Geotechnics and Construction Private Limited for marine geotechnical investigation for rock excavation in Mithi River which was held to be covered under the provisions of Section 194J so far as deductibility of income tax at source is concerned while secondly tender/contract awarded by the assessee to DBM Geotechnic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well learned CIT(A) in his appellate orders dated 16-07-2014 in para 4.4/4.5 have rightly concluded that services rendered by M/s DBM Geotechnics Construction Pvt. Ltd. to the assessee are technical in nature and duly covered u/s 194J of the Act for deductibility of tax at source, which orders of the authorities below we are not inclined to interfere. In our considered view theseare 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. Section 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 Hinduundivided 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) where any sum referred to in sub-section (1) is credited to any account, whether called "suspense account" or by any other name, in the books of account of the person liable to pay such sum, such crediting shall be deemed to be credit of such sum to the account of the payee and the provisions of this section shall apply accordingly. The fee for technical services has been defined in in Explanation 2 to clause (vii) of sub-section (1) of section 9; which is reproduced hereunder:- "Explanation [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 construction, assembly, mining or like 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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-à-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 channel5883.0 m towards BKC side including service road , which are placed as additional evidences before the tribunal(page 221-516 and it is claimed that the payment has been made by the assessee of Rs. 32,47,68,465/- to DBM Geotechnics Construction Private Limited towards these tenders viz. 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 and not towards the earlier tender i.e. marine geotechnical inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008-09 and 2011-12. Needless to say that proper and adequate opportunity of being heard shall be provided by the AO to the assessee in set aside proceedings in accordance with principles of natural justice in accordance with law and the assessee will be allowed to submit evidences and explanations to support its contentions in its defence which shall be evaluated by the AO on merits. Thus, the appeal of the assessee in ITA no. 5186//Mum/2016 for AY 2012-13 is allowed for statistical purposes. We order accordingly 7. In the result appeal of the assessee in ITA no. 5186/Mum/2016 for AY 2012-13 is allowed for statistical purposes. 8. Our above decision in ITA no. 5186/Mum/2016 for AY 2012-13 shall apply mutatis mutandis to the appeal of the assessee in ITA no. 5187/Mum/2016 for AY 2013-14 . Thus, the appeal of the assessee in ITA no. 5187/Mum/2016 for AY 2013-14 is also allowed for statistical purposes. We order accordingly. 9. In the result appeal of the assessee in ITA no. 5187/Mum/2016 for AY 2013-14 is allowed for statistical purposes. 10. In the result both the appeals of the assessee in ITA No. 5186/Mum/2016 and 5187/Mum/2016 for AY 2012-13 and 2013-14 respectively are allo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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