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2018 (2) TMI 509

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..... . No. 5186 & 5187/ Mum /2016 - - - Dated:- 7-2-2018 - Shri Mahavir Singh, Judicial Member And Shri Ramit Kochar, Accountant Member ACIT ( TDS) CIR -1( 3), Mumbai Assessee by: Shri. J.P Bairagra ORDER Per Ramit Kochar, Accountant Member These two appeals, filed by the assessee, being ITA No. 5186 5187/Mum /2 0 1 6 for assessment years 2 0 12 - 13 2 0 1 3 - 14 respectiv ely are directed against the common appellate order dated 12.05.2016 passed by learned Commissioner of Income-tax (Appeals)-59, Mumbai (hereinafter called the CIT(A) ) for assessment years 20 1 2 - 1 3 2 0 1 3 - 14 respectiv ely , appellate proceedings had arisen before learned CIT(A) from the separate orders both dated 25.03.2015 passed by learned Assessing Officer (hereinafter called the AO ) u/s 201(1)/201(A) of the Income-tax Act, 1961 (hereinafter called the Act ). 2. First we shall take appeal of the assessee in ITA no. 5186/Mum/2016 for assessment year 2012-13. The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the tribunal ) in ITA no. 5186/Mum/2016 for assessment year 2012-13 read as u .....

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..... . To Challenge the order passed by Ld. CIT(A), assessee has filed an appeal before the Hon'ble ITAT, the hearings of which is pending till date. 4. As per the provisions of section 194C, contract means work to be done by unskilled or technical person on combination of two or three and therefore the finding by your predecessor in earlier years that for carrying out this contract work special skills, knowledge and experience is required, does not mean that it is not a contract work and constitute fees for technical or professional services. Therefore, it is very clear that provisions of section 194C regarding fees for technical fees are not applicable in this case. Since the contract is given to DBM, the assessee has rightly deducted TDS u/s. 194C of the I. T. Act and the provisions of section 194C are not applicable. The provisions of section 194C are applicable only if the payments are made for technical services and professional services. Without prejudice to above, we hereby contended that since M/s. DBM Geotechnics Construction Pvt. (deductee) has already included the payments made by the assesse in their return of income as receipt and paid taxes on the .....

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..... formation 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 keys personnel having bachelor's degree in Civil Engineering/Diploma in Survey Technology/Master's in Science/Environment. Course/Degree in Geographical Information Systems. This page no. 12 is annexed to this order marked as Annex. 'C'. 5.2.3 On further examination of the tender document, it is seen in Chapter VII(e) Schedule B at page no. 82 onwards of tender documents(enclosed as Annex. 'D' to this order) speaks about item of work to be carried out and rate for the same work. In this Schedule at item no. 7 on page no. 83 is the list of laboratory test and number of such tests required to be conducted to carry out excavation of rocks by the contractor. The same are listed out as under: Laboratory Tests: 1) Moisture Content 2) Specific Gravity 3) Consistency Limits. 4) Gravel Fine Sieve analysis 5) Hydro Meter analysis 6) Consolidation 7) Direc .....

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..... )-14. The learned CIT(A) vide his order No. CIT(A)-14/IT.810 to 816/TDS Rg. 2/11-12 dated 24.10.2012, decided the issue in favour of the Assessing Officer. Further, the CIT(A) as per para 7.3 of the A.O's order restored the issue to the file of AO with the following direction:- 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 contract to DBM Geotechnics Construction Private Ltd. Has been given for rock excavation work, the AO shall not treat the appellant to be in default and shall accordingly delete the demand raised. However, if as observed by the AO, 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. In that case, however, the AO shall give relief to the appellant in respect of the tax already paid by DBM Geotechnics Construction Private Ltd. If any, on its receipts from the appellant, in .....

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..... ,24 , 936 1 , 00,499 2 % 14 . 03 - 2012 80 ,46,711 1 , 60 , 934 2 % Total 7,59,32,109 15,18,642 2% 9. In view of the above description and facts and circumstances of the case, I hold that the provisions of section 194J of the IT Act are clearly applicable in the assessee's case. Accordingly, TDS liability is determined under section 194J @ 10% which works out to ₹ 75,93,211/- Since the assessee has already deducted TDS@2% amounting to ₹ 15,18,642/-, balance amount representing short deduction of TDS is determined at ₹ 60,74,569/- and interest u/s. 201(1A) is worked out at ₹ 9,71,931/- for 16 months. 10, However, since the Assessee has filed certificate from the auditor of DBM Geotechnics Construtions to whom payment was made to the effect that it has filed its return of income including the payment received by the assessee company and paid taxes thereon. It has been contended that in view of judgment of the Hon'ble Supreme .....

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..... made payment to DBM Geotechnics . Construction Pvt. Ltd against contract for excavation of Rock from Mithi River on which the TDS is deducted as per the provisions of Section 194C of the Act. However as per the Assessing Officer, the TDS should have been deducted as per the provisions of section 194J and hence an order was passed u/s 201(1)/201(1A) and a demand was raised on account of Interest u/s 201(1A) of ₹ 9,71,931/- and 33,62,190/- for AY 2012-13 2013-14 respectively. Since DBM Geotechnics Construction Pvt. Ltd has already included the amount paid to them in their return of income and paid the taxes thereon and evidence in respect to the same was filed before the AO, he has not raised the demand of the TDS amount but raised the demand only for the interest. 2) The similar issues were there in the AY 2008-09 AY 2011-12. The assessee had preferred an appeal to the CIT(A). Further, the CIT(A) has upheld the order passed by AO that TDS should be deducted as per the provision of section 194J and not as per the provisions of section 194C for the two assessment years. 3) However, the assessee had filed an appeal before the Hon. ITAT for AY 2008-09 AY 2011-12 .....

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..... nical logging of the samples and carrying out field tests using pocket penetro meter and hands hear vane. Item No.4 : Coring 'NX' size using triple tube core barrel of 100/150 mm 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 1.25 m X 0.55 m X 0.15m for preserving core samples with all fixtures to fastening handles locking arrangements with lock and key etc. complete. Item No. 6 : Preparation of factual and interpretive report and submission of one copy draft report and six copies of final report along with C.D. Item No. 7 : Laboratory tests (i) Moisture content (ii) Specific gravity (iii) Consistency limits [L.L.P.L. S.L.] (iv) Gravel and fine sieve analysis (v) Hydro meter analysis (vi) Consolidation (vii) Direct shear test (viii) Triaxial (UU) (ix) UDS all above test ROCK SAMPLES: (x) Specific gravity (xi) Water absorption (xii) Porosity (xii) Crushing strength (xiv) Tensile Test (xv) Modulus of elastici .....

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..... r/contract awarded by the assessee in favour of DBM Geotechnics and Construction Private Limited for which payment was made by the assessee was for the construction of retaining wall alongwith bank of Mithi River for which two tenders documents are placed in paper book page 25-60 . It is the claim of the assessee that the tender was not for marine geotechnical investigation for rock excavation in Mithi River for which payments were made by the assessee to DBM Geotechnics and Construction Private Limited during the relevant period under consideration and learned CIT(A) mistook the tender/contract to be for marine geotechnical investigation for rock excavation in Mithi River while adjudicating appeal. It is pertinent to mention here that tribunal while adjudicating appeals vide common orders dated 30-01-2017 for AY 2008-09 and 2011-12 has held that payments to DBM Geotechnics Construction Private Limited towards tender for marine geotechnical investigation for rock excavation in Mithi River is covered by provisions of Section 194J so far as deductibility of income tax at source is concerned, while payments to DBM Geotechnics Construction Private Limited towards tender for constructio .....

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..... tender the payments were made by the assessee to M/s DBM Geotechnics and Construction Private Limited during the relvant period to arrive at correct decision. The relevant paras of the aforesaid common order of the tribunal are extracted below which are para 8 and para 14 of the tribunal order dated 30-01-2017 with respect to the decision of tribunal as to both the types of tenders , which are reproduced as under:- 8. We have considered the rival contentions and also perused the material available on record. We have also carefully gone through the tender documents running from pages 39 to 145 in the paper book filed with the tribunal. We have observed that the tender was floated by the assessee for marine geotechnical investigation for rock excavation in Mithi river approach channel (2.14 Km) situated at sea side of Mahim causeway . M/s DBM Geotechnics Construction Pvt. Ltd. was the successful bidder in the tender. We have observed that the tender was not floated for excavation of rocks in Mithi river rather the tender was for marine geotechnical investigation for rock excavation in Mithi river and the work was mainly towards rendering of technical services involving marine g .....

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..... 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 rupees, in the case of fees forprofessional services referred to in clause (a), or (ii) twenty thousand rupees, in the case of fees for technical services referred to in [clause (b), or] [(iii) twenty thousand rupees, in the case of royalty referred to in clause (c), or (iv) twenty thousand rupees, in the case of sum referred to in clause (d):] [Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such sum by way of fees for professional services or technical services is credited or paid, shall be liable to deduct income-tax under this section :] [Provided also that no individual or a Hindu undivid .....

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..... stinguishable 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 held to be work contract liable for deduction of tax at source u/s 194C of the Act . However, the assessee has placed on record Form 26A to contend that the amount received has been duly considered in the return of income filed by M/s DBM Geotechnics Construction Pvt. Ltd. and all taxes were duly paid by the said M/s DBM Geotechnics Construction Pvt. Ltd. to the Revenue . This contention of the assessee needs verification by the authorities below and we are inclined to set aside this issue to the file of the AO for verification and if the contention of the assesee are found to be correct, the AO shall grant relief keeping in view ratio of decision of Hon ble Supreme Court in the case of Hindustan Coca-Cola Beverages Private Limited (supra) 293 ITR 226(SC). The assessee is directed to appear before the AO and file necessary evidences to support its contentions, as per our above direction . Needless to say that proper and adequate opport .....

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..... re now placed as additional evidences before the tribunal (page 221-516/pb) which in our considered view goes to the root of matter and in the interest of substantial justice these additional evidences need to be admitted as we have also observed that the authorities below erred in passing the orders by relying on the earlier tender viz. tender for marine geotechnical investigation for rock excavation in Mithi river approach channel (2.14 Km) situated at sea side of Mahim causeway which was a small order stated to be completed in the previous year relevant to the assessment year 2008-09. However, these additional evidences placed in paper book page 221-516 needs verification by the A.O. and accordingly we set aside this matter to the file of the A.O. for redetermination of the issue on merits after evaluation of the tender documents and co-relating the same with the payments made by the assessee. Needless to say that proper and adequate opportunity of being heard shall be provided by the AO to the assessee in accordance with principles of natural justice in accordance with law and the assessee be allowed to submit evidences and explanations to support its contentions in its defense .....

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