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Mumbai Metropolitan Region Development Authority (MMRDA) Versus

2018 (2) TMI 509 - ITAT MUMBAI

TDS u/s 194J or 194C - tds liability on payment to DBM Geotechnics Construction Pvt. Ltd. for marine geotechnical investigation for rock excavation in Mithi River - Held that:- AO is directed to verify and evaluate the tender/contracts under which the payments were made by the assessee to DBM Geotechnics Construction Private Limited during the relevant period to the tune of ₹ 7,59,32,109/- and if the payments were found to be made by the assessee to DBM Geotechnics and Construction Private .....

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tribunal vide afore-stated common orders dated 30-01-2017 for AY 2008-09 and 2011-12. - I.T.A. 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 .....

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n 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 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 exca .....

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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 ₹ 7,59,32,109/- to M/s DBM Geotechnics and Construction Pvt. Ltd. on which income-tax was deducted at source (hereinafter called TDS ) u/s. 194C by the assessee , while AO was of the view that the assessee is required to deduct TDS u/s. 194J of the Act. The asse .....

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TDS @ 2% u/s. 194C. We enclosing herewith copy of Extract of Tender documents and copy of account appearing in the books of the assessee for the period from 01- 04-2011 to 31-03-2013 as Annexure -2 3. For the Asstt. Year 2008-09 and 2011-12, your predecessor has considered the payment made to M/s. DBM Geotechnics as fees for technical service and held that TDS is to be deducted u/s. 194J whereas the assessee has deducted u/s. 194C. Aggrieved by the said order, the assessee has filed an appeal be .....

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rying 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 194 .....

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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 ma .....

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Geotechnics Construction Pvt. Ltd for marine geotechnical investigation for rock excavation in Mithi River on which TDS has been deducted u/s 194C . From the nature of services rendered by M/s DBM Geotechnics Construction Pvt. Ltd. It appears to be in the nature of professional/technical services. Hence the amount paid to M/s DBM Geotechnics Construction Pvt. Ltd. (DBM) should have been subjected to TDS u/s 194J, as geotechnical investigation work is professional in nature. 5.2 Marine Geotechin .....

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ut requires special technical skills, knowledge and experience. 5.2.2 On further observation of the tender document, it is seen that page no. 12 has a title "Indicative Check List for Information 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&# .....

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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) Direct Shear Test 8) Triaxial (UU) 9) UDS all about tests. Rock Samples 10) Specific Gravity 11) Water absorption 12) Porosity 13) Crushing Strength 1 .....

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ovide 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 of the .....

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cal services as well as the content of the contract awarded by the assessee deductor, it is absolutely clear that the services provided by DBM are absolutely in the nature of technical services and therefore the provisions of Section 194J are applicable in respect of payments made to M/s. DBM Geotechnics & Construction Pvt. Ltd. 6. In assessee's own case, earlier, on the same issue the then Assessing Officer while passing order u/s 201(1)/201(lA) for assessment year 2008-09 to 2011-12 tr .....

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s, 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 .....

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. 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 Ta .....

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ckdrop of discussion, the undersigned is fully convinced and satisfied that the payments made by the assessee deductor to DBM squarely fall within the ambit of Section 194J as it satisfied all the parameters prescribed in Sec. 194J, as also held by the CIT(A) in its order for A.Y. 2008- 09 to 2011-12. 8 During the year under consideration, the assessee has made the following payments to M/s. DBM Geotechnics Construction Pvt. Ltd. and deducted TDS @ 2% as per provision of section 194C, the detail .....

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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 paym .....

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377; 9,71,931/-.( From 19/05/2011 till the date of filing of return by DBM Geotechnics & Construction-24/09/2012 i.e. 16 months @1%). The AO therefore held that assessee was required to deduct income-tax at source u/s. 194J at the rate of 10% which workout to ₹ 75,93,211 , while income-tax was deducted at source at the rate of 2% by the assessee which amounting to ₹ 15,18,642/- and hence for balance short deduction of income-tax at source was determined to be ₹ 60,74,569/-, .....

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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 s .....

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and not u/s.194C of the Act. 5.2 In appeal, it is submitted as under:- 1) The Authority has 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 .....

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he 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 which is still pending before the Tribunal The hearing for the two appeals has been fixed on 26-10-2016. 5.3 I have considered the facts of the case, AO's order, submission of the appellant. M .....

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act to DBM Geotechnics Construction Pvt. Ltd. has been given for rock excavation work, 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 " .....

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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 material such as csing peipe and accessories consumables etc. as required [including conveying the material to site of work] carrying out set at 1.5m. interval and taking undisturbed samples o .....

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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) .....

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te content and P.H. 4.5 Thus, from the above it is clear that the contract to DBM is not given for simple rock excavation work but it is given for 'Marine Geo Technical Investigation' for rock excavation in Mithi River. Therefore respectfully following the decision of my Ld. Predecessor, the action of the A.O. is upheld. Ground is dismissed. 5.4 Respectfully, following the decision of my Ld. Predecessor, the action of the AO holding the assessee as assessee-in-default for non- deduction .....

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d 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 fin .....

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30-01-2017 in ITA no. 6029/Mum/2014 for AY 2008-09, 6030/Mum/2014 and 5950/Mum/2014 AY 2011-12 respectively . It was submitted by learned counsel for the assessee that the order/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 .....

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Y 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 construction of retaining wall along bank of Mithi River is covered by provisions of Section 194C as the assessee has awarded both the .....

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e that the matter can be verified by the AO and if contentions are found correct, the tribunal order can be followed accordingly and in any case the tribunal has adjudicated on both the types of tenders/contracts awared by assessee in favour of DBM Geotechnics and Construction 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 ₹ 7.59 crore to D .....

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rded 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 Geotechnics and Construction Private Li .....

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re 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 geotechnic .....

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ock excavation which were technical in nature which are covered u/s 194J of the Act for deduction of tax at source. The authorities below have rightly concluded that these services are technical services which are covered u/s 194J of the Act for deduction of tax at source and not u/s 194C of the Act for deduction of tax at source . We have also gone through the various items of work reflected in tender documents as contained inChapter VIII(e), schedule - B which are placed on record in paper boo .....

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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 .....

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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 income-tax 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 .....

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ividual 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 undivided .....

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countancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AAor of this section; (b) fees for technical services shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9; [(ba) royalty shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;] (c) where any sum referred to in sub-section (1) is credited to any account, wheth .....

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ation (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. .....

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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 ve .....

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ay that proper and adequate opportunity of being heard shall be provided by the AO in accordance with principles ofnatural justice in accordance with law. This appeal is partly allowed for statistical purposes.We order accordingly. 14. We have considered the rival submission and also perused the material available on record. We have observed that the assessee has paid an amount of ₹ 32,47,68,465/ - to M/ s DBM Geotechnics Construction Pvt. during the previous year relevant to the assessmen .....

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, 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-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 al .....

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nd 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 investigation for rock excavation in Mithi river approach channel (2.14 Km) situated at sea side of Mahim causeway which was stated to be completed in the previous year relevant to the assessment year 2008-09. These new tenders are now placed as additional evidences before the tribunal (page 221 .....

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he 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 just .....

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