TMI Blog2019 (1) TMI 1294X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus we hold that payment made to the above parties are subject to tax deduction at source u/s 194C of the Act and assessee is liable to deduct tax at source u/s 194C of the Act. Therefore, to this extent we uphold the order of lower authorities. We direct the learned AO to delete the addition made u/s 195 of the Act in respect of the payments made to Snow Star SPA and M/s Pomagalski SA France We set aside the order u/s 201 of the Act with a direction that assessee may submit the requisite prescribed detail in specified manner before the ld Assessing Officer and then ld AO may decide the issue and, if found in accordance with the law, shall not treat the assessee in default u/s 201 of the Act. With respect to the interest u/s 201(1A) of the Act similar proviso is also added and AO may work out, based on the details furnished by the assessee, appropriate interest in accordance with law. Appeal of the assessee is partly allowed for statistical purposes. - ITA No.2941/Del/2015 Assessment Year: 2011-12 - - - Dated:- 10-12-2018 - Shri Prashant Maharishi And Shri K.Narasimha Chary, JJ. Assessee by Shri Saurabh Goyal, CA Shri Deepesh Garg, Advocate Revenue by Shri Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for purchase of equipment only does not hold ground as the perusal of contract with the company indicated that the contract was for work being defined in the contract title as EPC/improvement of slope, arrangement of artificial snow making system alongwith provisioning of required water storage (lake) and installation of ski-lifts for ski-resorts at Auli, (Distt. Chamoli) and required water storage and carrying out comprehensive maintenance for three years including one year of warranty period . The A.O. observed that there were 3 companies in consortium i.e. M/s Pomagalski SA, M/s Snow Star SPA and M/s Space Age Power Pvt. Ltd. with M/s Pomagalski as the lead member. He observed that under the contract with M/s Snow Star SPA as mentioned in the appendix-A, various equipment was also supplied along with a various services, support services engineering details, project management, supply of software and hardware of snow tern, control panels, project drawings and project management to complete the now making system along with manpower assistance for erection work supervision commissioning, training and maintenance. The contract with M/s Polmagalski is also of similar nature and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayments were made in the form of grant to the above mentioned agencies to get the work executed from various contractors and these agencies are deducting TDS wherever applicable. 6. Ld. A.O. observed that these organizations/companies has carried out the work of development of stadiums, infrastructure within the stadiums/sports facilities, construction of roads, buildings, hostels for sportsmen etc. according to the requirements and specifications of the Organizing Committee and it cannot be assumed that only grant has been transferred without any control directions, construction, conforming to the facilitates of the organizing committee. No evidence to the contrary had been filed before the AO. From the above it became clear that construction activities had been done as per requirements of the assessee (deductor) and payments had also been made to these organizations for the work done out of the bank accounts of the assessee. Thus as per the definition of works as mentioned in section 194C of I.T. Act, work had been executed and as per provisions of chapter XVII-B, liability of TDS had been attracted, which does not exonerate from its liability to deduct TDS as per relevant se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said amount in their income and paid taxes thereon, if the tax was recovered from the assessee, it would be an exercise in futility as on the one hand required to pay the tax, on the other hand payee shall be required to claim the refund. He, therefore, while following the decision of the Hon ble Apex Court in the case of Hindustan Coca Cola Beverages P. Ltd. Vs CIT (2007) 211 CTR (SC) 545 and CIT vs Dewan Chand (2009) 17 DTR (Del) 337 directed the assessee to present the evidence to show that the recipient of the amount have duly accounted the amount in their returns of income and if they did so, the AO to grant relief to the assessee to the extent of such tax and interest thereon. In respect of the Winter Games Federation of India is concerned, learned CIT(A) held that the payments to them cannot be brought within the provisions of Section 194C as the WGFI is not a contractor or project manager of the assessee but an associate for organizing the winter games. 9. Aggrieved by the finding of the learned CIT(A) in the impugned order, the assessee preferred this appeal. 10. At the outset, it is brought to our notice that the facts of this Asstt. year involved in this appeal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts only along with the warranty. Further, the payments have been made directly to those parties and naturally, each of them individually charged to tax on their profits or losses. It is apparent that the common management is only for administrative convenience. Assessee has also made payment directly to the foreign equipment suppliers. It is not shown to us that any of the conditions stated in that circular are not fulfilled. In view of this, we hold that assessee has made payment to the foreign parties independently, directly and it shall be chargeable to tax in their own hands. Now the issue arises is that whether payment made to them is subject to deduction of tax u/s 195 in the hands of those parties or not. The assessee has shown bills raised by those parties placed at page No. 99 to 100 of paper book. The custom duty has also been paid by the assessee. The bills have also been raised by those parties on the assessee itself. The payments are also made as advances through letter off credits. On looking at the various bills, it is found that goods have been shipped by those parties from outside India. It is not shown by the revenue that title of the goods has passed in India. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Specified person has been defined under explanation (i) of the section. iv. The tax is required to be deducted at the earliest point of time of credit to the account of contractor or the payment. v. The provisions specify the prescribed percentage of tax deduction. vi. It is deduction of tax on gross sums paid unless otherwise specified u/s 194C (3) of the act. 18. On plain reading of the above section it is clear that assessee is a specified person covered under explanation (i)(g) being a society registered under the Societies Registration Act 1860. Therefore, the liability for deduction of tax rests on the assessee. 19. Further, all the parties to whom payment have been made are residents and therefore, they are the recipients and receipts by them is subject to deduction of tax at source. 20. The assessee has made payment to all the parties, to some of them as advance and to some of them on various letters issued by the assessee. Therefore, the fact of the payment is also proved. 21. The payment to the various parties has been made on account of carrying on of certain work by them. The assessee is also specifically form for the object of preparation for and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re subject to tax deduction at source u/s 194C of the Act and assessee is liable to deduct tax at source u/s 194C of the Act. Therefore, to this extent we uphold the order of lower authorities. 25. Next clinching, alternative argument made by the assessee is that all the recipient of the income has already confirmed that they have received the grant. Such certificates are placed in the paper book from page No. 126 to 179 of the paper book. We have perused the same. The argument of the assessee is that if tax is recovered from the assessee it becomes refundable in the hands of the recipient. To mitigate such an impact the proviso has been added u/s 201 of the Act w.e.f. 01.07.2012 which provides that any person who fails to deduct tax in accordance with chapter XVII of the Act, shall not be deemed to be an assessee in default on fulfillment of certain condition. The above amendment is on similar line as argued by the appellant. Though the above amendment has come in to effect from /7/2012 but Honourable Delhi high court has held in Ansal Landmark Townships Limited in 161 /2015 held that 11. The first proviso to Section 210 (1) of the Act has been inserted to benefit the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied the goods. In fact, STC has arranged for the import of the goods as per requirement of the assessee. In view of this, it is apparent that assessee has given work to the STC for import of the material. Hence, according to us it is apparent that such payment falls under the provisions of section 194C(3) of the Act and tax is required to be deducted on the basis of the invoice value stated therein. The invoices are not place before us. Hence, we set aside this matter back to the file of the ld Assessing Officer with a direction to assessee to produce the bills of STC etc before ld AO who will examine them. If the invoice value shows the value of the material separately then assessee is required to deduct tax at source only on the invoice value excluding the value of material. Findings given by us with respect to the payment to the PSU with respect to Proviso to section 201 shall also apply mutatis mutandis to this payment also. Accordingly, the ground no. 2 of the appeal of the revenue is set aside to the file of the ld AO. 12. There is no dispute as to the similarity of the facts or the applicability of the ratio of the decision of the coordinate bench of this Tribunal for t ..... 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