Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home List
← Previous Next →

2019 (12) TMI 141

..... nd respectfully relying on the ratio laid down on this issue of allowability of supervision charges by the Jurisdiction High Court, we find no alternative but to allow the claim of the assessee for deduction u/s. 80IA since we find the income is attributable to the manufacturing activities. Consequently the addition is deleted. Hence, the assessee appeal is allowed. Applicability of the provision of Sec. 194C or Sec. 194J - payment to the contractors - non-deduction of tax at source or non payment of tax though was deducted on payments made to residents - HELD THAT:- It is a fact that the assessee has made such payment to the contractors but TDS has not been deducted u/s 194C and hence the disallowance was made under section 40(a)(ia) by the authorities below. It is also a fact that the assessee was with the bona fide wrong impression regarding the applicability of the provision of Sec. 194C or Sec. 194J to such nature of payments. It is also a fact that Sec. 40(a)(ia) after its amendment brought in by Finance (No. 2) Act, 2014 given a specific relief to the assessee that in case of non-deduction of tax at source or non payment of tax though was deducted on payments made to residen .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... onse to the same submitted as follows: Deduction u/s 80IB and other Income : We are submitting herewith a statement showing nature of other income. We have considered interest income from bank FDR as income from other source and balance income being relate to manufacturing activities of the company it is treated as business income. The statement is self explanatory. Supervision Income and 80IB Claim : We have submitted a statement showing the nature of supervision income wherein we have stated that this income is earned on account of manufacturing sales made to the parties to whom we have rendered this supervision work. Some of the parties are not paying separately but including this supervision work in the price of the panel purchase order while some of the parties are paying separately for the supervision work. The income shown under supervision work is for separately charged for this work. In addition to supervision charges received against our sales we have also done supervision work for other client who place order because we are having speciliasion on account of in this line of business hence this income also treated as income-from manufacturing business. Moreover, the compan .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... the paper book submitted before us by the assessee. It is an admitted fact that in terms of the purchase order of BPCL it is the duty incumbent upon the assessee to supervise the commissioning work at free of cost; the supervision cost is a part of the bills raised to the BPCL though the separate bills were not issued by the assessee to that effect like other clients. Thus, the case of the assessee that the supervision and maintenance is a part and parcel of the trading and supply to the electric panels has been proved beyond doubts. In that view of the matter the assessee is entitled to supervision charges raised by it. We also get the inspiration from the judgment passed by the jurisdictional High Court in the matter of Miles India Ltd. vs. DCIT in Tax Appeal No. 27/2003 on this aspect where it has been clarified that the income for rendering services and maintenance facility to the clients of the assessee is allowable since it relates to the goods manufacturing and supplied to the industrial undertaking. Thus the assessee is eligible for deduction u/s.80IA of the Act as claimed before the Revenue; the relevant portion of the said order is reproduced herein below: …3. Whi .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... s. Buckau Wolk NewIndia Engg. Works, reported in 160 ITR 7. The Apex Court in the case of Excel Industries (supra) held that in several assessment Years, the Department accepted the order of the Tribunal in favour of the assesse and did not pursue the matter any further but in respect of some assessment years the matter was taken up in appeal before the High Court. The Department could not be allowed to flip flop on the issue and it ought let the matter rest rather than pursue litigation. 8. The Bombay High Court in the case of International Data Management Ltd. (supra) held that the assessee derived income as it rendered services and maintenance facility to its clients for which it charged for maintenance and services. Therefore, there was a direct nexus between the receipts from rendering services and maintenance facility to its clients and lease rent and the main business activity of the assessee. There was also recorded as a finding offact by the Tribunal. The assessee was entitleto deduction under Section 801 in respect of that income. 9. Considering the facts of the case and also considering the principle laid, down in the case of Excel Industries Ltd. (supra) and Internation .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... work is handled to suitable contractors meaning thereby the payments made to labour contractors only for providing semi-skilled man power which has nothing to do with any kind of technical or professional services; thus applicability of Sec. 119J of the Act as made by the authorities below for non-deduction of tax at source is not permissible in the eye of law as the case made out by the assessee. Similarly ₹ 2,84,050/- incurred for PCL Programming Charges paid to the contractors only for the purpose for carrying out the work given to them with their semi-skilled labour as per specifications and drawings provided to them by the technical engineers of the company as the case of the assessee. Therefore, no technical work is involved on the part of the contractors. It is the further case of the assessee that in both the counts neither any single payment to the contractor exceeds ₹ 20,000 nor aggregate payments to only single contractor exceeds ₹ 50,000/-. Hence, question of deduction of tax even under section 194C is not justifiable. Such stand of the assessee was also reiterated before us by the Ld. AR at the time of hearing of the instant appeal. He has also relied .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... to have been made by the authorities below. We, therefore, taking into consideration the amended provision of Sec. 40(a)(ia) of the Act, restrict 30% of such disallowance. In the result, these grounds of assessee s appeal are partly allowed. 11. Ground No. 4:- This ground of appeal is identical to that of the issue already been dealt with by us in ITA No. 2837/Ahd/2014 for A.Y. 2011-12 and in the absence of any changed circumstances the same shall apply Mutatis Mutandis. Hence, this ground of assesse s appeal is allowed. ITA No.3056/Ahd/2013 for A.Y. 2010-11: 12. Ground No. 1 is general in nature needs no separate adjudication and hence dismissed. 13. Ground Nos. 2 to 3 are identical to that of the issue already been dealt with by us in ITA No. 3055/Ahd/2013 for A.Y. 2009-10 and in the absence of any changed circumstances, the same shall apply Mutatis Mutandis. Hence, both the ground of assesse s appeal are partly allowed. 14. Ground No. 4 is identical to that of the issue already been dealt with by us in ITA No. 2837/Ahd/2014 for A.Y. 2011-12 and in the absence of any changed circumstances the same shall apply Mutatis Mutandis. Hence, this ground of assessee s appeal is partly all .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map ||