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TMI Blog2023 (11) TMI 948X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the parties have been heard on the facts obtaining in Income Tax Appeal No. 111 of 2018 (Assessment Year 2013- 2014). 4. Earlier, the appeal was admitted on Question nos. 1 and 2, as framed in the memo of appeal. Today, with the consent of the parties, those questions have been refined as below: Question No. 1 Whether the Tribunal has erred in annulling the assessment order and reaching to a conclusion that Tax Deduction at Source (for short "TDS") was required to be made under Section 194C of the Act and not under Section 194J of the Income Tax Act, 1961 without first dealing with the reasons and findings recorded by the assessing authority, as affirmed in first appeal? Question No.2 Whether, in absence of proper books maintained to establish the exact expenditure incurred by the assessee in availing technical services, the Tribunal has erroneously granted relief to the assessee? 5. The facts found by the Tribunal are, the assessee was engaged in business of generation of power. It set up a 3 x 660 MW (Mega Watt) Super Critical Thermal Power Plant at District-Lalitpur, Uttar Pradesh. For that purpose, the assessee was incorporated as a Special Purpose Vehicle (fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income Tax (Appeals)-I, Noida. 11. Upon further appeal, the Income Tax Appellate Tribunal (for short "Tribunal"), vide its common order dated 20th February, 2018, has allowed the appeals preferred by the assessee. It has followed (in toto), the order of a division bench of the Punjab and Haryana High Court in the case of Pr. Commissioner of Income Tax, TDS-II, Chandigarh Vs. The Senior Manager (Finance), Bharat Heavy Electricals Ltd., Jhajjar, (2017) 390 ITR (P&H). 12. Submission of the learned counsel for the revenue is, the assessing authority had made a detailed consideration of facts. He found that the assessee had not maintained any account to establish the actual payment made to BHEL for the work of Testing and Commissioning of BTG. Similarly, the assessee had not maintained separate account to establish the payment made to CIPL for Installation and Commissioning of BOP. Since payments for those works performed by the BHEL and CIPL fell under the head "fees for technical services" as defined under clause (b) of sub-section (1) of Section 194J of the Act, read with Explanation [2] to clause (vii) to sub-section (1) of Section 9 of the Act, the assessee was liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility or composite nature and character of the contract, the exercise carried out by the assessing authority is described as erroneous and impermissible in law. 17. To that extent reliance has been placed on the decision of the division bench of the Karnataka High Court in the case of Commissioner of Income Tax Vs. Bangalore Metro Rail Corporation Ltd., (2022) 449 ITR 431 (Karnataka). 18. Last, it has been submitted, the assessee was only a payer. The payees i.e. BHEL and CIPL were subjected to tax. Upon completion of their assessment, those payers were also issued certificates of full payment of tax due. Therefore, if at all the assessee may only be liable for delay in payment of TDS. Yet, liability of short deduction of TDS could not be imposed. 19. Having considered the submissions advanced by learned counsel for the parties and having gone through the records of the present appeal, in first place, it has not been disputed by learned counsel for the revenue that the essence the contract involved in the present case and that involved in the case of Pr. Commissioner of Income Tax, TDS-II, Chandigarh Vs. The Senior Manager (Finance), Bharat Heavy Electricals Ltd., Jhajjar (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 194J. The consideration paid under the contracts, therefore, was hot for the professional or technical services rendered by the contractors to the respondent. Section 194J is, therefore, not applicable to the present case. 23. It is not necessary to consider Mr. Putney's submission that the con tracts do not fall under section 194C. The submission if accepted would be self destructive of the Revenue for then the assessee would not have been liable to deduct tax at source at all and would, therefore, be entitled to a refund. As we mentioned earlier, section 194J is not a residuary clause. In other words, it is not that if a contract does not fall within the ambit of section 194C, it must be deemed to fall within the ambit of section 194J. Sections 194C and 194J are independent provisions. In view of our finding that the contract does not fall within section 194J, the dismissal of the appeal would follow in any event. The respondent has not denied that the present case falls under section 194C. Had the respondent contended that section 194C is also not applicable, it would have been necessary to consider whether the contract falls within the ambit of section 194C. As the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS-II, Chandigarh Vs. The Senior Manager (Finance), Bharat Heavy Electricals Ltd., Jhajjar (supra) and Commissioner of Income Tax Vs. Bangalore Metro Rail Corporation Ltd. (supra). Unless an external (legal tool) was available to the assessing authority under any of the provisions of the Act as may have allowed it the luxury to dissect an otherwise indivisible contract and/or unless an internal tool was seen to exist to allow that exercise to be made, a composite contract could not dissected by the assessing authority . 27. On plain reading, the contracts executed by the assessee with BHEL and CIPL were indivisible contracts for BTG and BOP, respectively. The taxing authorities exist to apply the taxing statute to the proven facts of a case. Such facts are not for the taxing authority to imagine or presume or assume. Therefore, the burden existed on the revenue authorities to establish that they were enabled in law and also that the proven facts of the case permitted them divide an otherwise indivisible/composite contracts executed by the assessee with the BHEL and CIPL. Unless that exercise had been carried out by the assessing authority, no presumption was available in law. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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