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TMI Blog2023 (4) TMI 1347X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirming the order passed by the Learned AO U/s. 201(1) r.w.s. 201 (1A) of the Act and in directing that tax is required to be deducted U/s. 194J of the Act and not U/s. 194C of the Act. Rs.4,33,287/- 2. On the facts and in the circumstances of the case and in law the learned CIT (A) ought to have pass a speaking order and ought to have follow the CBDT Circular, binding precedent of hon'ble Apex Court and of ITAT, Ahmedabad which is fully applicable to the issue under consideration. Rs.4,33,287 3 On the facts and in the circumstances of the case and in law, the learned CIT(A) ought not have confirmed the order passed by AO treating the appellant in default and demanding the alleged differential tax with interest from the appellant by confirming the order passed U/s. 201(1) r.w.s. 201(1A) of the Act. Rs.4,33,287/- 4 It is therefore prayed that the orders passed by lower authorities may be quashed and set aside. Rs.4,33,287/- 5 Your appellant craves leave to add, amend, alter or withdraw any ground of appeal at the time of hearing. Rs.4,33,287/- Total tax effect (see note below) Rs.4,33,287/- 4. At the outset we note that the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct was carried out at the office premises of the assessee on 28-11-2014 for verification of TDS compliance. The assessee is a partnership firm engaged in the business of manufacturing of salt, providing liquid storage tank and providing warehouse on hire, trading of goods and commodities and sale of power, which are generated through windmills. From the details collected during this course of survey, the AO observed that the assessee had made payment of operation and maintenance charges and AMC charges to M/s Suzlon Group Companies. On verification of accounts, the AO observed that TDS on these payments have been made under section 194C of the Act. However, the nature of payments made to M/s Suzlon Group Companies is in lieu of technical services rendered for maintenance of windmills. Therefore, the AO held that the payment is in the nature of "fee for technical services" or "managerial services" and taxes are required to be deducted under section 194J of the Act as against taxes deducted by the company under section 194C of the Act. 6. In appeal, Ld. CIT(Appeals) dismissed the appeal of the assessee with the following observations: "6.Decision The appellant contended that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Parameters of the Equipment. 3,30,750.00 Total 35,00,437/- The appellant's claim is devoid of merit and it is accordingly held that the appellant had paid for technical services for Rs.35,00,437/- therefore liable to deduct tax on such payment u/s 194J of the Ac. The assessee has as such deducted TDS @ 2% u/s 194C is not maintainable therefore I confirm the action of the assessing officer to levy short deduction of tax as required u/s 194J of the Act as under F.Y. 2013-14 Amount of AMC Charges Paid 35,00,437/- Tax deducted @ 2% u/s. 194C 70,008/- Tax deductible @ 10% u/s. 194J 3,50,044/- Short deduction 2,80,036/- Accordingly the interest levied @ 1% on such lapse u/s 201(1A) for Rs.67,208/- of the Act is also confirm. In all the addition made for such default for total of Rs.3,47,244/- (2,80,036 + 67,208) is also confirmed. In view of section 201(1) r.w.s. 194J/194C and u/s 201(1 A) of the Act. The ground of appeal on this account is accordingly is dismissed." 7. Before us, the counsel for the assessee primarily reiterated the submissions made before Ld. CIT(Appeals). The counsel for the assessee submitted that the service provider M/s Suzlon Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) Data logging in for power generation, grid availability, machine availability. b) Preparation and submission of monthly performance report, c) Taking monthly meter reading jointly with SEE, of power generated at Firm's Wind Farm and supplied to SEB Grid from the meter/s maintained by SEB for the purpose and co-ordinate to obtain necessary power credit report/ certificate, d) Submission of detailed report of the Periodic preventive maintenance carried out with details of consumables / parts used. e) Prompt information in case of accidental damage/ shutdown of more than 24 hours, f) Breakdown Analysis report g) Schedule of repairing / replacing components with schedule. h) Liaison with insurance Firm including furnishing required information and all actions required for settlement of the claim from insurance company. IV Technical Services a) Visual inspection of the WTG and all parts thereof, b) Technical Assistance including checking of various technical, safety and operational parameters of the Equipment, trouble shooting and relevant technical services." 8.1 A perusal of the terms of contracts under the head "management services" includes preparation an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es repairs/replacement b) Major breakdown as mentioned below - * Rewinding/Repairs of Generator and Motors * Rewinding/Replacement of Gear Box * Rewinding/Repairs of Transformers * Repairs/replacement of VCB * Repairs/replacement of Blades * Repairs/replacement of Controller and Control Panel e) Crane charges for carrying out repairs/replacement. d) Total replacement of oil in Gear Boxes and Transformers e) Painting of Equipment" 8.3 A perusal of the terms of contract shows that the services are primarily in the nature of greasing of bearings, spares repairs/replacement, repairs of major breakdowns, painting of equipment etc. Therefore, on perusal of the terms of the contract, the services, in our considered view are primarily are in the nature of operation and maintenance of windmills and per se no technical services are rendered so as to necessitate deduction of tax under section 194C of the Act. 8.4 In the case of Bharat Forge Ltd. v Addl CIT 36 taxmann.com 574 (Pune - Trib.), the ITAT held that payment towards windmill operation and maintenance attracts provisions of section 194C of the Act. In the case of DCIT v. Asian Heart Institute & Research Centre (P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 2015-16 10. The assessee has taken the following grounds of appeal: "1. On the facts and circumstances of the case and in law, the learned CIT-(A) has erred in law and on facts in confirming the order passed by the Learned AO U/s. 201(1) r.w.s. 201(1A) of the Act and in directing that tax is required to be deducted U/s. 194J of the Act and not U/s. 194C of the Act. 2. On the facts and in the circumstances of the case and in law the learned CIT (A) ought to have pass a speaking order and ought to have follow the CBDT Circular, binding precedent of hon'ble Apex Court and of ITAT, Ahmedabad which is fully applicable to the issue under consideration. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) ought not have confirmed the order passed by the A.O. treating the appellant in default and demanding the interest from the appellant by confirming the order passed u/s. 201(1) r.w.s. 201(1A) of the Act. 4. It is therefore prayed that the orders passed by lower authorities may be quashed and set aside. 5. Your appellant craves leaves to add, amend, alter or withdraw any ground of appeal at time of hearing. Total tax effect: & ..... X X X X Extracts X X X X X X X X Extracts X X X X
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