Income Tax Appellate Tribunal - Ahmedabad
M/S. Bombardier Transportation ... vs The Dy.Cit, (Tds),, Baroda on 20 December, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "D" BENCH AHMEDABAD
BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER
AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER
ITA Nos. 192 to 196 & 235 to 239/Ahd/2015
(Assessment Years: 2008-09 to 2014-15)
M/s. Bombardier Transportation
India Pvt. Ltd.,
Brown Boveri House, Chakli Circle,
Race Course, Baroda 390007 Appellant
Vs.
Dy. Commissioner of Income Tax (TDS),
Aaykar Bhavn, Race Course Road, Baroda Respondent
&
ITA No. 456/Ahd/2015
(Assessment Year: 2014-15)
Dy. Commissioner of Income Tax (TDS),
Aaykar Bhavn, Race Course Road, Baroda Appellant
Vs.
M/s. Bombardier Transportation
India Pvt. Ltd.,
Brown Boveri House, Race Course Circle,
Vadodara, Pin 390007 Respondent
PAN: AAACA5584C
आवेदक क ओर से/By Assessee : Milin K. Mehta, A.R.
राज व क ओर से/By Revenue : Vasundhar Upmanyu, CIT D.R. with
V. K. Singh, Sr. D.R.
सन
ु वाई क तार ख/Date of Hearing : 06.12.2017
घोषणा क तार ख/Date of
Pronouncement : 20.12.2017
ITA Nos. 192 to 196, 235 to 239 & 456/Ahd/15
[M/s. Bombardier Transportation India Pvt. Ltd.] A.Ys. 2008-09 to 2014-15 -2-
ORDER
PER S. S. GODARA, JUDICIAL MEMBER
This batch of eleven appeals pertains to a single assessee M/s. Bombardier Transportation India Pvt. Ltd. Relevant proceedings in all these cases are u/s.201(1) r.w.s. 201(1A) of the Income Tax Act, 1961; in short "the Act". First set of assessee's appeals ITA Nos. 192 to 195/Ahd/2015 for A.Y. 2008-09 to 2011-12 emanate from the CIT(A)-V, Baroda's orders; all dated 30.10.2014 passed in case nos. CAB/(A)V-151/14-15, CAB/(A)V-152/14-15, CAB/(A)V-154/14-15 & CAB/(A)V-153/14-15, affirming Assessing Officer's action treating it to be an assessee in default u/s.201(1A) of the Act involving amounts of Rs.4,89,823/-, Rs.5,41,454/- Rs.4,29,341/- and Rs.5,18,150/-; respectively thereby concluding that its corresponding payments/remittances made to M/s. Computer Science Corporation India Pvt. Ltd. (CSCIPL) are in the nature of fee for technical and professional services attracting TDS deduction u/s.194J rather than Section(s) 194C and 194I of the Act. ITA Nos. 235 & 237/Ahd/2015 for A.Y. 2012-13 & 2013-14 arise against the CIT(A)-VI, Baroda's separate orders; both dated 10.11.2014 in case nos. CAB/VI-337/2013-14 & CAB/VI-339/2013-14 involve similar substantive pleadings except the fact that the assessment(s) in question involved therein read figures of Rs.31,54,489/- and Rs.1902710/-; respectively. The above taxpayer's next two appeals ITA Nos. 196 & 236/Ahd/2015 for A.Y. 2012-13 & 2014-15 arise from the CIT(A)-V & VI, Baroda's orders dated 30.10.2014 and 10.11.2014 in case nos. CAB/(A)V-122/14-15 & CAB/VI-342/2013-14, affirming upholding Assessing Officer's action treating payments of Rs.14,38,31,381/- and Rs.14,49,04,533/-; respectively towards the above very payers as fee for technical and professional services u/s.194J than u/s. 194C and 194I of the Act. Last A.Y. 2014-15 involves assessee's and Revenue's cross appeals ITA Nos. 238 & 456/Ahd/2015 against the above latter CIT(A)'s order dated 10.11.2014 in case no. CAB/VI-340/2013-14 treating identical payment of Rs.6,98,88,553/- as fee for technical and professional services paid to "CSCIPL". Latter's cross appeal seeks to revive the lower appellate authorities' directions issued to the Assessing Officer ITA Nos. 192 to 196, 235 to 239 & 456/Ahd/15 [M/s. Bombardier Transportation India Pvt. Ltd.] A.Ys. 2008-09 to 2014-15 -3- to verify where or not the payees concerned M/s. Aradhana Engineering Works (AEW) and Commtel Networks Pvt. Ltd. (CNPL) have included with respective payments in income retuned or not so as to absolve the assessee from the impugned recovery proceedings u/s.201(1) proviso.
2. It is evident from the above narrated pleadings that the sole issue in all assessee's appeals is as to whether both the lower authorities have rightly treated its payments/remittances to M/s. CSCIPL as payment for technical and professional services u/s. 194J than 194C and 194 I of the Act so as to attract Section 201(1) and interest thereupon u/s. Section 201 (1A) of the Act; as the case may be. Learned counsel representing both the parties inform us that ITA No.196/Ahd/2015 in A.Y. 2012-13 is be taken as lead appeal since containing all necessary facts for the sake of convenience and brevity. We thus call out necessary facts from the above lead appeal.
3. The assessee company manufactures rail vehicles and coaches. It is a deductor for TDS purposes. The department carried out a survey in its case on 13.08.2013. It found the assessee/deductor to have deducted TDS @2% on payments made to "CSCIPC" to the tune of Rs.14,38,31,381/- treating the same as contractual receipts exigible to 2% TDS deduction than fee for technical or professional services u/s. Section 9(1)(vii) Explanation 2 r.w.s. 194J 1(a) & (b) of the Act exigible for TDS @ 10%. The Assessing Officer's order in question dated 09.12.2013 reveals that he sought to treat assessee's above payments as fee for professional and technical services only.
4. It emerges from the case records that the Assessing Officer issued various show cause notices including the ones dated 20.09.2013 and 07.10.2013 asking necessary clarifications qua the above short deduction of TDS. The taxpayer's detailed reply came on 22.10.2013. It first of all highlighted the fact that the department had conducted a similar survey earlier on 07.10.2012 as concluded on 26.03.2013 wherein all relevant details of TDS returns, ledger account, invoice copies etc. were produced without resulting in any demand. The assessee thus ITA Nos. 192 to 196, 235 to 239 & 456/Ahd/15 [M/s. Bombardier Transportation India Pvt. Ltd.] A.Ys. 2008-09 to 2014-15 -4- reiterated that it was not a case of complete non deduction of TDS but that of a very genuine interpretational error of TDS deduction @2% already deducted or that @ 10% proposed to be deducted wherein it would not be treated as an assessee in default is the impugned proceedings as per CIT vs. British Airways 232 CTR 317 (SC) and Gwalior Rayon Silk Co. Ltd. vs. CIT (1983) 37 CTR (MP) 351. The assessee further stated that its payee "CSCIPL" had already included the very payments is the return of the corresponding assessment years. It thereafter threw light on the relevant statutory provisions i.e. Section 9(1)(vii) Explanation 2 r.w.s. 194J regarding professional/technical service, Section 194C including "works" definition inserted in the Act in 1972, CBDT Circular No. 202 dated 05.07.1976 clarifying effective meaning of technical services to be covering consideration for only those kinds of contracts wherein the payee recipient had to merely issue its intellectual/technical skills without any physical work through employee or deploy assets since in carrying not physical work through employees or in deploying assets, expenditure would have to be incurred by the recipient. The Board further clarified that if the recipient was engaged in a business of rendering such services, the consideration received for those services was to be excluded from the above defined fee for technical services. This followed a similar reference to the CBDT's latter circular no. 715 dated 08.08.1995 dealing with question no.29 as to whether a maintenance contract including supply of spares would be covered u/s.194C of the Act would be covered u/s.194C or 194J of the Act. The Board's answer thereto clarified such a contract including supply of shares would come u/s.194C of the Act. It further declared that such a contract would attract Section 194J of the Act if it involved technical services being rendered be the recipient.
5. The assessee went on quoting a catena of judicial precedents in seeking to cover its agreement to in the nature of a maintenance contract alike "construction, assembly, mining or like project" in the above explanation to Section 9 (1)(vii) of the Act. It further sought to highlight its recipient's services rendered as follows:
"The designated services envisaged in the restated Local Service Agreement contemplates the following services to be provided-
ITA Nos. 192 to 196, 235 to 239 & 456/Ahd/15 [M/s. Bombardier Transportation India Pvt. Ltd.] A.Ys. 2008-09 to 2014-15 -5-
(a) Direct light services which includes service desk services, service desk interface services, service desk partition set up, service desk resolver group set up, service transaction code (STC) set up, and service desk support services;
(b) Application server and storage services which includes active directory services and collaborative services and email services;
(c) Application, development and maintenance services;'
(d) Telecommunication and network services which includes remote access service;
(e) Cross functional services which includes license, management and compliance;
(f) Telecommunication billing and financial administrative services;
(g) Software order fulfillment services; and
(h) Projects and tasks using local supplier or supplier's agent resources.
Each of these services has been described in detail in Schedule A of the agreement and relate to networking and other IT related services, essentially providing support services, (Copy of sample invoice issued by the party is enclosed as Annexure 9 for your ready reference.
As this juncture it is submitted that the nature of the above agreement is for provision of 'work' as envisaged, which admittedly maybe technical in nature but not in any way alter the fact that the contract is essentially for execution of work. In any case the definition of work is an inclusive definition. The services envisaged are not a simplicitier case of rendering technical services so as to attract withholding tax provisions under section 194J of the Act. Merely because the scope of work is technical in nature would not render the provisions of section 194C inapplicable. Thus the contract squarely gets covered under the ambit of Section 194C and not Section 194J in light of various case laws and departmental circulars referred to above.
In any case where an issue relating to the interpretation of an agreement arises and the scope of work envisaged therein, short deduction of tax cannot be alleged. The assessee/deductor has nothing to gain by short deducting taxes since the payments are subject to withholding tax at the appropriate rates."
6. Case records indicate that the assessee also placed on record details of the payments made to M/s. CSCIPL alongwith all over payees. The Assessing Officer rejected all these assessee's pleadings in his abovestated order in question. He first of all quoted hon'ble Delhi High Court's judgment in DIT vs. Rio Tinto Technical Services 251 CTR 366 (Delhi) the crucial expression "Like Project" in Section 9(1)(vii) Explanation 2 exclusion clause had to read in conjunction with "construction project, assembly project or a mining project" as per "ejusdem generis" principle. He thus observed that no such details had been called in previous survey qua the interest issue. He thus distinguished "British Airways"
ITA Nos. 192 to 196, 235 to 239 & 456/Ahd/15 [M/s. Bombardier Transportation India Pvt. Ltd.] A.Ys. 2008-09 to 2014-15 -6- case law (supra) that the said assessee had already paid differentiate tax and interest in question alongwith an undertaking being made for not claiming any refund. The Assessing Officer rejected assessee's reliance on Gwalior Rayon Silk Co. case (supra) as well that there was no evidence that the party's estimation of its employees' income for the purpose of TDS deduction was a bonafide one with an honest belief. Their lordships were stated to have uphold TDS liability in principle. The Assessing Officer then viewed Section 201(1A) interest to be not an academic exercise at all. He observed that assessee's payee was not engaged in any construction, assembly, mining or like project at all being a railway coach manufacturer nor its payee was engaged in such activities. It is evident that the Assessing Officer considered Master Service Agreement (MSA) between assessee's parent and above payee wherein the latter's press release dated 21.11.2002 as per its official website read as under:
"5.1 Overview & Background of the Master Service Agreement (MSA) between Computer Science Corporation (CSC) and Bombardier Transportation (BT): As per the press release issued on Nov 21, 2002 by Computer Science Corporation extracted from its website:
http://www.csc.com/newsroom/press_releases/2603csc_signs_700_million_global _outsourcing_ agreement_with_bombardier_transportation "Computer Sciences Corporation today announced that it has signed an information technology (IT) outsourcing agreement with Bombardier Transportation, an operating group of Bombardier Inc., valued at $700 million ($1.11 billion Cdn) over seven years.
Under the terms of the contract, CSC will provide desktop, help desk, call center, data center, network and application management services to support Bombardier Transportation's rail equipment manufacturing and services operations at more, than 200 sites around the world.
Localized service agreements will be approved following employee consultations in accordance with appropriate country-specific procedures. Approximately 625 employees and contractors are expected to transfer to CSC in February 2003 in Europe, the -Americas, Australia and Asia when local service agreements are completed.
'This outsourcing project is of strategic importance for Bombardier Transportation," said Pierre Lortie, Bombardier Transportation's president- and chief- operating officer. "CSC will- work with us to deliver an IT transformation. program that will deliver a high quality, cost effective and scalable IT platform that will support the rapid deployment of Bombardier Transportation's business development programs. Improving service, reducing costs and enhancing business agility."
ITA Nos. 192 to 196, 235 to 239 & 456/Ahd/15 [M/s. Bombardier Transportation India Pvt. Ltd.] A.Ys. 2008-09 to 2014-15 -7- In consequence to the above Master Service Agreement (MSA), signed in 2002, between Bombardier Transportation (Parent company of Bombardier Transportation India Ltd) and Computer Science Corporation (Parent Company of Computer Science Corporation India Pvt Ltd), Local Service Agreement (LSA) was signed in India in 2002.
Later, this agreement was renewed in June 2008 for next 7 years. Some amendments were done in 2008 in the original MSA of 2002 and consequently LSA in India was also renewed for 7 years as well. As per the press release issued by CSC on June 17, 2008 (extracted from http://www.csc.com/newsroom/press releases/2969csc and bombardier transportation sign 1 2 billion 765 million it outsourcing agreement):-
"CSC announced today that it has renewed its information technology (IT) outsourcing agreement with Bombardier Transportation, an operating group of Bombardier Inc. The new seven-year, $1.2 billion (€765 million) contract, which has an incremental value of approximately $944 million (€610 million), is an extension and expansion of services that began under a 2002 contract that was valued at $700 million over seven years.
Under the new agreement, CSC will continue to provide Bombardier Transportation with a full range of infrastructure outsourcing services. These include desktop, service desk, network and application management services for more than 20,000 users at sites across 33 countries around the world. In addition, CSC will now provide overall integration for service ticket tracking and reporting, which will enable end-to-end service management across Bombardier's IT environment.
"This renewed agreement with CSC will ensure that our employees have quality IT services and supper, 24 hours a day, 365 days a year from anywhere in the world," said Andre Navarri, president of Bombardier Transportation."
7. The Assessing Officer also examined relevant clauses in assessee's Local Service Agreement (LSA) as well to conclude that its payees' services amounted to be in full spectrum of information technology outsourcing services in the nature of technical, managerial and consultancy services instead of an annual maintenance contract simplicitor covered u/s.194C of the Act. All the said reasoning resulted in the impugned demand being raised amounting to Rs.1,15,06,510/- qua M/s. CSCIPL thereby holding the deductor assessee to be an assessee in default.
8. The CIT(A) confirms Assessing Officer's action as under:
"4.2 I have given my careful consideration to the facts of the case as well as the observation of the AO and the submission of the AR. Before considering the facts ITA Nos. 192 to 196, 235 to 239 & 456/Ahd/15 [M/s. Bombardier Transportation India Pvt. Ltd.] A.Ys. 2008-09 to 2014-15 -8- of the case, it will be useful to note that "Professional services" for the purpose of section 194J have been defined as under in the explanation to the section 194J:-
""professional services" means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purpose of section 44AA or of this section."
Similarly, "fees for technical services" has been defined to have same meaning as in Explanation 2 to clause (vii) of sub section (1) of section 9. Explanation 2 to clause (vii) of sub section (1) of section 9 is reproduced hereunder: -
Explanation 2 - For the purposes of this clause, "fees for technical services"
means any consideration (including any lump sum consideration) for rendering of any managerial, technical or consultancy services (inc1uding 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".
Now let us examine the various agreements entered into by the appellant in light of the above provisions of the Act: -
Agreement with Computer Science Corporation India Private Limited(CSCIPL) To understand the nature of agreement of the appellant with the Computer Science Corporation India Private Limited (CSCIPL) it will be useful to quote the press releases of Computer Sciences Corporation (CSC) which is the parent company of CSCIPL with the Bombardier Transportation (BT) the parent company of Bombardier Transportation India Ltd. (BTIL) which has been quoted the assessment order on page 6 and 7.
Press release Nov 21,2002 "Computer Sciences Corporation today announced that it has signed an information technology(IT) outsourcing agreement with Bombardier Transportation, an operating group of Bombardier Inc., year in valued at $700 million ($1.11 billion Cdn) over seven years.
Under the terms of the contract, CSC will provide desktop, help desk, call centre, datacentre, network and application management services to support Bombardier Transportation's rail equipment manufacturing and services operation at more than 200 sites around the world.
..............
...............
"This outsourcing project is of strategic importance for Bombardier Transportation, said Pierre Lortie, Bombardier Transportation's president and ITA Nos. 192 to 196, 235 to 239 & 456/Ahd/15 [M/s. Bombardier Transportation India Pvt. Ltd.] A.Ys. 2008-09 to 2014-15 -9- chief operating officer. "CSC will work with us to deliver an IT transformation program that will deliver a high quality, cost-effective and scalable IT platform that will support the rapid deployment of Bombardier Transportation's business development programs, improving service reducing costs and enhancing business agility.""
The earlier agreement was renewed in June 2008 and Press release dated June 17, 2008 stated as under:-
.............
..................
"under the new agreement, CSC will continue to provide Bombardier Transportation with a full range of infrastructure outsourcing services. These include desktop, service desk/ network and application management services for more than 20,000 users at sites across 33 countries around the world. In addition, CSC will now provide overall integration for service ticket tracking an reporting, which will enable end-to-end service management across Bombardier's IT environment"
From the reading of Article 3 of the agreement quoted by the AO on pages 7- 9 of the order and Article 4 of the agreement quoted on pages 9-12 of the order is clear that the agreement is not only for providing IT consultancy, it is also for providing entire IT infrastructure (desktops, laptops, printers, LAN,WAN, data storage, facilities-servers etc) and support services to the appellant company. This fact is also supported by the copy of bill raised by CSCIPL filed by the appellant before the AO. Though the agreement is about providing a bundle of services- infrastructure, infrastructure support, software consultancy as well as software support services for a whole range of activities of the appellant, providing of infrastructure is a small part of total contract and it is the fees technical services which dominate the contract. The services are to be provided by qualified software professionals and are to be constantly upgraded to keep pace with the changing technology. CSCIPL is responsible for providing consistent and high levels of IS supports to the BTIL by implementing global standard processes and deploying standard technologies and best practices and it is required to employ industry best practices, eliminate resource, effort and technology duplication and optimise processes by leveraging of its Global Management Centres, Data Centres, Service Desks, Regional offices, Global competency Centres, Integrated Global Networks, third-party agreements, best practices (including catalyst), QA/QC processes, globally standard processes and integrated tools. The work to be done by CSCIPL is highly technical in nature and payment made to it cannot be said to be for any construction, assembly, mining are like project undertaken by it. Therefore, in view of the decision in the case of Rio Tinto Technical Services quoted by the AO in the assessment order, payment made to CSCIPL has to be termed as fees for technical services only.
So far as the decision of ITAT, Mumbai in the case of STCI Commodities Ltd vs ACIT 147 ITD 696 quoted by the appellant in para-23 of the submission is concerned, the observations of honourable tribunal are only in a passing reference and difference between "contract for technical services" and "contract for work' was not the subject matter of the appeal. The issue under appeal was whether the ITA Nos. 192 to 196, 235 to 239 & 456/Ahd/15 [M/s. Bombardier Transportation India Pvt. Ltd.] A.Ys. 2008-09 to 2014-15 - 10 -
payment made by the appellant to a certain party was disallowable under section 40(a)(ia) of the IT Act."
9. The assessee first of all submits that its payee in question performed annual maintenance contract only wherein the assessee has outsourced whole of its information technology and related services to M/s. CSCIPL as per its local services agreement "LSA" in tune with its Master Services Agreement "MSA" with its parent dated 21.11.2002 as amended from time to time. Mr. Mehta takes us to paper book contract comprising of the relevant vouchers of payments, specified services availed but corresponding billing particulars. He vehemently contended the same would in no way amount to fee for technical or professional services. His case is that the assessee has been outsourcing its all IT related services to M/s. CSCIPL on contractual basis attracting TDS deduction @ 2% only being contractual or rental payments than fee for technical services attracting TDS @10% u/s. 194J of the Act. His case therefore is that Section 194J r.w.s. 9(1)(vii) Explanation 2 applies in case of a consultancy agreement alike situation instead of fact of the instant case wherein the payer and payee engage in an agreement of technical consultancy services in lieu of lump sum payment. Case law (2016) 159 ITD 743 (Mum-Trib) ITO vs. Fino Fintech Foundation is quoted holding that Section 194J applies only in case of any managerial, technical or consultancy services being rendered instead of mere use of technology. Next judicial precedence cited is (2014) 147 ITD 696 (Mum-Trib) STCI Commodities Ltd. v. ACIT denying application of Section 194J of the Act wherein the payer/subsidiary had signed an MOU unit its holding entity for providing skilled professionals, each office support, software, hardware and other infrastructure in lieu of payment of services charges. The above co-ordinate bench treated the said management to be a contract u/s.194C of the Act not attract Section 40(a)(ia). Learned counsel then relies upon Section 9(1)(vii) explanation 2 containing exclusion thereof containing the following expression but does not include consideration for any construction, assembly, mining or like project consideration by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries". He then reiterates that the definition of technical services is the above definition clause ITA Nos. 192 to 196, 235 to 239 & 456/Ahd/15 [M/s. Bombardier Transportation India Pvt. Ltd.] A.Ys. 2008-09 to 2014-15 - 11 -
is very much an inclusive one. It is not attracted in facts of the instant case as it involves an instance wherein the payee/CSCIPL has received his impugned payment a contractual objective which nowhere involves any managerial, technical or consultancy services.
10. Learned counsel continues to justify assessee's said adopted throughout that it had been rightly treating the above payment as contractual one or at the best in the nature of rent requiring TDS deduction @ 2% u/s.194C and 194I which stood accepted in the past as well. He therefore seeks our indulgence for deleting the impugned demand. Learned counsel thereafter questions correctness of both the lower authorities' in charging Section 201(1A) interest in some of the above cases (supra) on the ground that the same involve an instance wherein no order u/s.201(1) has been passed necessitating the impugned interest levy. Mr. Mehta therefore vehemently pleads for acceptance of the instant appeals.
11. Learned Senior Departmental Representative Shri V. K. Singh representing Revenue strongly supports to be the lower authorities' identical action(s) in invoking Section 201(1) & 201(1A) demands in question after holding assesse's payments made to "CSCIPL" as per the technical services resulting 10% rate of TDS deduction u/s.194J than @ 2% u/s.194C or 194J of the Act.
12. We have given our thoughtful consideration to rival submissions. Case file(s) perused. There can hardly be any dispute that the sole question before us is whether or not assessee's impugned payments made to the payee "CSCIPL" already subjected to TDS deduct @ 2%; amount are to be treated as fee for technical services to be ascertained on the basis of their contractual terms only as incorporated in the bi-partite agreement in question. Page 37 in assessee's paperbook contains relevant vouchers followed by a well documented Local Services Agreement "LSA". It is an undisputed fact that this "LSA" has been executed as per the Master Services Agreement "MSA" (supra) between assessee's parent and the very payee. We notice that this MSA is basic foundation which nowhere forms part of the case file. Nor has the assessee placed it on lower ITA Nos. 192 to 196, 235 to 239 & 456/Ahd/15 [M/s. Bombardier Transportation India Pvt. Ltd.] A.Ys. 2008-09 to 2014-15 - 12 -
authorities' record. The above following "LSA" aimed to regulate necessary terms of information technology and related services to be rendered by the payee in lieu of assessee's payments. The assessee is fair enough in not disputing the fact that it has not handled or operated even a fraction of services on its own throughout all these assessment years. It seeks to take refuge under the contractual format on the other hand to come out of rigor of Section 194J of the Act. We are of the opinion that it is not the medium of contract or payment but the nature of services rendered by the payee which is the crucial factor to determine whether or not they amount to technical or professional services. The assessee cannot succeed in treating its payments u/s.194C by taking recourse to a written contract document. More particularly when it has come on record the payee itself had been issuing press release(s) alike the one already extracted hereinabove. The assessee has not made even a single attempt in the course of hearing to rebut the same. We therefore observe that its recipient's information technology related integrated service activities amount to technical services only. The assessee's reliance on its itemized billings of the above services in classifying the same as bundled payments/services cannot be accepted in view of the forgoing discussion that it is the recipient only who is wholly responsible for handling / providing all information technology related services.
13. We also deem it appropriate to observe that hon'ble Delhi high court's judgment DIT vs. Rio Tinto Technical Services 251 CTR 366 (Delhi) has held that the above exclusion clause in Section 9(1)(vii) explanation 2 is to be read as a project in the nature of construction, assembly, mining only. We thus reject assessee's argument seeking to invoke the above exclusion clause u/s.9(1)(vii) explanation 2 of the Act.
14. We find no merit in assessee's next argument of having acted in bonafide belief as well in deducting TDS @2% only qua its impugned payments as based on hon'ble Madhya Pradesh high court's judgment Gwalior Rayon Silk Co. Ltd. (supra) case as well as all the abovesaid facts/circumstances discussed leave no doubt much less formation of such relief that the payee "CSCIPL" had in fact ITA Nos. 192 to 196, 235 to 239 & 456/Ahd/15 [M/s. Bombardier Transportation India Pvt. Ltd.] A.Ys. 2008-09 to 2014-15 - 13 -
rendered technical services only requiring TDS deduction u/s.194J of the Act. We thus affirm both the lower authorities' findings holding the payee recipient to have rendered technical and professional services. The assessee's further plea that such technical services are nowhere in the nature of consultancy only is without any substance as there is no such isolated condition provided in the Act wherein all the relevant facts and circumstances have to be appreciated.
15. We now advert to assessee's former case law Fino Fintech Foundation (supra). We find that relevant facts in the said case involved were case of technology only instead of any technical service involving human service element being actually performed at the recipient's behest. Latter case law of STCI Commodities (supra) also does not help assessee's cause as the relevant agreement clauses therein discussed in para 4.1 of the order does not indicate any technical service being rendered in the array of recipient's obligations. Learned counsel's plea as per the above case law that lump sum payments made for availing a bundle of the impugned services do not attract 10% TDS deduction u/s.194J of the Act is also without any merit as per above definition provision in the nature of an inclusive one specifically including such a lump sum instance in explanation 2, Section 9(1)(vii) of the Act. The assessee's reliance on the above latter case law is therefore declined.
16. This leaves us with Mr. Mehta's last vehement contention that Section 201(1A) interest levied in some of the cases is not sustainable in absence of any Section 201(1) orders being passed to this effect. This argument also fails to convenience us as Section 201(1A) starts with " without prejudice to the provision of sub-section (1)" . Mr. Mehta has not quoted any judicial precedent at all which could take us to such a conclusion in assessee's favour. The assessee therefore fails in its last argument as well as in its lead appeal ITA No.196/Ahd.2015. All of its nine remaining appeals are therefore rejected.
17. We now advert to Revenue's appeal ITA No.456/Ahd/2014 for assessment year 2014-15 seeking to revive the Assessing Officer's action treating the assessee ITA Nos. 192 to 196, 235 to 239 & 456/Ahd/15 [M/s. Bombardier Transportation India Pvt. Ltd.] A.Ys. 2008-09 to 2014-15 - 14 -
in default qua its impugned payments made to the two payees namely M/s. Aradhana Indian Engineering Works (AEW) and Commtel Networks Pvt. Ltd. (CNPL). The CIT(A) reverses the above findings as follows:
"5.4 Since the facts and the circumstances of the present case are similar to the facts and circumstances of the assessee's case for A.Y. 2012-13, the issue is squarely covered by the decision of CIT(A)-V, Baroda in assessee's own case in A.Y. 2012-13 in CAB/(A)V-122/14-15. Following the same, it is held that the appellant was justified in deducting tax at source in respect of Aradhana Indian Engineering Works (AEW) and Commtel Networks Pvt. Ltd. (CNPL) under section 194C of the IT Act and finding of the AO that the appellant was required to deduct tax at source under section 194J of the IT Act is set aside in respect of this payee whereas finding of the Assessing Officer that the appellant was required to deduct tax at source under section 194J of the IT Act is upheld in respect of the payments to Computer Science Corporation India Private Limited (CSCIPL). In view of the above discussion, these grounds of appeal are partly allowed. The assessee partly succeeds on these grounds of appeal.
5.5 During the course of the appellate proceedings, the assessee has also submitted that in this case, the order u/s 201(1) was passed for the first two quarters of the year and since the relevant financial year i.e. F.Y. 2013-14 was not complete and the time limit available to the assessee under proviso to section 201 (1) had not elapsed, the Assessing Officer could not have treated the assessee as "assessee in default". It further submitted that, since the time limit for filing the return is yet not expired, it cannot furnish relevant evidence at this point of time, to prove its case under proviso to section 201 (1) -of the Act. The assessee submitted that it will face undue hardship because of non availability of Return of Income of the payees and the required certificate showing that the relevant income had been accounted for. In view of the above, it requested to direct the Assessing Officer to give quantum relief to the assessee as per provisions of proviso to section 201(1), if the assessee furnished necessary evidence before the Assessing Officer establishing that it fulfills the conditions prescribed in the proviso to section 201(1). I find considerable force in the arguments of the assessee. Since the due date for filing the return is yet to expire and presumably the returns by the payees are yet to be filed, the assesee cannot furnish relevant evidence showing that the recipients have taken in to account the amount received in their income and have paid due taxes on the same. The assessee cannot be asked to do the impossible and denial of this request will unnecessarily lead to hardship aid litigation. Past history of the assessee also suggests that in A.Y. 12-13 and 13-14, the assessee had furnished necessary evidence in this regard before CIT(A) and the assessee was allowed relief, relying on the proviso to section 201 (1) of the Act. Considering all the aspects of the case, the decision of ITAT, Delhi in ITO vs Amity International School, [2014 ] 48 taxmann.com 173 (Delhi - Trib.) and in view of the above discussion, the Assessing Officer is directed to consider assessee's eligibility for relief under first proviso to section 201 (1) after affording it an opportunity of being heard anti if the assessee is found to have fulfilled the conditions required under proviso to section 201 (1), appropriate relief will be allowed to it."
ITA Nos. 192 to 196, 235 to 239 & 456/Ahd/15 [M/s. Bombardier Transportation India Pvt. Ltd.] A.Ys. 2008-09 to 2014-15 - 15 -
18. We have given our thoughtful consideration to rival submissions. It has come on record that the assessee has already succeeded on the very issue in assessment year 2012-13. The Revenue fails to rebut the fact that the said findings holding the assessee to have deducted TDS only u/s.194C of the Act has already attained finality. Learned Departmental Representative is unable to refer to any cogent evidence on record taking us to a different conclusion on facts as well. We therefore decline Revenue's sole substantive ground as well as main appeal ITA No.456/Ahd/2015.
19. These ten assessee's appeals and Revenue's sole appeal are therefore dismissed.
[Pronounced in the open Court on this the 20th day of December, 2017.] Sd/- Sd/-
(PRADIP KUMAR KEDIA) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 20/12/2017
True Copy
S.K.SINHA
आदे श क त ल
प अ े
षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आय"
ु त / Concerned CIT
4. आयकर आयु"त- अपील / CIT (A)
5. *वभागीय -.त.न ध, आयकर अपील य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, अहमदाबाद ।