Income Tax Appellate Tribunal - Ahmedabad
Gujarat State Petroleum Corpn. Ltd.,, ... vs Assessee on 23 October, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "B" BENCH
Before: Sri D.K Tyagi, Judicial Member
and Shri Anil Chaturvedi, Accountant Member
ITA No. 2884/Ahd/2010
Assessment Year 2009-10
Income Tax Officer(TDS), Gujarat State Petroleum
Gandhinagar Corporation Ltd, GSPC
(Appellant) Vs Bhavan, Sector No. 11,
Gandhinagar
PAN: AHMG00887G
(Respondent)
C.O. No. 322/Ahd/2010
Assessment Year 2009-10
Gujarat State Petroleum Income Tax
Corporation Ltd, GSPC Officer(TDS),
Bhavan, Sector No. 11, Vs Gandhinagar
Gandhinagar (Respondent)
PAN: AHMGOO887G
(Cross Objector)
Revenue by: Sri P.L. Kureel, Sr.D.R.
Assessee by: Sri S.N. Soparkar, A.R.
Date of hearing : 23-10-2013
Date of pronouncement : 29-11-2013
I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 2
ITO vs. Gujarat State Petroleum Corporation Ltd
आदे श/ORDER
PER : D.K. TYAGI, JUDICIAL MEMBER:-
Revenue's appeal and CO by assessee are against the order of Ld. CIT(A)-VI Ahmedabad dated 09-08-2010.
2. In revenue's appeal there are two following effective grounds:
"1. The Ld. CIT(A) erred in law as well as facts of the case in deleting the order passed u/s. 201(1) & interest charged u/s. 201(1A) of the I T Act of Rs. 60,57,478/- for Asst. Year 2009-10 by the AO by treading the hiring of hoarding u/s. 194C of the Act against 194I of the Act by the AO.
2. The Ld. CIT(A) erred in law as well as facts of the case in deleting the order passed u/s. 201(1) & interest charged u/s. 201(1A) of the I T Act of Rs. 77,28,335/- for A.Y. 2009-10 by the AO by treating the hiring of pipelines connection u/s. 194C of the Act as against 1941 of the Act by the AO. "
3. Ground No. 1 relates to raising of demand u/s. 201(1) and 201(1A) r.w.s. 194-1 on payment made to Proveg Communication Pvt Ltd. AO has dealt with the issue involved in this ground as under:-
"the assessee company made payment of M/s Proveg Communication Pvt. Ltd. The A.O. had stated that the assessee Co. had submitted a letter dtd. 1/5/2008 regarding hiring the hoardings at 17 major locations in Gujarat and fixed the monthly rate of Rs. 34,24,2607/-. The A.O. observed that the assessee Co. had made payment of Rs. 6,85,43,740/- to the aforesaid contractor during the year under consideration. However, the assessee had deducted tax @ 2% u/s 194C as against 10% u/s 1941 of the Act. As the tax was deducted @ 2% only on the above payment, there was a short deduction of tax by 8% + SC+EC. The assessee was show-caused and replied as under... I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 3 ITO vs. Gujarat State Petroleum Corporation Ltd After considering assessee's reply AO held that assessee was liable for 10% TDS as against 2% deducted."
.
4. Assessee's submission before Ld. CIT(A) was as under:-
"The appellant has placed an order vide a letter No. GSPC / CC / 2008 dated 01-05-2008 with M/s. Praveg Communication Pvt. Ltd., 102 Shanti Arcade, 132 Ring Road, Naranpura, Ahmedabad for "Display of Hoarding Advertisement" at 17 major locations in Gujarat.
2.2 The learned A.O. has found the following in his show cause notice dated 27-03-2009 which is reproduced as under for your reference.
"You have made monthly payments of Rs. 34.24 lacs to Prove Communication Pvt. Ltd. For hiring of hoardings and deducted TDS @ 2% only u/s. 194C of the I T Act whereas you were required to deduct tax u/s 194 1 of the Act. As per office note in your file, it has specifically been mentioned that this is purely a hiring charges of hoardings and all other charges of Flex providing etc. are extra. This proves that charges paid on monthly basis from May, 2008 lo February 2009 are of nature of rent and as such you are required lo deduct tax @ 2 % . Please show cause why tax was not deducted @ 10% u/s 194 I of the Act."
2.3 The appellant has submitted reply on 04-05-2009 which is reproduced under for your reference.
With reference to the above, we have to state that GSPC has, issue an order dated May 2008 to Praveg Communication Pvt Limited- PCPL for "Display of Hoarding of Advertisement which includes the following.
1) Identification of hoarding location on hire basis at 110 different sites in 17 different towns / cities in Gujarat.
2) Flex Printing
3) Flex installation
4) Coordination with other agencies I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 4 ITO vs. Gujarat State Petroleum Corporation Ltd
5) Design
6) Planning
7) Quality control
8) Supervision From above, you will appreciate that GSPC has taken the services of PCPL with the only purpose of "Brand Building". You will further appreciate that GSPC is not in the business of taking "Hoardings on Rental basis". GSPC has sole purpose of advertisement and building its image in the State of Gujarat. For the very same reason PCPL has been appointed as an agency to render specialized services for display of hoarding of advertisement. PCFL itself does not own the "Hoardings" and it is natural for them to obtain the same from "Hoarding Owners" on rental basis. It is obvious that GSPC has to pay PCPL for the charges of the hoardings as a part of the advertisement contract.
However this entire procedure is a part of the wide understanding of rendering advertisement related services.
We draw your kind attention to the Circular No. 715 dated 8th August 1995 of CBDT, wherein it has been categorically mentioned that when contract for putting up a hoarding is in the nature of advertising contract, the provisions of the Section 194C of the Act will govern the tax deduction issue. You are aware that CBDT Circulars are binding to the tax authorities and hence the ratio pronounced by the CBDT circular has to be followed by you. Hence, GSPC has rightful deducted tax U/s 194C of the Act. In fact the rote of tax for "Advertisers" is 1% plus applicable surcharge and cess however GSPC has deducted tax at 2% plus applicable surcharge and cess. Under the circumstances, GSPC is not liable to deduct tax at the rate of 10% plus applicable surcharge and cess as per the provisions of Section 194-I of the Act.
Without prejudice to what is stated above, even if it is presumed that GSPC has paid rental charges for hiring of hoardings to PCPL, GSPC is liable only to deduct tax at the rate of 2% plus applicable surcharge and cess as per the provisions of Section 194C of the Act. The provisions of Section 194-1 of the Act are not applicable to the I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 5 ITO vs. Gujarat State Petroleum Corporation Ltd aforesaid transaction. This ratio is inline with the judgment of Hon'ble Mumbai ITAT in the case of ITO Vs. Roshan Publicity Private Limited (2005) 4 SOT 105 where the Tribunal has held that the amount paid for advertisement purpose would attract the provisions of 'section. 194C and hence TDS @ 2%.
It is therefore, clear beyond doubt that what is contemplated is brand building and there is no question of hoardings or rental given, but the idea is to build up the corporate image, hence, GSPC is liable to deduct tax at the rate of 2% plus applicable surcharge and cess.
2.4 The learned A.O. has grossly erred in ignoring the Judgment of the Hon'ble Mumbai ITAT in the case of ITO vs. Roshan Publicity Private Limited [2005] 4 SOT 105 where the Tribunal has held that the amount paid for advertisement purpose would attract the provisions of section 194C.
2.5 The learned A O. has grossly erred in law and on facts in levying interest under section 201(IA) of the Act.
Without prejudice to what 15 staled above, the appellant humbly pleads that as per the binding judgment of Hon'ble Gujarat High court in the case CIT Vs. Rishikesh Apartments Co-op. Housing Society Limited (2002) 253 ITR 310, if the payee has paid the advance tax if payable then there is no revenue loss to the exchequer and in that event no interest can be levied U/s 201(1A) of the Act.
2.6 The learned A.O. has grossly erred in not considering the following two judgment quoted by the appellant through letter dated 04-01-2010.
1. Children's Education Society Vs. DCIT (TDS) (2009) 319 ITR 409, Karnataka High Court
2. Hindustan Cocacola Beverages Pvt. Ltd Vs. CIT (2007) 293 ITR 226 (SC) It has been held in the aforesaid two judgments that once tax has been already paid by file deductee the same together with interest and I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 6 ITO vs. Gujarat State Petroleum Corporation Ltd penalty cannot be recovered from the deductor even though deductor had failed to deduct tax at source.
The appellant has also submitted that tax paid by PCPL amounts to Rs. 30, 91,403/- against tax payable of Rs. 10,07,430/-. The appellant has also submitted documentary evidencing through the letter dated 21-01-2010 for the above refund of Rs 20,63, 973/- for the A.Y. 2009-
10. You will appreciate that the details submitted are in line with the above referred two judgments. Hence there is no liability for TDS in view of the same.
2.7 In view of the above, the appellant humbly submits that the contentions of the learned AO is bad in law and hence the same should be deleted."
5. After taking into consideration these submissions of the assessee Ld. CIT(A) allowed the appeal of the assessee by observing as under:
"3.3 I have considered the order of the AO, fcts of the case and appellant's submission. Appellant paid to M/s Proveg Communication Ltd for the purpose of Brand Building and taking hoardings for advertisement included sever other services apart form hiring hoardings. Appellant relined upon ITAT, Mumbai decision in the case of ITO. Vs. Roshan Publicity Pvt. Ltd. Reported in 4 SOT 105. In the said decision it was held that in acquiring the right of displaying advertisement at hoarding site and making payment to hoarding site owners does not involve lease, sub-lease or tenancy and therefore, sec. 194-I is not applicable as the payment cannot be termed as rent. Applicant's case is also identical since it had advertisement contract with PCPL The advertising company who hires the hoardings will fall within the purview of 194-1 and not the person who pays advertisements charges. From the details of advertisement charges submitted it Is clear that only the part of the amount relates to hoardings, the remaining part is for other services referred in appellant's reply such as business promotion, printing and stationary Brand Building etc. Considering this and respectfully following the I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 7 ITO vs. Gujarat State Petroleum Corporation Ltd decision of Mumbai ITAT referred above, the ITO. TDS's action is not upheld and this ground is allowed."
6. Since Ld. CIT(A) has given relief to the assessee by following the decision of Mumbai ITAT in the case of ITO vs. Roshan Publicity Pvt Ltd reported in 4 SOT 105 and no contrary decision was cited by the revenue at the time of hearing before us we feel no need to interfere with the order passed by Ld. CIT(A) and the same is hereby upheld. This ground of revenue's appeal is dismissed.
7. Second ground relates to raising of demand u/s. 201(1) and 201(1A) r.w.s. 194J on payment to GSPL for gas transmission.
8. AO has dealt the issue as under:-
"the assessee company made payment to Gujarat State Petronet Ltd. It is observed by the AO that the assessee Co. had made payment of Rs. 8,90,69,820/- to Gujarat State Petronet Ltd. Towards gas transportation charges by hiring Pipeline Connection. However, the assessee had deducted tax @ 2% u/s 194C as against 10% u/s. 1941 of the Act. As the tax was deducted @ 2% only on the above payment, there was short deduction of tax by 8% +SC+EC. The assessee was show-caused and replied as under.....
The assessee's contention was not accepted by the AO and raised demand of Rs. 77,28,335/-."
9. Assessee's submission before Ld. CIT(A) was as under: -
'4.1 Without prejudice to what is stated below, the appellant submits that the learned A.O. has not asked any details regarding payment made to GSPL during the course at survey. The statement on oath dated 18-03-09 of Mr. Rajesh Sivadason evidence of the same. I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 8 ITO vs. Gujarat State Petroleum Corporation Ltd 4.2 The learned A.O. has found following in his show cause notice dated 27-03-09 which is reproduced as under for your reference.
"It is also observed that you have deducted TDS @ 2% only i.e. u/s 194C on gas transportation charges paid to Gujarat State Petronet Ltd. Whereas this payment is of rental nature and as such you were required to deduct tax @ 10%. The total amount paid for transportation of gas charges is approximately Rs. 12 crores. Short deduction @ 8% comes to Rs. 96 lacs + SC + EC as applicable."
4.3 The appellant has submitted reply on 04-03-2009 which is reproduced as under for your reference.
You hove observed that GSPC has deducted tax at the rate of 2% U/s 194C for the payment mode for "Gas Transportation Charges" of Rs. 12 Crores to Gujarat State Petronet Limited (GSPL) instead of TDS @ 10% U/s. 194-I as the same is of rental nature. You have further observed that payment is also made to GSPL by GSPC towards "Pipeline Payment Charges / Connectivity Charges" after deducing tax at the rate 2% U/s 194C instead of deducing tax at the rate of 10% U/s 194-I. We draw our kind attention to starting paragraph of your show cause notice which is reproduced below.
"A survey U/s. 133A (1) of the IT Act was carried out at your office premises at the address captioned above on 17th and 18th March 2009. During the course of Survey actions, following discrepancies were noticed.
(i)....................................
(ii)...................................
(iii)..................................
(iv)..................................
(v)
(vi) With shock and surprise, we draw your attention to the fact that no such so-called discrepancies were found by survey team as mentioned by you at Point No. (v) and (vi) which can be verified from the I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 9 ITO vs. Gujarat State Petroleum Corporation Ltd statement of Mr. Rajesh Sivadasan, Sr. Manager (Finance) which was recorded on oath on 18th March 2009 at 7 pm, and the same oath was administered by Mr. Narpat Singh, ITO, TDS -J, Ahmedabad, From the statement you will observe that no question regarding payment made to GSPL has been asked by the survey team of tax department.
This point is not a part of survey. With this background, and without prejudice to our contentions, you will appreciate that your contention that during the course of the survey the aforesaid discrepancies were found in payment to GSPL is totally baseless and far from the truth.
Without prejudice to our rights and contentions, we have to state as under.
You have correctly observed that GSPC has paid Rs. 12 Crores to GSPL for "Gas Transportation Charges". GSPC has paid "Gas Transportation Charges" to ensure that Gas reaches to consumers and has not paid for "Hiring of Pipelines". It may kindly be noted that GSPC is not in the business of "Hiring of Pipelines".
We draw your kind attention to the CBDT Circular No. 715 dated 8th August 1995, wherein it has been clearly stated that any payment mode for transportation / carriage of goods other than by rail is liable to tax U/s 194C of the Act. The same is also confirmed by CBDT Circular No. 723 dated 19th September 1995. You are aware that CBDT Circulars are binding to the tax authorities and hence the ratio pronounced by the CBDT circular has to be followed by you.
You will appreciate that GSPC has deducted tax from the payment made to GSPL at the appropriate rate i.e. @ 2% plus applicable surcharge and cess U/s 194C of the Act as the payment is for the purpose of 'Transportation of Goods".
Payments are made to GSFL for transportation of Gas. The payment is for Gas Transportation Charges. You have wrongly classified it as "Pipeline Payment Charges / Connectivity Charges". Gas Transportation Charges are paid only and only to ensure that the Gas reaches to the consumer and it is not for hiring of pipelines. Hence, viewed from any angle there is no question of hire and therefore the provisions of Section 194J are not applicable. I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 10 ITO vs. Gujarat State Petroleum Corporation Ltd GSPC is not in the business of hiring of pipelines. What is contemplated is "Gas transportation charges" which is also the heading corrected reflected in its accounts and thing being in the nature of works contract, the provisions of Section 194C are attracted.
You will therefore appreciate that question of payment of tax for shortfall of Ps. 96 lacs plus surcharge and cess as mentioned by you does not arise.
4.4 The learned A.O. has grossly erred in ignoring the "ruling of Bombay High Court in the case of Indian National Ship Owners Association (lNSA) stating as under.
"The High Court also opined that the scope of Section 194C covers carriage of goods and passengers, and freight payments are to be dealt with under Section 194C and not Section 194-I. In other words, one can say that the court has impliedly restarted the principle of "specific overrides general", That is. where Section 194C specifically covers cases of carriage of goods and passengers, then Section 194-1, which is more general in nature, cannot override the former."
4.5 The learned A.O. has grossly erred in ignoring the ruling of Associated Cement Company Ltd vs. CIT (201 1TR 435) wherein the Supreme Court held that "any work" means any work and not o '"work contract". "Work;" envisaged in the sub-section, has a wide import and covers '"any work" which the organizations specified in the sub section can get carried out through a contractor under a contract. It includes obtaining by the specified organizations supply of labour under a contact with a contractor for carrying out its work.
4.6 The learned A.O. has grossly erred in not considering the appellant's contention that as per CBDT Circular No. 681 dated 8th March 1994, clarifying that the scope of activities covered under provision of section 194 C of the Act as follows:
I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 11 ITO vs. Gujarat State Petroleum Corporation Ltd 'The provisions of section 194C shall apply to all types of contracts for carrying out any work including transport contracts, service contracts, advertisement contracts, broadcasting contracts, telecasting contracts, labour contracts, material contracts and work contracts.
4.7 Learned A.O. has grossly erred in ignoring the judgment of Hon'ble Kerala High Court in the matter of CBDT v. Cochin Goods Transport Association wherein the Hon'ble High Court held as under.
"Following the Associated Cement Co. Ltd.'s case (SC), we hold that a transport contract simpliciter falls within the ambit of subsection (1) of section 194C and, therefore deduction at source at the rate of two per cent from the amounts credited to the account of the contractor can be made by a person responsible for paying any sum for the transport contract."
4.8 The learned AO. has grossly erred in law and on facts in levying interest under Section 201(IA) of the Act. Without prejudice to what is stated above, the appellant humbly pleads that as per the binding judgement of Hon'ble Gujarat High Court in the case CIT Vs. Rishikesh Apartments Co -op. Housing Society Limited (2002) 253 1TR 310. If the payee has paid the advance tax, if payable then there is no revenue loss to the exchequer and in that event no interest can be levied U/s 201[IA] of the Act.
4.9 The learned A.O. has grossly erred in not considering the following two judgment quoted by the appellant through letter dated 04-01-2010.
1. Children's Education Society Vs. DCIT (TDS) (2009) 319 ITR 409, Karnataka High Court
2. Hindustan Cocacola Beverages Pvt Ltd. Vs. CIT (2007) 293 ITR 226 It has been held in the aforesaid two judgments that once tax has been already paid by the deductee the same together with interest and penalty cannot be recovered from the deductor even though deductor had failed to deduct tax at source.
I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 12 ITO vs. Gujarat State Petroleum Corporation Ltd The appellant has also submitted that tax paid by GSPL amounts to Rs. 54,65,16,254/- against tax payable of Rs. 54,65,16,254/-. The appellant has also submitted documentary evidencing through the letter dated 21-01-2010.
The details submitted are in line with the above referred two judgments. Hence there is no liability for TDS in view of the same."
10. Ld. CIT(A) after taking into consideration the above submission of the assessee has given relief to the assessee by observing as under:-
"5.3. I have considered the facts of the case, the Assessing Officer's order and appellant's submission. Appellant made payments of transmission of gas for which it deducted tax u/s 194C. However, the A.O. considered the payment as rent in view of amended definition of Sec. 194I for use of equipment such as gas pipelines. In the order, A.O. did not discuss or even mention as to how transmission of gas by GSPL will be equivalent to use of equipment by the appellant. For carrying out any work or transporting or transmitting goods, machines and equipments are used but question is who used these equipments. If the equipments have been given on lease, sublease, tenancy or under any other arrangement, then provisions of Sec. 1941 is attracted. In the absence of any of these, use of equipment for any work, transmission etc by the owner of these equipments will not attract the provision of Sec. 194-I. In the case of appellant, the gas pipeline is owned operated and maintained by GSPL who used the pipeline for transporting the gas. A certificate from GSPL was submitted by the appellant in which GSPL confirmed that GSPL provided services of transport of gas through the pipeline owned, maintained and operated by GSPL and appellant does not have any right, exclusive or otherwise on the pipelines. It was also confirmed that same pipeline is used or transport of gas for many other customers.
On perusal of contract with GSPL, it is clear that transmission charges are based on gas quantity transmitted. The charges are not based on time or length of the pipeline. This also indicates that appellant did not use any equipment but the same were used by GSPL I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 13 ITO vs. Gujarat State Petroleum Corporation Ltd transmitted gas through its pipeline. For bringing any payment in the nature of rent within the purview of section 194-1, there has to be use of asset or equipment by the payer. If the some is used by the receiver for the work of the payer, it will fall within the provisions of see. 194C. Since Sec. 194C clearly includes carriage of goods and passenger by any mode of transport other than railways, the transportation of gas through pipeline is covered by this.
Having considered the facts of the case, the gas transmission agreement, mode and basis for payment use of pipeline for transmitting gas for many consumers, operation and maintenance of pipeline by GSPL and no possession or exclusive right to use the pipeline at any given point of time, I am of the clear view that the payment for gas transmission by the appellant will not attract the provisions of Sec. 1941. In view of this, the appellant has not committed default u/s 201(1) and accordingly tax U/S 201(1] and interest u/s 201(1A) is not payable by the appellant."
11. Since Ld. CIT(A)'s above finding is in conformity with the finding of the Tribunal in the case of ACIT vs. Gujarat State Petronet Ltd in ITA No. 3317/Ahd/2010 & CO No. 17/Ahd/2011 A.Y. 2009-10 dated 08-03-2013 on identical issue wherein following was held.
"5. We have considered the rival contentions and perused the material on record. The first payment namely vehicle hiring charges has not been prescribed u/s. 1941 Vehicles and Chauffers supplied by the contractor and was under the complete control of the contractor. Thus, we confirm the order of the CIT(A) on this issue. Similarly, the second payment for connectivity charges were paid to GPSC against the agreement for using of pipeline connection of GAIL for gas transportation. This pipeline was owned by the GAIL and was opened to service to its other clients also, which was in nature of carriage of goods and covered U/S.194C of the IT Act. Thus, on second issue also, the ld. CIT(A) found justified and we do not find the reason of any intervention in the order of the CIT(A) on this issue. The third and last payment was gas transportation charges. The appellant paid these payments for gas transportation purposes to Gujarat Gas Company Ltd. and avail them facility of pipeline of it. The ownership I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 14 ITO vs. Gujarat State Petroleum Corporation Ltd and complete control of this pipeline is of Gujarat Gas Company Ltd. This pipeline owned by the contractor is open for use for other clients also and it was a work performed carriage of goods as prescribed U/S.194C of the IT Act. Thus, it is covered u/s. 194C and ld, CIT(A) was right to decide this issue is as a contract for the transportation of gas. The appellant has also submitted the confirmation from the deductee that these receipts have been disclosed in their respective income and all the deductees are limited company. Thus, in view of the Hon'ble Supreme Court decision in case of Hindustan Coca Cola Beverages Pvt. Ltd (supra) and the assessee cannot be treat as deemed defaulter within u/s. 201(1) of the IT Act. Accordingly, we dismiss the appeal of the Revenue and allow the CO of the appellant."
We feel no need to interfere with the order passed by Ld. CIT(A) and the same is hereby upheld. This ground of the revenue is also dismissed.
12. In the result, revenue's appeal is dismissed.
13. In the CO filed by assessee Ld. CIT(A)'s order has been challenged on following two grounds:-
"ITEM NO. I: PAYMENT TO GLOBAL VECTRA HILICORP LTD. (GVHL)- RS. 3,67,93,523/-
1.1 The learned CIT(A) has erred in law and on facts of the case by holding that appellant's contract is not for transportation but for hiring of Helicopter Services and therefore, it falls in the category of equipment rent. The learned CIT(A) has also erred in law and on facts in confirming the action of the learned Assessing officer to levy interest of Ra. 5,02.500/-U/s. 201(1A) on shortfall of TDS u/s 201(1). He ought to have appreciated that once the tax has already been paid by the deductee the same together with interest and penalty cannot be recovered from the deductor even though deductor had failed to deduct tax at source in view of decision of Children's Education Society Vs. DCIT (TDS) (2009) 319 ITR 409 Karnataka High Court and decision of Hindustan Cocacola Beverages Pvl Ltd. Vs CIT (2007) 293 ITR 226 (SC). In view of the above, the appellant humbly I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 15 ITO vs. Gujarat State Petroleum Corporation Ltd submits that the contention of the learned CIT(A) is bad in law and hence the same should be deleted ITEM NO. ll: PAYMENT TO 3RD I EVENT MANAGEMENT - Rs. 28,16,500/-
1.2 The learned CIT(A) has erred in law and on facts of the case by holding that appellant has made payment of Rs 28,16.500/- for arrangement of corporate cricket tournament which are squarely covered u/s. 194J and accordingly appellant is required to deduct tax at source. He has failed to appreciate that appellant has made payment to 3rd I Event management for managing and organizing the "GSPC Invitation 20-20 Corporate Cricket Tournament 2008" and therefore appellant is required to deduct tax as per provisions of section 194C. The learned CIT(A) has also erred in law and on facts in confirming the action of the learned Assessing officer to recover short deduction of tax of Rs 2,26,278/- and interest of Rs 18,102/- U/s. 201(1A) on short fall of TDS u/s. 201(1). In view of the above the appellant humbly submits that the contention of the learned CIT(A) is bad in law and hence the same should be deleted."
14. The AO has dealt the issue in respect of payment to Global Vectra Helicopter Ltd as under:
" The assessee Company has executed a service contract with M/s Global Vectra Helicrop Ltd. Lts office is situated at Mumbai. As per the LOI, the assessee company desires for hiring of Helicopter service for its offshore drilling sites and fixed the monthly rent for operating the Helicopter. On verification of the details submitted by the assessee, it was noticed that assessee had made payment of Rs. 3,67,93,523/- from 1/4/2008 to 16/06/2008 to M/s Global Vectra Helicrop. Ltd. And deducted TDS @ 2% u/s 194C as against 10% u/s 194I of the Act. Assessee submitted its reply as under...
The A.O. had stated that assessee's contention is not acceptable in view of Taxation Laws Amendment Act 2006 extended the definition of rent to include payment for the use of machinery, plant equipment, furniture, fittings etc. Hiring of vehicle to attract TDS u/s 1941 of the Act. Further, it is to be reiterated that the Contractor Co. (GVHL) has I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 16 ITO vs. Gujarat State Petroleum Corporation Ltd applied for certificate u/s 197 r.w.s. 1 94-1 of the Act for lower deduction of fax and obtained the same.
Considering the above, payment made to GVHL are in nature of Rent Equipment' as defined in section 194-I of the IT. Act and tax was required to be deducted @ 10 % upto the period of obtaining the certificate u/s 197 of the Act, i.e. upto 9/7/2006. Hence, there was a short deduction of tax by 8% + EX. Therefore, interest u/s 20l(IA) is mandatory and continued until tax is paid. Thus the A.O. raised demand of Rs. 34,58,490/- u/s 201(1) & 201 (1A) r.w.s. 194-I."
15. Assessee's submission before Ld. CIT(A) was as under:
"1.1 The appellant has executed a service contract with M/s. Global Vectra Helicorp Ltd. having its corporate office at Sundervilla, B-314, 3'd Floor, 19 SV Road. Santacruz (W), Mumbai on 23-11-2007 availing helicopter services in relation to air logistic support for crew and personnel of the appellant and/or any of its consultants and/or suppliers etc. as well as supply of essential cargo to and from offshore.
1.2 The learned A.O. has found the following; in his show cause notice dated 27-03-2009 which is reproduced as under for your reference.
"It is also observed that tax @ 2% has been deducted while making payment to Global Helicops Ltd. as the Global Helicorp Co. has provided you a certificate dated 9th July, 2008 u/s 197 read with 194 - 1 authorizing the payer to deduct tax @ 2% only, however as the certificate was issued on 09/07/2008, GSPC was required to deduct tax @ 10% plus SC + EC on payment of Rs. 4.5 crores made before issue of certificate. As tax was deducted @ 2% only on the above payment, there is short deduction of tax by 8% + SC + EC. You Ore therefore asked to show cause why tax was not deducted@ 10 % on payments to Global Helicorp Com Made before 09/07 2008."
1.3 The appellant has submitted reply on 04-05-2009 which is reproduced as under for your reference.
"With reference to the above we have to state that GSPC has entered into contract with Global Vectra Helicorp Limited - GVHL previously known as Global Helicorp Private Limited (GHPL) from 25th May 2004 for "Helicopter Services" and since then it has been making the payment to GVHL after deduction of tax U/s 194C of the Act. You I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 17 ITO vs. Gujarat State Petroleum Corporation Ltd will appreciate that payment for "Helicopter Services" are mainly for the air logistic support for crew and personnel of GSPC and/or any of its consultants and/or suppliers etc and supply of essential cargo to and from offshore. Thus in nut shell the "Helicopter Services" is for transportation purpose only i.e. transportation of personnel and cargo. The same is evident from the details mentioned in the contract between GSPC and GVHL as well as prospectus ft/ed bv GVHL with SEBI.
You will further appreciate that the contract is not merely for Hiring a Helicopter on rental basis but if also includes all the associated services such as compliance with DGCA rules, settlement of disputes with DGCA, arrangement for special sorties, radio services, safety services, specialized crew and pilots, hanger and base facilities along with the Helicopter. It is to be noted that "Helicopter Services" are to be provided as per the requirements of GSPC.
Section 194-1 of the Act was amended to include deduction of tax at the rate of 10% in relation to payment towards rent of plant and/or equipment from 1st June 2007. Thus without prejudice to our claim and contention even if the payment in relation to "Helicopter Services" is treated as "Rent" then it has to be treated as "Rent of Equipment". You will agree that it cannot be considered as "Rent of building, land, plant furniture or fixture''. The question of deduction of tax of the rate of 10% U/s 194-1 of the Act prior to 1st June 2007 from the payment to GVHL towards "Helicopter Services'' does not arise as the said provision came into operation only from 1st June 2007 only. The only section for deduction of tax for the aforesaid payment prior to t*' June 2007 was Section 194C of the Act and tax rate is 2% plus surcharge and cess as applicable. Thus, GSPC has rightly deducted and deposited tax accordingly from the payment made to GVHL prior to 1st June 2007.
So far as the payments made by GSPC to GVHL after 1st June 2007 and before the date of issue of certificate U/s 197 read with Section 194-1 of the Act by income tax department to GSPC i.e. 9'h July 2008 are concerned, we have to state as under.
We draw your kind attention to CBDT Circular No. 715 dated 8th August 1995, wherein it has been clearly stated that provisions of section 194C of the income Tax Act 1961 will be applicable when a plane or bus or other mode of transport is chartered. Under the circumstances, you will appreciate that the term "Other mode of I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 18 ITO vs. Gujarat State Petroleum Corporation Ltd transport" includes "Helicopter". Under the circumstances, GSPC had correctly deducted tax for the period beginning from 1st June 2007 till the date of issue of certificate/s 197 read with Section 194-1 of income Tax Act, 1961 by income tax department. This ratio will also apply to payments made to GVHL prior to 1st June 2007. You are aware that CBDT Circulars are binding to the tax authorities and hence the ratio pronounced by the CBDT circular has to be followed by you. Hence, GSPC was not liable to deduct tax at the rate of 10% under the provisions of Sections 194-1 of the Income Tax Act 1961 for the period beginning from 1st June 2007 till 9lh July 2008.
You will appreciate that what is contemplated is Helicopter Services and the main object is "Air Logistic Support" for Crew and Personnel of GSPC. That as per CBDT Circular No. 715 doted 8th August 1995, it amounts to transport which is chartered and the correct rate of tax would be 2% and the provisions of Section 1941 are not applicable.
To summarize the same, we further state that 1 The Certificate issued though is under Sec. 194-1 the rate of tax in the computation is much less and GSPC has correctly paid fox of the rate of 2%. Though the TDS Authority has invoked Sec. 194-1 vide Certificate dated 9th July, 2008, CBDT Circular No. 715 dated 8th August, 1995 states that where plane or other mode of transport is chartered, the rate of tax would be 2% as this would be falling within Sec. 194-C.
2. Plane includes Helicopter, even "Other mode of transport" would include Helicopters.
3. Circular of CBDT is binding and, therefore, viewed from any angle the rate of tax applicable for TDS purpose would be 2 %.
4. In connection with the treatment given by Global Vectra Helicorp Ltd, it is clearly specified under "Existing Clientele" that the services they are rendering are "Air Logistics support for crew/personnel and essential cargo to and from offshore".
5. Taking Info view the overall picture it is clear that GVHL is rendering Helicopter services as per the requirement of GSPC and hence for the services the correct rate of tax applicable would be 2%. I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 19 ITO vs. Gujarat State Petroleum Corporation Ltd 1.4 The learned A.O. has grossly erred in ignoring the ruling of Bombay High Court in the case of Indian National Ship Owners Association (INSA) stating as under:
'The High Court also opined that the scope of Section 194C covers carriage of goods and passengers, and freight payments are to be dealt with under Section 194C and not Section 1941. In other words, one can say that the court has impliedly restated the principle of "specific overrides general". That is, where Section 194C specifically covers cases of carriage of goods and passengers, then Sec 194l, which is more general in nature, cannot override the former."
1.5 The learned A O. has grossly erred in ignoring the ruling of Associated Cement Company ltd vs. CIT (201 ITR 435) wherein the Supreme Court held that "any work" means any work and not a '"work contact". "Work" envisaged in the sub-section, has a wide import and covers '"any work" which the organizations specified in the sub section can get carried out through a contractor under a contract. It includes obtaining by the specified organizations supply of labour under a contract with a contractor for carrying out its work. 1.6 The learned AQ. has grossly erred in not considering the appellant's contention that as per CBDT Circular No. 681 dated 8th March 1994, clarifying that the scope of activities covered under provisions of section 194 C of the Act as follows;
"The provisions of section 194C shall apply to all types of contracts for carrying out any work including transport contracts, service contracts advertisement contracts, broadcasting contracts, telecasting contracts labour contracts, material contracts and work contracts.
1.7 The learned A.O. has grossly erred in ignoring the judgment of Hon'ble Kerala High Court in the matter of CBDT v. Cochin Goods Transport Association wherein the Hon'ble Kerala High Court held as under.
"Following the Associated Cement Co. Ltd's case (SC), we hold that, a transport contract simpliciter falls within the ambit of subsection and,(1) of section 194C and therefore, deduction at source at the rate of two per cent from the amounts credited to the account of the contractor can be made by a person responsible for paying any sum for the transport contract."
I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 20 ITO vs. Gujarat State Petroleum Corporation Ltd Thus you will appreciate that what GSPC has done is correct and is considerate step considering the various interpretational issues involved in making the decision."
1.8 The learned A.O. has grossly erred in law and on facts in levying interest under Section 20l (lA) of the Act.
Without prejudice to what is stated above, the appellant humbly pleads that as per the binding judgment ot Han'ble Gujarat Highcourt in the case CIT Vs. Rishikesh Apartments Co-op. Housing Society Limited (2002) 253 RR 310, if the payee has paid the advance tax, if payable then there is no revenue loss to the exchequer and in that event no interest can be levied U/s 201 (1A) of the Act. 1.9 The learned AO has grossly erred in not considering the following judgment quoted by the appellant through letter dated 04- 01-2010.
1. Children's Education Society Vs. DCIT (TDS) (2009) 3T9 ITR 409, Karnataka High Court
2. Hindustan Cocacola Beverages Pvt Ltd. Vs. CIT (2007) 293 ITR 226 (SC) It has been held in the aforesaid two judgments that once tax has been already paid by the deductee the same together with interest and penalty cannot be recovered from the deductor even though deductor had failed to deduct tax at source.
The appellant has also submitted that tax paid by GVHL amounts to Rs. 4,07,53,082/- against tax payable of Rs. Nil. The appellant has also submitted documentary evidencing through the letter dated 15- 02-2010 for the above refund of Rs. 4,07,53,082/- for the A Y. 2009-
10. The details submitted are in line with the above referred two judgments. Hence there is no liability for TDS in view of the same."
1.10 In view of the above, the appellant humbly submits that the contention of the learned A.O. is bad in law and hence the same should be deleted."
16. However, Ld. CIT(A) confirmed the action of AO by observing as under:
I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 21 ITO vs. Gujarat State Petroleum Corporation Ltd "2.3 I have considered the order of the AO, facts of the case and appellant's submission. Appellant has deducted 2% tax on hiring of Helicopter Service u/s 194C whereas AO considered the same as covered by Sec. 1941 considering the same as rent of equipment and the differential tax deducted and interest thereon was raised as liability. Appellant hired the Helicopter service for logistic support for its employees and consultants. As per details submitted by the appellant, the contract with GVHL is for hiring Helicopter on rental basis which is also for associated services. The facts remains that appellant's contract is not for transportation but for hiring of Helicopter services therefore, it falls in the category of equipment rent. Even GVHL has applied for lower deduction u/s 197 r.w.s. 194-1 with regard to the payment received from appellant. In view of these clear facts, the transaction is for hiring of Helicopter and not for transportation. The decisions relied upon by the appellant are therefore, not relevant. In view of this I confirm the actin of the ITO.
ItS in levying tax and interest u/s 201(1) & 201(1A) on payment to GVHL.
2.3.1 Appellant's related ground in view of apex court's decision in the case of Hindustan Coca-Cola Ltd. is that the recipient GVHL had paid taxes on receipt and filed the return of income, therefore, the tax demand is not recoverable from the appellant. I agree with the appellant that wherever the income subject to TDS has been offered for tax and taxes have been paid on the same, the demand u/s 201(1) cannot be enforced. ITO.TDS. is therefore, directed to verify the appellant's claim and if the taxes have been paid on the Income received by the deductee; demand u/s 201(1) will be reduced. Interest u/s 201(1A) will however, be leviable in view of the same decision of apex court."
17. Before us learned counsel of the assessee reiterated the submission made before Ld. CIT(A) and placed reliance on the decision of Hon'ble Gujarat High Court in the case of CIT vs. Reliance Engineering Associated Pvt. Ltd wherein on similar facts it was held that agreement for hiring services of contractors for rendering transportation services for goods and I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 22 ITO vs. Gujarat State Petroleum Corporation Ltd passengers by buses cars sumos utility vans etc would be covered u/s. 194C and not u/s. 194I. Reliance was also placed on the decision of Bombay Bench of the Tribunal in the case of Skill Infrastructure Ltd. Ld. DR however relied on the order of lower authorities.
18. After hearing both the parties and perusing the record, we find that assessee had executed a service contract with M/s Global Vectra Helicorp Ltd on 23-11-2007 for availing helicopter services in relation to air logistic support for crew and personnel of the assessee and any of its consultants or suppliers as well as supply of essential cargo to and from offshore rig. Assessee while making payment to Global Vectra Helicorp Ltd has deducted tax @ 2 % as per provisions of section 194C. AO however was of the view that the payment made to M/s GVHL is covered by Section 194I, considering the same as rent of equipment and therefore assessee was to deduct tax @ 10 %. As per contract between assessee and M/s GVHL, the helicopter services were hired by the assessee for air lift of crew including company's and company's third party personnel and essential cargo required at the rig. Assessee had not taken possession of those helicopters from M/s. GVHL and responsibility of operating and maintaining of the helicopters was of M/s GVHL only. We further find that under clause (iv) of explanation added to section 194C of the Act, the work shall include:
"clause (c): carriage of goods and passengers by any mode of transport other than by railways."
I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 23 ITO vs. Gujarat State Petroleum Corporation Ltd Therefore this contract between assessee and GVHL falls under section 194C of the Act. This view of ours gets support from the decision of the Hon'ble jurisdictional High Court in the case of CIT vs. Reliance Engineering Associates P. Ltd [2012] 209 taxman 351. In that case, the assessee had engaged the services of contractors for rendering transportation services for goods and passengers by buses, cars, sumos utility vans etc. It had not taken possession of those vehicles from the contractors and the responsibility of operating and maintaining of the vehicles was of the contractor. The assessee made deduction of tax in accordance with provision u/s. 194C. The revenue authorities however held that carriages for the purpose of carrying goods and passengers would be treated to be machineries within the meaning of explanation to section 194I and therefore the assessee was liable to deduct higher amount of tax as per section 194I. On appeal the Tribunal decided in assessee's favour. On revenue's appeal Hon'ble jurisdictional High Court confirmed the order of ITAT by holding as under: -
"There was no dispute that a contract was entered into under clause
(iv) of Explanation to section 194C for carrying various goods and passengers by trailer, utility vans, water tankers, sumos, etc, and thus, it clearly comes within the meaning of 'work.' [Para 6] So far the definition of 'rent' as provided in section 194-I is concerned, accordingly to the same, 'rent' means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any:
(a) Land; or
(b) Building (include factory building); or
(c) Land appurtenant to a building (include factory building); or
(d) Machinery; or
(e) Plant ; or
(f) Equipment; or I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 24 ITO vs. Gujarat State Petroleum Corporation Ltd
(g) Furniture; or
(h) Fittings, Whether or nor any or all of the above are owned by the payee.
On comparison of the two Explanations added to sections 194-I and 194C, it appears that it was never the intention of the Legislature to overlap any of the items mentioned within the meaning of 'rent' by including the same within the meaning of 'work' under section 194C. Since the agreement for carriage of goods by vehicles other than railways comes within the purview of explanation of 'work' within the meaning of section 194C, it necessarily follows that it was never the intention of the Legislature to include the amount taken for hiring of such vehicles within the meaning of word 'rent'. [Para 6.1] Moreover, now it is settled law that where two interpretations are possible, the one which is favourable to the assessee should be adopted. Even if the aforesaid principle is applied, the Tribunal below was quite justified in adopting the case of the assessee in the facts of the instant case. [Para 8]"
In view of the above the lower authorities were not justified in holding that payment made by the assessee to M/s GVHL for hiring of helicopters for transportation of his employees falls under the category of equipment hiring and TDS @ 10% was deductable on this payment u/s 194I of the Act. Therefore their orders are hereby set aside and this ground of assessee's CO is allowed.
19. Second ground of CO has been dealt by AO as under: -
"4.1 The assessee company made payment to 3rd I Event Management. The assessee company issued a work order dtd. 23/05/2008 to 3rd I Event Management Group for managing and organizing the "GSPC Invitation 20-20 Corporate Cricket Tournament 2008" for an amount of Rs. 28, 16,500/-. The work order was placed offer inviting quotations from the interested parties. Further, 3rd I Event Management have also charged service charges @ 12% for the services provided to GSPC. Accordingly, the assessee Co. has made payment to the contractor and deducted the tax at source @ 2% only as against 10 % u/s 194-J of the Act. Since the I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 25 ITO vs. Gujarat State Petroleum Corporation Ltd payment was made to the person who managed the event (i.e. even management), the assessee was required to deduct the tax as per the provisions of Section 194J of the Act. As the tax was deducted @ 2% only on the above payment, there was short deduction of tax by 8% +5C+EC. The assessee was show-caused ...
After considering assessee's reply AO raised demand U/s 201(1) and 201(1A).
20. Assessee's submission was as under:-
"3.1 The appellant has issued a work order vide letter dated 23- 05-2008 to 3rd I Event Management Group for organizing the "GSPC Invitation 20-20 Corporate Cricket Tournament 2008" for an amount of Rs. 28,16,500/-.
3.2 The learned A O. has found following in his show cause notice dated 27-03-2009 which is reproduced as under for your reference. "It is also observed that you have made payment to 3m I event Manager of Rs. 13,32,140/- after deducing TDS @ 2% u/s 194C, whereas this services rendered by 3rd I Event Manager is of professional skills and therefore attracts TDS provision u/s 194 1 of the I T Act. You are hereby asked to show cause why tax was not deducted u/s 194 1 of the IT Act."
3.3 The appellant has submitted reply on 04-05-2009 which as reproduced as under for your reference.
"With reference to the above, we have to state that GSPC has issued an order to 3rd I event Manager - 3rd I primarily to organize a "Corporate Cricket Tournament involving GSPC, ONGC Reliance, TATA, Indian Railways and Income Tax. The entire responsibly of the management of the cricket tournament for a period of 12 days was on the shoulders of 3rd I. The responsibility of 3rd I among other things include the following.
1) arrangement for cricket balls/stumps
2) lighting
3) generator and fuel
4) decoration
5) sound
6) medical kits
7) manpower
8) ground expenses
9) photographs
10) refreshment
I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 26
ITO vs. Gujarat State Petroleum Corporation Ltd
11) dinner
12) room booking
13) fire crackers 3rd I was to be paid management fees at the rate of 15% of the total value of billing. SPC has taken the services of 3rd I for holding the "Cricket tournament". The order is for the arrangement of "Entire tournament" in an efficient manner. In short, 3rd I is required to conduct the "Entire tournament" as per the liking, standard and desire of GSFC. It is therefore obvious for GSPC to deduct tax as per the provisions of Section 194C of the Act.
You will appreciate that Provisions of Section 194J of the Act, is applicable only to
1) any payment by way of fees for professional services
2) any payment by way of fees for technical services
3) any payment by way of royalty We will analyze the aforesaid points one by one with reference to the payment made to 3rd I
1) Payment by way of fees for professional services:
Professional services mean the services rendered by person carrying on the following professions
(a) legal profession;
(b) medical profession;
(c) architectural profession;
(d) profession of accountancy;
(e) profession of technical consultancy;
(f) profession of inferior decoration;
(g) profession of advertising (i.e. actor, director and cameraman providing professional services to an advertising agency)
(h) any other profession notified for the purpose of Section 44AA; (it includes authorized representative, film artist, company secretary and information technology
(i) any other profession notified for the purpose of Section 194J (no such notification is issued so far ) From the above, you will be able to conclude that services rendered by 3rd I to GSPC are not covered by any of the above professions mentioned herein above and hence payments made by GSPC to 3rd I are certainly not covered by the first category.
2) Payment by way of Fees for Technical Services:
I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 27 ITO vs. Gujarat State Petroleum Corporation Ltd The expression fees for technical services has been defined U/s 9(1)(vii) of Income Tax Act, 1961 to mean any consideration (including lump sum consideration) for the rendering of any managerial, technical if consultancy services including provision of services of technical or consultancy services (including 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 is chargeable under the head "Salaries" From the above, you will be able to ascertain that services rendered by 3rd I to GSPC are not covered by technical services mentioned herein above and hence payments made by GSPC to 3rd I are certainly not covered by the second category.
3.4 The learned AO, has grossly erred in ignoring the decision of ITAT Ahmedabad 'C' Bench in the case of Gujarat State Electricity Corporation Limited vs. Income Tax Officer wherein it was held that in the case of agreement for operation and maintenance of power project, payment made by the appellant company to Gujarat State Electricity Board for entire operation and maintenance of power plant under a comprehensive contract could not be treated as payment of fees for professional services as contemplated in sec, 194J. Such payment would come within the limb of exclusive part, viz "consideration for like project' excluded fn the definition of "fees for technical services" given in Expln. to sec 9 (1A) (vii). Deduction of tax at source at 2% as per section 194C was justified.
3.5 The learned A.O. has grossly erred in law and on facts in levying interest under -Section 201 (IA) of the Act.
Without prejudice to what is stated above, the appellant humbly pleads the as per the binding Judgment of Hon'ble Gujarat Highcourt in the case CIT Vs Rishikesh Apartments Co -op- Housing Society limited (2002) 253 ITR 31O, if the payee has paid the advance tax, if payable then there is no revenue loss to the exchequer and in that event no interest can be levied U/s 201(IA) of the Act. The learned A.O. has grossly erred in not considering the following the two judgment quoted by the appellant through letter dated 04-01- 2010.
1. Children's Education Society Vs. DCIT (TDS) (2009) 319 ITP 409 Karnataka High Court I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 28 ITO vs. Gujarat State Petroleum Corporation Ltd
2. Hindustan Cocacola Beverages Pvt. LTd. Vs. CIT (2007) 293 ITR 226 (SC) It has been held in the aforesaid two judgments that once tax has been already paid by the deductee the same together with interest and penalty cannot be recovered from the deductor even though deductor had failed to deduct tax at source.
3.7 In view of the above, the appellant humbly submits that the contention of the learned. A.O. is bad in law and hence the same should be deleted."
21. Ld. CIT(A) confirmed the action of AO by observing as under:-
"4.3 I have considered the order of the AO, facts of the case and appellant's submission. Appellant made payment for management services however, deducted tax u/s 194C only. A.O. considered the same in the category of managerial consulting services. The kinds of services received by the appellant definitely fall in this category. The decision relied upon by the appellant in the case of Guj. Electricity Ltd, is not relevant since that contract was for comprehensive services. However in the case of appellant it was only management fees which are squarely covered u/s. 194-J. Accordingly, A.O. 's action is confirmed.
4.3.1 Appellant's related ground in view of apex court's decision in the case of Hindustan Coca-Cola Ltd. is that the recipient 3 I Event Management had paid taxes on receipt and filed the return of income, therefore, the tax demand is not recoverable from the appellant. I agree with the appellant that wherever the income subject to TDS has been offered for tax and taxes have been paid on the same, the demand u/s 201(1) cannot be enforced. ITO. TDS is therefore, directed to verify the appellant's claim and if the taxes have been paid on the income received by the dedcutee, demand u/s 201(1) will be reduced. Interest u/s 201 (1A) will however, be leviable in view of the same decision of apex court."
22. Before us learned counsel of the assessee reiterated the submission made before Ld. CIT(A) and submitted that though services provided by M/s 3rd Eye Event Management are managerial in nature but the same services were not taken by the assessee for managing its business but these services I.T.A No.2884/Ahd/2010 & CO No. 322/Ahd/2010 A.Y. 2009-10 Page No 29 ITO vs. Gujarat State Petroleum Corporation Ltd were taken for managing a 20-20 cricket tournament only. Therefore payment made to M/s 3rd Eye Event Management is not covered by the provisions of section 194 J. This argument advanced by the assessee is devoid of any merit as the expenses incurred by the assessee on organizing of cricket tournament have been claimed by the assessee against its business income as if the same were incurred for business purposes. Therefore it cannot be said that managerial consultation services of Third Eye Event were not for its business. The assessee cannot take contrary stand to avoid its TDS liability. Therefore we have no hesitation in upholding the order of Ld. CIT(A) and the same is hereby upheld. This ground of CO is dismissed
23. In the combined result revenue's appeal is dismissed and assessee's CO is partly allowed.
Order pronounced in open court on the date mentioned hereinabove at caption page Sd/- Sd/-
(ANIL CHATURVEDI) ( D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 29/11/2013 ak
आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-
1. Assessee
2. Revenue
3. Concerned CIT
4. CIT (A)
5. DR, ITAT, Ahmedabad
6. Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद