Income Tax Appellate Tribunal - Ahmedabad
Gujarat State Petronet Ltd.,, ... vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "B" BENCH AHMEDABAD
Before Shri G.C.Gupta, Vice President and
Shri T.R. Meena, Accountant Member
ITA No. 3317/Ahd/2010
Assessm ent Year :2009-10
&
C.O. No.17/Ahd/2011
Assessm ent Year :2009-10
ACIT, TDS Circle, V/s. Gujarat State Petronet Ltd.
Ahmedabad GSPC Bhavan, 5 t h Floor,
Amrut Jayanthi Bhavan, Sector - 11, Gandhinagar
Navnjivan Trust Complex,
Off. Ashram Road,
Ahmedabad
Gujarat State Petronet V/s. ACIT, TDS Circle,
Ltd. GSPC Bhavan, 5 t h Ahm edabad
Floor, Sector - 11, Amrut Jayanthi Bhavan,
Gandhinagar Navnjivan Trust Complex,
Off. Ashram Road,
Ahm edabad
PAN No. ADBPB4053E
(Appellant) .. (Respondent)
राजःव कȧ ओर से Shri Y.P. Verma, Sr.D.R.
By Revenue
आवेदक कȧ ओर से/By Assessee Shri Yogesh Shah, A.R.
सुनवाई कȧ तारȣख/Date of Hearing
22.01.2013
घोषणा कȧ तारȣख/Date of Pronouncement 08.03.2013
ORDER
PER : T.R.Meena, Accountant Member
This appeal of the Revenue and the C.O. of the assessee, emanated from the order of ld. Commissioner of Income-Tax (Appeals)-XXI, I T A No . 3 31 7 /A h d/ 2 01 0 & C.O . No. 1 7/ A h d/ 201 1 A. Y . 0 9- 10 Page 2 Ahmedabad, dated 13.09.2010 for the assessment year 2009-10. The issues and arguments in Revenue's appeal and assessee's C.O. are same. Therefore, we are deciding both in a consolidate order for the sake of convenience. The grounds of Revenue's appeal and Assessee's C.O. are as under:-
ITA No. 3317/Ahd/2010 (Revenue's Appeal)
"1. The Ld. CIT(A) erred in law as well as on facts of the case in deleting the order passed u/s. 201(1) of Rs.1,32,482/- & interest charged u/s. 201(1A) of the IT Act of Rs.23,76,350/- respectively for A.Y. 2009-10 by the A.O.
2. The Ld. CIT(A) erred in not considering the fact that after 13.7.2006 the provision of 194I is applicable on hiring charges of vehicle of Rs.1,50,70,235/- which cover uses of plant and machinery and not the provision of 194C of I.T. Act.
3. The Ld. CIT(A) erred in not considering the fact that after 13.7.2006 the provision of 194I is applicable on hiring charges of connecting charges of Rs.9,08,01,588/- which cover uses of plant and machinery and not the provision of 194C of I.T. Act.
4. The Ld. CIT(A) erred in not considering the fact that after 13.7.2006 the provision of 194I is applicable on hiring charges of Gas Transportation charges of Rs.3,58,44,097/- which cover uses of plant and machinery and not the provision of 194C of I.T. Act. Assessee's C.O. No. 17 /Ahd/ 2011
1. The appellant submits that in case it is found to be an assessee in default u/s 201(1) of the Act, the interest chargeable u/s 201(1A) should be restricted for the period from the date on which TDS ought to have been deposited with the government to the date on which due taxes I T A No . 3 31 7 /A h d/ 2 01 0 & C.O . No. 1 7/ A h d/ 201 1 A. Y . 0 9- 10 Page 3 have been paid by the payees themselves in respect of such payments made by the Appellant.
2. The appellant is a Public Limited Company engaged in the business of laying operating of natural gas transmission network During the financial year 2008-09, survey was carried out at the business premises of the appellant on 17th March 2009 for the purpose of verification of compliances in relation to various Tax Deduction at Source ("TDS") provisions of the Act. In response to the requirements of the surveying officers, desired information was duly provided for vide various replies. The ACIT (TDS) observed that during the course of survey, it was found that the appellant had made payment in F.Y. 08-09 relevant to A.Y. 09-10 as under:
i. Vehicle hire charges Rs.1,50,70,235/- ii. Connectivity charges Rs. 9,08,01,588/- iii. Gas transportation Charges Rs. 3,58,44,097/-
On verification of the TDS details, it was seen that the appellant had made TDS u/s.194C @ 2.266% on the above payments. The ld. A.O. found that these payments having nature of rent within Section 194I of the IT Act. Thus, tax is required to be deducted @11.33% u/s. 194I of the IT Act. Ld. ACIT, TDS Circle had given reasonable opportunity of being heard on this issue. The appellant also replied vide various letters before the ACIT, TDS Circle. The appellant claimed before the ACIT that vehicle hiring charges were for contract on fixed contract, was fixed basis on rate per km. Vehicles as well as chauffer drivers were under the control of the Contractor. Therefore, these I T A No . 3 31 7 /A h d/ 2 01 0 & C.O . No. 1 7/ A h d/ 201 1 A. Y . 0 9- 10 Page 4 services are covered u/s. 194C of the IT Act. Connectivity charges were in pursuant to the agreement entered into the GPSC payment in this regard was connected with the content transported and not lump sum. Thus, TDS was required to be deducted u/s.194C of the IT Act. Gas transportation charges were paid in pursuant to agreements entered in to Gujarat Gas Company Ltd. to provide services for transportation of natural gas. Since, there is no control over the pipeline from transporter and the contract for transport by any mode other than real way is covered u/s. 194C of the IT Act. The appellant further argued before the A.O. that it has submitted the confirmation letter from the deductee and respective receipts have been booked by the deductee in their income. Thus, by relying in case of Hindustan Coca Cola Beverages Pvt. Ltd. (293 ITR 226) (2007) (SC), there was no default of the appellant but the appellant did not furnish the confirmation in three cases. Therefore, ACIT, TDS Cricle computed TDS @ 11.33% u/s. 194I and also charged interest u/s. 201(1A) of the Act. Finally, total demand u/s. 201(1) at Rs. 1,32,482/- and interest u/s. 201(1A) at Rs. 23,76,350/- in total Rs.25,08,832/- was created.
3. Being aggrieved by the order of the ACIT, TDS Circle, the assessee carried the matter before the CIT(A) who has considered the appellant's submission, detailed discussion of Section 194C, relied upon various case laws and CBDT Circulars and it was held that Section 194C categorically covers transportation and contractor is obliged to provide particular type of vehicle but not the same vehicle, contractor has to bear cost of running and maintenance, repair and insurance etc. and obliged to provide another similar I T A No . 3 31 7 /A h d/ 2 01 0 & C.O . No. 1 7/ A h d/ 201 1 A. Y . 0 9- 10 Page 5 vehicle in case of break down. The appellant had to make payment based on km. used and not on fixed basis. These were uncontroverted facts and even the A.O. has also not disputed in all the material facts stated by the appellant like vehicle at all the times being under the supervision and control of the transporter charging of consideration based on kms. Traveled etc. Therefore, the contract is for carrying out of some work for the appellant and it cannot be called a contract where vehicle simplicitor has taken on hire by the appellant. After relying on Rajkot judgment in case of Reliance Industries Limited vs. The ACIT, TDS Circle, Rajkot (ITA No. 387/RJT/2009) A.Y. 2007-08, wherein on similar facts, the Rajkot ITAT has decided such type of payments are governed by the provision of Section 194C not u/s. 194I of the IT Act. Accordingly, the ld. CIT(A) allowed the appeal on first item that vehicle hire charges. Similar findings were given by the ld. CIT(A) on connectivity charges and transportation charges, which is reproduced as under:
"3.5 I have heard the learned authorized representative and considered the submissions alongwith other documents filed before me during the course of hearing of appeal. On perusal of the records, I find that the appellant company is having its own network and it is engaged in the transportation of the Gas through the pipeline. Pursuant to the contract with the customer it charges to them based on quantity of gas supplied through the pipeline. In respect of pipeline which is not owned by it and used for appellant's business, the owner of the pipeline, namely GSPC [owned by GAIL], Sabarmati Gas and Gujarat Gas levy the charges based on quantities transported through their pipeline." I T A No . 3 31 7 /A h d/ 2 01 0 & C.O . No. 1 7/ A h d/ 201 1
A. Y . 0 9- 10 Page 6
4. Now the Revenue is before us. Ld. Sr. D.R. relied upon the order of the A.O. whereas ld. Counsel for the appellant submitted the paper book and relied upon the following case:
i. ITA No. 1637/Ahd/2010 for A.Y. 09-10 in case of Ahmadabad Urban Development Authority vs. ACIT, TDS Circle, for hiring of car on fixed rent payment.
ii. ITA No. 387/RJT/2009 for A.Y. 07-08 in case of Reliance Industries Ltd.
vs. ACIT, TDS Circle, for import detention or demurrage charges, hire charges for vehicles, aircraft etc. and charges for Annual Maintenance Contract for Plant and Machinery.
iii. CIT (TDS) vs. Swayam Shipping Services (P.) Ltd. (2011) 11 taxmann.com 137 (Guj.) for freight and transportation works contracts. iv. CIT(TDS) vs. Krishak Bharati Co-operative Ltd. [2012] 349 ITR 68 (Guj.) for charges for transportation of natural gas to seller not liable to be deducted TDS u/s. 194C.
v. Chhattisgarh State Electricity Board vs. ITO (TDS) [2012] 18 taxmann.com 150 (Mum.) for transmitting power from NTPC's delivery point to assessee's facilities by PGCIL is covered u/s. 194I or not. Ld. Counsel argued that above case laws squarely applicable in case of the appellant. He also had drawn our attention on page nos. 60 to 64 by which he had proved that deductee had shown these receipts in their income. Thus, there is no revenue loss.I T A No . 3 31 7 /A h d/ 2 01 0 & C.O . No. 1 7/ A h d/ 201 1
A. Y . 0 9- 10 Page 7
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. 194I. 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 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 I T A No . 3 31 7 /A h d/ 2 01 0 & C.O . No. 1 7/ A h d/ 201 1 A. Y . 0 9- 10 Page 8 the IT Act. Accordingly, we dismiss the appeal of the Revenue and allow the C.O. of the appellant.
6. In the combined result, the Revenue's appeal is dismissed and the assessee's C.O. is allowed.
These Orders pronounced in open Court on 08.03.2013 Sd/- Sd/-
(G.C.Gupta) (T.R. Meena)
Vice President Accountant Member
True Copy
S.K.Sinha
आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-
1. अपीलाथȸ / Appellant
2. ू×यथȸ / Respondent
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ- अपील / CIT (A)
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद ।