Income Tax Appellate Tribunal - Amritsar
Addl. Superintending Engg. (Ddo), ... vs Assessee on 30 June, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR
(CAMP AT JALANDHAR)
BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND
SH. T.S. KAPOOR, ACCOUNTANT MEMBER
I.T.A Nos.385 to 387(Asr)/2015
Assessment Year: 2010-11 to 2012-13
Addl. Superintendig Engg. Vs. Income Tax Officer
(DDO) (TDS)
Punjab Power Corporation Ltd. Jalandhar.
City Division, Parbhat Chowk,
Hoshiarpur.
PAN: AAFCP-4714J
(Appellant) (Respondent)
Appellant by: Sh. Sachin Malhotra (Adv.)
Respondent by: Sh. A.N.Misra (DR)
Date of hearing: 23.06. 2016
Date of pronouncement: 30.06.2016
ORDER
PER T.S.KAPOOR (AM):
This is a bunch of three appeals filed by assessee against the consolidated order of learned CIT(A) dated 19.05.2015 for Asst. Years:
2010-11 to 2012-13 respectively.
2. These appeals contain a common issue and these were heard together, therefore, for the sake of convenience a common and consolidated order is being passed.
3. The brief facts of the case as noted in the order u/s 201(1)/201(1A) of the Income Tax Act, is that an inspection was carried out at the Office 2 ITA No.385 to 387 (Asr)/2015 Asst. Years: 2010-11 to 2012-13 premises of the person responsible and it was found that assessee had deducted TDS @ 2% from M/s J.D. Referigeration & Electricals and M/s. CCS Technergy Limited. The Assessing Officer was of the opinion that the assessee should have deducted tax at source @ 10% as the services provided to the assessee by the payees were technical in nature. The assessee filed copies of contracts entered into with the payees, however, the Assessing Officer did not accept the contentions of assessee and held the assessee was in default for short deduction of tax.
4. Aggrieved with the assessment order the assessee filed appeals before learned CIT(A). The learned CIT(A) relied upon the case law of M/s Hindustan Coca Cola Beverages (P) Limited Vs. CIT reported at (2007) 293 ITR 226 (SC) and held that in respect of two years the payees had paid due taxes, therefore, again taxes cannot be recovered and in respect of one year he remitted back the file to the office of Assessing officer for examination as to whether the payee had paid taxes or not.
5. The learned CIT(A), however, dismissed the ground of appeal of assessee regarding its stand that assessee was not engaged in providing technical services and, therefore, the assessee is in appeal before us.
6. Before us, the assessee has taken four grounds of appeal out of which ground Nos.2 & 3 has already been decided by learned CIT(A) in favour of assessee, therefore, these grounds of appeal are dismissed.
7. As regards ground No.1, regarding grievance of assessee for treating the contracts liable for TDS for category of persons engaged in 3 ITA No.385 to 387 (Asr)/2015 Asst. Years: 2010-11 to 2012-13 providing technical services, we find that during assessment proceedings, the assessee had filed copies of works contract entered into between M/s J.D. Referigeration and Electricals, and M/s CCS Technergy Limited. The Assessing Officer has himself reproduced the scope of work from such works contract which for the sake of completeness are reproduced below.
"3. I have carefully considered the reply furnished by the PR with reference to all the facts, material and evidence available on record. As regards the contract given to M/s J.D. Referigeratin & Electricals, Gahun Road, Balachaur, it may be pointed out that the PR has given contract for providing technical services to this contract M/s J.D. Referigeration & Electricals, Gahun Road 31-1-2011 copy of which has been furnished by the PR. Perusal thereof reads as follows:-
"1. Scope of work: Scope of work included execution of work by providing labour by the contractor. All clearances horizontal, veritical, phase to phase, shall be as per standard specifications of PSPCL and Indian Electricity Rules, 1956. Earthing is to be provided to all capacity distraction transformers and each pole as per existing inspection newly erected HT line. PSPCL may at its discretion change the scope of the work viz. increase/decrease in the quotation of work, if required. The material shall be provided by the PSPCL and shall be drawn by JE concerned of PSPCL Sub Division. The dismantled material shall be handed over to JE incharge at site by contractor and shall be returned by him to store.
"2. Final Checking, Testing and commissioning done by the PSPCL's officer or its authorized agency to ensure that all the works executed have been done according to specifications approved by PSPCL."
It is thus clear that the contract was for providing technical services and not for providing labour alone. The contention of the PR is therefore devoid of any merit. The cases relied on by the PR are distinguishable on facts. Moreover the PR has also not brought on record any documentary evidence to show that the tax short deducted at source has been paid by the deductee.
3.1 As regards the other contractor-M/s CCS Technergy Limited, Hyderabad-it may be pointed out that as per work order cum contract No.14/DB/33/B dated 9.6.2009 copy of which has been provided by the PR in the course of post inspection inquiries it is revealed that it was for carrying Meter reading, spot billing and cash collection in 10 divisions contained in this work order. Perusal of the work order states the scope of work as under:
'SCOPE OF WORK.
"PSEB intends to introduce spot billing scheme for its DS/NRS consumers with load less than 20KW to ease out the billing functions and processes.
"the vendor shall provide the required hardware, software, spot billing machines including manpower as per required services and take back the same after completion of the contract. It shall provide all the relevant services such as meter reading, bill calculation, bill generation, bill delivery/ handing over to consumers, payment collection, issue or receipt to consumer, date loading on the 4 ITA No.385 to 387 (Asr)/2015 Asst. Years: 2010-11 to 2012-13 machines, date downloading from the machines, integrating of data, generation of requisite reports, sending date to PSEB/DOEACC and should seamlessly integrate with the existing billing system being maintained by M/s DOEACC or PSEB or in future with ERP or any other billing software and also with various payment collection mechanisms under operation with PSEB.
From the nature of services provided by payees, we find that the services provided by payees are not technical in nature as defined by the Act in Section 194J. Section 194J requires the assessee to deduct TDS @ 10% for fees for professional services or technical services. Fee for technical services has been defined in Explantion-2 to Clause (vii) of Section-9. We further find that Explantion-2 to clause (viii) of section 9 is reads as under:
"Explanation [2]- For the purposes of this clause, "fees for technical services"
means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including 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."
From the above explanation provided in Section 9 for the meaning of technical services we find that explanation clarifies that technical services means the provision of managerial, technical or consultancy services. From the scope of work as noted by Assessing Officer from the works contract as reproduced in the earlier part of order, we do not find that assessee had obtained any managerial, technical or consultancy services from the payees, therefore, the provisions of section 194J were not applicable to the assessee and rather assessee had deducted tax u/s 194C rightly and therefore, we allow ground No.1 of the appeal. 5 ITA No.385 to 387 (Asr)/2015
Asst. Years: 2010-11 to 2012-13
8. Ground No. 4 is in respect of interest on demand created by Assessing Officer u/s 201(A) of the Act and as we have already decided the first ground of appeal in favour of the assessee, therefore, this ground will not survive and hence this action of learned CIT(A) will also not survive and therefore, Ground No.4 is also allowed.
9. In view of the above, appeals filed by assessee are partly allowed.
Order pronounced in the open Court on 30th June, 2016.
Sd/- Sd/-
(A.D. JAIN) (T. S. KAPOOR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated:30.06.2016.
/PK/ Ps.
Copy of the order forwarded to:
(1) The Assessee:
(2) The
(3) The CIT(A),
(4) The CIT,
(5) The SR DR, I.T.A.T.,
True copy
By order