2017 (5) TMI 1495 - HC - Income Tax

Addition on delay in deposit of employees contribution to CPF/GPF/ESI u/s 36 (1)(va) - Held that - If the amount has been deposited on or before the due date of filing the return under Section 139 and admittedly it was deposited on or before the due date then the amount cannot be disallowed under Section 43B of the I.T. Act or under Section 36(1)(va) of the Act. See CIT Vs. Jaipur Vidyut Vitran Nigam Limited 2014 (1) TMI 1085 - RAJASTHAN HIGH COURT - Decided against Revenue. TDS u/s 194J - payments on account of transmission/wheeling/SLDC Charges to M/s RRVPN - Held that - No liability to deduction tds required. See Commissioner of Income Tax Vs. Bharti Cellular Ltd. (2010 (8) TMI 332 - Supreme Court of India ), Commissioner of Income Tax Vs Bharti Cellular Ltd (2008 (10) TMI 321 - DELHI HIGH COURT ) wherein decided providing assistance or aid, services not involving human interface, hence services are not technical services as contemplated under Explanation 2 to section 9(1)(vii) - interconnect charges/port access charges cannot be regarded as fees for technical services, hence not liable for tax deduction at source - Decided against revenue

Summary

Issues:
1. Challenge to Tribunal's judgment on addition of employees' contribution to CPF/GPF/ESI.
2. Challenge to Tribunal's judgment on payments for technical services to M/s RRVPN not liable for TDS.

Issue 1 - Employees' Contribution to CPF/GPF/ESI:
The appellant challenged the Tribunal's decision on the addition of employees' contribution to CPF/GPF/ESI. The Court framed the substantial question of law regarding the justification of the Tribunal's deletion of the addition made by the AO. The respondent relied on the decision in CIT Vs. Jaipur Vidyut Vitran Nigam Limited, where it was held that if the amount was deposited on or before the due date of filing the returns under the IT Act, it cannot be disallowed under relevant sections. Another decision in CIT vs. SBBJ emphasized the importance of timely deposit of statutory liabilities to claim deductions. The Court concluded that if the contributions were paid after the due date under the respective Act but before filing the return of income, they cannot be disallowed under the IT Act provisions.

Issue 2 - Payments for Technical Services to M/s RRVPN:
The appellant contested the Tribunal's decision on payments made for technical services to M/s RRVPN not being liable for TDS under section 194J of the IT Act. The respondent relied on the decision in Ajmer Vidhut Vitran Nigam Ltd. Vs. Authority for Advance, which highlighted the provisions of sections 194C and 194J regarding TDS deductions for professional and technical services. The Court noted that the issue was concluded by decisions of the Bombay High Court and Delhi High Court, and since the SLP against those decisions was dismissed, the issues were required to be answered in favor of the assessee against the department. Consequently, both issues were decided in favor of the assessee, leading to the dismissal of the appeal.

In summary, the High Court of Rajasthan addressed two key issues in this judgment related to the addition of employees' contribution to CPF/GPF/ESI and payments for technical services to M/s RRVPN not liable for TDS. The Court relied on previous decisions to support its conclusions, emphasizing the importance of timely deposits of statutory liabilities and the applicability of TDS provisions for various services. Ultimately, the Court ruled in favor of the assessee, dismissing the appeal against the Tribunal's judgment.