2013 (10) TMI 867 - AT - Income Tax

TDS on renting of pipelines for for transportation of GAS TDS to be deducted u/s 194C or u/s 194I of the Income Tax Act - Assessee has made payment of gas transportation charges to Gujarat State Petronet limited for F.Y.2007-2008 at Rs.22,81,69,361/- Held that - Since there is no control over the pipeline from transporters and the contract for transport by any mode other than rail way, was specifically covered under section 194C of the Act - Present appeal is covered by the provision of section 194C, and not under section 194I of the Act, and therefore, interest under section 201(1A) is not payable by the assessee Decided against the Revenue.

Summary

Issues:
Appeal against deletion of interest charged under section 201(1A) of the IT Act for two different assessment years.

Analysis:
The Revenue's appeals arose from orders of the CIT(A)-VI, Ahmedabad for the assessment years 2008-2009 and 2009-2010, both concerning interest charged under section 201(1A) of the IT Act. The Revenue contended that the CIT(A) erred in law and fact by deleting the interest charged. The primary issue was the correct rate of tax deduction on gas transportation charges paid by the assessee to Gujarat State Petronet Limited. The AO held the deductor company liable for interest under section 201(1A) due to incorrect tax deduction rate. However, the CIT(A) accepted the assessee's submissions, ruling that the payment did not attract section 194I provisions, and thus, no default under section 201(1) occurred, leading to no interest liability under section 201(1A).

The Revenue's argument was based on the AO's order, while the assessee relied on a decision by ITAT, Ahmedabad, 'B' Bench in a similar case involving Gujarat State Petronet Ltd. The ITAT decision supported the assessee's position that the payments were covered under section 194C, not section 194-I of the Act. The ITAT held that the assessee could not be deemed a defaulter under section 201(1) and dismissed the Revenue's appeal. The present case mirrored the Gujarat State Petronet Ltd. case, leading to the conclusion that the appeal was covered by section 194C, not 194-I. Consequently, the CIT(A)'s decision to reverse the AO's order and relieve the assessee of interest liability under section 201(1A) was upheld.

The Tribunal found the facts in the present case identical to the earlier appeal for the assessment year 2008-2009. Therefore, the grounds raised in the current appeal were dismissed following the same reasoning. Ultimately, both appeals by the Revenue for the assessment years 2008-2009 and 2009-2010 were dismissed, affirming the CIT(A)'s decisions.