2013 (12) TMI 1046 - AT - Income Tax

Interest u/s 201(1A) Vehicle hiring charges Held that - Such charges has not been prescribed u/s. 194I. Vehicles and Chauffers supplied by the contractor and was under the complete control of the contractor - 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 Such type of payments are governed by the provision of Section 194C not u/s. 194I. Connectivity charges Held that - 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. Gas transportation charges Held that - 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 - It is covered u/s. 194C - 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 - Following decision in case of Hindustan Coca Cola Beverages Pvt. Ltd 2007 (8) TMI 12 - SUPREME COURT OF INDIA Decided against Revenue.

Summary

Issues Involved:
1. Interpretation of Sections 194C and 194I of the Income Tax Act for TDS on various payments.
2. Determination of default under Section 201(1) and interest under Section 201(1A) for assessment year 2009-10.

Analysis:

Issue 1: Interpretation of Sections 194C and 194I for TDS on payments:
The case involved a dispute regarding the correct section for Tax Deducted at Source (TDS) on payments made by the appellant for vehicle hire charges, connectivity charges, and gas transportation charges. The Assessing Officer (A.O.) contended that the payments should have been subject to TDS under Section 194I at 11.33%, while the appellant argued that Section 194C applied. The appellant provided detailed explanations for each type of payment, highlighting the nature of the contracts and the control over the services provided. The Commissioner of Income-Tax (Appeals) considered the submissions, case laws, and CBDT Circulars, ultimately ruling in favor of the appellant. The CIT(A) found that the vehicle hire charges, connectivity charges, and gas transportation charges were covered under Section 194C, not Section 194I, based on the specific nature of the contracts and the obligations of the contractors. The CIT(A) relied on precedents and detailed discussions to support this interpretation.

Issue 2: Determination of default under Section 201(1) and interest under Section 201(1A):
The A.O. had assessed the appellant as being in default under Section 201(1) and levied interest under Section 201(1A) for the TDS shortfall. However, the CIT(A) reviewed the facts, contractual arrangements, and submissions made by the appellant. The CIT(A) found that the appellant had acted in accordance with the provisions of Section 194C for the payments in question. The appellant had also provided confirmation from the deductees that the receipts had been included in their income. Relying on the Supreme Court decision in Hindustan Coca Cola Beverages Pvt. Ltd., the Tribunal concluded that the appellant could not be deemed a defaulter under Section 201(1) of the IT Act. Therefore, the Tribunal dismissed the Revenue's appeal and allowed the appellant's Cross-Objection (C.O.), emphasizing that there was no revenue loss and the appellant had complied with the relevant TDS provisions.

In conclusion, the Tribunal's consolidated order addressed the issues raised in the Revenue's appeal and the appellant's C.O. for the assessment year 2009-10. The judgment clarified the application of Sections 194C and 194I for TDS on specific payments and determined that the appellant was not in default under Section 201(1) of the IT Act. The detailed analysis of the contractual arrangements and legal interpretations provided a comprehensive basis for the Tribunal's decision in favor of the appellant.