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2014 (1) TMI 1126 - AT - Income TaxDemand u/s 201(1) and 201(1A) r.w.s. 194I - Held that - Following ITO vs. Roshan Publicity Pvt Ltd 2005 (5) TMI 551 - ITAT MUMBAI - In acquiring the right of displaying advertisement at hoarding site and making payment to hoarding site owners does not involve lease, sub-lease or tenancy and therefore, sec. 194-I is not applicable as the payment cannot be termed as rent - The advertising company who hires the hoardings will fall within the purview of 194I and not the person who pays advertisements charges - From the details of advertisement charges submitted it is clear that only the part of the amount relates to hoardings, the remaining part is for other services referred in appellant s reply such as business promotion, printing and stationary Brand Building etc - Decided against Revenue. Demand u/s 201(1) and 201(1A) r.w.s. 194J - Held that - Following ACIT vs. Gujarat State Petronet Ltd 2013 (12) TMI 1046 - ITAT AHMEDABAD - Appellant made payments of transmission of gas for which it deducted tax u/s 194C - On perusal of contract with GSPL, it is clear that transmission charges are based on gas quantity transmitted - The charges are not based on time or length of the pipeline - This also indicates that appellant did not use any equipment but the same were used by GSPL transmitted gas through its pipeline - For bringing any payment in the nature of rent within the purview of section 194-1, there has to be use of asset or equipment by the payer. If the same is used by the receiver for the work of the payer, it will fall within the provisions of see. 194C - Sec. 194C clearly includes carriage of goods and passenger by any mode of transport other than railways, the transportation of gas through pipeline is covered by this - The gas transmission agreement, mode and basis for payment use of pipeline for transmitting gas for many consumers, operation and maintenance of pipeline by GSPL and no possession or exclusive right to use the pipeline at any given point of time clearly indicates that the payment for gas transmission by the appellant will not attract the provisions of Sec. 194I - Decided against Revenue. Demand u/s 201(1) Payment for hiring helicopter services - Held that - Assessee had executed a service contract with M/s Global Vectra Helicorp Ltd on 23-11-2007 for availing helicopter services in relation to air logistic support for crew and personnel of the assessee and any of its consultants or suppliers as well as supply of essential cargo to and from offshore rig - Assessee while making payment to Global Vectra Helicorp Ltd has deducted tax @ 2 % as per provisions of section 194C - As per contract between assessee and M/s GVHL, the helicopter services were hired by the assessee for air lift of crew including company s and company s third party personnel and essential cargo required at the rig - Assessee had not taken possession of those helicopters from M/s. GVHL and responsibility of operating and maintaining of the helicopters was of M/s GVHL only - Following CIT vs. Reliance Engineering Associates P. Ltd 2012 (6) TMI 234 - GUJARAT HIGH COURT - This contract between assessee and GVHL falls under section 194C of the Act - The lower authorities were not justified in holding that payment made by the assessee to M/s GVHL for hiring of helicopters for transportation of his employees falls under the category of equipment hiring and TDS @ 10% was deductable on this payment u/s 194I of the Act Decided in favour of assessee. Payment made for use of gas pipeline Held that - Though services provided by M/s 3rd Eye Event Management are managerial in nature - These services were taken for managing a 20-20 cricket tournament only - The expenses incurred by the assessee on organizing of cricket tournament have been claimed by the assessee against its business income as if the same were incurred for business purposes - It cannot be said that managerial consultation services of Third Eye Event were not for its business - The assessee cannot take contrary stand to avoid its TDS liability Demand u/s 201(1) is leviable alongwith ineterst u/s 201(1A) - Decided against assessee.
Issues Involved:
1. Deletion of order passed under Section 201(1) and interest charged under Section 201(1A) of the IT Act for hiring hoardings. 2. Deletion of order passed under Section 201(1) and interest charged under Section 201(1A) of the IT Act for hiring pipeline connections. 3. Payment to Global Vectra Helicorp Ltd. and applicability of Section 194I. 4. Payment to 3rd I Event Management and applicability of Section 194J. Issue-wise Detailed Analysis: 1. Deletion of order passed under Section 201(1) and interest charged under Section 201(1A) of the IT Act for hiring hoardings: The Revenue's appeal contested the deletion of the order passed under Section 201(1) and interest under Section 201(1A) for the hiring of hoardings. The AO argued that the assessee should have deducted tax at 10% under Section 194I instead of 2% under Section 194C. The assessee countered that the payments were for advertisement services, not rent, and cited CBDT Circular No. 715, which supports the deduction under Section 194C for advertising contracts. The Ld. CIT(A) agreed with the assessee, referencing the ITAT Mumbai decision in ITO vs. Roshan Publicity Pvt. Ltd., concluding that the payments were for advertisement services and not rent. The Tribunal upheld this decision, finding no need to interfere as no contrary decision was presented by the Revenue. 2. Deletion of order passed under Section 201(1) and interest charged under Section 201(1A) of the IT Act for hiring pipeline connections: The AO raised a demand under Sections 201(1) and 201(1A) for payments made to Gujarat State Petronet Ltd. (GSPL) for gas transportation, arguing that the payments should be considered rent under Section 194I. The assessee argued that the payments were for transportation services, not for hiring pipelines, and cited CBDT Circulars and judicial precedents supporting this view. The Ld. CIT(A) agreed, stating that the appellant did not use the equipment but paid for transportation services, thus falling under Section 194C. The Tribunal upheld this decision, referencing a similar case (ACIT vs. Gujarat State Petronet Ltd.), where payments for gas transportation were considered under Section 194C. 3. Payment to Global Vectra Helicorp Ltd. and applicability of Section 194I: The AO contended that payments to Global Vectra Helicorp Ltd. for helicopter services should be taxed under Section 194I as rent for equipment, not under Section 194C. The assessee argued that the payments were for transportation services, not equipment rental, and cited CBDT Circular No. 715 and judicial precedents supporting this view. The Ld. CIT(A) disagreed, considering the payments as rent for equipment. However, the Tribunal found that the helicopter services were for transportation, not equipment rental, and thus fell under Section 194C. The Tribunal referenced the Gujarat High Court decision in CIT vs. Reliance Engineering Associates P. Ltd., which supported this interpretation. 4. Payment to 3rd I Event Management and applicability of Section 194J: The AO argued that payments to 3rd I Event Management for organizing a cricket tournament should be taxed under Section 194J as fees for professional services. The assessee contended that the payments were for event management services, falling under Section 194C. The Ld. CIT(A) sided with the AO, considering the payments as managerial services under Section 194J. The Tribunal upheld this decision, noting that the services provided were managerial and related to the assessee's business, thus falling under Section 194J. Conclusion: The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's cross-objections, upholding the decisions of the Ld. CIT(A) regarding the applicability of Sections 194C and 194I/194J based on the nature of the services and payments involved.
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