9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (7) TMI 1016 - AT - Income TaxLiability to deduct tax u/s 194J - demand raised by the AO vide order u/s.201(1)1/201(1A) - whether the payments made to Nhava Sheva International Container Terminal Private Limited are not in the nature of fees for professional services but the payments are for carriage of goods and thus defined as work in Explanation III to section 194C(2) of the Act, and hence the same are not covered under the provisions of section 194J? - direction of CIT(A) that payments made to NSICT be treated as covered under section 194C and not section 194J challenged - Held that - assessee was making available the containers on customer s trailers / rail wagons, which were lifted from such trailers / rail wagons on the cranes by NSICT and were then moved from yard to vessel side.This movement of cargo is part of the journey of the container from the place of source to the place of destination, which is vessel. The assessee made payment for carriage of goods from the customer s trailers up to the vessel in case of export and vice versa in case of import of goods. This payment cannot be characterized as anything other than for the carriage of goods. When we view Explanation III (c) below section 194C(2) it becomes apparent that the payment made by the assessee to NSICT is covered within this provision and the assessee rightly deducted tax at source u/s. 194C of the Act. See ACIT Versus Merchant Shipping Services (P) Ltd. 2010 (11) TMI 692 - ITAT, Mumbai We, therefore, hold that the payments made by the assessee to NSCIT are covered u/s 194C and there is no scope for applying the provisions of section 194J. The natural corollary is that the assessee rightly made deduction of tax at source at the applicable rate. - Decided in favour of assessee.
Issues Involved:
1. Liability to deduct tax under Section 194J of the Income Tax Act, 1961. 2. Nature of payments made to Nhava Sheva International Container Terminal Private Limited (NSICPL). 3. Applicability of Section 194C versus Section 194J for tax deduction at source. 4. Deletion of interest under Section 201(1A) of the Income Tax Act, 1961. Detailed Analysis: 1. Liability to Deduct Tax under Section 194J of the Income Tax Act, 1961: The Assessing Officer (AO) contended that the assessee should have deducted tax under Section 194J instead of Section 194C, arguing that the services provided by NSICPL were technical in nature. The AO deemed the assessee in default for failing to deduct tax at the appropriate rate and calculated the shortfall in tax deduction along with interest. 2. Nature of Payments Made to NSICPL: The AO observed that the assessee made payments to NSICPL for container handling services, which he classified as technical services requiring tax deduction under Section 194J. The assessee, however, argued that these payments were for composite services related to the carriage of goods, falling under Section 194C. 3. Applicability of Section 194C versus Section 194J for Tax Deduction at Source: The First Appellate Authority (FAA) held that the payments to NSICPL were covered under Section 194C, not Section 194J. The FAA noted that the services provided by NSICPL involved the movement of containers, which constituted "work" as defined in Explanation III to Section 194C(2). The Tribunal upheld this view, referencing the case of Merchant Shipping Services Pvt. Ltd., where similar services were deemed to fall under Section 194C. 4. Deletion of Interest under Section 201(1A) of the Income Tax Act, 1961: The FAA deleted the interest levied under Section 201(1A) as a consequence of holding that the tax was correctly deducted under Section 194C. The Tribunal agreed, noting that the deletion of the principal tax demand logically necessitated the deletion of the interest. Conclusion: The Tribunal confirmed the FAA's decision that the payments made to NSICPL were for carriage of goods and thus fell under Section 194C, not Section 194J. Consequently, the assessee was not in default, and the demand for additional tax and interest was deleted. The appeals filed by the AO for both assessment years were dismissed. The Tribunal's decision was pronounced in the open court on 17.6.2015.
|
