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TMI Blog2012 (7) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... lant by : Shri Atul Garg, C.A. Respondent by : Shri A.K. Sharma, Jr. D.R. ORDER Per Bhavnesh Saini, J.M.: This appeal by the assessee is directed against the order of the ld. CIT(A), Gwalior dated 30.06.2011 for the assessment year 2008-09 on the following grounds :- 1. On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in law and on facts in upholding confirming Assessing Officer s order that payment made for normal and routine supervision of works assigned was covered u/s. 194J as not u/s. 194C of the Income Tax Act, 1961 and consequently upholding Assessing Officer s order u/s. 201(1)/201(1A) of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in law and on facts in confirming Assessing Officer s Order u/s. 201(1)/201(1A) ignoring the material on record and the facts that the payee deductee has already paid the tax on his income element comprised in the payment made to him by the appellant deductor and thereby no demand for short deduction of TDS could be raised against the deductor. 2. Briefly, the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same has been paid for construction supervision charges for work of Narmada River Bridge at Nandner Dhana, Naseerabad Road Tawa River Bridge at Bandradhan, Hosangabad Road, Hosangabad (M.P.). The same has also been shown by Shri Agrawal as supervision charges as per his Income Expenditure A/c enclosed with his return filed on 25.09.2008 on which net surplus of Rs.2,92,000/- has been declared. As per his P L A/c, the appellant deductor has claimed it under the head supervision charges of Head office whereas consultancy expenditure of Rs.1,81,732/- has also been debited. However, before a person can be called a contractor to be covered u/s. 194C, his status must have nexus in its characteristics as carrying out work for another person as a contractor in the ordinary sense and not merely carrying on activities of his business or profession in the ordinary course by charging fees or remuneration. This view has been held by Hon ble Gujrat High Court in the case of Allgvjrj Federation of Tax Consultant vs. CBDT (1995) 214 ITR 270 (Guj.). Also the expression any work occurring in Sec. 194C cannot include a contract for rendering of services which is the fact found in case of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which it was held that engagement for professional service or services simpliciter which do not involve contract for carrying out any work itself, or a contract for labour for carrying out such services, are not within the purview of section 194C of the Act as it exists. Therefore, contention of the assessee was rightly rejected that the provisions of section 194C would apply in the case of the assessee because Shri Tanuj Agarwal acted as contractor and merely provided service simpliciter for supervising work of the assessee. To that extent, the order of the ld. CIT(A) is confirmed. However, the ld. CIT(A) has not given any finding as to how the provisions of section 194J would also apply in the case of the assessee. The ld. CIT(A) merely confirmed the order of the AO because the assessee himself has shown the same payment u/s. 194J in the original return of income. Such an approach of the ld. CIT(A) is not warranted under law because merely applying a wrong provision of law would not be sufficient to fasten a liability upon the assessee. The AO in the remand report stated that in fact such payment is in the nature of fees for technical services as is specified in Explanation 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idual or a Hindu undivided family referred to in the second proviso shall be liable to deduct income-tax on the sum by way of fees for professional services in case such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family.] (2) [***] (3) [***] Explanation . For the purposes of this section, (a) "professional services" means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified 5 by the Board for the purposes of section 44AA or of this section; (b) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9; (ba) "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9; (c) where any sum referred to in sub-section (1) is credited to any account, whether called "suspense account" or by any other name, in the books of account of the person liable to pay such sum, such crediting shall be deemed to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the Tribunal recalling its earlier order, that order attained finality and the High Court could not interfere with the final order; (ii) without deciding the question whether the Appellate Tribunal could have reopened the appeal for rectifying an error apparent on the record that in view of Circular No.275/201/95-IT(B) dated January 29, 1997, and since the assessee had paid the interest under section 201(1A) and there was no dispute that the tax due had been paid by the deductee (Pradeep Oil), the Appellate Tribunal came to the right conclusion that the tax could not be recovered once again from the assessee. 4.2 Since the ld. CIT(A) has also not given any finding on the same, therefore, on ground No. 2 also, the matter requires reconsideration at the level of the ld. CIT(A). In view of the above discussion, we set aside the order of the ld. CIT(A) to the extent of confirming applicability of section 194J and Ld. CIT(A) shall decide as to which of the clauses of section 194J would apply in the case of assessee and whether the deductee has paid tax on the same income / payment and its effect thereon. The ld. CIT(A) shall decide both the points afresh by giving reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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