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TMI Blog2013 (3) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... not applicable. Pilotage Contract - liable to TDS u/s 194C OR u/s 194J - Held that:- On perusal of relevant agreement the assessee has engaged pilots on contract basis for Kandla Pilotage operation on periodical basis who will be treated as an employee of Kandla Port Trust from time to time. The pilots engaged for Kandla, Vadinar will be available for pilotage job at either place in exigencies. The payment is provided to be made for days. He is available for pilotage operation. The other condition in the agreement are in respect of engagement of initial period, termination of the contract by giving one month notice, accommodation, medical facilities, etc. concludes that the payment to pilots is in the nature of salary as their contracts agreement were not for managerial and technical or consultancy services and not covered by section 194J. Taxi & Tug Hire Charges - liable to TDS u/s 194C OR u/s 194(I) - Held that:- The assessee entered into agreement with Thakkar Travels for hiring of vehicles where it is provided that the rates at which the payments will be made for normal running of 12 hours from time of reporting and for deployment beyond 12 hours. In the agreement nowhere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS survey u/s 133A was carried out from 08-09-2008 to 16-09-2008 at the premises of the assessee. The assessee runs a port at Kandla. During the course of survey it was noticed that the assessee has taken on rent various vehicles, like cars, jeeps from travel agencies. It has also hired a tug boat, named Ocean Sparkle on daily basis. The assessee used to make TDS u/s 194C of the Act from the payment made to travel agency and the owner of the tug boat. The department was of the view that such payments covered under the provisions of section 194-I as the payments made to them are in the nature of rent. 4. It was also noticed that the assessee has made payments to various contractors for annual maintenance and has made TDS u/s 194C of the Act. The department was of the view that such payments covered under provisions of section 194J and not u/s 194C of the Act, as they are technical fees and professional fees in nature. It has also been noticed that the assessee has made payments to various pilots, who are engaged on daily basis for bringing vessels in and out of the port. On this payment also, the assessee deducted tax u/s 194C of the Act. The revenue is of the view that such p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord perused and gone have through the decisions cited. The issue under consideration is whether Annual maintenance contact, pilotage contract and vehicle hire contracts cover under section 194C or u/s 194J and 194-I of the Act. The assessee deducted tax at source under section 194C. The revenue is of the view that annual maintenance contract and pilotage contract are in the nature of technical services, therefore, falls under section 194J and vehicle contract is rent contract therefore section 194I is applicable. To examine this issue first of all we see what are the activities of the assessee, AMC pilotage contract. The assessee is running a port and in order to carry on the operations machineries such as heavy cranes, weigh bridge, elevator, EPBX systems are installed. The assessee awarded some contracts for repairs and maintenance of these machineries. Section 194C provides that any person responsible for paying any sum to any contractor for carrying out any work including supply of labour for carrying out any work in pursuance of a contract between the contractor and a specified person shall, at the item of credit of such sum to the account of the contractor or at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chnical or consultancy services. Thus, it is clear that these agreements were related to annual maintenance of machineries and not for technical services. The revenue in view of the fact that the contractors have utilized services of technical persons presumed that the assessee made payments for technical services. For this presumption we do not agree with the revenue. It may be technical services for contractor but not for the assessee. The case of assessee is simply a case of annual maintenance of machineries for section 194J is not applicable, we therefore hold accordingly. 18. As regards pilotage payments, on perusal of relevant agreement we notice that the assessee has engaged pilots on contract basis for Kandla Pilotage operation on periodical basis. It is provided in the contract agreement that contract pilots will be treated as an employee of Kandla Port Trust from time to time. He goes to the ship or levy leave the jetty for pilotage work. Till he returns to the jetty, after completion of pilotage operation for the purpose of taking responsibility for injuries sustained by him during the course of pilotage operation. The pilots engaged for Kandla, Vadinar will be ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nowhere it is stated that the possession of the vehicles were given to the assessee. The ITAT, Mumbai Bench in the case of Vodafone Essar Ltd vs DCIT 135 TTJ (Mum)385 while dealing with section 194I held that merely making use of the facility without himself using the equipment and without taking possession the payment cannot be said to be a rent. The relevant finding of the ITAT are reproduced below: 14. We may now refer to a few authorities cited by both the sides. From the assessee s side reference was made to the decision of the AAR in Dell International Services India (P) Ltd, In re (2008) 218 CTR (AAR) 209 : (2008) 305 ITR 37 (AAR). This decision seems to suggest that the user of any equipment should have some right over the equipment and further that there should be some deducted machinery or equipment instead of a common infrastructure which can be used by various operators to provide services. It was also observed further that there should be some dedicated machinery or equipment instead of a common infrastructure which can be used by various operators to provide services. It was also observed that there should be a right to exclusive possession or custody of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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