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TMI Blog2015 (2) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... er 13, 2006 (supra), in our view, also clarifies the situation envisaged in the present case and considering the circular as well as the facts available on record, we have no hesitation in holding that the agreement of supply of gas by GAIL to the assessee, in the instant case, is a simpliciter transaction of sale and purchase and cannot be termed to be an agreement for work/providing of technical services. The ITAT has rightly come to the conclusion and, in our view, it is based on appreciation of evidence and facts and no question much less substantial question of law can be said to emerge out of the said order of the Income- tax Appellate Tribunal - Decided in favour of assessee. - DB ITA-258/2012, DB ITA-259/2012 - - - Dated:- 13-8-2014 - MR. AJAY RASTOGI AND MR. J.K. RANKA, JJ. For the Appellant : Mr. Sanjiv Gupta, ITO, BY THE COURT (Per Hon'ble Ranka, J.): 1. Both these Income-tax appeals are directed against the common order dated July 27, 2012, passed by the Income-tax Appellate Tribunal, Jodhpur Bench, Jodhpur (for short, the ITAT ), by which the Income-tax Appellate Tribunal, while affirming the common order passed by the Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... January 23, 2004, was also issued for revising article 9.2 of the said GSA. There was another side letter of the same date stating that the prices of the gas are on CIF basis. It was further contended that the price is comprised the following elements : 9.2.1.1-Price based on unit rate S.No. Elements of price Rs. /MMBTU 1. Foreign currency component (USD) 141 2. Indian rupees component 52 3. Total 193 4. Both the parties further agreed that there would be fixed transmission charges of ₹ 12,44,363 per month for the year 2004-05 and it will be increased at 3 per cent. on yearly rest basis with effect from April 1, 2005. They further agreed that the total price includes basic customs duty, service tax and is exclusive of all taxes, duties and statutory levies, by whatever name called and levied by either Central, State Governments or local bodies, sales tax, entry tax and other tax and duties and statutory levies shall be payab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 194C or section 194J of the Act. It was further submitted on behalf of the assessee relying upon the judgment of the hon'ble apex court in the case of Hindustan Coca Cola Beverage P. Ltd. v. CIT [2007] 293 ITR 226 (SC) that the hon'ble apex court has held that where the payee has already paid tax on the income on which there was a short deduction of tax at source, recovery of tax cannot be made once again from the tax deductor and this was proved by the assessee on the basis of the profit and loss account and other material provided to the Assessing Officer. However, the Assessing Officer did not agree with any of the contentions raised by the assessee and after coming to his own conclusion and relying upon article 8, more particularly clause 8.10 of the agreement, he came to the conclusion that the present case is not a case of sale of gas only but it also includes certain terms and conditions for providing services which are technical in nature which attracts TDS provision and, accordingly, found the assessee liable for TDS under the provisions of section 194J at ₹ 16,92,800 for the assessment year 2008-09 and ₹ 12,69,600 for the assessment year 2009- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on going activities and, thus, it cannot be said that it was merely a purchase/ sale transaction. He further contended that it is essentially a service transaction and the services provided by GAIL to the assessee are technical in nature and, therefore, either it falls under the provisions of section 194C or section 194J of the Act. He further contended that the first liability was of the assessee and merely because the hon'ble apex court observed that if the recipient (payee) has paid tax, then there is no liability, is secondary in nature. He further contended that the liability was there and the Assessing Officer rightly came to the conclusion of levying of TDS as also interest on account of non-payment of the TDS. He ultimately contended that the orders passed by both, i.e., the Commissioner of Income-tax (Appeals) as well as the Income-tax Appellate Tribunal, are bad in law, perverse and substantial question of law arises out of the order of the Income-tax Appellate Tribunal. 8. We have considered the submissions of the officer, appearing on behalf of the Revenue, and have also perused the impugned order as well as the orders of the lower authorities and, in our view, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f gas. These facilities as required and used by the seller at the terminal shall be free of cost. 10. Though the Assessing Officer has quoted other clauses as well but, in our view, the said two clauses, referred to hereinabove, will be sufficient and will clinch the issue for disposal of the present appeals. A perusal of clause 8.1.1., quoted herein above, clearly describes two parties as buyer and seller and in furtherance thereof, if the seller provides certain facilities on account of the business exigencies to maintain good relations and for on going contract/agreement, then, in our view, such an agreement of purchase and sale cannot be said to be an agreement in between the parties which could change the nature of the contract as technical services falling within the ambit of section 194C or section 194J of the Act. It is also a finding of fact that not only the seller charged other amounts but equally charged VAT in the bills exchanged between the parties. When the seller charged VAT, then essentially the seller as well as the buyer both were of the view that it is sale and purchase per se and nothing more. It has also come on record that the assessee, by providing copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property in goods has been transferred from one hand to another. Thus, it was a transaction of sale and purchase and nothing more. It is already on record that even GAIL, the seller of the gas, had provided material to the assessee in the shape of the profit and loss account as also other material wherein GAIL has shown receipts in the profit and loss account and GAIL has not only carried the said item into the profit and loss account but also paid tax on the income ultimately earned by it on account of the transaction in between the assessee and GAIL and such receipts were included in the relevant return of income submitted by GAIL in both the assessment years under appeal. 12. This, as observed hereinabove, not merely the recipient had shown the said transaction as sale in their relevant records but also have paid due tax. 13. In our view, the predominant purpose of the contract for supply of gas was for sale of goods and, therefore, the contract was outside the purview of section 194C as well as section 194J of the Act. Considering the invoice raised by GAIL vis-a-vis reading of the clauses, referred to supra, in our view, by no stretch of imagination, it can be said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly of boxes was a contract for supply of chattel and, as such, outside the purview of section 194C of the Income- tax Act and, after considering the evidence on record, it held that printing of the labels on the corrugated boxes did not require any special skill or involve any confidence or secrecy and held that the predominant object underlying the contract was one for sale of the goods which took the contract out of the purview of section 194C of the Act. 16. In view of the above discussion, we are of the opinion that the Tribunal committed no error in coming to the conclusion that the case was not covered under section 194C/194J of the Act. It may be that the transportation component of gas was paid separately by the assessee to GAIL. Here also the transportation charges did not depend on the consumption of quantity of gas but was of fixed monthly charges to be borne by the assessee as part of the agreement between the parties. The ownership of the gas vested in GAIL till it was transported and delivered to the assessee's premises at the outlet of the gas metering station. The pipeline was laid down by GAIL and was permitted to be utilised for further onward transportatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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