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TMI Blog2015 (7) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... haracterized 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. - ITA No. 5520 & 5521/Mum/2013 - - - Dated:- 17-6-2015 - Joginder Singh, JM And Rajendra, AM,JJ. For the Petitioner : Ms Aarti Vissanji For the Respondent : Ms Radha K Narang, Sr.AR ORDER Per Rajendra, AM. Challenging the order dated 14.5.2013 of the CIT(A)-14, Mumbai,for the above mentioned two years the Assessing officer (AO) has raised following identical Grounds of Appeal: i) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in holding that the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tainer Private Limited (NSICPL), that it had deducted tax at source @2% u/s. 194C of the Act. The AO was of the opinion that assessee should have deducted tax u/s. 194J of the Act, that NSICPL was rendering technical services to its clients, that container handling was technical and specialized service, that NSICPL provided technical assistance to its customer with machines and technical manpower, that any payment made to NSICPL on account of container handling charges should be subjected to TDS u/s. 194J of the Act and not u/s. 194C of the Act. Finally, the AO held that the assessee was deemed to be an assessee indefault. Finally the AO treated the assessee deemed to be an assessee in default for its failure to deduct tax at source @ 5.5%. He worked out the default to ₹ 59,25,477/- u/s. 201 (1)of the Act. As the assessee had paid the tax @2% he worked out the liability at ₹ 37.70 lacs. He further calculated interest u/s. 201(1)(A) for the period from 1.4.2004 to 28.2.2011 @ 1% at ₹ 31,29,713/-. Thus, the assessee company was directed to make payment of ₹ 69, 00, 452/- (Rs.37.70 + 31.29 lacs). 3. Aggrieved by the order of the AO,the assessee preferred an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 order dt.6.4.2011 . 5. We have perused the material before us. We find that while deciding the case of Merchant Shipping Services (P) Ltd. the Tribunal had dealt the issue as under :- 2. The only ground raised by the Revenue is against the direction of the learned CIT(A) that payments made to NSICT be treated as covered under section 194C and not section 194J. Briefly stated the facts of the case are that the assessee-company is a shipping agent handling vessels at various Indian ports. A survey was conducted u/s.133A on 09.03.2005 for verification of compliance of deduction of tax at source provisions. During the course of survey it was discovered that in the financial year 2003-2004 the assessee made payment of ₹ 12,23,29,581 to M/s.Nava Sheva International Container Terminal Limited (hereinafter referred to as NSICT ) and deducted tax at source at the rate of 2.05% as provided u/s.194C for which payment was made. The Assessing Officer, during the course of proceedings u/ss.201(1) and 201(1A), noted that NSICT entered into technical service agreement with P O Australia under which P O Australia was to provide technical know-how to the assessee-company. It as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of survey that the payments made by NSICT were in the nature of fees for technical services as they were providing specialized services to the assessee. He further argued that P O Australia entered into technical service agreement with NSICT providing them the technical knowhow, from where it would naturally follow that NSICT also provided technical services to its customers including the assessee. He further stated that NSICT charged service tax in its invoices raised on the customers,which was clear indicator of they being provider of technical services. The learned Departmental Representative argued that section 194C applies in respect of payments made to contractors, which was not the case under consideration. It was, therefore, strenuously argued that the view taken by the learned CIT(A),on this issue,be overturned. 6. We have heard the rival submissions and perused the relevant material on record in the light of precedents cited before us. It is noted that the assessee company is a shipping agent handling vessels for import and export at various Indian Ports on behalf of its customers. Before we proceed further, it is sine qua non to zero in on the exact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technical services is consideration for the rendering of any managerial, technical or consultancy services including the provision of services for technical or other personnel. Thus the foremost criteria for bringing any payment under the purview of Explanation (2) to section 9(1)(vii) is that the payment must have been made for rendering of any managerial, technical or consultancy services and also including the provision of services for technical or other personnel. 12. The Assessing Officer, in the instant case, has restricted himself only to the technical services and it is nobody's case that the assessee made any payment for managerial or consultancy services. In the like manner the AO has not pressed into service the later part of the Expl. 2, which deals with provision of services of technical or other personnel. It is rightly so because of the fact that NSICT raised invoices in respect of movement of cargo and there is no reference to any specific provision of services by technical or other personnel. Rule of ejusdem generis helps in ascertaining the meaning of a general words in the company of specific words. As per this rule, the general words draw their colour and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for technical services. ...... 15.Coming back to the facts of the instant case it is noticed that the assessee made payment to NSICT for the movement of the containers from or up to the vessel. In order to facilitate the movement of containers, NSICT provided the services of different types of cranes such as quay cranes, rubber tyre gantry cranes and rail mounted gantry cranes. These cranes are used for specific purposes only. Rubber tyre gantry cranes, rail mounted gantry cranes are used for lifting the container from customer's trailer/rail wagons and quay cranes are used for moving containers from trailers at the quay side on to the vessel. When the assessee made payment to NSICT it was meant for using the facility of cranes provided by them for the movement of containers and not for availing any technical services which may have gone into the making of cranes. NSICT opened its doors of service to one and all. Anybody interested in movement of containers could avail the facility. The assessee has also made payment on bill to bill basis. In other words, payment was made for user of a standard facility provided by NSICT, specifically for the movement of containers from or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be considered as fees for technical services, then the payments in all such cases shall be covered u/s 194J and the other sections, as taken note of above, would be rendered as a redundant piece of legislation. It is axiomatic that it cannot be the case. 21.In view of the foregoing discussion we hold that there was no liability on the assessee to deduct tax at source from the payments made to NSICT within the meaning of section 194J and the ld. CIT(A) was justified in holding so. 22. Now let us examine and evaluate the contention of the assessee that the payments made to NSICT are covered u/s.194C of the Act. This section mandates that any person responsible for paying any sum to any resident for carrying out any work including supply of labour for carrying out any work in pursuance of contract between the contractor and the persons specified, shall at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, shall deduct income tax at source at the specified rate. Explanation III below sub-section 194C(2) defines the expression work , which is r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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