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TMI Blog2016 (6) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... y the decision of Hon’ble Supreme Court, in the case of Hindustan Coca-Cola Beverages Pvt. Ltd. (2007 (8) TMI 12 - SUPREME COURT OF INDIA ) wherein held that no demand can be visualized, once the assessee proved to the satisfaction of the officer incharge of TDS that the recipient has considered the payment and discharged the tax liability. In the present case on hand, on perusal of the documents available on record, we find that the assessee has furnished the income tax returns on the recipient for the relevant assessment years. The assessee also furnished a certificate from the recipient, wherein the recipient has categorically stated that he has paid the taxes on the consideration received from the assessee company. Therefore, we are of the opinion that the A.O. was not correct in coming to the conclusion that the assessee as an assessee in default u/s 201(1) of the Act. Therefore, we are of the view that on both counts, the demand raised by the A.O. cannot sustain in the eyes of law. - Decided in favour of assessee - I.T.A.Nos.454&455/Vizag/2013 - - - Dated:- 29-4-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER and SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides required machinery for the purpose of extraction of lime stone. The contractor needs to deploy experienced man power and also extract required quantity of lime stone. Therefore, this is a contract for execution of works contract and not a contract for provision of providing technical services. To support its arguments, furnished copies of agreement entered into with the contractor along with copies of invoices issued by the contractor. 3. The A.O. after considering the submissions of the assessee held that the services provided by the contractor M/s. Divine Establishment, Chennai is not a mere contract for supply of labour for execution of works contract. The A.O. further observed that the contractor himself has raised invoice for the services provided in relation to provision of technical services. Therefore, the service provided by the contractor is coming within the provisions of section 194J of the Act and not within the provisions of section 194C of the Act. The A.O. further observed that on perusal of the service order issued by the company, it was clear that the assessee has engaged the services of the contractor for engaging experienced engineers for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught not to have held that this was a contract for technical services in as much as section 194J of the Act defined the fees for technical services as having the same meaning assigned to it in explanation 2 to clause (vii) to sub section 1 of section 9 of the Act. The said explanation to clause (vii) of sub section 9(1) of the Act, defines the technical services and assigned the same meaning as referred to in section 9 of the Act. As per the said definition, fees for technical services means any consideration for rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel), but does not include consideration for any construction, assembling, mining and like project undertaken by the recipient or consideration which would be income of the respondent chargeable under the head salaries. Therefore, assuming for a moment that the services provided by the contractor is coming within the meaning of fees for technical services, any services provided in relation to mining activity is kept outside the purview of the provisions of section 194J of the Act. Therefore, the A.O. was not correct in holding the assessee as an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wned by the company and provided to the contractor, the A.O. by mistaken of facts considered that the heavy machinery was provided by the contractor to the company and in such circumstances wrongly concluded that the provisions of section 194J and 194I of the Act were applicable. The fact being that providing men to run the machinery, in the mines owned by the assessee to extract lime stone and the payments on hourly basis is nothing but a simple contract for work. With these observations, the CIT(A), directed the A.O. to delete the additions. Aggrieved by the CIT(A) order, the revenue is in appeal before us. 7. The Ld. D.R. submitted that the CIT(A) erred in coming to the conclusion that the payments are covered u/s 194C of the Act, though in the service order, it was clearly mentioned as contract for providing technical services which are covered u/s 194J of the Act. The Ld. D.R. further argued that as per the service order, the assessee himself has admitted that it is an agreement for providing technical services. The contractor has raised invoices for providing technical services, therefore, the CIT(A) was grossly erred in holding that the payments are covered u/s 194C of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r clause (vii) of sub section 1 of section 9, the term fees for technical services would mean any consideration (including any lumpsum consideration) for rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personal), but does not include consideration for any construction, assembly or mining and like other project undertaken by the recipient. Though, payments are in the nature of technical services, the payment made towards mining activity is kept outside the purview of provisions of section 194J of the Act. Therefore, the A.O. was not correct in invoking the provisions of section 194J of the Act. 9. Alternatively, the A.R. submitted that the recipient has already paid the taxes on the amount paid by the company. Therefore, in view of the provisions of section 191 of the Act and also as per the circular issued by the CBDT vide circular no.275/201/95-IT(b) dated 29.1.1997, it was clarified that no demand can be visualized u/s 201(1) of the Act after the tax deductor has satisfied the officer incharge of the TDS that taxes due have been paid by the deductee assessee. In the present case on hand, the contractor M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contract further provides for provision of providing required consumables for maintenance of the machineries by the assessee. Under these circumstances, the A.O. was not correct in coming to the conclusion that the payments are covered u/s 194J of the Act. 11. The sole issue came up for our consideration is whether the contract entered into by the assessee with M/s. Divine Establishment, is one for supply of manpower for execution of works contract attracting TDS provisions of section 194C of the Act or is the contract for providing technical services attracting the provisions of section 194J of the Act. According to the A.O., it is a contract for providing technical services, therefore, the provisions of section 194J of the Act applies. The A.O. has given elaborate reasons for coming to the conclusion that the impugned payments are coming within the provisions of section 194J of the Act. It was the contention of the assessee that the contract entered into with M/s. Divine Establishment, is for the purpose of extraction of lime stone. The assessee further contended that the contractor needs to provide only manpower required for extraction of lime stone or operating the HEMM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for technical services is having the same meaning assigned to it in explanation 2 to clause (vii) to sub section 1 of section 9 of the Act. The said explanation 2 to clause (vii) of section 9(1) of the Act reads as under: Explanation [2] For the purposes of this clause, fees for technical services means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head Salaries . A careful study of explanation 2 above, it is clear that any activity relating to mining is not considered as fees for technical services. Therefore, even assuming that the impugned payments are coming under the provisions of section 194J of the Act, still any payments in relation to mining activity cannot be considered as fees for technical services, so as to apply the provisions of section 194J of the Act. 13. Coming to the alternative plea of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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