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TMI Blog2018 (2) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... by the tribunal vide afore-stated common orders dated 30-01-2017 for AY 2008-09 and 2011-12. X X X X Extracts X X X X X X X X Extracts X X X X ..... n 194C. To Challenge the order passed by Ld. CIT(A), assessee has filed an appeal before the Hon'ble ITAT, the hearings of which is pending till date. 4. As per the provisions of section 194C, contract means work to be done by unskilled or technical person on combination of two or three and therefore the finding by your predecessor in earlier years that for carrying out this contract work special skills, knowledge and experience is required, does not mean that it is not a contract work and constitute fees for technical or professional services. Therefore, it is very clear that provisions of section 194C regarding fees for technical fees are not applicable in this case. Since the contract is given to DBM, the assessee has rightly deducted TDS u/s. 194C of the I. T. Act and the provisions of section 194C are not applicable. The provisions of section 194C are applicable only if the payments are made for technical services and professional services. Without prejudice to above, we hereby contended that since M/s. DBM Geotechnics Construction Pvt. (deductee) has already included the payments made by the assesse in their return of income as receipt and paid taxes on the same, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsultants". On this page, the details of contract experience in carrying out Cadastral Survey under tidal condition as measurement and collection of Hydraulic and Physio-Chemical Parameters are given. It is further required that there shall be at least 3 keys personnel having bachelor's degree in Civil Engineering/Diploma in Survey Technology/Master's in Science/Environment. Course/Degree in Geographical Information Systems. This page no. 12 is annexed to this order marked as Annex. 'C'. 5.2.3 On further examination of the tender document, it is seen in Chapter VII(e) Schedule B at page no. 82 onwards of tender documents(enclosed as Annex. 'D' to this order) speaks about item of work to be carried out and rate for the same work. In this Schedule at item no. 7 on page no. 83 is the list of laboratory test and number of such tests required to be conducted to carry out excavation of rocks by the contractor. The same are listed out as under: Laboratory Tests: 1) Moisture Content 2) Specific Gravity 3) Consistency Limits. 4) Gravel & Fine Sieve analysis 5) Hydro Meter analysis 6) Consolidation 7) Direct Shear Test 8) Triaxial (UU) 9) U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -12 dated 24.10.2012, decided the issue in favour of the Assessing Officer. Further, the CIT(A) as per para 7.3 of the A.O's order restored the issue to the file of AO with the following direction:- "Since the facts, as stated by the AO and as stated by the appellant are opposite, the appellant is directed to furnish necessary evidence in support of the above facts, if any before the AO. After verifying the correctness of the facts pleaded by the appellant, the AO shall accordingly take a decision in this regard. If the contract to DBM Geotechnics Construction Private Ltd. Has been given for rock excavation work, the AO shall not treat the appellant to be in default and shall accordingly delete the demand raised. However, if as observed by the AO, the contract is for marine geo- technical investigation for the purposes of rock excavation in Mithi river, the AO's decision in this regard shall be upheld. In that case, however, the AO shall give relief to the appellant in respect of the tax already paid by DBM Geotechnics Construction Private Ltd. If any, on its receipts from the appellant, in view of the decision of the Hon'ble Apex Court in the case of Hindustan C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 201(1A) is worked out at ₹ 9,71,931/- for 16 months. 10, However, since the Assessee has filed certificate from the auditor of DBM Geotechnics & Construtions to whom payment was made to the effect that it has filed its return of income including the payment received by the assessee company and paid taxes thereon. It has been contended that in view of judgment of the Hon'ble Supreme Court in Hindustan Coca Cola Beverage (P) Ltd. v/s. CIT in (2007) 211 CTR (SC) 545, no further tax can be recovered from the assessee company. Considering these facts of the case, tax liability u/s 201(1) is worked out to Rs. Nil and tax liability u/s. 201(1A) is worked out at ₹ 9,71,931/-.( From 19/05/2011 till the date of filing of return by DBM Geotechnics & Construction-24/09/2012 i.e. 16 months @1%). The AO therefore held that assessee was required to deduct income-tax at source u/s. 194J at the rate of 10% which workout to ₹ 75,93,211 , while income-tax was deducted at source at the rate of 2% by the assessee which amounting to ₹ 15,18,642/- and hence for balance short deduction of income-tax at source was determined to be ₹ 60,74,569/-, but since however the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the AY 2008-09 & AY 2011-12. The assessee had preferred an appeal to the CIT(A). Further, the CIT(A) has upheld the order passed by AO that TDS should be deducted as per the provision of section 194J and not as per the provisions of section 194C for the two assessment years. 3) However, the assessee had filed an appeal before the Hon. ITAT for AY 2008-09 & AY 2011-12 which is still pending before the Tribunal The hearing for the two appeals has been fixed on 26-10-2016. 5.3 I have considered the facts of the case, AO's order, submission of the appellant. My Ld. Predecessor in the appellant's own case for AY 2008-09, vide her order dated 07.07.2014 has discussed the issue in detail and held as under:- 4.3 I have considered the facts of the case, submissions of the appellant, order giving appeal effect of the CIT(A) order and the order of my Ld. Predecessor. My Ld. Predecessor has set this issue to the file of the A.O to verify the correctness of the fact and accordingly take a decision holding inter-alia held as under:- "That if the contract to DBM Geotechnics Construction Pvt. Ltd. has been given for rock excavation work, the A.O. shall not treat the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsistency limits [L.L.P.L. S.L.] (iv) Gravel and fine sieve analysis (v) Hydro meter analysis (vi) Consolidation (vii) Direct shear test (viii) Triaxial (UU) (ix) UDS all above test ROCK SAMPLES: (x) Specific gravity (xi) Water absorption (xii) Porosity (xii) Crushing strength (xiv) Tensile Test (xv) Modulus of elasticity and Poissiori's Ratio (xvi) Chemical analysis of soil to determine chloride and sulphate content (xvii) Chemical analysis of ground water to determine chloride and Sulphate content and P.H. 4.5 Thus, from the above it is clear that the contract to DBM is not given for simple rock excavation work but it is given for 'Marine Geo Technical Investigation' for rock excavation in Mithi River. Therefore respectfully following the decision of my Ld. Predecessor, the action of the A.O. is upheld. Ground is dismissed. 5.4 Respectfully, following the decision of my Ld. Predecessor, the action of the AO holding the assessee as assessee-in-default for non- deduction of tax at source u/s 194J as against 194C in respect of payments made to M/s DBM Geotechnics Construction Pvt. Ltd. is upheld Ground is Dismissed. 6. For the AYs 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cs Construction Private Limited towards tender for marine geotechnical investigation for rock excavation in Mithi River is covered by provisions of Section 194J so far as deductibility of income tax at source is concerned, while payments to DBM Geotechnics Construction Private Limited towards tender for construction of retaining wall along bank of Mithi River is covered by provisions of Section 194C as the assessee has awarded both the types of contract under tender to DBM Geotechnics Construction Private Limited . It was claimed that learned CIT(A) mistook the tender to be towards marine geotechnical investigation for rock excavation in Mithi River while infact the tender was for construction of retaining wall along bank of Mithi River for which payments were made by the assessee to DBM Geotechnics and Construction Private Limited during relevant period under consideration. It was submitted by learned counsel for the assessee that the matter can be verified by the AO and if contentions are found correct, the tribunal order can be followed accordingly and in any case the tribunal has adjudicated on both the types of tenders/contracts awared by assessee in favour of DBM Geotechnics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. was the successful bidder in the tender. We have observed that the tender was not floated for excavation of rocks in Mithi river rather the tender was for marine geotechnical investigation for rock excavation in Mithi river and the work was mainly towards rendering of technical services involving marine geotechnical investigation for rock excavation which were technical in nature which are covered u/s 194J of the Act for deduction of tax at source. The authorities below have rightly concluded that these services are technical services which are covered u/s 194J of the Act for deduction of tax at source and not u/s 194C of the Act for deduction of tax at source . We have also gone through the various items of work reflected in tender documents as contained inChapter VIII(e), schedule - B which are placed on record in paper book /page 139-142 and also detailed item wise specification in tender document placed in paper book/page 143- 145 , which clearly lead to the irresistible conclusion that these are technical services rendered by M/s DBM Geotechnics Construction Pvt. Ltd. to the assessee for 'Marine Geo Technical Investogation'. The learned AO vide orders dated 11-03-2013 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial year immediately preceding the financial year in which such sum by way of fees for professional services or technical services is credited or paid, shall be liable to deduct income-tax under this section :] [Provided also that no individual 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 by the Board for the purposes of section 44AAor 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 sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a-Cola Beverages Private Limited (supra) 293 ITR 226(SC). The assessee is directed to appear before the AO and file necessary evidences to support its contentions, as per our above direction . Needless to say that proper and adequate opportunity of being heard shall be provided by the AO in accordance with principles ofnatural justice in accordance with law. This appeal is partly allowed for statistical purposes.We order accordingly. " "14. We have considered the rival submission and also perused the material available on record. We have observed that the assessee has paid an amount of ₹ 32,47,68,465/ - to M/ s DBM Geotechnics Construction Pvt. during the previous year relevant to the assessment year 2011-12 on which tax was deducted at source u/s 194C of the Act by the assessee. The assessee has contended that the authorities below have framed the orders based on evaluation of a wrong tenders/order which was also awarded to the assessee earlier being marine geotechnical investigation for rock excavation in Mithiriver approach channel (2.14 Km) situated at sea side of Mahim causeway of which work was completed way back in the previous year relevant to the assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tunity of being heard shall be provided by the AO to the assessee in accordance with principles of natural justice in accordance with law and the assessee be allowed to submit evidences and explanations to support its contentions in its defense. Thus, this appeal is allowed for statistical purposes. We order accordingly." Thus, the AO is directed to verify and evaluate the tender/contracts under which the payments were made by the assessee to DBM Geotechnics Construction Private Limited during the relevant period to the tune of ₹ 7,59,32,109/- and if the payments were found to be made by the assessee to DBM Geotechnics and Construction Private Limited for the construction of the retaining wall alongwith the bank of Mithi River , then the provision of section 194C shall be applicable so far as deductibility of income tax at source is concerned, while if the payments were made by the assessee to DBM Geotechnics and Construction Private Limited towards marine geotechnical investigation for rock excavation, then provisions of Section 194J will be applicable so far as deductibility of income-tax at source is concerned, as was held by the tribunal vide afore-stated common orders d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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