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TMI Blog2019 (10) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... 21,36,296/- is not undisputed. The Assessing Officer has computed the non collection of TCS on the amount of sale of scrap of ₹ 9,59,608/- which is the difference between the total sale of scrap of ₹ 21,36,296 less ₹ 11,76,688) on which TCS has been collected. The ld. AO has not doubted on the collection of TCS of ₹ 11,76,688/- paid by the assessee for sale of scrap but failed to give credit for the TCS claimed to have been deposited of ₹ 9596/-. In our view this issue needs to restored back to the file of Ld. AO so that the assessee can prove the payment of tax deducted at source at ₹ 21,363/- which inter alia includes the TCS payment of ₹ 9596/-. If the Ld. AO is satisfied with the necessary supporting evidence, the alleged demand of ₹ 9596/- and the interest charged thereon may be deleted after giving reasonable opportunity of being heard to the assessee. - ITA No 101 to 103/Ind/2018 (Assessment Years 2013-14 to 2015-16) - - - Dated:- 13-9-2019 - HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER Revenue by: Shri R.P. Mourya, Sr.DR Assessee by: S/S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that on the facts and in the circumstances of the case the deduction collection was correctly made deposited and the same may very kindly be accepted/be now allowed and the said order dated. 26.03.2015 DCIT-TDS may kindly be quashed. 5. That the appellant further, leave toad, to alter and/or amend or make any additional grounds of appeal as and when necessary. ITA No.102/Ind/2018 for Assessment Year 2014-15 1. The Ld. CIT(A-I erred in dismissed grounds of appeal No.1 of CIT appeal for applying rate of deduction of TDS u/s 201(1) 201(1A) by applying incorrect rate of deduction of TDS correct head of deduction. The correct Head of deduction is 194C in which rate of deduction was 2% while the Ld. Officer considered incorrect head u/s 194J in which rate of deduction taken @10% sustained the order of DCIT(TDS) Indore which is bad in law unjustified and unwarranted should be deleted. 2. The Ld. CIT(A)-I erred in dismissed grounds of appeal No.2 of CIT appeal for the correct head of section is 194C for deduction of TDS under contractual arrangements for operation maintenance of machines while CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the circumstances of the case the deduction collection was correctly made deposited and the same may very kindly be accepted/be now allowed and the said order dated. 26.03.2015 DCIT-TDS may kindly be quashed. 4. That the appellant further, leave toad, to alter and/or amend or make any additional grounds of appeal as and when necessary. 3. As the issues raised in these appeals are common these were heard together and therefore are being disposed off by this common order for sake of convenience and brevity. 4. From perusal of the grounds we observe that first common issue relates to the difference of rate of deduction of TDS u/s 201(1) 201 (1A) of the Act on the amounts paid by the assessee towards operation maintenance of windmill machines. This issue is common for ITA Nos. 101, 102 103/Ind/2018. 5. Second issue only pertains to A.Y. 2013-14 in ITANo.101/Ind/2018 for lower deduction of tax collected at source. 6. Apropos to first common issue relating to rate of deduction of tax as to whether the assessee has rightly deducted the tax at source u/s 194C of the Act or whether the Ld. AO wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of technical services as they are specifically excluded from the definition of fees for technical services and are being specifically covered by the provisions of section 194C of the Act. 10. Per contra, Ld. DR vehemently argued supporting the orders of both the lower authorities. 11. We have heard rival contentions and perused the record placed before us and carefully gone through written submissions filed by the Ld. counsel for the assessee and the judgments/decisions referred and relied therein. The deductor company i.e. the assessee is engaged in the business of foregoing of steel for automobile components and wind power generation plant. The two plants are located at Maharashtra (250 KWA 500 KWA), one at Madhya Pradesh (230 KWA) and another on at Tamilnadu (600 KWA) for the operation maintenance. it entered into written contract with M/s. RRB Energy Limited., M/s Enercon (India) Limited, Suzlon Energy Ltd., M/s Kelvin Energy Solution Ujaas Energy Ltd. for carrying out the contract for Operation maintenance . Copies of all the agreements are placed in the paper book. From perusal of respective clause in these agreement we find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced below : Whereas the owner is setting up a power project of 210 MW Gandhinagar Thermal Power Station, Unit-5, And whereas the owner will sell all of the net electricity produced by the Plant as per the terms of the Power Purchase Agreement (PPA) executed between Gujarat State Electricity Corporation Ltd. and Gujarat Electricity Board dt. 22nd Jan., 1997. And whereas throughout the commercial operation of the Plant, the owner requires a qualified, competent and experienced operator to perform the operation maintenance of the plant. And whereas the operator has long-standing experience in operation and maintenance of power plants of similar capacity. And whereas the operator is willing to provide the services on the terms and conditions setforth hereinafter. And whereas both the owner and the operator have agreed to follow the PPA between Gujarat State Electricity Corporation Ltd. and Gujarat Electricity Board dt. 22nd Jan., 1997, without violating any requirement/provision of the said PPA. Now, therefore, in consideration of the mutual promises contained herein and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (xiii) provide all personnel, services, vendor contracts, tools, equipment and materials, under approval of the owner, to make such repairs or replacements as may be necessary to operate and maintain all portions of the facility. (xiv) perform periodic routine and annual overhaul of equipment related to the facility. (xv) perform routine inspections and maintenance of the facility. (xvi) perform periodic operational checks, and testing of equipment relating to the facility. (xvii) maintain records of maintenance inspections, operational checks and financial transactions relating to the facility. (xviii) perform calibration of all instruments and loop checking on a regular basis. (xix) prepare paper work for any insurance claim on behalf of the owner. The provisions of Section 194J provide that any person, not being an individual or a HUF, who is responsible for paying to a resident any sum by way of : (a) fees for professional services, or (b) fees for technical services, shall, at the time of credit of such sum to the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure incurred for earning the same to 20 per cent of the gross amount as provided in new Section 44AD of the IT Act. Consideration for any construction, assembly, mining or like project will, therefore, be chargeable to tax on net basis, i.e., after allowing deduction in respect of costs and expenditure incurred for earning the same and charged to tax at the rates applicable to the ordinary income of the non-resident as specified in the relevant Finance Act. (ii) Consideration which will be chargeable to tax in the hands of the recipient under the head Salaries . 13. It is clear from the aforesaid circular that the expression 'fees for technical services' does not include consideration for any construction, assembly, mining or like project undertaken by the recipient. Such consideration has been excluded from the definition on the ground that such activities virtually amount to carrying on business for which considerable expenditure Will have to be incurred by the recipient. A perusal of the operation and maintenance agreement executed between GSECL (appellant-company) and GEB clearly shows that the agreement was not only for pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other case two per cent, of such sum as income tax on income comprised therein. The Hon'ble apex Court has explained the meaning and scope of Section 194C in the case of Associated Cement Co. Ltd. v. CIT (supra) as under, at p. 440 : We see no reason to curtail or to cut down the meaning of the plain words used in the section. Any work means any work and not a works contract , which has a special connotation in the tax law. Indeed, in the sub-section, the work referred to therein expressly includes supply of labour to carry out a work. It is a clear indication of the legislature that the work in the subsection is not intended to be confined to or restricted to works contract . Work envisaged in the sub-section, therefore, has a wide import and covers any work which one or the other of the organisations specified in the subsection can get carried out through a contractor under a contract and further it includes obtaining by any of such organisations supply of labour under a contract with a contractor for carrying out its work which have fallen outside the work , but for its specific inclusion in the sub-section. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the light of the above decisions as well as the provisions of law is provided u/s 194C 194J of the Act, we are of the considered view that the alleged payment made for operation maintenance of the wind mills paid by the assessee company to various payees was under a composite contract and the deduction of tax on such payment was required to be made u/s 194C of the Act @ 2%. The revenue authorities have failed to refer to any of the specific clause of the agreement which could show that the amount has been paid towards taking the technical services through which the assessee has acquired certain rights which could be used in the future. Therefore, there remains no dispute that the alleged payment is a payment for contractual payment of labour for operations and maintenance work liable for deduction of tax at source u/s 194C of the Act and not 194J of the Act. Accordingly, this common issue for A.Y. 2013-14 to 2015-16 is allowed in favour of the assessee. 16. Apropos to the second issue which pertains to A.Y. 2013-14 only, brief facts are that the assessee was required to collect tax at source on the sale of scrap. The Ld. AO observed that there was a shor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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