TaxTMI 
TaxTMI 
TaxTMI 
2011 (9) TMI 103
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....: VEHICLE CHARGES 1. The CIT(A) erred in confirming that payments made by the appellant Company in respect of vehicle charges paid to M/s. Maruti Travels is covered under provisions of Section 194I of the Act and not under Section 194C of the Act as claimed by the appellant Company. 2. The learned CIT(A) erred in not appreciating that the payments made by the appellant Company to M/s. Maruti Travels were similar to the payment made by the appellant Company to another travel agent, M/s. Baroda Travels, where the tax department has issued the certificate under Section 197 of the Act stating that payment is covered by provisions of Section 194C of the Act. REIMBURSEMENT OF FOOD EXPENSES 3. The learned CIT(A) erred in confirming that the reimbursement of food expenses of Rs. 500 per month paid to the employees is a taxable perquisite and chargeable to tax as salary for the purpose of deduction of tax at source under section 192 of the Act CERTAIN ITEMS OF EXPENSES ON WHICH TAX IS DEDUCTED U/S 194C As AGAINST U/S 194J OF THE ACT 4. The learned CIT(A) erred in confirming that the payment made of Rs. 272,742/-in respect of certain items of expenses viz Maintenance of telepho....
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....D U/S 194C As AGAINST U/S 194J OF THE ACT 4. The learned CIT(A) erred in confirming that the payment made of Rs. 1,931,400/-in respect of certain items of expenses viz Maintenance of telephone charges, AMC for IT services, facility management and AMC for Power Line Carrier Communication ('PLCC') System etc. are covered by the provisions of Section 194J of the Act instead of Section 194C of the Act as claimed by the appellant Company. BONAFIDE BELIEF 5. The learned. CIT(A) erred in not considering the submissions made by the appellant company in its correct perspective. 6. The learned CIT(A) erred in not appreciating that the appellant company has not deducted tax at source/made the deduction of tax under Section 194C of the Act under a bonafide belief and therefore it should not be treated as an "assessee in default" in relation to the said payments. INTEREST UNDER SECTION 201(1A) OF THE ACT 7. The learned CIT(A) erred in holding that the appellant Company is an "assessee in default" and liable to interest under Section 201(1A) of the Act. GENERAL 8. Each one of the above grounds of appeal is without prejudice to the other. 2.2 The grounds raised by the ass....
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....1(1A) of the Act. GENERAL 8. Each one of the above grounds of appeal is without prejudice to the other. 2.3 The only ground raised by the Revenue in the appeal for the assessment year 2009-2010 is as under: "1. The Ld.CIT(A) has erred on facts and law in respect of vehicle charge to direct the A.O. to verify whether recipient have paid the taxes on due income for A.Y.2009-10 following the decision of the Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages Pvt. Ltd. vs. CIT (293 ITR 226). However, order u/s.201 was passed by the on 10.2.2009, it is clear that taxes due for A.Y.2009-10 have not paid by the deductee and ratio of Hon'ble Supreme Court's decision in the case of Hindustan Coca Cola Beverages Pvt. Ltd. vs. CIT(293 ITR 226] is not applicable on facts on this case." 3. First we take up the ground nos.1 and 2 of assessee's appeals in respect of three assessment years i.e. 2007-08, 2008-09 and 2009-10 and only ground of Revenue's appeal for the assessment year 2009-2010. In respect of this issue, the dispute is that the assessee has deducted TDS in respect of vehicle expenses under section 194C whereas, according to AO, the assessee ....
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.... assessee has effectively taken the buses/light vehicle on lease. 7.1 In rejoinder, the Counsel of the assessee pointed out that the relevant terms and conditions of the contract for supply of light vehicle with crew on contract with M/s.M/s. Joydev Barot and M/s.Baroda Travels are reproduced by the ld. CIT(A) in para 4.1 at page 14 of the impugned order. From the perusal of the same, it can be seen that the terms and conditions identical with that of various decisions, relied on by him (supra). He accordingly pointed out that since the matter is squarely covered, the demand created under section 201(1) in respect of vehicle hire charges be deleted and consequently, it may be held that no interest under section 201(1A) is payable. 8. Having heard both the sides, we have carefully gone through the orders of the authorities below. ITAT, Ahmedabad 'A' Bench in the case of Ahmedabad Urban Development Authority (supra) held that the definition of rent under section 194-I does not provide any item for vehicle hire charges. Similar view is taken by the ITAT 'B' Bench, Ahmedabad in the case of M/s. Mukesh Travels Co. (supra) and the other decisions, relied on by the ld. C....
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.... Act, is deemed to be in default and he accordingly charged TDS and interest under section 201(1) and 201(1A) of the I.T. Act, 1961. 10. On appeal, the ld. CIT(A) upheld the action of the AO for the detailed reasons given in para 8.1 of the impugned order, which is reproduced hereunder: "81 I have considered the submission made by the appellant and observation of the A.O. From the above discussion, it is clear that the facts are not in dispute. The appellant has not provided free meals. The appellant has not provided prepaid vouchers which are to be exchanged for food in the canteen. The appellant has provided a lumpsum allowance of food. It has taken a certificate at the end of the month from each employee that the food has been purchased for more than the amount of allowance. On these facts, it is clear that the appellant is not at all covered by the exemption mentioned in Rule- 3 as well as provisions of Section 17(2)(vi). The appellant has not given free food and the appellant has not given paid vouchers, Therefore, the decision of various Courts cited by the appellant and quoted above in para- 6.7.1 to para-6.7.9 are not applicable as in all of them the appellant company ha....
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....ears 2007-08 and 2008-09 and at page no.63 of the paper book for the assessment year 2009-10. The ld. Counsel of the assessee further submitted that the AO has considered such amount of monthly reimbursement as taxable on the ground that it is not an exempt perquisite. After narrating the aforesaid facts, he pointed out that the aforesaid payment of Rs. 600/- is exempt on the following three grounds. i) This is not perquisite at all If an amount is a mere reimbursement of necessary disbursement, the same is not perquisite at all. In the case of the assessee, the work of the assessee, being in remote place, assessee has to provide such subsidized food facility out of necessity to keep employees in good and healthy condition during office hours, as such this amount cannot be considered as perquisite at all. Assessee relies on following three decisions: a) Saipem SPA v/s ITO 254 ITR 26 (AT) ITAT Delhi (SB) b) CIT v/s Hyndai Industries Co. Ltd. 264 ITR 328 (Uttaranchal High Court) c) CIT v/s Sedco Forex International Drilling Co. Ltd. 264 ITR 320 (Uttaranchal H.C.) ii) Even if it is considered as perquisite, it is exempt under Rule-3 When such reimbursement is provided, i....
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....be of any help and on compensatory ground, the assessee had to pay interest because the money due to government, was utilised by the assessee, until paid either by the assessee company or by its employee. Since the allowance in question is not exempt under section 10(14), the view taken by the ld. CIT(A) be upheld. 14. Having heard both the sides, we have carefully gone through the orders of the authorities below. Admittedly, the assessee has not provided free meals. It has also not provided pre-paid vouchers which are to be exchanged for food in the canteen. The assessee, in the present case, has provided a lump-sum allowance of food. It has taken a certificate at the end of the month from each employee that food has been purchased for more than the amount in question. Therefore, the case of the assessee is not covered by exemption mentioned in Rule 3 as well as provisions of section 17(2)(vi) of the I.T. Act, 1961. We are, therefore, of the view that both the departmental authorities below are legally and factually correct in holding that the assessee was required to deduct tax as per income slab of each employee. Since the AO has computed short deduction under section 201(1) on....
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....under voucher No. 5207BPV12194 Gujarat Energy Transmission Corporation, etc. for the assessment year 2008-09 and in respect of (i) maintenance for telephone exchange, (ii) maintenance of VHF wireless Base Station, (iii) AMC for station lighting, (iv) AMC for cabling, (v) AMC for PLCC system, etc. for the assessment year 2007-2008. 16. On appeal, the ld. CIT(A) in para 11.1 of the impugned order held that various Courts have decided that mere servicing an equipment of high technical nature would not amount to fee for technical services but still the facts of each case would decide whether a particular service is a service contract or fees for technical services. He accordingly decided these items as under: A.Y. 2009-10 (i) Payment of Rs. 79,775/- for maintenance of telephone exchange. This payment is for maintenance of the telephone exchange. It is mentioned in clause-02 that necessary exchange programming in the exchange shall be done by the party for connection AVAYA exchange through radio link or OFC link. I agree with the appellant that normal maintenance of telephone exchange would be part of service contract U/S.194C but where the programming is required to be done and if....
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....overed by Section 194J. A.Y. 2008-09:- (i) These are various payments made for maintenance of telephone exchange. This is same as item no.(i) of A.Y. 2009-10 above and hence these payments are treated as covered U/S.194J for the reasons discussed above. (ii) Payment of Rs. 4,46,380/- made to HCL Ltd. for AMC of IT. services. This seems to be similar to item No.(iii) of A.Y.2009-10 above and hence these payments are also treated as covered u/s.1943 for the reasons discussed above. (iii) Payment of Rs. 5,39,216/- made to HCL Ltd. for AMC of I.T. services. This seems to be similar to item No.(in) of A.Y. 2009-10 and item No.(ii) above and hence these payments are also treated as covered u/s.194J for the reasons discussed above. (iv) Payment of Rs. 5,59,360/- to HCL Ltd. The A.O. has stated that the scope of contract is facility management, comprehensive hardware Maintenance etc. and covers a wide range area of work such as software configuration for servers, desktops, installation support for all peripherals, LAN trouble shooting, configuration of fouters, maintenance of internet web, developing new applications for hosting, data base management maintenance of IT equipments ....
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..... Aggrieved with the order of the ld. CIT(A), the assessee is in appeal before the Tribunal. 17. At the time of hearing, the ld. Counsel for the assessee submitted that various payments made by the assessee are not covered under section 194J of the I.T. Act, 1961. Elaborating his argument, the Counsel of the assessee pointed out that as per Explanation (b) to section 194J "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9. The ld. Counsel for the assessee relied on the decision of the ITAT 'H' Bench, Delhi in the case of DCIT-vs- Parasrampuria Synthetics Ltd. reported in [2008] 20 SOT 248 (Delhi), wherein it has been held as under: "The term 'fees for technical services' as per Explanation (b) to section 194J means as defined in Explanation 2 below clause (vii) of sub-section (1) of section 9. As per said Explanation '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 fo....
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....ed the orders of the ld. CIT(A). The ld. D.R. pointed out that in the impugned order, the ld. CIT(A), after considering the relevant clauses of all the contracts, only in respect of two contracts, which involved rendering managerial, technical or consultancy services, held that the assessee was required to deduct TDS under section 194J of the I.T. Act, 1961. Therefore, the view taken by the ld. CIT(A) be upheld. 19. After hearing both the sides, we have carefully gone through the orders of the authorities below. The Hon'ble Madras High Court, in the case of Skycell Communication Ltd. -vs- DCIT (supra), held that installation and operation of sophisticated equipments with a view to earn income by allowing customers to avail of benefit of the user of such equipment does not result in the provision of technical service to the customer for a fee. Keeping in view the ratio of this decision, in the instant case, there might be use of services of technically qualified persons to render for maintenance of telephone exchange, annual maintenance contract for VHF wireless set, repairs and annual maintenance of computers, etc., but that itself did not bring the amount paid as 'fees fo....