TaxTMI 
TaxTMI 
2011 (9) TMI 103
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....the Act') on the following amongst other grounds: 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 tha....
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....yees 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. 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 ....
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.... 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. 2.3 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 ....
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.... High Court at Ahmedabad in Tax Appeal No.1037/2009 7. On the other hand, Shri Kartar Singh, Sr.D.R., appearing on behalf of the Revenue, pointed out that in respect of vehicle hire charges, TDS is required to deducted under section 194-I and not under section 194C because in the present case, this is not a service contract or carrying passenger alone. It is a contract whereby the 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 ....
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....the extent of Rs. 50/- per day is exempt from tax. This was not accepted by the AO and for the detailed reasons given in order under section 201(1)/201(1A), the AO held that the assessee ought to have been deducted tax on food allowance shown as reimbursement under section 192 of the I.T. Act, 1961. He also held that for its failure to deduct tax under the provisions of section 192, the assessee, under section 200 of the I.T. 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 ....
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..... 600/- per month from 1/8/2007. This amount was utilised by the employees for their expenditure on one breakfast with tea, one lunch and one afternoon snacks with tea meaning thereby while they are on duty during office hours. A certificate from each employee is obtained to the effect that he is spending this amount per month on the intended use. A copy of such certificate is attached at page no.133 of the paper book for the assessment years 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 ....
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....ith regard to levy of interest under section 201(1A), the ld. D.R. pointed out that it is not penal one but compensatory, in view of Judgement of the Hon'ble Supreme Court in the case of Anjuman Ghaswala reported in 252 ITR 01 (SC) and the Central Province Manganese Co. Ltd. reported in 160 ITR 961 and various High Court decisions reported in 212 ITR 92 (Bom.), 245 ITR 13(Ker.), 253 ITR 705 (Del), 261 ITR 488 (Cal), 278 ITR 218 (Cal) and 272 ITR 95 (Ker.) Therefore, the bonafide belief of the assessee would not 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 th....
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....educt TDS under section 194J in respect of (i) maintenance of telephone exchange, (ii) AMC for VHF wireless set, (iii) Repairs and maintenance of computers, (iv) Contract HYDR. BEMCO. HYDROLIC, (v) AMC for X-ray machine, (vi)Service fee/charges, (vii) Testing charges for the assessment year 2009-2010, in respect of (i) maintenance for telephone exchange, (ii) AMC of IT services - various payments made to HCL Infosystem Ltd., (iii) AMC of IT services- payment made to P.C.S. Technology Ltd., (iv) AMC for PLCC system paid 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....
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....194J. (vii) and (viii) Payment of Rs. 4,52,249/- and Rs. 1,15,150/- for testing charges. This is for inspection, testing and supply of combined particulate and iodine filters. This cannot be called works contract because the payment is for testing of newly purchased iodine filters to test to do the radiography testing of pipes. Evaluation charges for dissolved gases etc. The A.O. has pointed out that for A.Y. 2008-09 the assessee itself has deducted TDS u/s.194J. I agree with the A.O. that the description clearly shows that the payment for fee for technical services covered 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 simi....
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.... (v) Payment of Rs. 53,622/- being AMC for cabling. The AMC is clearly a service contract covered by the provisions of Section 194C. The provisions of Section 194J will not be applicable. (vi) Payment of Rs. 33,672/- being payment for AMC for PLC system. The description has not been given by the A.O. or the appellant. In the absence of the description, the A.O.'s finding is upheld." 16.1 Further, the ld. CIT(A) held that the assessee is liable to pay interest under section 201(1A) from the period TDS was deductible to the date when payee has made the payment on the entire receipts either as TDS, advance tax or by way of self-assessment tax or regular tax. 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. Coun....
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....rvices within the meaning of section 194J." 17.1 The Counsel of the assessee pointed out that the assessee has made various payments made under contract of maintenance of telephone exchange, annual maintenance contract for VHF wireless set, repairs and annual maintenance of computers, etc. and accordingly deducted TDS under section 194C of the I.T. Act, 1961, which is legally correct, keeping in view the Ratio of Judgement of the Hon'ble Madras High Court in case of Skycell Communications Ltd. (supra), followed by Delhi ITAT 'H' Bench in the case of Parasrampuria Synthetics Ltd. (supra). 18. On the other hand, the ld. D.R. appearing on behalf of the Revenue, vehemently supported 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....