AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 90
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..... Divine Establishment, Chennai for the purpose of mining of lime stone to be used for manufacture of cement from the mines owned by the assessee. It was further observed that as per the invoices raised by the contractor M/s. Divine Establishment, Chennai, the contractor has issued invoice with a description that the contract for providing technical services and maintenance and operation of HEMM at your Kadapa site for the month of August, 2009. It was further observed that the contractor has issued one more bill towards hire charges of machinery. Therefore, the A.O. was of the opinion that the services provided by the contractor is not a mere supply of labour for execution of works contract as claimed by the assessee, but it is for providing technical services, therefore, TDS needs to be deducted u/s 194J of the Act. Hence, issued a show cause notice and asked to explain why the assessee shall not be treated as assessee in default u/s 201(1) of the Act. In response to show-cause notice, the assessee has filed a written submission dated 14.7.2010 and contended that the services provided by the contractor M/s. Divine Establishment, Chennai is a mere contract for extraction of lime s....
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..... 4. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions made before the assessing officer. The assessee further submitted that the service provided by the contractor is a mere contract for supply of labour for execution of works contract. It was further argued that the assessee has entered into agreement with the contractor and issued a service order. The terms and conditions of service order shows that the contractors needs to deploy as many as required number of labourers to extract the lime stone from the mines owned by the company. The company provides the required machinery for extraction of lime stone. The contractor is not deploying his own machinery to extract the lime stone. It was further argued that as per the service order and scope of work placed by the company, the contractor was responsible for extracting specified quantity of lime stone within a specified time limit by deploying his manpower as per the requirement of the company from time to time. The supply of manpower includes supply of trained manpower required for operating the heavy earth moving machineries which w....
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....the contractor specifically stated that he had paid the taxes on the consideration received from the company. Therefore, the A.O. was not correct in holding that the assessee as an assessee in default u/s 201(1) of the Act. In support of his arguments, relied upon the judgement of Hon'ble Supreme Court of India, in the case of Hindustan Coca-Cola Beverages Pvt. Ltd. Vs. CIT 293 ITR 226. 6. The CIT(A), after considering the relevant submissions of the assessee, held that it transpires from the records and as per the service order and scope of work, M/s. Divine Establishment, is responsible for extracting specified quantity of lime stone within the specified time limit by deploying its trained man power as per the requirement of the assessee. On perusal of the agreement copy, it was undisputedly clear that the services provided by the contractor is a mere contract for supply of labour for execution of works contract, which is coming under the definition of works contract and accordingly, the assessee has rightly deducted the TDS u/s 194C of the Act. The CIT(A) further held that the company had provided the heavy earth moving machinery owned by it to the contractor and the contract....
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....(A). The Ld. A.R. further submitted that the service provided by the contractor is a mere contract for supply of man power for execution of works contract and not a contract for provision of providing technical services. The Ld. A.R. further submitted that the assessee has entered into an agreement with the contractor. The terms and conditions of the contract clearly shows that it is a contract for extraction of lime stone. It was further argued that the contractor needs to deploy as much as required number of labourers to operate the HEMM and also extract required quantity of lime stone. The assessee company has provided the required number of HEMM and contractor responsibility is to operate the machines and extract the lime stone. The payment has been made on hourly basis. Therefore, the A.O. was not correct in coming to the conclusion that it is a contract for provision of providing technical services. The A.R. further submitted that assuming for a moment that it is a contract for technical services and the impugned payments are coming within the provision of section 194J of the Act, any services rendered in relation to the activity of mining is kept outside the purview of the p....
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....d in the business of manufacture of cement. The assessee owned lime stone mines for captive consumption of raw material to be used in the manufacture of cement. The assessee has engaged the service of contractor M/s. Divine Establishment, Chennai for extraction of lime stone from the mines owned by the company. The assessee has entered into agreement with the contractor and issued a service order. According to the assessee, the payments made to the contractors are covered under the provisions of section 194C of the Act. A survey operation u/s 133A of the Act, was conducted in the business premises of the assessee. During the course of survey, it was noticed that the assessee has deducted TDS u/s 194C on payment to M/s Devine Establishment, Chennai. It was further observed that as per the scope of work and terms and conditions of the contract, the payment to the contractors are coming under the provisions of section 194J of the Act. Therefore, the A.O. has passed order u/s 201(1) of the Act and computed the tax by invoking the provisions of section 194J of the Act. It was the contention of the assessee that the service provided by the contractor is a mere contract for supply of man ....
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.... by deploying his manpower as per the requirement of the company from time to time. The supply of the manpower includes supply of trained manpower required for operating the heavy earth moving machineries which were owned by the company. We further observed that the A.O. himself has admitted that the predominant objective of the contract for which the assessee engaged the services of M/s. Divine Establishment, is to carry out mining and make the required quantity of lime stone available to the assessee within a specified time. Therefore, we are of the opinion that the A.O. was not correct in coming to the conclusion that the service provided by the contractor M/s. Divine Establishment to the assessee is in the nature of fees for technical services and the impugned payments are covered under the provisions of section 194J of the Act. 12. The assessee further contended that though the payments are in the nature of fees for technical services, which comes under the provisions of section 194J of the Act, any services rendered in relation to mining is kept outside the purview of the provisions of section 194J of the Act. The Ld. A.R. invited our attention to the provisions of section....