TaxTMI 
TaxTMI 
2016 (7) TMI 1187
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....em it appropriate to dispose them by way of this common order. Accordingly we are taking the facts of the case for AY 2004-05 as a lead case for the sake of convenience, we pass a consolidated order for all the appeals. Effective grounds have been raised out of which ground No.1 is of general nature and does not require separate adjudication. The grounds raised are as under:- "1. For that on the facts of the case, the order passed by the Ld. C.I.T.(A)-XVI, Kolkata is completely arbitrary, unjustified and illegal. 2. For that on the facts of the case, the Ld. CIT(A) was wrong in holding that Rs. 10,51,87,592/- paid to BRP Ltd was terminaling charges and liable to deduction u/s. 194C of the IT Act, which is completely arbitrary, unjustified and illegal. 3. For that on the facts of the case, the Ld. CIT(A) was wrong in not considering the agreement between BRP Ltd and the Assessee Company wherein as per Clause 8.4, the said amount of Rs. 10,51,87,592/- crores was aid to BRP Ltd against marketing rights vested with IOC and for also using the loading of Products through loading infrastructure operated by BRP Ltd, therefore, the said amount was not liable for d....
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....urther submitted that the payment was made to BRPL for the utilization of loading infrastructure owned by BRPL and assessee in support of its claim produced the agreement with BRPL. The terminalling charges which have been paid to BRPL is for evacuating the oil extracted and refined by BRPL which is part of the price for the purchase of the petroleum products. The assessee also furnished the copy of the computation of total income and assessment orders of BRPL to justify that the payee has included the terminalling charges in its income. Accordingly the assessee submitted that the transactions for the payment of terminalling charges are out of the purview of TDS provision. However AO has disregarded the plea of the assessee and while doing so the AO also considered certain clauses of the agreement. The reasons for the rejections are enumerated as under:- i) M/s BRPL written a letter to the assessee that it has not obtained any certificate under section 197/ 197A of the Act but has included the receipt of terminalling charges in its books of account as income. ii) Same terminalling charges were paid to M/s Indian Oil Petronas Pvt. Ltd. after the deduction of TDS. ....
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....petroleum products. But the payment made during the year to BRBL cannot be bifurcated between the above two services. However it is very much glaring that the payment is made towards the use of infrastructure facilities as the assessee has debited the entire amount as terminalling charges. In view of above, AO inferred that assessee has failed to deduct TDS as required u/s. 194C of the Act. The AO further observed that similar payment was made to M/s Indian Oil Petronus Pvt. Ltd. (IOPPL for short) during the financial years 2001-02, 2002-03 & 2003-04 without deducting TDS as IOPPL submitted the certificate of non-deduction of TDS issued by Income Tax Department to IOPPL under section 197 of the Act. Therefore, argument raised by assessee cannot be accepted that payment is not in the nature of work contracts and therefore not allowable due to non deduction of TDS. In view of above, AO has held that assessee is in default within the meaning of Sec. 201(1) of the Act and accordingly charged interest u/s. 201(1A) of the Act. 4. Aggrieved, assessee preferred an appeal before L'd CIT(A) where assessee submitted that the payments made to BRPL in these three years are as follows o....
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....onsidered the submission of the appellant and perused the copy of the agreement as well as other documents filed by the appellant. As far as the appellant's contention regarding applicability of provisions of section 194C of the Act on payment of Terminling charges is concerned, it is seen that the AO has made an exhaustive and detailed analysis of the agreement between M/s BRP Ltd and the appellant, in his order dated 31.03.2008. On perusal of agreement and the reasons given by the AO I agree with the Assessing Officer that the provisions of section 194C of the Act were applicable on the payment of Terminalling Chargers to M/s BRP Ltd. and M/s IBP Ltd. and the appellant was required to deduct the tax at source on such payment. From the submission of the appellant before the AO vide letter dated 12.02.2008, it is seen that the appellant has made payment of similar nature to M/s Indian Oil Petronus Ltd. on account of Terminalling charges. For Financial years 2001-02 & 2002-03, the said company has obtained nil deduction certificate from the concerned officer and hence no deduction was made by the appellant in those years. However, in FY 2003-04 the appellant itself has deducted the ....
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....ges without deducting TDS. We find from the assessment order, AO that assessee's transactions were very much attracted towards the provisions of Sec. 194C of the Act and nondeduction of TDS has made assessee in default of Sec. 201(1) of the Act and accordingly assessee is liable to pay interest to Sec. 201(1A) of the Act. However, in appellant order, L'd CIT(A) has also confirmed the action of AO. Now the issue arise before us is as to whether payment made by assessee for availing infrastructure facilities amounts to work contract as mentioned under section 194C of the Act. The fact reveals from the copy of Agreement between assessee and BRPL, that payment was made for availing the infrastructure facilities and as such, there was no work contract of the nature as specified u/s. 194C of the Act. It is also pertinent to note that Legislative has brought amendment to Sec. 194-I of the Act for making such transactions subject to TDS but which came into force with effect from 1-6-2007 only. The dispute in the instant case relate to the period prior to the amendment u/s 194-I of the Act. At this juncture it is important to produce the relevant provisions of section 194-I of the Act which....
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.... (ii) where any income is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credited of such income to the account of the payee and the provisions of this section shall apply accordingly.] From the plain reading of the section, we find that the rent paid for availing the infrastructure facility are subject to TDS under section 194-I of the Act which is effective from 1.6.2007. In the case on hand the disputes relate to the years before the insertion of the provisions of section 194-I of the Act. For making a transaction subject to TDS under section 194-C of the Act there has to be written or unwritten works contract. Now it is important to understand the meaning of works contract in the context of infrastructure facility used by the assessee. From the facts we find that in the instant case the assessee was buying the petroleum products from BRPL. Besides the above the loading services were also provided by BRPL in connection with the purchase of the petroleum product. For the loading services the assessee was making the payment separately to BR....
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....ellant made payments of the sums payable to him under cl. 12 of the contract and the sums reimbursable to him under cl. 13 thereof. But the deductions made under s. 194C(1) of the Act by the appellant out of the sums paid or reimbursed to the contractor fell short of the deductions required to be made thereunder. As the appellant took the stand that it was not liable to deduct any amount under s. 194C(1), out of the sums paid on its behalf to the contractor as per cls. 12 and 13 of the contract, the ITO, Jamshedpur, served on the Principal Officer of the appellant a notice dt. 30th March, 1978 to show cause as to why action should not be taken against the appellant under ss. 276B(1), 281 and 221 of the Act in respect of asst. yrs. 1973-74 and 1974-75 for short deductions out of the sums paid to contractor without observing the requirement of s. 194C(1) of the Act. Another notice dt. 8th May, 1978, relating to the asst. yrs. 1974-75 to 1977-78 of a similar nature, was also served on the Principal Officer of the appellant. The appellant, although impugned both the said notices in a Writ Petition filed under Articles 226 and 227 of the Constitution before the High Court of Judicature ....