TaxTMI 
TaxTMI 
TaxTMI 
2016 (7) TMI 1187
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.... 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 deduction of TDS u/s. 194C of the IT Ac, therefore the finding of th....
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....re 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. iii) The assessee failed to produce documents to demonstrate that the payee has included the terminalling c....
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....e 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 on which the AO has calculated the non-deduction of TDS u/s. 201(1) and interest u/s. 201(1A) which are as follows:- FY Amount credited to BRPL (Rs) Demand u/s. ....
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....s 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 tax on the payment of Terminalling Charges to M/s Indian Oil Petronus Ltd. in view of above, I uphold the view of the AO that the provisions of section 194C of the Act were applicable on payment of Termin....
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..... 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 reads as under : "[Rent. 194-I. Any person, not being an individual or a Hindu undivided family, who is responsible for paying to -a resident] any income by way of rent, shall, at the time of credit of such income to th....
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....he 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 BRPL. The petroleum products were purchased by the assessee in bulk and regular basis for which loading facility was provided by BRPL. The assessee for availing the loading facility was making the payment to the same party from which he was buying the products i.e. BRPL. Thus the loading facility was intricately linked with the every p....
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....tand 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 at Patna, that Writ Petition was dismissed by the High Court by its order dt. 8th March, 1979. The appellant has, therefore, filed this appeal by special leave before this Court seeking the quashing of the notices which it had unsuccessfully impugned before the High Court, in its Writ petition." However, we find that the facts in the abov....