TaxTMI 
TaxTMI 
2018 (2) TMI 509
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....he assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called "the tribunal") in ITA no. 5186/Mum/2016 for assessment year 2012-13 read as under:- "1. The learned CIT (Appeals) erred in holding that contract to M/s. DBM Geotechnics Construction Pvt. Ltd. has not been given for simple rock excavation work but is given for Marine Geo Technical Investigation for rock excavation in Mithi River. Therefore, it is covered by the provisions of section 194J and not as per the provisions of section 194C for deduction of TDS on total payment amounting to Rs. 7,59,32,109/- made to M/s. DBM Geotechnics Construction Pvt. Ltd. 2. The appellant craves to add to, alter or amend the foregoing grounds, which are without prejudice to one another, at the time of hearing." 3. The assessee is a local authority created by the Government of Maharashtra by enacting MMRDA Act ,1974 and it is engaged in the business of planning, coordinating and supervising the development of the areas in the region and of executing plans, projects and schemes of such developments. The assessee has made payments to the tune of Rs. 7,59,32,109/- to M/s DBM Geote....
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....udice to above, we hereby contended that since M/s. DBM Geotechnics Construction Pvt. (deductee) has already included the payments made by the assesse in their return of income as receipt and paid taxes on the same, no demand should be raised on account of being difference between the TDS as per provisions of section 194J and as per section 194C as per the first proviso to section 201 of the I.T. Act. However, the demand may be raised on account of interest u/s.201(1A) from the date of deduction to the date of filing return by the deductee as per the provisions of first proviso to section 201 (1A) of the Act. In A. Y. 2011-12 and 2008-09, the Ld. CIT(A) has also accepted the above contention of the assessee and directed to AO to reduce the demand by giving the relief on the same grounds." The AO after considering the submissions of the assessee held that the assessee has made payments amounting of Rs. 7,59,32,109/- to DBM Geotechnics Construction Pvt. Ltd. for marine geotechnical investigation for rock excavation in Mithi River on which TDS has been wrongly deducted u/s. 194C instead of Section 194J. The AO while passing order dated 25-03- 2015 u/s 201(1) and 201(1A) , ....
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....me are listed out as under: Laboratory Tests: 1) Moisture Content 2) Specific Gravity 3) Consistency Limits. 4) Gravel & Fine Sieve analysis 5) Hydro Meter analysis 6) Consolidation 7) Direct Shear Test 8) Triaxial (UU) 9) UDS all about tests. Rock Samples 10) Specific Gravity 11) Water absorption 12) Porosity 13) Crushing Strength 14) Tensile Test 15) Modulus of Elasticity & Poission's ratio 16) Chemcial analysis of soil to determine chloride & sulphate content and 17) Chemical analysis of groundwater to determine chlorine and sulphate content and PH 5.2.4 From the above list of laboratory test and rock examination, it is crystal clear that the contract was not just a simple work contract, but was for providing highly technical services. The every entry in this list clearly speaks out the DBM was required to provide scientific and technical services coupled with consultancy. Such specialized services cannot be accomplished without involvement of professional caliber and merit. 5.2.5 It is worth to me....
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.... technical investigation for the purposes of rock excavation in Mithi river, the AO's decision in this regard shall be upheld. In that case, however, the AO shall give relief to the appellant in respect of the tax already paid by DBM Geotechnics Construction Private Ltd. If any, on its receipts from the appellant, in view of the decision of the Hon'ble Apex Court in the case of Hindustan Coca Cola Beverage (p) Ltd. Vs. CIT [2007] 293 ITR 226. The AO is therefore directed accordingly.' 6.1 The assesse has also furnished the following details for claim of relief u/s. 201(1) in respect of Hon'ble Apex Court in the case of Hindustan Coca Cola Beverage (p) Ltd. Vs. CIT [2007] 293 ITR 226. In support of it, the assessee has submitted - 1. Audited Financial Statements of Accounts of DBM Geotechnics & Construction Pvt. Ltd. including Auditors Report under the Companies Act. 2. Acknowledgement of Income Tax return filed by the Company. 3. Computation of Total income. 4. Tax Audit Report under the Income Tax Act in Form 3CA and 3CD. 5. Copy of ledger account of MMRDA in the books of M/s. DBM Geotechnics & Construction Pvt. Ltd....
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....s 201(1) is worked out to Rs. Nil and tax liability u/s. 201(1A) is worked out at Rs. 9,71,931/-.( From 19/05/2011 till the date of filing of return by DBM Geotechnics & Construction-24/09/2012 i.e. 16 months @1%). The AO therefore held that assessee was required to deduct income-tax at source u/s. 194J at the rate of 10% which workout to Rs. 75,93,211 , while income-tax was deducted at source at the rate of 2% by the assessee which amounting to Rs. 15,18,642/- and hence for balance short deduction of income-tax at source was determined to be Rs. 60,74,569/-, but since however the assessee filed certificate from auditors of DBM Geotechnics and Construction Private Limited to the effect that it filed its return of income including the payment received from the assessee company and paid due taxes to the Revenue, the liability u/s 201(1) was determined by the AO against the assessee was computed at NIL u/s 201(1) but interest u/s. 201(A) was workout by the AO to be Rs. 9,71,931/- , vide order passed by the AO u/s. 201(1)/201(A) dated 25.03.2015. 4. Aggrieved by the order dated 25-03-2015 passed by the AO u/s 201(1) and 201(1A), the assessee carried the matter in appeal before th....
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.... appellant. My Ld. Predecessor in the appellant's own case for AY 2008-09, vide her order dated 07.07.2014 has discussed the issue in detail and held as under:- 4.3 I have considered the facts of the case, submissions of the appellant, order giving appeal effect of the CIT(A) order and the order of my Ld. Predecessor. My Ld. Predecessor has set this issue to the file of the A.O to verify the correctness of the fact and accordingly take a decision holding inter-alia held as under:- "That if the contract to DBM Geotechnics Construction Pvt. Ltd. has been given for rock excavation work, the A.O. shall not treat the appellant to be in default and shall accordingly delete the demand raised. However, if as observed by the A.O. the contract is for marine geo-technical investigation for the purposes of rock excavation in Mithi river, the AO's decision in this regard shall be upheld" 4.4 I have perused the contract document filed by the appellant. The name of work for the contract is "Marine Geotechnical Investigation for Rock Excavation in Mithi River Approach Chanel". The nature of work defined in Schedule B is as under:- * Item No. 1 : Establis....
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....de and sulphate content (xvii) Chemical analysis of ground water to determine chloride and Sulphate content and P.H. 4.5 Thus, from the above it is clear that the contract to DBM is not given for simple rock excavation work but it is given for 'Marine Geo Technical Investigation' for rock excavation in Mithi River. Therefore respectfully following the decision of my Ld. Predecessor, the action of the A.O. is upheld. Ground is dismissed. 5.4 Respectfully, following the decision of my Ld. Predecessor, the action of the AO holding the assessee as assessee-in-default for non- deduction of tax at source u/s 194J as against 194C in respect of payments made to M/s DBM Geotechnics Construction Pvt. Ltd. is upheld Ground is Dismissed. 6. For the AYs 2012-13 & 2013-14, the appellant has taken alternative ground vide Ground No. 3. Since it is held that the appellant was required to deduct the tax u/s 194J as against the 194C for the payments made towards M/s DBM Geotechnics Constructions Pvt. Ltd., the alternative ground taken by the appellant that the Interest u/s 201 (1A) should levied from the date of deduction to the date of fi....
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....ed by provisions of Section 194C as the assessee has awarded both the types of contract under tender to DBM Geotechnics Construction Private Limited . It was claimed that learned CIT(A) mistook the tender to be towards marine geotechnical investigation for rock excavation in Mithi River while infact the tender was for construction of retaining wall along bank of Mithi River for which payments were made by the assessee to DBM Geotechnics and Construction Private Limited during relevant period under consideration. It was submitted by learned counsel for the assessee that the matter can be verified by the AO and if contentions are found correct, the tribunal order can be followed accordingly and in any case the tribunal has adjudicated on both the types of tenders/contracts awared by assessee in favour of DBM Geotechnics and Construction Private Limited. The Ld. DR raised no objection if the matter is restored to the file of the AO for necessary verifications on merits as to the nature of the payments having been made to the tune of Rs. 7.59 crore to DBM Geotechnics Construction Pvt. Ltd. during relevant period for construction of retaining wall alongwith bank of Mithi River. 6. We....
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....ere technical in nature which are covered u/s 194J of the Act for deduction of tax at source. The authorities below have rightly concluded that these services are technical services which are covered u/s 194J of the Act for deduction of tax at source and not u/s 194C of the Act for deduction of tax at source . We have also gone through the various items of work reflected in tender documents as contained inChapter VIII(e), schedule - B which are placed on record in paper book /page 139-142 and also detailed item wise specification in tender document placed in paper book/page 143- 145 , which clearly lead to the irresistible conclusion that these are technical services rendered by M/s DBM Geotechnics Construction Pvt. Ltd. to the assessee for 'Marine Geo Technical Investogation'. The learned AO vide orders dated 11-03-2013 in para 2 as well learned CIT(A) in his appellate orders dated 16-07-2014 in para 4.4/4.5 have rightly concluded that services rendered by M/s DBM Geotechnics Construction Pvt. Ltd. to the assessee are technical in nature and duly covered u/s 194J of the Act for deductibility of tax at source, which orders of the authorities below we are not inclined to interfere. ....
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....vided family referred to in the second proviso shall be liable to deduct income-tax on the sum by way of fees for professional services in case such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family.] (2) [***] (3) [***] Explanation.-For the purposes of this section,- (a) "professional services" means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AAor of this section; (b) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9; [(ba)"royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;] (c) where any sum referred to in sub-section (1) 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 sum, such creditin....
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....less to say that proper and adequate opportunity of being heard shall be provided by the AO in accordance with principles ofnatural justice in accordance with law. This appeal is partly allowed for statistical purposes.We order accordingly. " "14. We have considered the rival submission and also perused the material available on record. We have observed that the assessee has paid an amount of Rs. 32,47,68,465/ - to M/ s DBM Geotechnics Construction Pvt. during the previous year relevant to the assessment year 2011-12 on which tax was deducted at source u/s 194C of the Act by the assessee. The assessee has contended that the authorities below have framed the orders based on evaluation of a wrong tenders/order which was also awarded to the assessee earlier being marine geotechnical investigation for rock excavation in Mithiriver approach channel (2.14 Km) situated at sea side of Mahim causeway of which work was completed way back in the previous year relevant to the assessment year 2008-09. Thus, the assessee admitted its mistake of submitting wrong tender documents before the authorities below for evaluation of the applicability of Section 194C of the Act vis-à-vis p....