TaxTMI 
TaxTMI 
2017 (7) TMI 1144
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....been awarded a contract for constructing a new airport terminal in Kolkata by Airport Authority of India for short hereafter as (AAI). A survey was conducted on 18.01.2013 on the assessee under section 133A(1) of the Act. During the course of survey on an examination of records and documents it was observed that the assessee has paid an amount of Rs. 2,16,90,806/- towards land rent to AAI and the said amount was paid without deducting TDS. The AO issued show cause seeking explanation why the assessee should not be treated as in default for not taking TDS and as well as for not depositing to the Govt. accounts. 4. The assessee in explanation referred to Clause 19, 19.1 and 39 of general clauses of contract for short GCI and Clauses 29 and 36 of special conditions of contract for short SCC between the assessee and the AAI. It was submitted that the assessee did not have exclusive and unfettered possession of the site and the said site was to be shared with other contractors and as well as staff of AAI. On the strength of the above said clauses, the assessee submitted that the parties to the agreement agreed that the assessee should conduct and manage the construction activity under ....
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....disclosed the said TDS in its accounts, the CIT(A) held that the assessee is not in default for non-deduction of tax. The relevant portion of which is reproduced here-in-below: "3.2 The submissions of the Appellant have been considered. It is seen that the issue is regarding certain amounts deducted by the Appellant's client Airport Authority of India (AAI) from the Running Bills submitted by the Appellant towards construction of the Airport Terminal at Kolkata. The Appellant is a Joint Venture (assessed as an AOP) between ITD Thailand and ITD Cementation Ltd. Which was formed for the construction of Integrated Passenger Terminal Building at Netaji Subhash Chandra Bose International Airport for and on behalf of Airport Authority of India under a contract with them. Further that a sum of Rs. 2,16,90,806/- was deducted by the AAI on account of purported Land Rent from the Running Account (RA) bills. Thus, the Appellant was receiving the balance money after deduction from the monthly running account bills and was not actually making payments to the AAI. The rent charged by the AAI has been disputed by the Appellant before the Disputes Resolution Board and AAI had also approached the....
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.... cannot be said that by the agreement, rent was in fact being paid by the assessee-company to the licensee. No doubt, the charges have been broken up under two heads viz., that of, marketing claim and infrastructure claim. However, the agreement is an agreement as a whole and such a composite agreement cannot be broken up as it sought to be done and contended by the revenue. The provision of section 194I cannot be read to break up composite contracts and when that is not the intention of the parties themselves. If, the interpretation of the Revenue is accepted then, in a case where there is a partnership and one of the partner brings in his capital in the form of his premises from where the partnership business is carried on, then, payment made to such partner by the firm can be stretched to be included in the definition of rent under section 194I and which surely cannot be the intention of the Legislature" Furthermore in the case of National Panasonic India Ltd. it has clearly been held by the ITAT Delhi as under: 6. We have duly considered the rival contentions and the material on record. Section 194I of the Act mandates a person, other than an individual or a Hindu Undivided F....
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....-06, 2006-07 and 2008-09, order dated 31.07.2012, the onus was on the AO to verify the same and if the same has not been offered as income by the recipient, only then the Appellant could be held to be liable for tax u/s 201(1). Therefore in view of the above discussion and the facts in the Appellant's case it is held that the action of the AO was not justified and ground of appeal is allowed." 7. Learned DR relied on the order of AO. Learned AR supported the order of CIT(A) and reiterated the submissions as made before the CIT(A). 8. Heard rival submissions and perused the relevant material available on record. We find that the CIT(A) held the impugned amount does not constitute rent which attracts deduction of TDS under section 194I of the Act by placing reliance on the decision of Hon'ble High Court of Delhi in the case of CIT vs NIIT reported in 318 ITR 289. 9. We note that the CIT(A) placed reliance on the decision of Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverage Pvt. Ltd. reported in 293 ITR 226 and held that the assessee is not in default for non-deduction of TDS as the payment alleged to have been paid to AAI was in turn offered by AAI as income in ....
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....is not an income in the hands of assessee. Considering the facts of the case with that of case laws relied by the assessee, the CIT(A) sought remand report from the AO. The AO stated that the section 194A does not distinguish between the payment of interest or the reimbursement of interest and it clearly provides that any interest amount is paid the TDS has to be deducted on such interest expenses. The CIT(A) by placing reliance in the case of Grand Prix Fab Pvt. Ltd. reported in 128 TTJ 60 (Delhi) and in the case of Utility Powertech Ltd. of Mumbai Tribunal and held when there is no element of income and the payment of only reimbursement expenses no disallowance can be made under section 40(a)(ia) of the Act. The relevant portion of which is reproduced here-in-below: "The submission of the appellant its rejoinder to the Remand Report of the AO have all been considered. It is seen that the issue is regarding certain payments made by the appellant to its Co-Ventures on account of interest of Rs. 30,67,418/-, Bank Guarantee Commissioon Rs. 37,00,880/- and Bank Charges Rs. 37,36,966/- as also the reimbursement towards Conveyance Expenses of Rs. 1,02,399/- and Travelling Expenses of ....