TaxTMI 
TaxTMI 
2018 (10) TMI 859
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.... The CIT(A)'s elaborate discussion qua the instant former issue reads as under:- "5. Ground of Appeal No.4 is against non-deduction of TDS @ 10%, i.e. Rs. 41,600/- on Pollution Control Expenses of Rs. 4,16,000/- and interest thereon of Rs. 12,480/-. It has been mentioned in para-2 of the impugned order that the Appellant was asked to explain why TDS was not deducted on Pollution Control expenses of Rs. 4,16,000/- u/s 194J. The AO however did not accept the explanation of the Appellant and held that the description of the job indicates that the Appellant had given contract for designing, engineering, supply and installation of Air Pollution control system as per its specifications and appellant's contract was for supplying and installation of highly specialized items, payments of which was covered u/s.194J, i.e. for professional and technical services. The AO therefore treated the Appellant in default for non-deduction of TDS on this amount of Rs. 4,16,000/-. 5.1 In appeal it has been submitted that the AO accepted that the contract was for supplying and installing the pollu9tion control equipment. However, he alleged that since the nature of transaction involves not only suppl....
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....ved in an outright sale / purchase transaction of the relevant air pollution control equipment than any kind of services rendered by the equipments supplier. It is thus an instant of outright sale therefore Hon'ble Andhra Pradesh high court's decision in CIT vs. Sundwiger & Co. [2003] 262 ITR 110 (AP) holds that the relevant customizing design, supply and installation in such a case forming part and parcel of the purchase order does not attract u/s 9(1)(vii) Explanation 2 of the Act requiring TDS deduction. Yet another case law CIT vs. Neyveli Lignite Corporation Ltd. 243 ITR 459 (Mad) echoes the very legal principle in concluding that limited purpose of such customize design, supply, and installation is to meet special requirements and not to enable the payer / deductor to manufacture the equipments itself with the aid of the design in question. This tribunal's decision in Hindustan Aeronautics Ltd. vs. ITO 310 ITR (AT) 74 also holds that subject-matter of the contract in these circumstances is of equipment purchase only. We take into account all the above narrated facts in light of foregoing judicial precedent to conclude that assessee had made the impugned payment for purcha....
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....t of NRSC as per the Invoice from NRSC (based on rates negotiated between the appellant and the NRSC agent) and gets the Bill of Lading (B/L) released from NRSC. The bill of lading has the name of the appellant as the shipper. viii. Forwarder present B/L to the appellant along with their Invoice of the exact amount as raised by agent of NRSC along with NRSC invoice for Sea Freight. ix. Thereafter, the appellant makes the payment to the Forwarder a few days after receipt of B/L. TDS is not affected since the entire payment is for the NRSC and the forwarder does not charge anything from the appellant. In the absence of any income of the forwarder, he steps into the shoes of the agent of the NRSC. Further the following table gives a summary of the transactions of the appellant:- Forwarder Amount Paid (Rs) Name of Shipping Co. N.R. Amount of bill raised (Rs) Cargomar 1,05,17,926 MEARSK 1.05 Consolidated shipping 1,57,770 17,926 Damani Shipping Pvt. Ltd. 4,54,409 MEARSK 4,54,409 EMU Lines Pvt. Ltd 1,79,112 Authorised agent of N.R Shipping Co. 1,79,112 Global Shipping & Co. 1,32,23,147 PIL ....
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....s. 44,32,186/- and in the case of LCL Logistics India. Therefore, in view of the decision of the Hon'ble Supreme Court in the case of Hindustan Coca Cole Beverage (P) Ltd., supra, the Appellant cannot be considered as 'assessee in default' in respect of payments made to these parties. 4.3 However the main issue is whether the Concerns to which the Appellant has made the payments could be considered to be the Agents of the Non-Resident Shipping Companies for the purpose of Sec. 1-72 has envisaged in Circular No.72 of the CBDT. It is seen that the issue has been considered in the case of ITO , Freight System (India) (P) Ltd. in Para-1D of the order which is reproduced under- '10. The provisions of section 172 constitute a code in itself with regard to the mode of levy and recovery of tax in the case of any ship, belonging to or chartered by a non-resident. By virtue of sub-section (8) of section 172 'the demurrage charge or handling charge or any other amount of similar nature' are treated at par with carriage paid or payable to such owner or charter. Thus, even as the amounts in the nature of demurrage etc. may not end up being paid to non-residents, these a....
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....ders. In the case of the Appellant it has demonstrated with the help of sample bills and invoices of the Forwarders and Shipping Lines that there was no payment being made to such forwarders by the Appellant for their Services and the payments were being passed on to the NRSCs. In view of the above it is clear the above decisions cited by the Appellant and Circular No 723 of CBOT were applicable in the Appellant's case. Therefore, after carefully considering the above facts and circumstances, it is held that Tax for default deduction of TOS levied by the AO in respect of payments to Globelink WW India, LCL Logistics India and Tierra Logistics (P) Ltd is not leviable in view of Form No.26A submitted by the Appellant. Further even otherwise in the case of these payments, it is seen as discussed above that provisions of Sec.194C are not applicable. Hence, it is held that the demand raised by the AO for non-deduction of TDS was not justified and this Ground of Appeal is allowed." 5. This is what leaves both the assessee and Revenue aggrieved to the extent indicated in their respective pleadings. The Revenue seeks to revive the Assessing Officer's action in enterity whereas the ass....