TaxTMI 
TaxTMI 
2022 (7) TMI 336
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....gregation possible while the assessee has segregated and arrived at the percentage of technical services component, when the Tribunal itself has observed that some portion of the contract can be segregated to attract TDS, whether it was factually and legally tenanble to have allowed the appeal of the assessee in entirety? 3. Whether the work taken up is ancillary to supply of rolling stock or a part of it is a rendering professional and technical service? 2. Hence, they are disposed of by this common order. 3. Heard Shri. K.V. Aravind, learned Standing Counsel for the Revenue and Shri. K.K.Chaitanya, learned Senior Advocate for the assessee. 4. The BMRCL (Bangalore Metro Rail Corporation Ltd.) entered into a Contract with a consortium consisting of M/s BEML Ltd., M/s Hyundai Rotem Company, Mitsubhishi Corporation and M/s Mitsubhishi Electric Corporation, of which, BEML Ltd., being the consortium leader, for design manufacture, supply, testing and commissioning of passenger Rolling Stock, including training of Personnel and Supply of spares and operation. The total cost of the Contract was Rs.1672.50 Crores. 5. The Income Tax Department conducted a survey under Section 133A of....
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....s. Director of Income Tax (2007)158 Taxman 259 (SC). (b) Transmission Corporation of A.P. Ltd., Vs. Commissioner of Income Tax (1999)105 Taxman 742 (SC). 9. In substance, the argument advanced on behalf of the Revenue is, the Contract between BMRCL and BEML consisted of two parts namely, the supply and the Technical service. Therefore, Section 194(j) of the I.T. Act is applicable so far as the Technical services are concerned. 10. Shri. Chaitanya, learned Senior Advocate, opposing the appeal submitted that the specific case of both assessee and the Revenue throughout is that it is a composite Contract. He contended that the ITAT has recorded in para 7 of its order that the Assessing Authority had held that the Contract was in the nature of a composite package. He contended that the Departmental Representative has argued before ITAT that it is an 'indivisible' Contract for supply, commissioning, testing etc. 11. Thus, in substance, Shri. Chaitanya argued that both the assessee and the Revenue have understood the Contract as an 'Indivisible Contract'. Therefore, the Revenue cannot be permitted to improve its case at this stage. He has placed reliance on the following authorities....
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....ores whereas, the training component is about Rs.19 Crores. 19. Though the consortium consists of different Companies, BEML Ltd., is the consortium leader. To a query made by the Court with regard to payment made, Shri. Chaitanya, on instructions from the BMRCL Officer present in the Court, submitted that all cheques have been issued in favour of BEML Ltd. 20. Shri. Chaitanya further submitted that the question of deduction of tax under Section 194J is held against the assessee by the Revenue only in respect of 10% of the entire project value which was given as 'Mobilization Advance'. The project is complete. Assessment for all years in respect of the remaining 90% payment is complete. In respect of 90% payment, the Revenue has not raised any objection with regard to non-compliance of Section 194J. 21. In para 14 of its order, the ITAT has recorded Revenue's contention and it reads as follows: "14. The learned DR also placed reliance upon the following decisions in support of his contention that the project being a composite contract, it has to be considered as one indivisible contract and the tax is to be deducted at source on such contracts having regard to the domina....
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.... (Emphasis Supplied) 24. Shri. Aravind has relied upon Transmission Corporation of A.P. Ltd. The question involved in that case was deduction of income tax under Section 195 of the Act on the payments made to the non-resident Company. In the instant case, the entire payment has been made to BEML Ltd., which is a resident Company. Therefore, on facts, the said authority does not lend any support to the Revenue. 25. He has also relied upon Ishikawajma- Hairma Heavy Industries Ltd. The said authority also does not lend any support because, in that case, payments were made 'separately' to the Members of the Consortium. 26. In Japan Airlines Company Ltd., the Revenue took a stand that deduction was required to be made under Section 194-I of the Act while making payment towards 'Landing and Parking the Aircrafts' in Indira Gandhi International Airport. Under Section 194-I of the Act, any person responsible for paying to any other person, any income by way of "rent", shall deduct Income tax at the rate of 15% in the case of individuals or HUF and 20% in other cases. The word 'rent' has been described to mean any payment by whatever name called under any lease, sub-lease, tenan....