TaxTMI 
TaxTMI 
2017 (10) TMI 1681
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....the course of survey proceedings it was noticed that assessee was awarding large number of contracts ranging from repairs and maintenance of its staff quarters/godowns to design new/manufacturing/commissioning/ tugs and launches etc. to meet its operations/obligations. He further observed that some of the contracts prima facie appeared technical in nature while some other qualified as purely hiring arrangements, that it had made certain payments to various parties/contractors, that it had deducted tax as per the provisions of section 194C of the Act, that payments made for contracts where technical services were availed, that tax had to be deducted as envisaged under provisions of section 194J, that payments made in the nature of hiring arrangements should have been subjected to provisions of section 194-I.He asked the assessee to file certain details in that regard. Accordingly, party-wise details along with tender-value, nature of work, nature of job done by the contractors for the assessee were submitted. After considering the same the AO held that services rendered by the contractors/service providers were in the nature of technical services, that the assessee ought to had dedu....
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....received any technical services, that a final product was delivered to it, that the routine repair and maintenance done on machines was to be included under the ambit of section 194 C, as per Circular issued by the CBDT on 8/8/1995 (Cir.No.715) and 30/8/1995 (Cir.No.829 of 1995). 3.1. With regard to hiring of vehicle to transport employees through Capital Tourist Taxi Operators, the FAA held that claim made by assessee was supported by bills and terms of contract, that the contracts were not for having vehicles. He referred to cases of Kandla Port Trust(ITA/451/Rjt/2012)and Associated Cement Co. Ltd.(201 ITR 435)and allowed the appeal filed by the assessee 4. During the course of hearing before us, the Departmental Representative (DR) supported the order of the AO and stated that contracts entered into by the assessee were for providing technical services, or for hiring of vehicles, that the assessee should have deducted tax as per provisions of Section 194J or 194-I of the Act. The Authorised Representative (AR) stated that Shree Engineering Services carried out major overhauling of port side main engine (Rs.8.63 lakhs), that machinery and equipment were required routi....
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....eiving payments from the assessee, had shown the receipts in their returns of income. The AR also supplied names of the contractors along with their PAN who had dealt with the assessee during the year under consideration. 5. We have heard the rival submission and perused the material before us. We find that AO had held that assessee should have deducted tax u/s. 194J and 194-I of the Act for various payment made to parties who had carried out piece of work for assessee or had rendered service to it. TDS provisions were included in Act to ensure the payment of taxes from the recipient of the income and to keep a trail of payments received by contractors. 5.1. In our opinion, it will be useful to consider the case of Bharat Heavy Electricals Ltd.(390 ITR 322) of the Hon'ble P&H High Court, which deals with section 194 and 194 J of the Act. In that matter a survey was conducted under section 133A of the Act at the office premises of the assessee. The AO found that the assessee had made payments to five contractors in respect of various contracts and deducted tax in respect thereof under section 194C@ 2%.He observed that all the contracts involved the provision of professiona....
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....of section 194C, it must be deemed to fall within the ambit of section 194J . Sections 194C and 194J are independent provisions." Clearly, all contracts cannot be categorised as contract for supply of professional or technical services, as envisaged by the provisions of section 194 J of the Act. Section 194C of the Act deals with contract of work and Sec.194J is about technical services offered by the contract - ors. We have gone through the details of various contracts awarded by assessee to different parties. Prima facie all contracts do not involve rendering of any technical knowledge /services to the assessee or all the contracts were for routine services including repairing and providing maintenance. Here, we would like to refer to the case of Associated Cement Co. Ltd.(supra)and it reads as under: "No ambiguity is found in the language employed in section 194C(1).On plain reading of said section, what is contained in the sub-section, admits of the following formulations: (1) A contract may be entered into between the contractor and any of the organisations specified in the sub-section. (2) Contract in formulation could not only be for carrying ou....