INCOME TAX APPELLATE TRIBUNAL
The CIT(A) has erred on facts and in the law in cancelling the order dated 14.6.2011 passed by the ACIT (TDS), Noida and in directing that provisions contained in sec. 194C is applicable on the payment made by M/s Container Corporation of India Ltd. Noida for hiring of buses, ignoring the fact of the case that the deductor company is liable to deduct the tax u/s 194-I at the rate of 10% for hiring of buses in view of amendment made u/s 194-I w.e.f. 1.6.2007.
ACIT (TDS) Container Corporation of India Sector-20, Ltd., 502, 5th Floor, Noida. (Appellant) Vs. Ocean Plaza, Sector-18, Noida. (Respondent)
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH ‘B’ NEW DELHI)
BEFORE SHRI U.B..S. BEDI, JUDICIAL MEMBER
SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
I.T.A. No.4875, 4876 & 4877/Del/2012
Assessment year: 2009-10, 2010-11 & 2008-09
ACIT (TDS) Container Corporation of India
Sector-20, Ltd., 502, 5th Floor,
Ocean Plaza, Sector-18, Noida.
Appellant by: Mrs.Y.Kakkar, Sr. DR
Respondent by: Shri K. Sampath, Advocate.
PER TS KAPOOR, AM:
These are bunch of three appeals filed by the revenue against the common order of Ld CIT(A) dated 14.6.2012. The common grounds raised by the revenue are as under:-
1.1. The CIT(A) has erred on facts and in the law in cancelling the order dated 14.6.2011 passed by the ACIT (TDS), Noida and in directing that provisions contained in sec. 194C is applicable on the payment made by M/s Container Corporation of India Ltd. Noida for hiring of buses, ignoring the fact of the case that the deductor company is liable to deduct the tax u/s 194-I at the rate of 10% for hiring of buses in view of amendment made u/s 194-I
1.2. In directing so, Ld CIT(A) has failed to appreciate the following:-
i) Section 194-I(a) introduced w.e.f.1.6.2006 is applicable and the Board Circular No.558 dated 28.3.1990 is not applicable as it was issued prior to the introduction of section 194-I.
ii) Sub clause (a) of sec. 194-I clearly mention ten percent for the use of any machinery or plant or equipment and section 43(3) provides inclusion of vehicle under plant. Thus the Assessing Officer has applied the provisions of sec. 194-I read with section 43(3) of the Income Tax Act, 1961.”
2. The brief facts of the case are that the assessee is a public sector company and is engaged in the business of handling and transportation of goods through road and railways. During the year under consideration, the assessee paid charges to transporters for transportation of containers/wagon and loading and unloading charges and deducted the tax at source while making payments to transporters. A survey u/s 133A of the Income Tax Act, 1961 was conducted on 16.11.2009 to check the correct applicability of TDS provisions. During the course of survey proceedings, it was observed that assessee has deducted tax at source for payments for handling charges towards hiring of cranes etc. and tax was being deducted u/s 194C of the Act. The Assessing Officer harbored a belief that assessee had taken machinery on hire which was covered u/s 194(1) of the Act and therefore it should have deducted TDS under that section which is applicable for payment of any rent for hiring of any plant & machinery.
3. On appeal, it was contended by the assessee that it had not hired any machinery rather it was a service contract whereby the contractor render their services using their cranes by their operators through their own staff. Ld CIT(A) after going through the submissions of assessee allowed the appeal of the assessee.
4. Aggrieved, the revenue is in appeal before us.
5. At the outset, the Ld AR submitted that the case of the assessee is duly covered by I.T.A. No.2100/Del2011 decided by ‘F’ Bench of ITAT Delhi and submitted a copy thereof.
6. The Ld DR conceded that the matter was covered by the said appellate order.
7. We have heard the rival submissions of both the parties and have gone through the material available on record. We find that assessee has been deducting tax at source u/s 194C for payments for hiring of cranes etc. The cases of the assessee are covered by the I.T.A. No.2100/Del/2011. The relevant paragraphs are as under:-
“20. We have duly considered the rival contentions and gone through the record carefully. Learned First Appellate Authority has gone through the invoices raised by the assessee and thereafter arrived at a conclusion that contract was for rendering services by the crane operators. The services were rendered by the contractor through their own man using the cranes. The cranes were brought to the respective sites and they were operated by the staff of the contractor. Thus, assessee has not taken any machinery on hire for which it has paid the rent. In the case of ACIT vs. M/s. National Capital Power in ITA No.5885/Del/2010, we have considered a similar issue. In that case, the assessee had hired buses. Learned Assessing Officer construed that buses were taken on lease and such buses are to be construed as plant and machinery.
21. The discussion made by the ITAT in this case reads as under:
“In brief, the solitary issue is whether assessee has to deduct TDS under sec. 194C or 194I of the Income-tax Act, 1961 on the payments made to the transporters who have plied their busses for transporting the employees and their wards to different destination as per the agreement between the assessee and the transporters.
x x x x x x x x x x
x x x x x x x x x x
4. Learned DR while impugning the order of the Learned CIT(Appeals) contended that assessee has taken the busses on hire. It means that the buses were taken on lease and such buses are to be construed as plant. Since the lease payment was made for the hiring of the plant, its case comes within the ambit of explanation appended to sec. 194 I of the Act. It provides that any rent paid for plant or machinery or equipment then TDS is to be deducted at 10%. The learned counsel for the assessee on the other hand, submitted that Assessing Officer has misconstrued the provisions. The assessee has not taken the buses on lease. It had entered into a contract of service whereby the travel agencies were required to supply the buses for transportation of the passengers. The buses were to be plied for a fixed number of hours. The vehicles would remain in the possession of the travel agency. The agency would provide its driver and also maintain the vehicle in good shape. In other words, all responsibility for plying the vehicles is of the transporters. Thus, according to the assessee, it was a service contract of transporting the passengers. It has not taken the buss on lease and used them as plant in business. The learned counsel for the assessee further contended that a similar issue in somewhat different context came up before the Hon'ble Delhi High Court in the case of CIT vs. Prasar Bharti reported in 292 ITR 580. In that case, the facts are that assessee was making certain payment to outside producer for programs under “commissioned category” for which the assessee had been deducting the tax at source under sec. 194C by treating them as contract payment. Assessing Officer alleged that it is fee for professional services or fee for technical service within the ambit of sec. 194J and, therefore, assessee ought to have deducted TDS under sec. 194J of the Act. Learned CIT(Appeals) dismissed the appeal of the assessee. The issue traveled to the ITAT. The ITAT has observed that Explanation 3 of section 194C provides the meaning of expression “work” which includes advertising, broadcasting and telecasting including production of programming for such broadcasting and telecasting. According to the ITAT, a specific provision has been made in sec. 194C which bring within its ambit the contractual work concerning broadcasting and telecasting, therefore, revenue cannot apply section 194J which is more general term. Hon'ble Delhi High Court has upheld this view of the ITAT. The learned counsel for the assessee pointed out in the present case also at Sr. No.4 of the explanation appended to sec. 194C, meaning of expression “work” has been given which provides (a) advertising; (b) broadcasting & telecasting including production of programs for such broadcasting and telecasting; (c) carriage of goods or passengers by any mode of transport other than by railways; (d) x x x, (e) x x x. On the strength of Hon'ble Delhi High Court’s decision, he pointed out that once specific provision has been provided then there is no need to apply section 194 I of the Act which is in relation to deduction of TDS on payment of rent.
We have duly considered the rival contentions and gone through the record carefully. The first disputed point is whether it is a payment being contract of service or a rent for hiring a plant. The emphasis of the Learned DR was that assessee has hired a bus which is akin to taking a plant on lease, therefore, the payment made by the assessee to the travel agency has to be construed as a rent paid for the bus. On the other hand, contention of the assessee is that it has availed the facility of transportation from the travel agency. It has not taken the bus in its possession. According to the contract, the travel agency has to ply the bus for a fixed number of hours. Thus, it is a simplicitor service contract for transportation of the passengers and it falls within the ambit of clause (c), Sr. No.(IV) of explanation appended to sec. 194C. The assessee has placed on record copy of a letter of award for hiring of busses. It has also placed on record copy of the contract entered on Ist of February 2008. On perusal of these documents, it reveals that assessee has just hired the transportation facilities which is akin to hiring of a taxi though on regular basis for a fixed number of hours. Before the Learned First Appellate Authority, assessee has made a reference to Circular No. 558 dated 28.3.1990 issued by the CBDT. In the circular, board has considered this aspect and was of the view that where a vehicle is given on hire along with provisions of a driver for use of carrying of the passengers for fixed hours than it is a service contract for carrying out the work. It will be covered under sec. 194C of the Act because the vehicle has been made available as a matter of service. Learned First Appellate Authority has considered this aspect while observing that it is a service contract and assessee was to deduct tax under sec. 194 C of the Act. Considering the order of Learned CIT(Appeals) and in view of the above discussion, we do not find any merit in this appeal. It is dismissed”.
The facts and circumstances in this case are also not different. The assessee has availed the services of cranes which were operated by the contractee, hence, Assessing Officer has erred in construing that assessee has paid rent and its case falls under sec. 194I of the Act. Respectfully following the order of the ITAT in the light of Hon'ble Delhi High Court’s decision in the case of Prasar Bharti reported in 292 ITR 580, we do not find any merit in this ground of appeal. It is rejected.
8. The facts and circumstances of the present appeals are also not different. The assessee has availed the services of cranes which was operated by staff of the contractor. Hence, the Assessing Officer has erred in construing that assessee had paid rent and its case falls u/s 194I. Respectfully following the order of ITAT in I.T.A. No.2100/Del/2011, we hold that assessee had rightly deducted tax at source u/s 194C of the Act. Therefore, we do not find any infirmity in the order of Ld CIT(A).
9. In the result, the appeals filed by the revenue are dismissed.
10. Order pronounced in the open court on 24th day of May, 2013.
(U.B.S. BEDI) (T.S. KAPOOR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Copy forwarded to:-
1. The appellant
2. The respondent
3. The CIT
4. The CIT (A)-, New Delhi.
5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi.
(ITAT, New Delhi).
Date of hearing 14.3.2013
Date of Dictation 17.5.2013
Date of Typing 17.5.2013
Date of order signed by both the Members & pronouncement. 24.5.2013
Date of order uploaded on net & sent to the Bench concerned. 24.5.2013