COMMISSIONER OF INCOME TAX, CHD vs. EXECUTIVE ENGINEER CONTRUCTION DIVISION

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ITA/832/2010HC Punjab & HaryanaPHHC01093807201009 November 2011Bench: MR. JUSTICE HEMANT GUPTA,MR. JUSTICE GURMEET SINGH SANDHAWALIA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the ITAT had made a finding of fact that the agreement was split into two parts: one for the supply of material as per specifications and another for the erection of the transmission lines. The Tribunal concluded that tax was required to be deducted only from that part of the contract dealing with the erection of transmission lines, which falls within the scope of Section 194C of the Income Tax Act, 1961. Consequently, no tax was required to be deducted in respect of the contract for the purchase of material. The Court found no substantial question of law arising for its consideration based on this factual finding and therefore dismissed the appeals.

What were the facts?

The Commissioner of Income Tax (TDS), Chandigarh (the Revenue) filed appeals against the orders of the Income Tax Appellate Tribunal (ITAT), Delhi Bench. The appeals pertained to assessment years 2005-06, 2006-07, 2007-08, and 2008-09. The assessee, Executive Engineer Construction Division, DHBVN, Gurgaon, awarded composite contracts for the erection of 33 KV electric lines/sub-stations, which included both the execution of work and the supply of material. The Revenue had raised demands for non-deduction of Tax Deducted at Source (TDS) on the entire payments made under these contracts.

What were the issues?

1. Whether, on the facts and circumstances of the case, the ITAT rightly upheld the order of the CIT(A) in deleting the demand raised for non-deduction of TDS on the whole payments of contract work, including the execution of work and the contract for supply of material, as required under Section 194C of the Income Tax Act, 1961. Assessee's Contention: The judgment does not record any specific contentions made by the assessee. The ITAT's finding, upheld by the High Court, was that the contract was split into two parts: one for the supply of material and another for erection. Tax was deductible only on the erection part. Revenue's Contention: The Revenue contended that TDS was required to be deducted under Section 194C on the entire payment for the composite contract, which included both work and material supply.

Which sections of the Income-tax Act were involved?

Section 194C

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

ITA No.4752/DEL/2009
ITA No 4749/DEL/2009

Read from the judgment's own cause title. This page is filed under one of them.

ITA No.832 of 2010 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 09.11.2011 ITA No.832 of 2010 (O & M) The Commissioner of Income Tax (TDS), Chandigarh ….Appellant Vs. Executive Engineer Construction Division (Now Deputy General Manager), Works Division, Operation Circle, DHBVN, M.G. Road, Gurgaon

….Respondent ITA No.833 of 2010 (O & M) The Commissioner of Income Tax (TDS), Chandigarh ….Appellant Vs. Executive Engineer Construction Division (Now Deputy General Manager), Works Division, Operation Circle, DHBVN, M.G. Road, Gurgaon

….Respondent ITA No.834 of 2010 (O & M) The Commissioner of Income Tax (TDS), Chandigarh ….Appellant Vs. Executive Engineer Construction Division (Now Deputy General Manager), Works Division, Operation Circle, DHBVN, M.G. Road, Gurgaon

….Respondent ITA No.835 of 2010 (O & M) The Commissioner of Income Tax (TDS), Chandigarh ….Appellant Vs. Executive Engineer Construction Division (Now Deputy General Manager), Works Division, Operation Circle, DHBVN, M.G. Road, Gurgaon ….Respondent

ITA No.832 of 2010 2 CORAM: HON’BLE MR.JUSTICE HEMANT GUPTA HON’BLE MR.JUSTICE G.S.SANDHAWALIA Present: Mr.Yogesh Putney, Advocate for the appellant. HEMANT GUPTA J. (ORAL) This order shall dispose of ITA Nos.832 of 2010, 833 of 2010, 834 of 2010 and 835 of 2010 arising out of order passed by Income Tax Appellate Tribunal, Delhi Bench in ITA No 4750/DEL/2009 for the assessment year 2006-07; ITA No.4751/DEL/2009 for the assessment year 2007-08; ITA No.4752/DEL/2009 for the assessment year 2008-09; and ITA No 4749/DEL/2009 for the assessment year 2005-06. The Revenue has claimed the following substantial question of law: “Whether on the facts and circumstances of the case, the Ld. ITAT has rightly upheld the order of the CIT(A) deleting the demand raised for Non-deduction of TDS on the whole payments of the contract work done including execution of work and the contract supply of material being part of the same contract with the same contractors as required u/s 194C of the I.T. Act, 1961.” The assessee awarded contract to different contractors the work of erection of 33 KV electric lines/sub-stations including the work of laying poles and electric wires. The contract in question was a composite contract for erection of the transmission lines and for supply of material. The learned Income Tax Appellate Tribunal has recorded a finding of fact that the agreement was split into two parts – one for supply of material as per the specifications and other for erection of the same. The learned Tribunal returned a finding that tax was required to be deducted only from that part of the contract which dealt with erection of the

ITA No.832 of 2010 3 transmission lines falling within the scope of Section 194C of the Income Tax Act. 1961. It is finding of fact that the contract was composite contract consisting of two parts – one for the supply of material and another for erection of electric poles. Therefore, no tax was required to deducted in respect of the contract for the purchase of material. In view of the said fact, we do not find any substantial question of law arises for consideration of this Court. Dismissed. (HEMANT GUPTA) JUDGE

(G.S.SANDHAWALIA) 09.11.2011 JUDGE Sailesh/vimal

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