C.I.T. UDAIPUR vs. M/S HINDUSTAN ZINC LTD.

PDF · subscribers
ITA/89/2014HC Rajasthan2024:RJ-JD:36563-DB03 September 2024Author: PUSHPENDRA SINGH BHATI, MUNNURI LAXMAN5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court, in its judgment dated October 19, 2016, which covered the present appeals, referred to the contentions of the parties. The Court noted that the issue was concluded by decisions of the Bombay High Court and Delhi High Court, against which Special Leave Petitions (SLPs) had been dismissed. Based on these precedents, the High Court held that the issues were required to be answered in favour of the assessee and against the department. Consequently, all the appeals were dismissed. The operative direction was that the appeals were dismissed, implying the Tribunal's order allowing the assessee's appeal (and thus holding that TDS was not deductible) was upheld. No issue was expressly left undecided.

What were the facts?

The appeals before the Rajasthan High Court at Jodhpur concerned Hindustan Zinc Ltd. (assessee) and the Commissioner of Income Tax (revenue). The appeals challenged orders of the Income Tax Appellate Tribunal (ITAT) concerning assessment years not specified in the judgment. The core dispute revolved around whether the assessee was obligated to deduct Tax Deducted at Source (TDS) on payments made for transmission, wheeling, and SLDC charges. The High Court noted that the controversy was covered by a previous judgment of the Jaipur Bench of the same High Court dated October 19, 2016, in a batch of appeals including D.B. Income Tax Appeal No. 422/2011 (CIT vs. Principal Officer JVVNL). The parties jointly submitted that the present appeals were covered by this prior decision.

What were the issues?

1. Whether the Tribunal was justified in holding that payments made by the assessee for transmission/wheeling/SLDC charges were not liable to TDS under Section 194J or Section 194C of the Income Tax Act, 1961? (Mixed law and fact) 2. Whether the Tribunal was justified in holding that the provisions of Section 194J or Section 194C of the Act were not attracted to the assessee's case? (Mixed law and fact) 3. Whether the Tribunal was justified in holding that the assessee was not liable to pay interest under Section 201(1A) of the Act? (Mixed law and fact) Assessee's Contentions: The assessee argued that the issue was concluded by several High Court and Supreme Court decisions, including CIT vs. Bharti Cellular Ltd. (2011) 330 ITR 239 (SC), Union of India vs. Satish Panalal Shah (2001) 249 ITR 221 (SC), and CIT vs. Jaipur Vidyut Vitran Nigam Ltd. (DB ITA No.579/2009). The respondent (revenue) contended that the assessee was bound to deduct TDS for services received and was liable to pay tax under Explanation 2 to Section 9(1)(vii) of the Act.

Which sections of the Income-tax Act were involved?

Section 194J,Section 194C,Section 201(1A),Section 9(1)(vii)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[2024:RJ-JD:36563-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 30/2012 Hindustan Zinc Ltd., Through Mr. D.S. Rudra S/o Shri D.C. Hanumantha Rao, Associate General Manager, Taxation Department, Yashad Bhawan, Udaipur. ----Appellant Versus Commissioner of Income Tax, Saheli Marg, Udaipur ----Respondent Connected With D.B. Income Tax Appeal No. 89/2014 Commissioner of Income Tax, Udaipur ----Appellant Versus M/s. Hindustan Zinc Ltd., Yashad Bhawan, Udaipur. ----Respondent For Appellant(s) : Mr. Anjay Kothari For Respondent(s) : Mr. K.K. Bissa HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI HON'BLE MR. JUSTICE MUNNURI LAXMAN

Order 03/09/2024

1.

Learned counsel for the parties jointly submit that the controversy involved in the these cases stands covered by the judgment dated 19.10.2016, passed by the Jaipur Bench of this Court in D.B. Income Tax Appeal No.422/2011: (Uploaded on 10/09/2024 at 05:00:18 PM) (Downloaded on 28/10/2026 at 12:45:33 AM)

[2024:RJ-JD:36563-DB] (2 of 5) [ITA-30/2012]

2.

The judgment dated 19.10.2016 reads as under:- “1. By way of these appeals, the department has challenged the judgment and order of the Tribunal whereby the Tribunal has allowed the appeal of the assessee and has held that the assessee is not required to deduct TDS.

2.

While admitting the matter following questions were framed:-

1.

Whether Tribunal was justified in holding that the payment made by the assessee in form of transmission/ wheeling/ SLDC charges were not liable to be deducted at source either under Section 194J or 194C of the Income Tax Act?

2.

Whether Tribunal was justified in holding that on the facts found, provisions of Section 194J or 194C of the Act are not attracted or in other words, the case of the assessee does not fall within four corners of the twin sections.

3.

Whether Tribunal was justified in holding that assessee was not liable to pay interest u/s. 201 (1A) of the Act?”

3.

Counsel for the appellant relied on the provisions of Section 194C and 194J which reads as under :- 194C. (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor85) for carrying out any work85 (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to— (i) one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family; (Uploaded on 10/09/2024 at 05:00:18 PM) (Downloaded on 28/10/2026 at 12:45:33 AM)

[2024:RJ-JD:36563-DB] (3 of 5) [ITA-30/2012] (ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family, of such sum as income-tax on income comprised therein. (2) Where any sum referred to in sub- section (1) is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. (3) Where any sum is paid or credited for carrying out any work mentioned in sub-clause (e) of clause (iv) of the Explanation, tax shall be deducted at source— (i) on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or (ii) on the whole of the invoice value, if the value of material is not mentioned separately in the invoice. (4) No individual or Hindu undivided family shall be liable to deduct income- tax on the sum credited or paid to the account of the contractor where such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family. (5) No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor, if such sum does not exceed 86[thirty] thousand rupees 194J. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of— (a) fees for professional services, or (b) fees for technical services26, 27[or] [(ba) any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company, or] [(c) royalty, or (Uploaded on 10/09/2024 at 05:00:18 PM) (Downloaded on 28/10/2026 at 12:45:33 AM)

[2024:RJ-JD:36563-DB] (4 of 5) [ITA-30/2012] (d) any sum referred to in clause (va) of section 28,]shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to 29[ten] per cent of such sum as income-tax on income comprised therein”

4.

The assessee was bound to deduct TDS in lieu of services received by them and for the services received by them was liable to pay tax within the meaning of Explanation 2 to Section 9(1)(vii) of the Act.

5.

However counsel for the respondent Mr. Jhanwar contended that the issue is concluded in view of the following decisions :

1.

No.579/2009, High Court of Judicature Commissioner of Income Tax-II and Ors. Vs Delhi Transport Ltd. Manu/ DE/ 2199/2015. 6. We have heard learned counsel for the parties.

7.

In view of the fact that issue is concluded by decision of Bombay High Court and Delhi High Court and SLP against the same has been (Uploaded on 10/09/2024 at 05:00:18 PM) (Downloaded on 28/10/2026 at 12:45:33 AM)

[2024:RJ-JD:36563-DB] (5 of 5) [ITA-30/2012] dismissed. In that view of the matter the issues are required to be answered in favour of the assessee against the department.

8.

Consequently, all the appeals are dismissed. A copy of this judgment be placed in each file.”

3.

In light of the aforesaid judgment and considering the fact that both the parties agreed to the same, D.B. Income Tax Appeal No.30/2012 is allowed and D.B. Income Tax Appeal No.89/2014 is dismissed on same terms.

(MUNNURI LAXMAN),J (DR. PUSHPENDRA SINGH BHATI),J 60-61-Ramesh/PoonamS/- Powered by TCPDF (www.tcpdf.org) (Uploaded on 10/09/2024 at 05:00:18 PM) (Downloaded on 28/10/2026 at 12:45:33 AM)

More judgments on Section 194J

All 1,434 judgments and leading authorities on Section 194J →

Recent GST High Court judgments

Search GST case law →