ITO (TDS) 2(3), MUMBAI vs. THE MUMBAI DISTRICT CENTRAL CO OPERATIVE BANK LTD, MUMBAI

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ITA 2482/MUM/2014Status: DisposedITAT Mumbai09 October 2015AY 2008-093 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the First Appellate Authority's (FAA) decision that the payments were for routine maintenance covered by Section 194C. The Tribunal also noted that the recipients had paid taxes on this income, as per CBDT circulars.

What were the facts?

The assessee-company made payments for maintenance of UPS and computer systems. The Assessing Officer (AO) held that these payments were for technical services attracting TDS under Section 194J, not Section 194C. The assessee argued they were routine maintenance attracting TDS under Section 194C.

What were the issues?

The primary issue was whether payments for maintenance services fell under Section 194C or Section 194J of the Income Tax Act, and if short deduction of TDS made the assessee an assessee in default.

Which sections of the Income-tax Act were involved?

Section 194C,Section 194J,Section 201(1),Section 201(1A),Section 133A,Section 133(6)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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आयकर आयकर अपीलीय अपीलीय अिधकरण अिधकरण, बी बी खंडपीठ खंडपीठ मुंबई मुंबई आयकर आयकर अपीलीय अपीलीय अिधकरण अिधकरण बी बी खंडपीठ खंडपीठ मुंबई मुंबई INCOME TAX APPELLATE TRIBUNAL,MUMBAI-“B”,BENCH सव"ी राजे"",लेखा सद"य एवं शि"जीत डे, "याियक सद"य Before S/Sh. Rajendra,Accountant Member & Shaktijit Dey,Judicial Member आयकर अपील अपील संसंसंसं/.ITA No.s.2482-83/Mum/2014,िनधा"रण िनधा"रण वष" वष"/Assessment Year-2008-09&09-10 आयकर आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" Income tax Officer-(TDS)-2(3) The Mumbai District Central Co- Room No.708, 7th Floor operative Bank Ltd. Smt. K.G. Mittal Ayurvedic Vs 207, D.N. Road, Fort Hospital Building, Charni Road Mumbai-400 001. Mumbai-400 002. PAN:AAALM 0042 L (अपीलाथ" /Appellant) (""यथ" / Respondent) िनधा"र ती ओर ओर सेसेसेसे/Assessee by :Shri S. Sriram िनधा"र िनधा"रती िनधा"र ती ती ओर ओर राज"व क" ओर से/ Revenue by :Shri Maurya Pratap सुनवाई सुनवाई क" क" तारीख तारीख / Date of Hearing : 06- 10 -2015 सुनवाई सुनवाई क" क" तारीख तारीख घोषणा क" तारीख / Date of Pronouncement :09-10-2015 आयकर आयकर अिधिनयम अिधिनयम,1961 1961 क" क" धारा धारा 254 254(1)केकेकेके अ"तग"त अ"तग"त आदेश आदेश 1961 1961 254 254 आयकर आयकर अिधिनयम अिधिनयम क" क" धारा धारा अ"तग"त अ"तग"त आदेश आदेश Order u/s.254(1)of the Income-tax Act,1961(Act) अनुसार PER RAJENDRA, AM- लेखा सद"य सद"य राजे"" राजे"" केकेकेके अनुसार लेखा लेखा लेखा सद"य सद"य राजे"" राजे"" अनुसार अनुसार Challenging the order,dated 17.01.2014,of CIT(A)-13,Mumbai,the Assessing Officer(AO) has filed the present appeals for the above mentioned two Assessment Years.(AY.s.). 2.Effective ground of appeal for both the AY.s.deal with provisions of section 194 of the Act. Assessee-company is engaged in the business of providing banking and other related services.A survey action u/s.133A of the Act was carried out at its business premises on 12. 01.2011 and statements on oath of the manager accounts were recorded.During the course of survey,it was observed that the assessee had entered in to agreement with three companies for maintenance of UPS systems,computer systems and AMC support etc.,that it had paid Rs.1,00,38,227/- and Rs.

1.

50 Crores respectively for the above referred two AY.s.to those companies,that it had deducted TDS @2%.The ITO TDS issued notices u/s.133(6)of the Act to the parties to whom the assessee had made payments.After considering their reply he held that the nature of services rendered by the three companies was highly technical in nature and same fell within the meaning of technical services defined in explanation 2 to section 9(1)(vii)of the Act,that the assessee had to deduct tax as per the provisions of section 194J of the Act and not u/s.194 C of the Act.He referred to the order of Ultra Entertainment Solutions Ltd.(17SOT249)and passed an order on 31.03.2011 u/s. 201(1)/201(1A) of the Act for both the AY.s.He held that the assessee had committed a default of short deducting of tax.He worked out the default of Rs.7.80 lacs u/s. 201(1) of the Act and calculated interest u/s. 201(1A) of the Act at Rs.2,80,992/-for the period 1.4.2008 to March, 2011 for the AY 08-09.For the AY 09-10 the default u/s.201 was calculated at Rs.11.69 lacs and interest was calculated at Rs.2,80,646/-for the period 1.4.2009 to March, 2011. 3.Aggrieved by the order of the ITO-(TDS),the assessee filed an appeal before the First Appellate Authority (FAA).Before him it was argued that payments made by it were in the nature of routine maintenance contract payment attracting TDS @2%.It relied upon the cases of Parsurampuria Synthetics Ltd.(20SOT248),Gujarat State Electricity(82TTJ456).After consider -ing the submissions of the assessee and the order of the ITO-TDS,the(FAA) held that the job done by them of routine maintenance fell within the definition of work, that it could not be ITA/2482-83/Mum/2014-AY.08-09&09-10,BDCCBank considered technical services,that job done by the service providers was covered by the provisions of section 194C of the Act not by section 194J,that the assessee could not be treated ‘an assessee in default’ for short deduction.Finally,he set aside the orders of the ITO TDS for both the assessment years. 4.Before us,Departmental Representative(DR)supported the order of the AO.Authorised Representative(AR) relied upon the case of Parsurampuria Synthetics Ltd.(supra),Gujarat State Electricity(supra),Kandala Port Trust(50SOT109) and argued that the scope of work were routine maintenance service for the equipments and machinery used by the assessee,that such payments were subject to TDS u/s.194C of the Act,that the assessee can choose the provision that was less burdensome,that if the assessee opted for section 194C in place of 194J of the Act it could not be treated an assessee in default,that the recipient of income had paid taxes,that the assessee could not be regarded as defaulter,that in subsequent years the AO himself had not treated it as assessee in default for the similar payments. 5.We have heard the rival submissions and perused the material before us.We find that the issue before us is very simple i.e.whether the payments made by the assessee to three or four entities for maintenance charges are covered by the provisions of section 194C or 194J of the Act.We find that the FAA has given a categorical finding of facts that the agreements entered in to by the assessee clearly prove that the payments were in the nature or work.Secondly,the assessee had produce the evidences before the FAA indicating that the vendors had included the subject income in their total income and had paid taxes thereon.We find that in the case of Coca Cola Beverages Pvt. Ltd.(293ITR226)the Hon’ble Apex Court has held as under:

“10. Be that as it may, Circular No. 275/201/95-IT(B) dated January 29, 1997, issued by the Central Board of Direct Taxes, in our considered opinion, should put an end to the controversy. The circular declares " no demand visualized under section 201(1) of the Income- tax Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS, that taxes due have been paid by the deductee-assessee. However, this will not alter the liability to charge interest under section 201(1A) of the Act till the date of payment of taxes by the deductee-assessee or the liability for penalty under section 271C of the Income-tax Act" . In the case of Asian Heart Institute & Research Center Pvt.Ltd.(ITA/7051/Mum/2012)it has been held that AMC contract are subject to TDS u/s.194 C of the Act and under section 194J.

Considering the above the above and deliberating upon the facts and circumstances of the cases, we are of the opinion that the order of the FAA does not require any interference from our side. So,confirming his orders we decide the effective grounds of appeal for both the AY.s.against the AO. As a result,appeal filed by the AO for both the AY.s.stand dismissed. फलतः िनधा"रती अिधकारी "ारा दािखल क" गई दोनो वष" क" अपील" नामंजूर क" जाती ह". Order pronounced in the open court on 9th October,2015. आदेश क" घोषणा खुले "यायालय म" "दनांक 9,अ"टूबर,2015 को क" गई । (शि"जीत डे / Shaktijit Dey) (राजे"" / RAJENDRA) "याियक सद"य / JUDICIAL MEMBER लेखा लेखा सद"य सद"य / ACCOUNTANT MEMBER लेखा लेखा सद"य सद"य मुंबई/Mumbai,"दनांक/Date: 09.10.2015 व.िन.स.Jv.Sr.PS. 2

ITA/2482-83/Mum/2014-AY.08-09&09-10,BDCCBank

आदेश क" क" "ितिलिप "ितिलिप अ"ेिषत अ"ेिषत/Copy of the Order forwarded to : आदेश आदेश आदेश क" क" "ितिलिप "ितिलिप अ"ेिषत अ"ेिषत 1.Appellant /अपीलाथ"

2.

Respondent /""यथ" 3.The concerned CIT(A)/संब" अपीलीय आयकर आयु", 4.The concerned CIT /संब" आयकर आयु" 5.DR “ B” Bench, ITAT, Mumbai /िवभागीय "ितिनिध, बी बी खंडपीठ,आ.अ."याया.मुंबई बी बी 6.Guard File/गाड# फाईल स"यािपत "ित //// आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst.

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