By Sri A. Shankar, Sri v. Chandrashekar& Sri M. Lava, Advocates

IN THB HIGH COURT OF KARNATAKAKALABURAGI BENCH DATEBRD THIS THE DAY OF AUGUST, 2015 PRESENT: THE HON’BLE MR.SUBHRO KAMAL MUKHERJEE,ACTING CHIBF JUSTICE ANI THR HON’BLE MR. JUSTICK A.V.CHANDRASHBKARA INCOME TAX APPEAL NO.92 OF 2014C/WINCOME TAX APPEAL Nos.93 OF 2014, 94 OF 201495 OF 2014, 96 OF 2014, 97 OF 2014 INCOME TAX APPEAL NO.92 OF 2014 BETWEEN: 1.THERE COMMISSIONER INCOME-TAAYAKAR BHAVAN,HUBLI -— 580 O20AAYAKAR BHAVAN,HUBLI -— 580 O20 ? THE ASSISTANT COMMISSIONEROF INCOME-TAX,TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BBELLARY — 583 102OF INCOME-TAX,TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BBELLARY — 583 102 APPRLLANTS (BY SRI AMEE TKUMAR DESHPANDE, ADVOCATE 2 AND: THR BXBCUTIVE BNGINBERO&M DIVISION,(GESCOM),RAICHUR — 584 101, .. RESPONDE (BY SRI A. SHANKAR, SRI V. CHANDRASHEKAR& SRI M. LAVA, ADVOCATES) THIS INCOMBEB-TAX APPEKAL IS FILED UNSECTION 260A OF THE INCOME TAX ACT 19061PRAYINGTO.FORMULATETHESUBSTANTIALQUESTIONS OF LAW STATED ABOVE, ALLOW THEAPPEAL AND SBI ASIDE THE ORDERS PASSED BYTHE INCOME-TAX APPELLATE TRIBUNAL, ‘C’ BENCHBANGALOREIN|ITANO.772/BANG/2013DATHD30.09.2013 VIDK ANNBXURE-C CONFIRMING THRORDER OF THE APPELLATE COMMISSIONER ANDCONFIRM THRE ORDER PASSED BY THE ASSISTANCOMMISSIONEROFINCOME-TAX,TDS.CIRCLE,BELLARY. INCOME TAX APPEAL NO.93/2014 BETWEEN: 1.‘THE COMMISSIONER INCOME-TAXAAYAKAR BHAVAN,HUBLI — 580 020,HUBLI. ? THE ASSISTANT COMMISSIONEROF INCOME-TAX,OF INCOME-TAX, $ TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BELLARY — 583 102. APPBRLLANTS (BY SRI AMEETKUMAR DESHPANDE, ADVOCATE) AND: THR BXBCUTIVE ENGINEERO&M DIVISION,(GESCOM),RAICHUR — 584 101, RBSPONDENT (BY SRI A. SHANKAR, SRI V. CHANDRASHEKAR@& SRI M. LAVA, ADVOCATES.) THIS INCOME-TAX APPEAL IS FILED UNDERSECTION 260A OF THE INCOME TAX ACT 1961,PRAYING.TO.RORMULATETHESUBSTANTIALQUESTIONS OF LAW STATED ABOVE, ALLOW THEAPPEAL AND SBI ASIDE THE ORDERS PASSED BYTHE INCOME-TAX APPELLATE TRIBUNAL, ‘C’ BENCHBANGALORETN|ITANO.773/BANG/2013DATHD30.09.2013 VIDE ANNBXURE-C CONFIRMING THEORDBR OF THR APPRHLLATKE COMMISSIONER ACONFIRM THRE ORDER PASSED BY THE ASSISTANCOMMISSIONEROFINCOME-TAX,TDS.CIRCLE,BELLARY. INCOME TAX APPEAL NO.94/2014 BETWEEN: 1)THR COMMISSIONBR INCOMB-TAXAAYAKAR BHAVAN,HUBLI -— 580 O20AAYAKAR BHAVAN,HUBLI -— 580 O20 ? THE ASSISTANT COMMISSIONEROF INCOME-TAX,TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BBLLARY — 583 102. APPRLLANTS (BY SRI AMEETKUMAR DESHPANDE, ADVOCATE.) AND: THR BXBCUTIVE ENGINEERO&M DIVISION,(GESCOM),RAICHUR — 584 101, .. RESPONDE (BY SRI A. SHANKAR, SRI V. CHANDRASHEKAR@& SRI M. LAVA, ADVOCATES) THIS INCOME-TAX APPEAL IS FILED UNDERSECTION 260A OF THE INCOME TAX ACT 1961,PRAYING.TO.RORMULATETHESUBSTANTIALQUESTIONS OF LAW STATED ABOVE, ALLOW THEAPPBAL AND SET ASIDE THR ORDERS PASSED BYTHE INCOME-TAX APPELLATE TRIBUNAL, ‘°C’ BENCHBANGALORETN|ITANO./77/74/BANG/20DATHD 30.09.2013 VIDK ANNBXURE-C CONFIRMING THRORDER OF THE APPELLATE COMMISSIONER ANDCONFIRM THR ORDER PASSEKD BY THE ASSISTANCOMMISSIONEROFINCOME-TAX,TDS.CIRCLE,BELLARY. INCOME TAX APPEAL NO.95/2014 BETWEEN: 1.THR COMMISSIONBR INCOMB-TAXAAYAKAR BHAVAN,HUBLI — 580 O20.AAYAKAR BHAVAN,HUBLI — 580 O20. a2THER ASSISTANT COMMISSIONEOF INCOME-TAX,TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BELLARY — 583 102. .. APPELLAN (BY SRI AMEE TKUMAR DESHPANDE, ADVOCATE AND: THR BXBCUTIVE BNGINBERO&M DIVISION,(GESCOM),RAICHUR —- 584 101 RBSPONDENT (BY SRI A. SHANKAR, SRI V. CHANDRASHEKAR& SRI M. LAVA, ADVOCATES) 30.09.2013 VIDK ANNBXURE-C CONFIRMING THRORDER OF THE APPELLATE COMMISSIONER ANDCONFIRM THR ORDER PASSEKD BY THE ASSISTANCOMMISSIONEROFINCOME-TAX,TDS.CIRCLE,BELLARY. INCOME TAX APPEAL NO.95/2014 BETWEEN: 1.THR COMMISSIONBR INCOMB-TAXAAYAKAR BHAVAN,HUBLI — 580 O20.AAYAKAR BHAVAN,HUBLI — 580 O20. a2THER ASSISTANT COMMISSIONEOF INCOME-TAX,TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BELLARY — 583 102. .. APPELLAN (BY SRI AMEE TKUMAR DESHPANDE, ADVOCATE AND: THR BXBCUTIVE BNGINBERO&M DIVISION,(GESCOM),RAICHUR —- 584 101 RBSPONDENT (BY SRI A. SHANKAR, SRI V. CHANDRASHEKAR& SRI M. LAVA, ADVOCATES) THIS INCOMBEB-TAX APPEKAL IS FILED UNSECTION 260A OF THE INCOME TAX ACT 19061PRAYINGTO.FORMULATETHESUBSTANTIALQUESTIONS OF LAW STATED ABOVE, ALLOW THEAPPEAL AND SBI ASIDE THE ORDERS PASSED BYTHE INCOME-TAX APPELLATE TRIBUNAL, ‘C’ BENCHBANGALOREIN|ITANO.775/BANG/2013DATHD30.09.2013 VIDK ANNBXURE-C CONFIRMING THRORDBR OF THR APPRHLLATKE COMMISSIONER ACONFIRM THR ORDER PASSEKD BY THE ASSISTANCOMMISSIONEROFINCOME-TAX,TDS.CIRCLE,BBRLLARY INCOME TAX APPEAL NO.96/2014 BETWEEN: 1.THR COMMISSIONBR INCOMB-TAXAAYAKAR BHAVAN,HUBLI — 580 O20.AAYAKAR BHAVAN,HUBLI — 580 O20. ? THE ASSISTANT COMMISSIONEROF INCOME-TAX,TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BELLARY — 583 102. .. APPELLAN (BY SRI AMEE TKUMAR DESHPANDE, ADVOCATE AND: THR BXBCUTIVE BNGINBERO&M DIVISION,(GESCOM), RAICHUR — 584 101, .. RESPONDE (BY SRI A. SHANKAR, SRI V. CHANDRASHEKAR@& SRI M. LAVA, ADVOCATES) THIS INCOME-TAX APPEAL IS FILED UNDERSECTION 260A OF THE INCOME TAX ACT 1961,PRAYING.TO.RORMULATETHESUBSTANTIALQUESTIONS OF LAW STATED ABOVE, ALLOW THEAPPBAL AND SET ASIDE THR ORDERS PASSED BYTHE INCOME-TAX APPELLATE TRIBUNAL, ‘°C’ BENCHBANGALORETN|ITANO./7/6/BANG/2013DATHD30.09.2013 VIDE ANNBXURE-C CONFIRMING THEORDBR OF THR APPRHLLATKE COMMISSIONER ACONFIRM THR ORDER PASSEKD BY THE ASSISTANCOMMISSIONERORINCOME-TAX,TDS_CIRCLE,BELLARY. INCOME TAX APPEAL NO.97/2014 BETWEEN: 1.THR COMMISSIONBR INCOMB-TAXAAYAKAR BHAVAN,HUBLI — 580 O20.AAYAKAR BHAVAN,HUBLI — 580 O20. ?)THER ASSISTANT COMMISSIONEOF INCOME-TAX,TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BBELLARY — 583 102 APPRLLANTS (BY SRI AMEETKUMAR DESHPANDE, ADVOCATE) 8 AND: THR BXBCUTIVE BNGINBERO&M DIVISION,(GESCOM),RAICHUR — 584 101, .. RESPONDE (BY SRI A. SHANKAR, SRI V. CHANDRASHEKAR& SRI M. LAVA, ADVOCATES) THIS INCOMBEB-TAX APPEKAL IS FILED UNSECTION 260A OF THE INCOME TAX ACT 1961,PRAYINGTO.FORMULATETHESUBSTANTIALQUESTION OF LAW STATED ABOVE, ALLOW THEAPPBAL AND SET ASIDE THR ORDERS PASSED BYTHE INCOME-TAX APPELLATE TRIBUNAL, ‘C’ BENCHBANGALOREIN|ITANO.777/BANG/2013DATHD30.09.2013 VIDK ANNBXURE-C CONFIRMING THRORDER OF THE APPELLATE COMMISSIONER ANDCONFIRM THRE ORDER PASSED BY THE ASSISTANCOMMISSIONEROFINCOME-TAX,TDS.CIRCLE,BELLARY. THERESE APPEALS COMING ON FOR ADMISSITHIS DAY,ACTING CHIEF JUSTICEDBRLIVERED THFOLLOWING: JUDGMENT These appeals by the revenue are against thejudgment and order dated September 30, 2013, passedby the Income-Tax Appellate Tribunal, C Bench,Bengaluru, affirming the order dated July 29, 2011,passed by the Commissioner of Income-tax (Appeals),Navanagar, Hubli. 2. We are informed that in all these six appeals,similar questions of law and facts are involved.Therefore, by consent of the parties, we take up allthese appeals for analogous hearing. 3.|GulbargaElectricitySupplyCompanyLimited, the assessee in short, challenged demands ofthe jurisdictional Deputy Commissioner of Income-tax.Appeals were filed before the Commissioner of Income-tax (Appeals) and by order dated July 29, 2011, theappeals were partly allowed. The revenue’ took the matter before the Income-tax Appellate Tribunal, butthe attempt of the revenue was abortive. 2. We are informed that in all these six appeals,similar questions of law and facts are involved.Therefore, by consent of the parties, we take up allthese appeals for analogous hearing. 3.|GulbargaElectricitySupplyCompanyLimited, the assessee in short, challenged demands ofthe jurisdictional Deputy Commissioner of Income-tax.Appeals were filed before the Commissioner of Income-tax (Appeals) and by order dated July 29, 2011, theappeals were partly allowed. The revenue’ took the matter before the Income-tax Appellate Tribunal, butthe attempt of the revenue was abortive. 4The first issue involved in these appeals is ifon the payment made against the supply of materialsincluded in composite contracts for executing Turn KeyProjects, provisions under Section 194C of the Income-Tax Act, 1961 (for short, ‘tthe Act’) would attract or not. oO. The other issue is if payments made by theassessee to Bellary Computers and IT Solutions,Bellary, towards Bill Management Services are fees forprofessional and technical services and, therefore,comes within the purview of Section 194J of the Act orpayments made towards carrying out work come withinthe ambit ot Section 194C of the Act. 6. The Tribunal, in its detailed discussion, heldthat the issue regarding non-deduction/short deductionof tax deducted at source on payments made on supply part of contracts awarded for execution of Turn KeyProjects, has, already, been settled by the JurisdictionalHigh Court in the case ofCommissioner of Income-taxand others vs. Karnataka Power TransmissionCorporation Limited,the respondent in ITA 337 of2011.The issue was decided by a Division Bench ofthis court on March 15, 2012. It is recorded that thedecision of the coordinate Bench is also binding on thisBench. To|We are, also, of the opinion that the clausesof the contract particularly, clause 3.95 of the contracagreement, make it clear that three separate contractshave been entered into, but all the separate contractswere integral parts of a composite contract on singlesale responsible basis. The invoices raised on the basisiof the said composite contract separately mentioningthe value of the material supplied, no deduction ispermissible under Section 194C of the Act. Section 194C of the Act cannot be pressed into service to deducttax at source. The whole object of introduction of thatsection is to deduct tax in respect of payments made forworks contract. No division is, therefore, permissible in|respect of a contract for supply of materials for carryingout the work. [tis ina case of distinct contracts. Thecontract for supply of material being a separate anddistinct contract, no division is permissible underSection 194C of the Act. Section 194C has suffered anamendment also with effect from October 1, 2009 andthe provision has been made very clear without anyambiguity. 3S.|Thus, we can conclude safely that if a personexecuting the work, purchases the materials from aperson other than the customer, the same would not fallwithin the definition of ‘work’ under Section 194C of theAct. OQ Now, we shall deal with the second issue. Ifthe provisions of Section 194J or Section 194C wouldapply in respect of payments made by an assesseetowards Bill Management Services. The services|rendered by the agencies engaged by the assessees atHospet, Bellary and Raichur are not professionalservices, and, therefore, Section 194J is not attracted.The demand towards the alleged short deduction of taxdeducted at source and interest, therefore, wasimproper. The contract was rightly held to be a servicecontract by the Tribunal and we, also, feel that it was acontract, which should be covered under Section 194Cof the Act. 10.|We do not find that these appeals involveany substantial question of law, which requiresconsideration by this court. Therefore, all these appealsare dismissed. �����12�54:9?23�4:2�1CH2;2:�A?:2D92A�9C�724: 912?:�:2352D9?;2�DC393� ��������������,)�-������������"��.���� !,���� �����������������������,)�- ������������ !�"� ��