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

IN THE HIGH COURT OF KARNATAKAKALABURAGI BENCH DATED THIS THE 18 DAY OF AUGUST, 2015 PRESENT: THE HON’BLE MR.SUBHRO KAMAL MUKHERJEE,ACTING CHIEF JUSTICE AND THE HON’BLE MR. JUSTICE A.V.CHANDRASHEKARA 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.THE COMMISSIONER INCOME-TAXAAYAKAR BHAVAN,HUBLI – 580 020.AAYAKAR BHAVAN,HUBLI – 580 020. 2.THE ASSISTANT COMMISSIONEROF INCOME-TAX,TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BELLARY – 583 102.OF INCOME-TAX,TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BELLARY – 583 102. …APPELLANTS (BY SRI AMEETKUMAR DESHPANDE, ADVOCATE) AND: THE EXECUTIVE ENGINEERO & M DIVISION,(GESCOM),RAICHUR – 584 101. …RESPONDENT (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 FORMULATE THE SUBSTANTIALQUESTIONS OF LAW STATED ABOVE, ALLOW THEAPPEAL AND SET ASIDE THE ORDERS PASSED BYTHE INCOME-TAX APPELLATE TRIBUNAL, ‘C’ BENCHBANGALORE IN ITA NO.772/BANG/2013 DATED30.09.2013 VIDE ANNEXURE-C CONFIRMING THEORDER OF THE APPELLATE COMMISSIONER ANDCONFIRM THE ORDER PASSED BY THE ASSISTANTCOMMISSIONER OF INCOME-TAX, TDS CIRCLE,BELLARY. INCOME TAX APPEAL NO.93/2014 BETWEEN: 1. THE COMMISSIONER INCOME-TAXAAYAKAR BHAVAN,HUBLI – 580 020,HUBLI. 2. THE ASSISTANT COMMISSIONEROF INCOME-TAX,OF INCOME-TAX, TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BELLARY – 583 102. …APPELLANTS (BY SRI AMEETKUMAR DESHPANDE, ADVOCATE) AND: THE EXECUTIVE ENGINEERO & M DIVISION,(GESCOM),RAICHUR – 584 101. …RESPONDENT (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 FORMULATE THE SUBSTANTIALQUESTIONS OF LAW STATED ABOVE, ALLOW THEAPPEAL AND SET ASIDE THE ORDERS PASSED BYTHE INCOME-TAX APPELLATE TRIBUNAL, ‘C’ BENCHBANGALORE IN ITA NO.773/BANG/2013 DATED30.09.2013 VIDE ANNEXURE-C CONFIRMING THEORDER OF THE APPELLATE COMMISSIONER ANDCONFIRM THE ORDER PASSED BY THE ASSISTANTCOMMISSIONER OF INCOME-TAX, TDS CIRCLE,BELLARY. INCOME TAX APPEAL NO.94/2014 BETWEEN: 1.THE COMMISSIONER INCOME-TAXAAYAKAR BHAVAN,HUBLI – 580 020.AAYAKAR BHAVAN,HUBLI – 580 020. 2.THE ASSISTANT COMMISSIONEROF INCOME-TAX,TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BELLARY – 583 102. …APPELLANTS (BY SRI AMEETKUMAR DESHPANDE, ADVOCATE.) AND: THE EXECUTIVE ENGINEERO & M DIVISION,(GESCOM),RAICHUR – 584 101. …RESPONDENT (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 FORMULATE THE SUBSTANTIALQUESTIONS OF LAW STATED ABOVE, ALLOW THEAPPEAL AND SET ASIDE THE ORDERS PASSED BYTHE INCOME-TAX APPELLATE TRIBUNAL, ‘C’ BENCHBANGALORE IN ITA NO.774/BANG/2013 DATED 30.09.2013 VIDE ANNEXURE-C CONFIRMING THEORDER OF THE APPELLATE COMMISSIONER ANDCONFIRM THE ORDER PASSED BY THE ASSISTANTCOMMISSIONER OF INCOME-TAX, TDS CIRCLE,BELLARY. INCOME TAX APPEAL NO.95/2014 BETWEEN: 1.THE COMMISSIONER INCOME-TAXAAYAKAR BHAVAN,HUBLI – 580 020.AAYAKAR BHAVAN,HUBLI – 580 020. 2.THE ASSISTANT COMMISSIONEROF INCOME-TAX,TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BELLARY – 583 102.OF INCOME-TAX,TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BELLARY – 583 102. …APPELLANTS (BY SRI AMEETKUMAR DESHPANDE, ADVOCATE) AND: THE EXECUTIVE ENGINEERO & M DIVISION,(GESCOM),RAICHUR – 584 101. …RESPONDENT (BY SRI A. SHANKAR, SRI V. CHANDRASHEKAR & SRI M. LAVA, ADVOCATES) 30.09.2013 VIDE ANNEXURE-C CONFIRMING THEORDER OF THE APPELLATE COMMISSIONER ANDCONFIRM THE ORDER PASSED BY THE ASSISTANTCOMMISSIONER OF INCOME-TAX, TDS CIRCLE,BELLARY. INCOME TAX APPEAL NO.95/2014 BETWEEN: 1.THE COMMISSIONER INCOME-TAXAAYAKAR BHAVAN,HUBLI – 580 020.AAYAKAR BHAVAN,HUBLI – 580 020. 2.THE ASSISTANT COMMISSIONEROF INCOME-TAX,TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BELLARY – 583 102.OF INCOME-TAX,TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BELLARY – 583 102. …APPELLANTS (BY SRI AMEETKUMAR DESHPANDE, ADVOCATE) AND: THE EXECUTIVE ENGINEERO & M DIVISION,(GESCOM),RAICHUR – 584 101. …RESPONDENT (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 FORMULATE THE SUBSTANTIALQUESTIONS OF LAW STATED ABOVE, ALLOW THEAPPEAL AND SET ASIDE THE ORDERS PASSED BYTHE INCOME-TAX APPELLATE TRIBUNAL, ‘C’ BENCHBANGALORE IN ITA NO.775/BANG/2013 DATED30.09.2013 VIDE ANNEXURE-C CONFIRMING THEORDER OF THE APPELLATE COMMISSIONER ANDCONFIRM THE ORDER PASSED BY THE ASSISTANTCOMMISSIONER OF INCOME-TAX, TDS CIRCLE,BELLARY. INCOME TAX APPEAL NO.96/2014 BETWEEN: 1.THE COMMISSIONER INCOME-TAXAAYAKAR BHAVAN,HUBLI – 580 020.AAYAKAR BHAVAN,HUBLI – 580 020. 2.THE ASSISTANT COMMISSIONEROF INCOME-TAX,TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BELLARY – 583 102. …APPELLANTS (BY SRI AMEETKUMAR DESHPANDE, ADVOCATE) AND: THE EXECUTIVE ENGINEERO & M DIVISION,(GESCOM), RAICHUR – 584 101. …RESPONDENT (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 FORMULATE THE SUBSTANTIALQUESTIONS OF LAW STATED ABOVE, ALLOW THEAPPEAL AND SET ASIDE THE ORDERS PASSED BYTHE INCOME-TAX APPELLATE TRIBUNAL, ‘C’ BENCHBANGALORE IN ITA NO.776/BANG/2013 DATED30.09.2013 VIDE ANNEXURE-C CONFIRMING THEORDER OF THE APPELLATE COMMISSIONER ANDCONFIRM THE ORDER PASSED BY THE ASSISTANTCOMMISSIONER OF INCOME-TAX, TDS CIRCLE,BELLARY. INCOME TAX APPEAL NO.97/2014 BETWEEN: 1.THE COMMISSIONER INCOME-TAXAAYAKAR BHAVAN,HUBLI – 580 020.AAYAKAR BHAVAN,HUBLI – 580 020. 2.THE ASSISTANT COMMISSIONEROF INCOME-TAX,TDS CIRCLE,AAYAKAR BHAVAN,STAFF ROAD, FORT,BELLARY – 583 102. …APPELLANTS (BY SRI AMEETKUMAR DESHPANDE, ADVOCATE) AND: THE EXECUTIVE ENGINEERO & M DIVISION,(GESCOM),RAICHUR – 584 101. …RESPONDENT (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 FORMULATE THE SUBSTANTIALQUESTION OF LAW STATED ABOVE, ALLOW THEAPPEAL AND SET ASIDE THE ORDERS PASSED BYTHE INCOME-TAX APPELLATE TRIBUNAL, ‘C’ BENCHBANGALORE IN ITA NO.777/BANG/2013 DATED30.09.2013 VIDE ANNEXURE-C CONFIRMING THEORDER OF THE APPELLATE COMMISSIONER ANDCONFIRM THE ORDER PASSED BY THE ASSISTANTCOMMISSIONER OF INCOME-TAX, TDS CIRCLE,BELLARY. THESE APPEALS COMING ON FOR ADMISSIONTHIS DAY, ACTING CHIEF JUSTICE DELIVERED THEFOLLOWING: 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. Gulbarga Electricity Supply CompanyLimited, 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. Gulbarga Electricity Supply CompanyLimited, 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. 4. The 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, ‘the Act’) would attract or not. 5. 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 of 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 of Commissioner 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. 7. We are, also, of the opinion that the clausesof the contract particularly, clause 3.5 of the contractagreement, 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 basisof 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 inrespect of a contract for supply of materials for carryingout the work. It is in a 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. 8. 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. 9. 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 servicesrendered 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. 11. The parties are however directed to beartheir respective costs. Sd/- ACTING CHIEF JUSTICE Sd/- JUDGE DM