Commissioner Income Tax v. M/S Prism Cement Unit

HIGH COURT OF MADHYA PRADESH PRINCIPAL SEAT:AT JABALPUR INCOME TAX APPEAL No.100/2014 Commissioner Income Tax Versus M/s Prism Cement Unit INCOME TAX APPEAL No.101/2014 Commissioner Income Tax Versus M/s Prism Cement Unit INCOME TAX APPEAL No.102/2014 Commissioner Income Tax Versus M/s Prism Cement Unit INCOME TAX APPEAL No.103/2014 Commissioner Income Tax Versus M/s Prism Cement Unit Present: Hon'ble Shri Justice Rajendra MenonHon'ble Shri Justice Sushil Kumar Gupta Shri Sushrut Dharmadhikari, learned counsel for the appellant. Shri Sumit Nema, learned counsel for the respondent. O R D E R( 18/08/2015) As common questions of law and facts are involved in allthese 4 appeals filed under Section 260-A of the Income Tax Actby the revenue, they are being disposed off by this commonorder except the fact that the assessment quarter are different, allother the facts and questions of law are identical. 2.A show cause notice was issued by the Assessing Officer tothe respondent assessee under Section 201(1) read with 206 C(7)as to why the assessee should not be treated as a defaulter underSection 201(1) on account of the short deduction made oninterest under Section 201(1A) of the Income Tax Act i.e. in thematter of deduction of Tax at source and interest. 3.The Assessing Office found that the respondent assesseehas not deducted the interest and TDS for various purchasesmade for the unit in question the order of assessment was passedand challenging the same appeals were filed before the Commissioner Income Tax Appeal. The Commissioner IncomeTax Appeal vide his order dated 19/12/2011 came to theconclusion that the assessee was not liable to deduct TDS andtherefore, deleted the addition. Appeal was partly allowed onvarious other grounds. Further appeal filed by the revenuehaving also being dismissed by ITAT, Jabalpur by the impugnedorder passed on 28/03/2014 this appeal by the revenue. It is thecase of the revenue that as the contract in question is a compositecontract in the nature of a works contract, the deduction underSection 201(1) and 201 (1A) was required and as the additionmade on account of such statutory violation has been deleted bythe appellate authorities, the substantial question of law asframed in the memorandum of the appeal arises forconsideration. In rebuttal, Shri Sumit Nema invites our attentionto the order passed by the appellate authorities concurrently, theadmission made by the Assessing Officer in his remand reportsubmitted before the appellate authority, and points out that theassessee has two units and for both the units i.e. Unit No.I & unitNo.II two different contract were entered into. As far as thepresent appeals are concerned, they pertain to unit No.1 and forthe said unit a contract was entered into with certain foreignsconcern for the purpose of purchase of injunction pipes andvarious other items. This contract was not a composite contract,it was a simple purchase contract for procurement of certainitems on prices fixed from a foreign company and therefore inview of the law laid down by the Supreme Court in the case of GE India Technology Cen. (P) Ltd. Vs. Commissioner ofIncome Tax (2010) 193 TAXMAN 234 (SC) the appellateauthorities have not committed any error. Shri Sumit Nemapoints out that under the misapprehension and misconceptionthat the agreement for unit No.2 which is composite workscontract has also been executed in unit No.1 also a error wascommitted by the Assessing Officer and when he admitted theerror the appellate authorities have taken note of the same andpermitted the deduction. In doing so, he argues that the appellateauthorities have not committed any error and on the basis of thisadmitted factual position no question of law arises forconsideration as the purchase in question made is beyond thepurview of the deductions. As contemplated under Section195(2) of the Income Tax Act as is laid down by the SupremeCourt in the case of GE India Technology (Supra). 4.We have considered the rival contentions and on goingthrough the reply filed the respondent so also the material onrecord, we find that an agreement was entered into by theassessee for the purchase of certain items vide quotationNo.210.62 dated 04/05/2006 a purchases made from M/s MarinePower International, Dubai so also various other purchasecontract similar in nature. This was not a composite contract, itwas a simple purchase contract for purchase of certain items, allthese purchase agreements were made for unit No.1 and arebeyond the purview of deductions contemplated under Section 195(2), however, the assessee also has a separate unit known asunit No.2 which has a separate TAN and PAN and assessmentfor this unit is also done separately and for this unit a worthycontract was entered into with Koppern Germany for supply,purchase and installation of certain machinery i.e. a compositeworks contract. The Assessing Officer in his remand note hasadmitted this position and the order passed by the CommissionerAppeals in para 4.9, these aspects have been taken note of and itis specifically held that the contract on the basis of which the AOmade the addition by treating the appellant company in default isfor unit No.2 and not for unit No.1. If that be the factual position,its clear that for unit No.1 the contract in question for whichaddition has been made was one for which the provision ofSection 195(2), 201(1) and 201(1A) is not attract as the contractfor the said unit was not a composite contract. Accordingly, if theprinciple laid down in the case of GE India Technology (Supra)are applied in the facts of the present case, no question of lawarises for consideration and in view of the aforesaid, we find noerror in the concurrent orders passed by the appellate authorities,the same being in accordance with law, we find no question oflaw for consideration, the appeal is therefore, dismissed. Ajay/- (Rajendra Menon)(Sushil Kumar Gupta)Judge Judge