Commissioner Of Income Tax (Tds), Chandigarh v. General Manager, Haryana Roadways, Hissar

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No. 21 of 2010 (O&M) Date of Decision: April 29, 2010 Commissioner of Income Tax (TDS), Chandigarh ..Appellant Versus General Manager, Haryana Roadways, Hissar ...Respondent CORAM:HON'BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE JITENDRA CHAUHAN Present:Mr. Yogesh Putney, Advocate,for the revenue-appellant. Mr. B.M. Monga, Advocate,for the assessee-respondent. 1.To be referred to the Reporters or not?2.Whether the judgment should be reported in2.Whether the judgment should be reported in the Digest? M.M. KUMAR, J. This order shall dispose of a bunch of 12 appeals[2] filed by therevenue under Section 260A of the Income Tax Act, 1961 (for brevity, ‘theAct’). Since common questions of law and facts are involved, these appealshave been clubbed together. In ITA Nos. 131 and 132 of 2009, common orderdated 22.7.2008 passed by the Income Tax Appellate Tribunal, ChandigarhBench ‘B’, Chandigarh, passed in ITA Nos. 1001 & 1002/Chd/2007 in respectof assessment years 2003-04 & 2004-05, has been challenged. Similarly, inITA Nos. 21 to 30 common order dated 27.5.2009, passed by the Income TaxAppellate Tribunal, Delhi Bench ‘A’, Delhi, in ITA Nos. 870, 872, 868, 874,873, 875, 879, 877, 876 and 871/Del/2009, in respect of assessment years2004-05, 2005-06, 2006-07 and 2007-08, is the subject matter of challenge. The following substantial questions of law have been raised by the revenue inITA No. 21 of 2010:- “(1)Whether on the facts and in the circumstances of the case, the ITATwas right in law in upholding the order of the CIT(A), deleting thedemand created by the Assessing Officer under Section 201(1) and201(1A) of the Income Tax Act, 1961, as the assessee failed todeduct tax at source as per the provisions of Section 194C of theAct?was right in law in upholding the order of the CIT(A), deleting thedemand created by the Assessing Officer under Section 201(1) and201(1A) of the Income Tax Act, 1961, as the assessee failed todeduct tax at source as per the provisions of Section 194C of theAct? (2)Whether on the facts and in the circumstances of the case the ITATis right in law in holding that contract was for supply of goods andnot a case of executing works contract ignoring the provisions ofSection 194C of the Income Tax Act, 1961?”is right in law in holding that contract was for supply of goods andnot a case of executing works contract ignoring the provisions ofSection 194C of the Income Tax Act, 1961?”.It is pertinent to notice that in the other appeals similar questions oflaw have been raised by the revenue.law have been raised by the revenue. Brief facts of the case as culled out from ITA No. 21 of 2010 arethat the Income Tax Officer (TDS), Hisar, noticed that the assessee-GeneralManager, Haryana Roadways, Hisar, entered into a contract with the HaryanaRoadways Engineering Corporation Limited, Gurgaon (HRECL), forfabrication of bodies of buses but failed to deduct tax at source under Section194C of the Act. During the Financial Year 2006-07 (Assessment Year 2007-08) the assessee paid a sum of Rs. 28,99,252/- as fabrication charges. However,no tax at source at the rate of 2% plus cess was deducted out of the aforesaidpayment in terms of Section 194C of the Act. The Income Tax Officer (TDS),Hisar, treated the assessee in default and raised a demand of Rs. 76,120/- inrespect of the Financial Year 2006-07, vide order dated 29.8.2008, passed underSection 201(1) & 201(1A) of the Act (A-1). The assessee filed an appeal before the Commissioner of Income The assessee filed an appeal before the Commissioner of Income Tax (Appeals), Rohtak, against the orders passed by the Income Tax Officer(TDS), Hisar. The CIT (Appeals) followed the decision of the Income TaxAppellate Tribunal, Chandigarh Bench ‘B’, dated 22.7.2008, passed in ITANos. 1001 and 1002/CHD/2007, in respect of the Assessment Years 2004-05and 2005-06 (General Manager, Haryana Roadways, Kurukshetra v. ITO Ward-I/TDS, Kurukshetra) and also relied upon his own order dated 21.10.2008 in thecase of General Manager, Haryana Roadways, Jhajjar, in ITA Nos. 79 and80/RTK/2008-09, while allowing the appeal in favour of the assessee vide orderdated 11.12.2008 (A-2). Thereafter the revenue preferred further appeal before the IncomeTax Appellate Tribunal, Delhi Bench ‘A’, Delhi, against the order of the CIT(A), Rohtak. The Tribunal dismissed the appeal of the revenue on the groundthat the contract was for supply and was not a works contract. The Tribunalfollowed the order passed by the Income Tax Appellate Tribunal, ChandigarhBench ‘B’, Chandigarh, in the case of General Manager, Haryana Roadways,Kurukshetra, in ITA No. 1001 and 1002/Chd/2007, dated 22.7.2008, againstwhich ITA Nos. 131 and 132 of 2009 have been filed. The finding recorded inpara 11 of the order by the Tribunal reads thus:- “11.From the facts narrated by the department itself, it is clearthat Haryana Roadways Engineering Corporation Ltd., Gurgaonmanufactured and fabricated the bus bodies as per specificationgiven by the Transport Commissioner and Secretary (Transport) toGovt. of Haryana and the ownership of the vehicle passed on to theGovt. of Haryana through Transport Commissioner and Secretary(Transport) after full payment is made by Transport Commissioner,Haryana Roadways. The manufacturer and fabricator of the busbodies also charged sales tax and VAT as applicable. From thisthat Haryana Roadways Engineering Corporation Ltd., Gurgaonmanufactured and fabricated the bus bodies as per specificationgiven by the Transport Commissioner and Secretary (Transport) toGovt. of Haryana and the ownership of the vehicle passed on to theGovt. of Haryana through Transport Commissioner and Secretary(Transport) after full payment is made by Transport Commissioner,Haryana Roadways. The manufacturer and fabricator of the busbodies also charged sales tax and VAT as applicable. From this fact, it is clear that it is a case of supply of bus bodies manufacturedand fabricated as per specification given by the buyer. Thus, it isnot a case of executing works contract as it contemplated u/s 194Cof the Act. It is a case of supply of goods as per specification givenby the buyer.” Having heard learned counsel for the parties and perusing the paper books with their able assistance we are of the considered view that there is nomerit in these appeals warranting their admission and the same are liable to bedismissed. From the categorical findings it is evident that Haryana Roadwaysdid not purchase any bus chasis and, therefore, there was no question of anycontract between Haryana Roadways through its Transport Commissioner andHaryana Roadways Engineering Corporation Limited. It is a simple case ofsupply of buses by the Haryana Roadways Engineering Corporation Limited tothe Haryana Roadways. The supply of buses as such has been subjected tocharge of Sales Tax and VAT. We may examine Section 194C(1) of the Act, which envisagespayment of any sum to any resident for carrying out any work in pursuance of acontract between the contractor and Central or State Government etc. In thepresent case there is no such contract for carrying out any contract nor theexpression ‘Contractor’ could be imputed to any one of the parties. Therefore,no question of law much less a substantive question of law would arise fordetermination of this Court. These appeals are wholly without merit and thesame are dismissed. A photocopy of this order be placed on the files of connected appeals. April 29, 2010 Pkapoor (JITENDRA CHAUHAN) JUDGE 2 We may examine Section 194C(1) of the Act, which envisagespayment of any sum to any resident for carrying out any work in pursuance of acontract between the contractor and Central or State Government etc. In thepresent case there is no such contract for carrying out any contract nor theexpression ‘Contractor’ could be imputed to any one of the parties. Therefore,no question of law much less a substantive question of law would arise fordetermination of this Court. These appeals are wholly without merit and thesame are dismissed. A photocopy of this order be placed on the files of connected appeals. April 29, 2010 Pkapoor (JITENDRA CHAUHAN) JUDGE 2 Sr. No.ITA No.Parties Name131 of 2009The Commissioner of Income Tax(TDS), Chandigarh v. General Manager, Haryana Roadways,Kurukshetra132 of 2009The Commissioner of Income Tax (TDS),Chandigarh v. General Manager, Haryana Roadways, Kurukshetra.21 of2010The Commissioner of Income Tax (TDS), Chandigarh v. GeneralManager, Haryana Roadways, Hissar.22 of 2010The Commissioner ofIncome Tax (TDS), Chandigarh v. General Manager, Haryana Roadways,Bhiwani.23 of 2010The Commissioner of Income Tax (TDS), Chandigarh v.General Manager, Haryana Roadways, Hissar.24 of 2010The Commissionerof Income Tax (TDS), Chandigarh v. General Manager, Haryana Roadways,Bhiwani.25 of 2010The Commissioner of Income Tax (TDS), Chandigarh v.General Manager, Haryana Roadways, Bhiwani.26 of 2010TheCommissioner of Income Tax (TDS), Chandigarh v. General Manager,Haryana Roadways, Bhiwani.27 of 2010The Commissioner of Income Tax(TDS), Chandigarh v. General Manager, Haryana Roadways, Fatehabad.28of 2010The Commissioner of Income Tax (TDS), Chandigarh v. GeneralManager, Haryana Roadways, Fatehabad.29 of 2010The Commissioner ofIncome Tax (TDS), Chandigarh v. General Manager, Haryana Roadways,Fatehabad.30 of 2010The Commissioner of Income Tax (TDS), Chandigarhv. General Manager, Haryana Roadways, Hissar. (M.M. KUMAR)JUDGE April 29, 2010Pkapoor (JITENDRA CHAUHAN) JUDGE