District Project Officer, Sarva Shiksha Abhiyaan, Dholpur Throughadditional District Project Coordinator Shri Prem Singh Kuntal S/Oshri Ram Singh Kuntal v. The Principle Commissioner Of Income Tax, Central Revenuebuilding, Moti Dongri Road, Alwar Raj.building, Moti Dongri Road, Alwar Raj

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 32/2018 District Project Officer, Sarva Shiksha Abhiyaan, Dholpur ThroughAdditional District Project Coordinator Shri Prem Singh Kuntal S/oShri Ram Singh Kuntal Aged About 54 Years ----Appellant Versus 1. The Principle Commissioner Of Income Tax, Central RevenueBuilding, Moti Dongri Road, Alwar Raj.Building, Moti Dongri Road, Alwar Raj. 2. The Income Tax Officer TDS, Alwar, Central RevenueBuilding, Moti Dungri Road, Alwar Raj.Building, Moti Dungri Road, Alwar Raj. ----Respondents Connected With D.B. Income Tax Appeal No. 33/2018 District Project Officer, Sarva Shiksha Abhiyaan, Dholpur ThroughAdditional District Project Coordinator Shri Prem Singh Kuntal S/oShri Ram Singh Kuntal Aged About 54 Years ----Appellant Versus 1. The Principle Commissioner Of Income Tax, Central RevenueBuilding, Moti Dongri Road, Alwar Raj.Building, Moti Dongri Road, Alwar Raj. 2. The Income Tax Officer TDS, Alwar, Central RevenueBuilding, Moti Dungri Road, Alwar Raj.Building, Moti Dungri Road, Alwar Raj. ----Respondents For Appellant(s) : Mr. Naresh Gupta withMr. Mihir KattaMr. Mihir KattaFor Respondent(s): Mr. Prateek Kedawat for Mr. R.B. Mathur HON'BLE MR. JUSTICE MOHAMMAD RAFIQ HON'BLE MR. JUSTICE GOVERDHAN BARDHAR Judgment 18/12/2018 Both the appeals are directed against the order dated30.06.2017 of the Income Tax Appellate Tribunal, Jaipur Bench,Jaipur, consisting of two members, in ITA Nos.84 & 85/JP/2017.These appeals were admitted by this court vide order dated 03.07.2018 for hearing on the following substantial questions of law:- “In D.B. Income Tax Appeal No.32/2018 1. Whether the ld. ITAT has acted on total misconceptionof law in uploading TDS liability of the appellant u/s. 194Jinstead of u/s.194C of the Income Tax Act, 1961 on thefull value of invoice raised towards supply of Solar PhotoVoltaic Panels including supply of manpower and labourfor the installation and commissioning thereof? 5. Whether on the facts and in the circumstances of thecase and in law, the order of the ITAT passed in case ofappellant needs remand being violative to the judicialdiscipline taking view contrary to the judgment and orderdated 30.06.2017 (Annexure-4) passed by it in identicalfactsandcircumstancesincaseofITANos.471&472/JP/2016 for the A-Ys 2012-13 & 2013-14titling ITO (TDS-2), Jaipur Vs. the Controller Finance,Rajasthan Council of Elementary Education?” In D.B. Income Tax Appeal No.33/2018 1. Whether the ld. ITAT has acted on total misconceptionof law in uploading TDS liability of the appellant u/s. 194Jinstead of u/s.194C of the Income Tax Act, 1961 on thefull value of invoice raised towards supply of computerhardware, UPS, consumables, stationary or Solar PhotoVoltaic Panels including supply of manpower and labourfor the installation and commissioning thereof? 5. Whether on the facts and in the circumstances of thecase and in law, the order of the ITAT passed in case ofappellant needs remand being violative to the judicialdiscipline taking view contrary to the judgment and orderdated 30.06.2017 (Annexure-4) passed by it in identicalfactsandcircumstancesincaseofITANos.471&472/JP/2016 for the A-Ys 2012-13 & 2013-14titling ITO (TDS-2), Jaipur Vs. the Controller Finance,Rajasthan Council of Elementary Education?” Learned counsel for the appellant has invited attention of thecourt towards the judgment dated 30.06.2017 passed by the ITAT,Jaipur Bench (SMC), Jaipur, in ITA Nos.471&472/JP/2016, consistingof different member, which passed the impugned order. Both theorders were passed on the same date, i.e., 30.06.2017, however, in a contrary view was taken therein. The view taken in ITA Nos.84 & 85/JP/2017 reads thus:- Learned counsel for the appellant has invited attention of thecourt towards the judgment dated 30.06.2017 passed by the ITAT,Jaipur Bench (SMC), Jaipur, in ITA Nos.471&472/JP/2016, consistingof different member, which passed the impugned order. Both theorders were passed on the same date, i.e., 30.06.2017, however, in a contrary view was taken therein. The view taken in ITA Nos.84 & 85/JP/2017 reads thus:- “8.3. We have heard rival contentions and perused thematerial available on record. The AO observed that onperusal of bills and vouchers and copy of agreement withPearson Education Services Pvt. Ltd. and CompucomSoftware pvt. Ltd., it is evident that the aforesaidcompanies have to provide computers along with theinstallation and commission of the computer labs, andalso to provide technical manpower and all the technicalandmanagementassistanceinsuccessfulimplementation of the above programme at the Statelevel. Thus the nature of work and services as per theAO is covered under the category of Technical Servicesas described under the provisions of section 194J of theAct. This view was affirmed by the ld.CIT(A). There is nodispute that the assessee entered into a contract. Theterms of the contract is for supply of computers,installation, commissioning of computer lab with brandnew equipments on BOOT (Build, Own, Operate andTransfer) basis to maintain working condition of thehardware, software and necessary infrastructure such asUPS, furniture, etc., supply of personnel to manageproject. For the sake of clarity, it would be appropriate toreproduce the definition of Technical Service as persection 9(1)(vii) of the Act read with Explanation 2.: “Fee for Technical Services” means any consideration forrendering of any managerial, technical or consultancyservices including the provision of services of technical orother personnel but does not include consideration forany construction, assembly, mining or like projectundertaken by the recipient or consideration which wouldbe income of the recipient chargeable under the head“Salaries”. In the present case, admittedly, the contract includes thesupply of personnel to manage project. Therefore, thecontract also included managerial services, which clearlyfalls under the category of “Fee for Technical Services”.Under these facts, we are unable to accept thecontention of the ld. Counsel for the assessee that thecontract did not include managerial services since themanagerial service falls under the category of TechnicalServices. The tax ought to have been deducted undersection 194J of the Act. We do not find any infirmity inthe order of ld. CIT(A). Same is hereby affirmed. Theground raised by the assessee is dismissed.” The view taken in ITA Nos.471&472/JP/2016 reads thus:- From the above terms and conditions it can be notedthat the entire contract is for supply of computerhardware, software, connected accessories, UPS,furniture, stationary, consumables, etc. and this contractis to be carried out by the contractor through its ownpersonnel. Thus, it is a simple contract of carrying out awork. Section 194J applies to a person responsible forpaying to any resident any sum by way of fees forprofessional/technical services. In the present case, thecontractor has not made viable any technical services tothe assessee but has only provided the computerhardware, software, etc. and employed his ownpersonnel for implementing the same in various schoolsas per the terms and conditions of the contract. Hence,section 194J is not applicable and the assessee hasrightly deducted tax at source u/s 194C. 2. The Hon’ble Punjab and Haryana High Court in case ofPCIT Vs. Senior Manager (Finance), Bharat HeavyElectricals Limited (2017) 390 ITR 322, where contractwas for erection, installation, commissioning, testing andtrail operations of various equipments and other relatedmachinery and that under the terms of the contract itwas the duty of the contractor to provide all type oflabour, supervisors, engineers, inspectors, etc. forexecution of the project, the AO held that Section 194J isapplicable as the level of human interaction was high andsophisticated. The Ld. CIT (A) however held that thescope of the work given to the sub-contractor did not fallin the scope of technical services merely becausetechnical persons were employed in execution of contractand therefore, tax is deductible only u/s 194C. Thisfinding was confirmed by he Hon’ble ITAT. On furtherappeal, the Hon’ble High Court by a elaborate order heldas under:- “Held, dismissing the appeal, that the contract enteredinto between the assessee and each of the contractorsdid not involve supply of professional or technicalservices sat least within the meaning of Section 194J ofthe Income Tax Act, 1961. Therefore, the considerationspaid under the contracts were not for professional ortechnical services rendered by the contractors to theassessee and Section 194J was not applicable. Thetechnical personnel were deployed not for and on behalfof the customer, but for and on behalf of the contractoritself with a view to ensuring that the contractor suppliedthe equipment in accordance with the contractualspecifications. The nature of human intervention wasreflected in the terms and conditions of the agreementitself. Thus, the consideration was paid not forprofessional or technical services rendered to theassessee.” 3. Further reliance is placed in case of Prithvi InformationSolutions Ltd. Vs. ITO 34 ITR (Trib.) 28 (Hyd.). In view of above, the Ld. (CIT(A) has rightly deleted thedemand raised by AO and thus, ground of thedepartment be dismissed.” It is submitted that in both the sets of cases, the supplier wascommon and the recipient was also the same department. Theappeals were therefore admitted by this court, apart from thequestion as to attractability of Section 194C or Section 194J of the ITAct, also on the question whether in the facts of the case the matterdeserves to be remanded to the Tribunal being violative of thejudicial discipline. In response to the pointed query by the court, the learnedcounsel appearing for revenue was unable to make a categoricalstatement whether the appeals were filed against the contraryjudgment by the Tribunal in ITA Nos.471&472/JP/2016 before thiscourt by filing appeal. The learned counsel for the appellant is alsounable to give a categorical answer as to in what manner the supplymade by the aforementioned supplier has been dealt with by the ITauthority in respect of the other district. We are, therefore, persuaded to allow the appeals on questionno.2 setting aside the impugned order of the ITAT and remand thematter to the ITAT to decide it afresh. Ordered accordingly. It wouldbe open to the parties to apprise the ITAT about the aforementionedaspects. With that direction, the appeals are disposed of. Office to place a copy of this order in connected file. (GOVERDHAN BARDHAR),J (MOHAMMAD RAFIQ),J //Jaiman//23-24