Ita/81/2014 Of The Commissioner Of Income Tax v. The Executive Engineer

IN THER HIGH COURT OF KARNATAKDHARWAD BENCH K DATED THIS THE 2[nd]DAY OF SEPTEMBER, 2015 PRESENT *Corrected videChamber orderdated 28.09.2015PS to Hon’ble ABJ THE HONOURABLE MR.JUSTICE ANAND BYRAREDDY ANI THE HONOURABLE MRs. JUSTICE S.SUJATHA Income Tax Appeal No. 8lof 2014C/W2014, Income Tax Appeal Nos.82 of 2014, 83 of 2014, 87 of 2014, 90 of Income [ax Appeal No. 31 of 2014; Between: 11The Commissioner of Income Tax,Aayakar Bhavan,Sedam Road,Gulbarga-585 105. ? The Deputy Commissioner of Income Tax(TDS),Aayakar Bhavan,Staff Road, Fort,Bellary, ... Appellants (By Mr. Y.V Raviraj, Advocate) And: The Executive Engineer,O & M Division, (GESCOM),HOSPET. ... Respondent (By Shri Shashank Hegde, Advocate for Shri A.Shankar,Advocate) This Income Tax Appeal is filed under Section 260-A ofIncome Tax Act, 1961, for the assessment year 2008-09 praying toallow the appeal and set aside the orders passed by the IncomeTax Appellate Tribunal, Bangalore 1n Income ‘Tax AppeaNo.768/Bang/2013 dated:30/09/2013 confirming the order ofthe Appellate Commissioner and confirm the order passed by theAssistant Commissioner of Income Tax, TDS Circle, Bellary. Income [Tax Appeal No. 82 of 2014 Between: 11The Commissioner of Income Tax,Aayakar Bhavan,Sedam Road,Gulbarga-585 105. ? The Deputy Commissioner of Income Tax(TDS),Aayakat Bhavan,Staff Road, Fort,Bellary,... Appellants (By Mr. Y.V Raviraj, Advocate) And: The Executive Engineer,O & M Division, (GESCOM),HOSPET. ... Respondent (By Shri Shashank Hegde, Advocate for Shri A.Shankar,Advocate) This Income Tax Appeal is filed under Section 260-A ofIncome Tax Act, 1961, for the assessment year 2008-09 praying toallow the appeal and set aside the orders passed by the IncomeTax Appellate Tribunal, Bangalore 1n Income ‘Tax AppeaNo.769/Bang/2013 dated:30/09/2013 confirming the order ofthe Appellate Commissioner and confirm the order passed by theAssistant Commissioner of Income Tax, TDS Circle, Bellary. Income [Tax Appeal No. 83 of 2014 Between: 11The Commissioner of Income Tax,Aayakar Bhavan,Sedam Road,Gulbarga-585 105. ? The Deputy Commissioner of Income Tax(TDS),Aayakat Bhavan,Staff Road, Fort,Bellary,... Appellants (By Mr. Y.V Raviraj, Advocate) And: The Executive Engineer,O & M Division, (GESCOM),HOSPET. ... Respondent (By Shri Shashank Hegde, Advocate for Shri A.Shankar,Advocate) This Income Tax Appeal is filed under Section 260-A ofIncome Tax Act, 1961, for the assessment year 2008-09 praying toallow the appeal and set aside the orders passed by the IncomeTax Appellate Tribunal, Bangalore 1n Income ‘Tax AppeaNo.770/Bang/2013 dated:30/09/2013 confirming the order ofthe Appellate Commissioner and confirm the order passed by theAssistant Commissioner of Income Tax, TDS Circle, Bellary. Income [Tax Appeal No. 87 of 2014 Between: 1. The Commissioner of Income Tax, Aayakat Bhavan,Sedam Road,Gulbarga-585 105, 2. The Deputy Commissioner of Income Tax(TDS),Aayakat Bhavan,Staff Road, Fort,Bellary,... Appellants (By Mr. Y.V Raviraj, Advocate) And: The Executive Engineer,O & M Division, (GESCOM),HOSPET. ... Respondent (By Shri Shashank Hegde, Advocate for Shri A.Shankar,Advocate) This Income Tax Appeal is filed under Section 260-A ofIncome Tax Act, 1961, for the assessment year 2008-09 praying toallow the appeal and set aside the orders passed by the IncomeTax Appellate Tribunal, Bangalore 1n Income ‘Tax AppeaNo.519/Bang/2013 dated:30/09/2013 confirming the order ofthe Appellate Commissioner and confirm the order passed by theAssistant Commissioner of Income Tax, TDS Circle, Bellary. Income Tax Appeal No. 90 of 2014; Between: 1 The Commissioner of Income Tax,Aayakar Bhavan,Sedam Road,Gulbarga-585 105, 2. The Deputy Commissioner of Income Tax(TDS),Aayakar Bhavan,Staff Road, Fort,Bellary.... Appellants (By Mr. Y.V Raviraj, Advocate) And: The Executive Engineer, O & M Division, (GESCOM), HOSPET. ... Respondent (By Shri Shashank Hegde, Advocate for Shri A.Shankar,Advocate) This Income Tax Appeal is filed under Section 260-A ofIncome Tax Act, 1961, for the assessment year 2008-09 praying toallow the appeal and set aside the orders passed by the IncomeTax Appellate Tribunal, Bangalore 1n Income ‘Tax AppeaNo.519/Bang/2013 dated:30/09/2013 confirming the order ofthe Appellate Commissioner and confirm the order passed by theAssistant Commissioner of Income Tax, TDS Circle, Bellary. Income Tax Appeal No. 90 of 2014; Between: 1 The Commissioner of Income Tax,Aayakar Bhavan,Sedam Road,Gulbarga-585 105, 2. The Deputy Commissioner of Income Tax(TDS),Aayakar Bhavan,Staff Road, Fort,Bellary.... Appellants (By Mr. Y.V Raviraj, Advocate) And: The Executive Engineer, O & M Division, (GESCOM), HOSPET. ... Respondent (By Shri Shashank Hegde, Advocate for Shri A.Shankar,Advocate) This Income Tax Appeal is filed under Section 260-A ofIncome Tax Act, 1961, for the assessment year 2008-09 praying toallow the appeal and set aside the orders passed by the IncomeTax Appellate Tribunal, Bangalore 1n Income ‘Tax AppeaNo.522/Bang/2013 dated:30/09/2013 confirming the order ofthe Appellate Commissioner and confirm the order passed by theAssistant Commissioner of Income Tax, TDS Circle, Bellary. These appeals coming on for Admission, ANANDBYRAREDDY J., delivered the following :- JUDGMENT These appeals coming on for admission, are considered for final disposal having regard to the issues raised in these appeals having been addressed in Income-Tax Appeal No.75/2014 andconnected cases, disposed of by a judgment dated 11.38.2015. 2. These appeals filed by the revenue are against the ordersof the Income-Tax Appellate Tribunal confirming the orderpassed by the Commissioner of Income-tax (Appeals), Hubli. 3. Gulbarga Electricity Supply Company Limited, theassessee had challenged demands of the jurisdictional DeputyCommissioner of Income-tax and therafter appeals were filedbefore the Commissioner of Income-tax and the appeals had beenpartly allowed and the revenue had taken up the matter before theIncome-Tax Appellate Tribunal, which was futile. The first issue involved in those appeals was if on thepayment made against the supply of materials included incomposite contracts for executing Turn Key Projects, provisionsunder Section 194C of the Income-Tax Act, 1961 (for short, ‘theAct’) would attract or not, The second issue was if payments made by the assessee toBellary Computers and IT Solutions, Bellary, towards BillManagement Services were fees for professional and technicalsetvices and, therefore, comes within the purview of Section 194] of the Act or payments made towards carrying out work comeswithin the ambit of Section 194C. of the Act The Tribunal, 1n its detailed discussion, has held that theissue regarding non-deduction of tax deducted at source onpayments made on supply part of contracts awarded for executionof Turn Key Projects, is a settled issue in the case ofCommissionerof Income-tax and others vs. Karnataka Power lI ransmission Corporatil wwitedin ITA 337 of 2011]>decided on 15.3.2012. Therefore,the said decision was held binding in so far as the revenue wasconcerned. Therefore, this court had formed an opinion that theclauses of the contract particularly, clause 3.5 of the contractaoreement, made it clear that there were three separate contractsentered into, but all the separate contracts were integral parts of acomposite contract on single sale responsible basis. The invoicesraised on the basis of the said composite contract separatelymentioning the value of the material supplied, no deduction waspermissible under Section 194C of the Act. The said provisioncould not be pressed into service to deduct tax at source. The whole object of introduction of that Section was to deduct tax inrespect of payments made for works contracts. No division was,therefore, permissible in respect of a contract for supply ofmaterials for carrying out the work as in case of distinctcontracts. The contract for supply of material being a separateand distinct contract, no division was permissible under Section194C. of the Act. Section 194C was amended with effect fromOctober 1, 2009 and the provision ts unambiguous. Therefore, ttwas concluded by this court that if a person executing the work,purchases the materials from a person other than the customer,the same would not fall within the definition of ‘work’ underSection 194C of the Act, In so far as the second issue was concerned, this court hasopined that the provisions of Section 194] or Section 194C wouldapply in respect of payments made by an assessee towards BillManagement Services. The services rendered by the agencies|engaged by the assessee at several places are not professionalsetvices, and, therefore, Section 194] was not attracted. The demand towards the alleged short deduction of tax deducted atsource and interest, was hence improper and the contract was tightly held to be a service contract by the Tribunal. This courthad affirmed that it was a contract, which should be coveredunder Section 194C of the Act. Hence, it was held that the appeals did not involve any substantial question of law, which requires consideration and theappeals were dismissed. The present appeals also face the same fate and areaccordingly dismissed, Sd/-JUDGE Sd/-JUDGE