Itxa/1418/2016 Of Commissioner Of Income Tax(Tds)-1 v. B.g. Exploration And Production(India) Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1418 OF 2016 Commissioner of Income Tax, (TDS)-1 .. Appellant v/s. B.G. Exploration & Production (India) Ltd. .. Respondent Mr. Suresh Kumar for the appellant None for the respondent CORAM : AKIL KURESHI & M.S. SANKLECHA, J.J. P.C. DATED : 11[th] JANUARY, 2019 1.This Appeal under Section 260-A of the Income Tax Act, 1961(the Act) challenges the order dated 16[th] October, 2015 passed by theIncome Tax Appellate Tribunal (the Tribunal). This appeal relates toAssessment Year 2009-10. 2.Although numerous questions have been raised, the only issuewhich arises for consideration and which is pressed by the Revenue is asunder :- (i)Whether on the facts and in the circumstances of the caseand in law, the Tribunal was correct in holding that the natureof services rendered by ONGC for which charges are paid come within the purview of Section 194C whereas such charges are inthe nature of technical fee within the meaning of Section 194J ofthe Income Tax Act, 1961? (ii)Whether on the facts and in the circumstances of the caseand in law, the Tribunal was correct in holding that the natureof services rendered by Arya Offshore Services Pvt. Ltd. (AOSPL)for which charges are paid come within the purview of Section194C whereas such charges are in the nature of technical feewithin the meaning of Section 194J of the Income Tax Act,1961? 3.Regarding question no.(i) :- (a)The respondent assessee has engaged the services of M/s. ONGCLtd. underwater inspection, installation and pipeline repairs etc. Theseservices according to the appellant were in the nature of routine repairmaintenance and installation of pipelines. Thus, while making thepayment to M/s. ONGC Ltd. the respondent assessee have deducted taxunder Section 194C of the Act. However, the Assessing Officer was ofthe view that these services are technical in nature and, therefore, thetax had to be deducted at source under Section 194J of the Act. Thus,resulting in an order dated 31[st] March, 2011 under Section 201 of theAct for short deduction of tax at source, as the same was not doneunder Section 194J of the Act. (b)Being aggrieved, the respondent carried the issue to theCommissioner of Income Tax (Appeals) [CIT(A)]. By an order dated 28[th]February, 2013, the CIT(A) allowed the respondent's appeal. It heldthat the activity carried by M/s. ONGC Ltd. was in the nature ofinstallation work and could not be considered as fees for technicalservices. Besides, reliance was placed upon the CBDT CircularNo.681/94, dated 3[rd] March, 1994 to the effect that repairs, renovationand installation of plant and machinery are in the nature of contract forwork and income tax will have to be deducted from such paymentunder Section 194C of the Act. (c)Being aggrieved, the Revenue filed further appeal to the Tribunal.By the impugned order dated 16[th] October, 2015, the Tribunal upheldthe view of the CIT(A) and dismissed the Revenue's appeal. (d)It is not disputed before us that the CBDT Circular No.681/94dated 3[rd] March, 1994 is applicable to the present facts. (e)The question as proposed by the Revenue does not give rise toany substantial question of law as the tax has been properly deducted atsource under Section 194C of the Act in terms of the CBDT CircularNo.681/94 dated 3[rd] March, 1994. Thus, not entertained. 4.Regarding question no.(ii) :- (c)Being aggrieved, the Revenue filed further appeal to the Tribunal.By the impugned order dated 16[th] October, 2015, the Tribunal upheldthe view of the CIT(A) and dismissed the Revenue's appeal. (d)It is not disputed before us that the CBDT Circular No.681/94dated 3[rd] March, 1994 is applicable to the present facts. (e)The question as proposed by the Revenue does not give rise toany substantial question of law as the tax has been properly deducted atsource under Section 194C of the Act in terms of the CBDT CircularNo.681/94 dated 3[rd] March, 1994. Thus, not entertained. 4.Regarding question no.(ii) :- (a)The respondent had engaged the services of Arya OffshoreServices Pvt. Ltd. (AOSPL) for the purposes carrying out yardmanagement, port coordination and shipping agency services. Therespondent paid M/s. AOSPL for its services after deduction of taxunder Section 194C of the Act. The Assessing Officer was of the viewthat deduction ought to have been made not under Section 194C butunder Section 194J of the Act. This on the ground that the payment toAOSPL were in the nature of fees for technical services. Thus, leadingto an order dated 31[st] March, 2011 under Section 201 of the Act. (b)Being aggrieved, the respondent filed an appeal to the CIT(A).By an order dated 28[th] February, 2013, the CIT(A) on consideration ofthe nature of services concluded that the service provided by AOSPL isakin to that of C&F agent. The scope of work was not restricted to mereproviding consultancy or advisory in nature but engaged in yard facilitymanagement, port coordination and logistic work. In the above view,while allowing the appeal, it held that tax has been correctly deductedat source under Section 194C of the Act. Therefore, Section 194J of theAct would no application in the present facts. (c)Being aggrieved, the Revenue filed an appeal to the Tribunal.However, before the Tribunal the Revenue was not able to point out any illegality committed by the CIT(A). Nothing has been shown to uswhich would warrant taking a view different from the view taken by theCIT(A). (d)In the above view, as this question is essentially one of finding offact, both the CIT(A) and the Tribunal have concurrently come to theconclusion that the services rendered are not in the nature of technicalservices, therefore, not covered by Section 194J of the Act as contendedby the Revenue. In the absence of these findings of the CIT(A) and theTribunal being shown to be perverse, the question as proposed does notgive rise to any substantial question of law. Thus, not entertained. 5.Accordingly, the appeal is dismissed. No order as to costs. (M.S. SANKLECHA, J.) (AKIL KURESHI, J.)