NO TDS ON SERVICE TAX U/S 194J Commissioner of Income Tax (TDS) Versus M/s. Rajasthan Urban Infrastructure - [2013 (8) TMI 12 - RAJASTHAN HIGH COURT] - Case Law - Income Tax IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN D.B. INCOME TAX APPEAL NO.235/2011, D.B. INCOME TAX APPEAL NO.222/2011, D.B. INCOME TAX APPEAL NO.238/2011, D.B. INCOME TAX APPEAL NO.239/2011 Commissioner of Income Tax (TDS) Versus M/s. Rajasthan Urban Infrastructure 01.07.2013 Narendra Kumar Jain And Smt. Meena V. Gomber,JJ. For the Appellant Ms. Parinitoo Jain ORDER Heard the learned counsel for appellant. 2. Since common facts and law are involved in these appeals, therefore, they were heard together and are being disposed of by this common order. 3. For convenience, the facts of D.B. Income Tax Appeal No.235/2011 are being taken as leading facts. The Assessing Officer, vide its order dated 30.01.2009, raised a demand of Rs.1,70,881/- along with interest thereon amounting to Rs.44,776/-, on account of TDS on the amount paid as service tax. The matter relates to the Financial Year 2005-06. The assessee preferred an appeal, which was allowed by the Commissioner of Income Tax(Appeals)-III, Jaipur (for short the Appellate Authority ), setting aside the aforesaid demand. Being aggrieved with the same, the Revenue preferred an appeal before the Income Tax Appellate Tribunal, Jaipur Bench A , Jaipur, but the same was dismissed. Hence, the Revenue has preferred this appeal. 4. Submission of the learned counsel for appellant is that Appellate Authority and Income Tax Appellate Tribunal, both, have committed an illegality in relying upon the Circular dated 28.04.2008, which was in respect of Section 194-I of the Income Tax Act (hereinafter referred to as the Act), whereas dispute in the present case was in respect of TDS, to be deducted under Section 194J of the Act. It was further argued that the Circular dated 28.04.2008 was clarified by a subsequent Circular dated 30.06.2008, which was wrongly held to be inapplicable or contrary to law by the Appellate Authority as well as Appellate Tribunal. She, therefore, submitted that orders passed by the Appellate Authority as well as Appellate Tribunal, are illegal and same are liable to be set aside. 5. We have considered the submissions of the learned counsel for appellant and examined the Circulars dated 28.04.2008 and 30.06.2008 and also the provisions of Sections 194-I and 194J and other provisions of the Income Tax Act. 6. The assessee, Rajasthan Urban Infrastructure Development Project(in short RUIDP ), is a project of Government of Rajasthan for the Infrastructure Development and Civic Amenities in the specified areas/cities in the State of Rajasthan. The project is financially assisted by the Loan from the Asian Development Bank through the Government of India. The project is working under the Urban Development Department of the Government of Rajasthan. The accounts are maintained on cash basis of accounting and also audited by the Chartered Accountant as per the requirement of the Asian Development Bank and also audited by the Department of Accountant General of Rajasthan. The RUIDP appoint the technical and project consultants on open tender basis and the limited companies as well as corporate consulting firms of repute are selected and appointed as per the laid down procedure. The assessee deduct the incometax at source from the payments made by it and deposit the same as per the relevant provisions of the Income Tax Act and the return for the same is filed in due time. It appears that main consultants are charging the service tax at the prevailing rates on the amount of fee payable as per the agreement and the same is paid by the assessee/RUIDP. The tax is deducted on fees and other payments of expenses as being part of contract, however, no TDS has been deduced on service tax in view of the term of contract. 7. The dispute relates to a point as to whether TDS is to be deducted on the amount payable on account of service tax or not? The Tribunal has considered the agreement and recorded a finding that as per the term of contract, the amount of service tax was to be paid separately, therefore, the same was not subject to TDS. The Appellate Authority decided the appeal on the basis of reasoned order dated 31.03.2009 passed in Appeal No.413/Jaipur/ 2008-09 of the same assessee, which is the subject matter of D.B. Income Tax Appeal No.239/2011. The relevant para 02.3 of the above referred order dated 31.03.2009, passed by the Appellate Authority, is reproduced as under - 8. The aforesaid finding was discussed and consi................Income Tax - Case Law
Posted on: Fri, 30 Aug 2013 03:30:48 +0000