Case Law Details
ITAT JODHPUR BENCH
Assistant Commissioner of Income-tax (TDS)
versus
Chambal Fertilizers & Chemicals Ltd.
IT APPEAL NOS. 337 & 338 (JU.) OF 2012
[ASSESSMENT YEARS 2007-08 & 2008-09]
FEBRUARY 18, 2013
ORDER
Per Bench
For A.Ys. 2007-08 and 2008-09 the assessee has filed appeals against the common order of the ld. CIT(A), Kota dated 29.06.2012.
2. Briefly stated, the facts leading to these appeals are that the assessee, namely Chambal Fertilizers and Chemicals Ltd., is a public limited company having is registered office at Gadepan, District Kota. The assessee- company’s Corporate Office is situated at New Delhi and its Regional Marketing Offices are situated in the States of Punjab, Haryana, UP, MP, Gujarat etc. The assessee is engaged in the manufacturing of fertilizers, power, textiles, etc and is also engaged in trading and shipping activities. On 16.12.2008 spot-verification was carried out at the assessee’s business premises situated in Kota. The details/other information furnished on spot-verification revealed that the assessee had made huge payments towards transmission charges to Gas Authority of India Ltd. [GAIL] and Indian Oil Corporation Ltd. [IOCL] for the supply of gas pursuant to an agreement entered into between the assessee and the above named parties. It was also noticed that the assessee company was deducting tax at source under the provisions of section 194C on these payments. When the concerned agreements were examined and analyzed, regarding gas sale with GAIL, it was noticed that the assessee was required to make payments towards transmission charges in addition to gas price for certain services provided by the seller. The terms and conditions as per this agreement also revealed that the services provided by GAIL to the assessee to facilitate uninterrupted supply of gas were technical in nature. Therefore, as per the A.O, the assessee is required to deduct tax at source as per the provisions of section 194J of the Act. Instead, the assessee had deducted tax at source u/s 194C of the Act, so the A.O. has treated the assessee company as the assessee in default. Accordingly, a detailed show cause notice dated 13.1.2009, was issued requiring it to explain why the provisions of section 194J are not applicable to its case, especially when the transmission of gas by GAIL and IOCL being a technical service as per the Articles 4 and 8 of the Agreement. It was mentioned that Article 4 deals with delivery of gas and Article 8 deals with measurement and calibration of gas supply. The assessee company was also required to explain as to why interest u/s 201(1A) of the Act should also not be charged. The assessee through its authorized representative Shri M.L. Patodi, the ld. Advocate, also filed a written submission dated 27.1.2009 in reply to the above show-cause notice which is reproduced as under:
“6. As discussed earlier, the assessee deductor filed its reply to the show-cause notice dated 13/01/2009 on 27/01/2009. The assessee deductor submitted that-
1. The assessee company is a manufacturer/producer of chemical fertilizers and textiles. The assessee company is also carrying on shipping business. The Company is a trader in respect of the commodities manufactured/produced by it as well as of other goods. It is duly registered under the Rajasthan VAT Act and Central Sale Tax Act vide TIN 08222951511. It is regularly filing its returns of turnover to the Commercial Taxes officer, Special Circle, Kota and have been regularly paying central sale tax/ VAT from time to time.
2. That in the course of its business of manufacturing the chemical fertilizers (urea) and in respect of purchase of such gas, it has entered into a gas Sales and transmission contract with GAIL (India) Limited as “seller” and Chambal Fertilizers and Chemicals Limited as “Buyer” for the sale and purchase/transmission of natural gas dated 23rd June 2008. Copy of the said agreement stands furnished to your honor and has been referred to in the impugned notice. The assessee company is “buyer” of natural gas and GAIL (India) Limited is a “seller”. We submit that GAIL (India) Limited is not a contractor for execution of any works contract but is a seller of such gas.
3. That the Government of India issues pricing order from time to time and the assessee company i.e. the buyer pays to GAIL i.e. the seller such price of gas fixed by the Government. The assessee company in terms of the said Order has to pay the transmission charges at the specified rate. The said price is for the supply of gas to the assessee company at the delivery point. In performance of such sale contract. GAIL has laid down pipeline to the factory premises of the “buyer” i.e. the assessee company. The said pipeline has been installed by the seller, is maintained by the seller and the assessee company is not in anyway responsible for its installation or maintenance or its management. The delivery point in the factory of the assessee company is looked after by the employees of the seller company and no managerial, technical or consultancy services are provided by the seller to the assessee company.
4. That as per Article 4.1 duly reproduced by you in the impugned notice-gas sold and transported to the buyer is to be delivered by the seller at the delivery point of the buyer’s premises at Gadepan, Dist. Kota. A Gas metering station is also provided and managed by the Seller and all the facilities upto the “delivery point” are maintained, constructed and operated by the seller at their own risk and cost. The facilities downstream from the delivery point on wards are maintained/constructed and operated by the assessee company at its own risk and cost. Title, control and risk of the gas passes from the seller to the assessee company at the delivery point and not earlier. The gas so required by the assessee Company is to be delivered by the seller at the delivery point and the ownership in the gas so delivered transfers on supplying at the delivery point and not earlier. We submit “it is a contract for sale” and not “a contract for technical services” to be provided by the seller to the assessee company. No technical services are provided by GAIL. It is a contract of sale/purchase simpliciter and delivery is “FOR destination i.e. at the delivery point” of the assessee company. The Central Board of Direct Taxes as issued a Circular No. 86, dated May 29,1972 (see (1972) 84-ITR-(St.) 99). (F.No. 275/9/1972-ITJ). Sub-clause (ii) of clause (1) of this circular which relates to the present controversy, reads (page 99) : “(ii) The deduction of the income-tax will be made from sums paid for carrying out any work or supplying labor for carrying out any work. In other words, the new provision will apply only in relation to ‘works contracts’ and ‘labor contracts’ and will not cover “contracts for sale of goods”. We submit it being a contract for sale of goods, neither section 194C nor section 194J attracts.
Read more TDS on interest.
5. That the Punjab & Haryana High Court in CIT v. Deputy Chief Accounts Officer,(2008) 304-ITR-17 explained difference between “sale” and “works contract.” It observed that the predominant object underlining the contract was sale/purchase of goods and the only intention of the assessee was to buy the material. It ultimately held that “it was a case of sale and not a contract for carrying out any work. In the case of the assessee company the only intention is to buy gas from the sellers. In the case of CIT v. Dabur India Ltd.(2006) 283-ITR-197, the Hon’ble Delhi High Court held that printing labels on corrugated boxes did not require any special skill or involve any confidence or secrecy and the Tribunal was justified in holding that the predominant object underlying the contract was one for sale of goods which took the contract out of the purview of section 194C of the Income-tax Act, 1961. In BDA Ltd. v. ITO (IDS)(2006) 281-ITR-99 (Bom.), the court held that if a manufacturer purchases material on his own and manufactures a product as per the requirement of a specific customer, it is a case of sale and not a contract for carrying out any work. The fact that the goods manufactured were, according to the requirement of the customer, does not mean or imply that any work was carried out on behalf of that customer “.
6. That the GAIL i.e. the seller issues invoice fortnightly on the basis of quantity actually supplied. The invoice contains the price, transmission charges, VAT, etc. The VAT which is charged by the seller is on the composite price and not only in respect of price of the gas. Only on account of the order of the Government which regulates the price of gas as well as transmission charges, both have to be disclosed separately in the invoice for your reference and record.
6.1 That as submitted herein above and as is apparent and patent on the face of the record that composite price of Gas and other charges have been considered by the GAIL as sale-price and VAT has been charged on the total price. Charging of VAT on the entire sale price clearly brings out the intention of the two contracting parties i.e. the contract is intended to be a contract of sale. Verification, if desired may be made from the seller or the assessee company be allowed one month’s time to furnish certificate from the seller.
6.2 That Gail (India) Ltd is a Government of India Undertaking with registered office at 16, Bikaji Kama Place, R.K. Puram, New Delhi-110066 and PANAAACG1209J.
The company has registered for sales tax and has been allotted TIN 08302905877 for VAT and C.S.T. . The company regularly files its Sales-tax Return declaring the sale of gas inclusive of transmission charges.
They are regularly assessed to income-tax and claiming credit for Tax Deduction at Source by the assessee. They have filed their return of income for the Assessment year 2008-09 and are regularly paying advance-tax or other taxes as required under the Act. No tax on the returned income for the assessment year 2008-09 is outstanding. Verification, if desired, may be made from them or their Assessing Officer.
6.3 That the Hon’ble Supreme Court in Hindustan Sugar Mills Ltd. v. State of Rajasthan (1979) 43-STC-13 held that the sale price meant the amount payable to a dealer as consideration for the sale of any goods and, therefore, the concept of real price or actual price retain able by the dealer is irrelevant. The test is, what is the consideration passing from the purchaser to the dealer for the sale of the goods. It is immaterial to esquire as to how the amount of consideration is made up, whether it includes excise duty or sales tax or freight. The only relevant question to be considered is the net consideration retain able by the dealer. “In ultimate analysis it upheld that the price of the cement is not only the sale price of the cement but inclusive of excise duty, sale tax or freight etc for F.O.R. destination.
Further, the in the case of Black Diamond Beverages and another vs. CTO Central section, Assessment wing, Calcutta reported in 107 STC 219. It has been held that definition of sale price being and inclusive of freight and delivery charges incurred by the selling dealer in making goods available in sale price.
Further, in the case of Greaves Chitram v. State of Tamilnadu reported in 100 STC 411. The Madras High court has held the contract for supply of crane – which stipulated the price including delivery at site and insurance up to the delivery, the transport and insurance charges are part of sale price. In another reported case, in Commissioner of Income-tax v. B.M. Kharwar72 ITR 603, the Supreme Court quoted with approval a passage from the judgment of the Privy Council in the case of bank of Chettand Ltd. v. CIT & ITR 522 in – which the Supreme court has stated.
The taxing authority is entitled and indeed bound to determine the true legal relation resulting from the transaction. If the parties has chosen to conceal by a device the legal relation it is open to the taxing authorities to unravel and to determine the true character of the relationship. But the legal effect of a transaction cannot be displayed by probing into the substance of the transaction.
Thus, a contract which is intended to be a contract of sale of good, FOR delivery cannot be construed to be anything but a contract for sale.
7. That “Fees for technical service” is not defined in section 194J. Explanation (b) in that section provides that expression shall have the same meaning as in Explanation 2 in section 9(l)(vii) reads thus: “For the purposes of this clause, ‘fees for technical service means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services(including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient chargeable under the head ‘Salaries”.
7.1 The Madras High Court in Sky cell Communications Ltd. v. Dy. CIT(2001) 251 ITR 53 at 57 observed: “This definition shows that consideration paid for the rendering of any – managerial, technical or consultancy service, as also the consideration paid for the provision of services of technical or other personnel, would be regarded as fees paid for “technical service”. Thus while stating that “technical service” would include managerial and consultancy service, the Legislature has not set out with precision as to what would constitute “technical service to render it “technical service”. The meaning of the word “technical” as given in the New Oxford Dictionary is adjective 1. of or relating to a particular subject, art or craft or its techniques: technical terms (especially of a book or article) requiring special knowledge to be understood : a technical report. 2. of involving, or concerned with applied and industrial sciences : an important technical achievement. 3. resulting from mechanical failure : a technical fault. 4. according to a strict application or interpretation of the law or the rules :the arrest was a technical violation of the treaty.
Having regard to the fact that the term is required to be understood in the context in which it is used, “fee for technical services” could only be meant to cover such things technical as are capable of being provided by way of service for a fee. The popular meaning associated with “technical” is “involving or concerning applied and industrial science”. In the modern day world almost every facet of one’s life is linked to science and technology inasmuch as numerous things used or relied upon in ever day life is the result of scientific and technological development. Every instrument or gadget that is used to make life easier is the result of scientific invention or development and involves the use of technology. On that score, every provider of every instrument or facility used by a person cannot be regarded as providing technical service, (Emphasis supplied).
When a person hires a taxi to move from one place to another, he uses a product of science and technology, viz., an automobile. It cannot on that ground be said that the taxi driver who controls the vehicle, and monitors its movement is rendering a technical service to the person who uses the automobile. Similarly, when a person travels by train or in an aeroplane, it cannot be said that the railways or airlines is rendering a technical service to the passenger and, therefore, the passenger is under an obligation to deduct tax at source on the payments made to the railway or the airline for having used it for traveling from one destination to another. When a person travels by bus, it cannot be said that the undertaking which owns the bus service is rendering technical service to the passenger and, therefore, the passenger must deduct tax at source on the payment made to the bus service provider, for having used on the ground that generators are used to generate electricity, transmission lines to carry the power, transformers to regulate the flow of current, meters to provision of technical services to the consumer resulting in the consumer having to deduct tax at source on the payment made for the power consumed and remit the same to the Revenue”. (Emphasis supplied) It also observed : “Installation and operation of sophisticated equipments with a view to earn income by allowing customers to avail of the benefit of the user of such equipment does not result in the provision of technical service to the customer for a fee”. (Emphasis supplied).
When a person decides to subscribe to a cellular telephone service in order to have the facility of being able to technical service. What he does agree to is to pay for the use telephone service provider has installed sophisticated technical equipment in the exchange to ensure connectivity to its subscriber, does not on that score, make it provision of a technical service to the subscriber. The subscriber is not concerned with the complexity of the equipment installed in the exchange, or the location of the base station. All that he wants is the facility of using the telephone when he wishes to, and being able to get connected to the person at the number to which he desires to be connected. What applies to cellular mobile telephone is also applicable in fixed telephone service. Neither service can be regarded as “technical service” for the purpose of section 194J of the Act”. It further observed : “Technical service” referred in section 9(1)(vii) contemplates rendering of a “service” to the payer of the fee. Mere collection of a “fee “for use of a standard facility provided to all those willing to pay for it does not amount to the fee having been received for technical services”. Copy of the judgment is enclosed. Apart there lay many similar decisions on Section 195 and 194J of the Act.
7.2 The case of the assessee Company is similar to that of Sky cell Communications Ltd. (supra). Whatever equipment has been put or used by the GAIL for supply and measurement of gas is incidental, ancillary and essential for a ‘contract of sale’. It is not providing of ‘technical services’ as envisaged in Section 194J. We submit the said Section is unattracted in respect of amount of transmission charges paid to GAIL of Rs. 640,771,476 and Rs. 510,271,499 for the A.Y. 2007-08 and from 1.4.2008 to 30.11.2008 respectively. It deserves to be excluded and is objected.
That as discussed herein above the “delivery point” installed by GAIL in the factory premises of the assessee Company is like putting up a petrol pump. It is transportation by GAIL of its own gas by pipelines. Pipelines are more suitable for transportation of gases. The sale is by GAIL at their delivery point. 8.1 That in ultimate analysis as discussed herein before, we submit there is no liability for tax deduction at source u/s. 194C or 194J of the Act. That there exists a Gas Sale Agreement between the assessee Company (As Buyer) and India Oil Corporation Ltd. a Public Sector Company of the Government of India with registered at G-9, AH Yavar Jung Marg, Bandra (East), Mumbai 400051 (As Seller) dated 15.10.2004. As per the said deed the assessee Company has purchased Gas at Contract Price (Clause 10.1) to be delivered at “Delivery Point” located at Gadepan, invoice where for is regularly sent as per Clause 11. Copy of one invoice is enclosed. No separate charges for transmission of gas is charged. Hence question of applicability of the impugned sections do not arise. The transmission charges of Rs. 905,278,610 and 567,691,905 for A.Y. 2007-08 and 2008-09 (upto November, 2008) deserves to be excluded.)
That on 29.07.2008 the assessee Company has entered into (“Supply Framework Agreement”) at Gandhi Nagar with Gujarat State Petroleum Corporation Ltd. (GSPCL), a Government Company with registered office at GSPC Bhawan, Behind Udhyog Bhawan, Sector 11, Gandhi Nagar 382011 (as seller). Price for Gas is as per contract Gas Price (C1.12). Invoices are received. Payment for Gas in made. Such gas is delivered to the assessee company for which Bill is received from GAIL and paid to them for transportation through their pipeline. A sum of Rs. 98,85,747 was paid for the A.Y. 2008-09 (upto November, 2008), on which tax has been deducted u/s 194C of the Act. We submit as above stated section 194J is unattracted.
That deduction of tax as above stated is being made for the past several years and the Revenue has accepted such deduction as in accordance with law. The assessee Company was under bonafide belief and has been advised that tax is not deductible u/s 194J of the Act. The burden to prove is on the Revenue. We submit your honor have mis-construed and wrongly interpreted provisions of Section 194J of the Act.
That without prejudice to above, we may also submit tax deduction at source is a transitory tax. It is a mode of collection and recovery of tax under chapter XVII. The tax deducted at source by payer is to be allowed credit in the hands of payee. It is for this reason that w.e.f. 01.06.2003 an explanation is provided to section 191 which explains as under:
Explanation – For the removal of doubts it is hereby declared that if any person referred to in section 200 and in the cases referred to in section 194, the principal officer and the company of which he is the principal officer does not deduct the whole or any part of the tax and such tax gas not been paid by the assessee direct, then such person the principal officer and the company shall without prejudice to any other consequences which he or it may incur, be deemed to be an assessee in default as referred to in sub-section (1) of section 201 in respect of such tax.
Thus, the explanation clarifies that the principal officer shall be deemed to be an assessee is default U/s 201 (IA) only when he does not deduct the whole or any part of the tax and such tax has not been paid the tax direct, the principal officer shall not be held to be an assessee in default for non-deduction of tax at source.
This issue has also made clear from the Circular No. 275/201/95-IT9Bo dated 29.01.1997 issued by the CBDT. This circular declares that no demand visualized under section 201(1) of the officer in charge TDS, that taxes due have been paid by the deductee assessee.
It is also a settled law that where assessee has failed to deduct tax at source but the recipient paid advance tax/self assessment tax and there is no loss to the revenue, it would not be proper to levy tax U/s 201 and interest u/s 201(1 A). The assessee deductor has placed reliance on the judgement of the Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverages (P) Ltd. v. CIT 293 ITR 226 (SC) and judgement of Hon’ble Rajasthan High Court in the case of CIT v. Rajasthan Rajya Vidyut Prasaran Nigam Ltd.287 ITR 354 ( Raj) along with the other case laws.”
3. After considering the above submissions, the A.O. concluded that the services provided by GAIL and also by IOCL are technical in nature and therefore, the assessee is required to deduct tax at source on the payments of transmission charges as per the provisions of section 194J and not as per section 194C of the Act. It was also observed that the assessee is also liable to pay interest u/s 201(1A) of the Act on the short deduction of tax from the date of deposit of tax in the respective months to the date of filing of return by GAIL & IACL in the year concerned. Accordingly, the A.O., i.e. Dy. CIT, TDS, Udaipur has raised demand of Rs. 1,39,96,574/- and Rs. 1,35,97,923/- u/s 201(1A) for F.Ys. 2007-08 and 2008-09 [upto Nov. 2008], respectively. Against this finding, the assessee preferred appeals for both the years before the ld. CIT(A) who has deleted the above additions through the impugned common order passed for both the years. The ld. CIT(A), after discussing the relevant agreements and provisions of section 194C and 194J of the Act, has finally concluded that the assessee cannot be treated as assessee in default u/s 201(1) of the Act and therefore, interest u/s 201(1A) of the Act is not chargeable from the assessee. He has, therefore, deleted the entire addition so made in both the years. In coming to this conclusion he has relied on various decisions and has referred to the relevant provisions of the Act. Now the revenue is aggrieved and has filed the above-captioned appeals.
4. We have heard the rival submissions and have carefully perused the entire material on record. At the very outset of the opening of the hearing, the ld. A.R. submitted that the impugned issue stands covered by the decision of this very Bench taken in the case of ITO v. Samtel Glass Ltd., Kota in ITA No. 150 & 151/JU/2010 for A.Ys. 2008-09 and 2009-10 dated 27.7.2012. According to the ld. A.R., the facts of this case are exactly identical to the facts of his assessee and therefore, it was pleaded that the issue being squarely covered in favour of the assessee, these appeals of the revenue may kindly be dismissed.
5. Per contra, the ld. D.R. has relied on the order of the A.O. and has further submitted that the arguments of the ld. A.R. that no TDS is to be deducted in this case is contradictory to the assessee’s stand because it has itself deducted tax at source qua these payments but under a different provision of the Act namely, u/s 194C of the Act instead of 194J of the Act. With the above submissions, he has stated that the facts of the case in hand are different from the cases of Samtel Glass Ltd. (supra) on which reliance has been placed by the ld. A.R.
6. We have cogitated the entire records. We have carefully perused the Tribunal orders relied before us, conjointly with the oral submissions and reasonings given by the A.O. for treating the assessee in default u/s 201(1) and for charging interest 201(1A) of the Act; and also the reasons given for reversing the findings by the ld. CIT(A). We have found that the assessee- company is duly registered under Rajasthan VAT Act and Central Sales Tax Act and has been regularly filing its return. The assessee company needs gas as ‘feed-stock [i.e. the raw material] for manufacturing the chemical fertilizers [urea] and for purchasing gas it has entered into a gas-sales-and-transmission-contract dated 23.6.2008 with GAIL as ‘seller’ and Chambal Fertilizers and Chemicals Ltd as ‘buyer’ for sale and purchase/transmission of natural gas. Thus the assessee company is a ‘buyer’ of natural gas and GAIL is a ‘seller’. It is found that the GAIL is not at all a contractor for execution of any works-contract but it is a seller of gas simpliciter. We have noticed that the Government of India issues pricing orders from time to time and the assessee company makes payments to GAIL as per the price of the gas fixed by the Government. The assessee in terms of the said order has to pay transmission charges at a specific rate. This payment is towards supply of gas to the assessee company at the delivery point. GAIL has laid down a pipeline to the factory premises of the ‘buyer’ in terms of the above agreement. These pipelines have been installed by the seller and are also maintained by the seller and the assessee company is not at all in any way responsible for is installation or maintenance or even its management. The delivery point in the factory of the assessee company is looked after by the employees of the ‘seller’-company. As per this agreement equipments so installed by the ‘seller’ shall remain properties of the seller only and the seller shall have the right to remove such equipment at any time within 12 months after the expiry of the contract. The agreement also states that for the effective deliveries, the seller shall install and maintain at its own risk and cost the piping control regulation and also metering equipment in the gas metering station. All the above fats are found to be correct and have not been contradicted by the revenue. Thus it becomes clear that all the facilities like pipelines, metering equipments and other gas accessories belong to the seller only and they only maintain equipments for facilitating effective deliver of the gas to the assessee- company.
7. As per Article 4.1 of the agreement, gas sold and transported to the buyer is to be delivered by the seller at the delivery point of the buyer’s premises at Gadepan, Dist kota. A gas metering station is also provided and managed by the seller and all the facilities upto the delivery point are maintained, constructed and operated by the seller at their own risk and cost. Thus it becomes crystal-clear that it is ‘a contract for sale’ and not ‘a contract for technical services’ as has been construed by the A.O. In this regard reliance was placed on the CBDT Circular No. 86 dated may 29, 1972 reported in [1972] 84 ITR [St.] 99. Its sub-clause (ii) of clause (1) reads as under:
“The deduction of the income-tax will be made from sums paid for carrying out any work or for supplying labour for carrying out any work. In other words, the new provision will apply only in relation to ‘works contract’ and ‘labour contracts’ and will not cover ‘contracts for sale of goods.”
We have also found that our above finding is supported by the decisions of the Hon’ble Delhi High Court in the case of CIT v. Dabur India Ltd. [2006] 283 ITR 197; and Mumbai High Court in the case of BDA Ltd. v. ITO (TDS) [2006] 281 ITR 99 and by the Hon’ble Punjab & Haryana High Court in the case of CIT v. Dy. Chief Accounts Officer, Markfed, Khanna [2008] 304 ITR 17. The agreement between the assessee and GAIL is a contract for sale of gas and not a works contract. VAT which is charged by the seller is on the composite price and not only on the price of the gas. The assessee is required to disclose the price of the gas and transmission charges separately in the same invoice. GAIL is a Government of India undertaking and regularly files its Sales Tax Returns declaring sale of gas inclusive of transmission charges. GAIL is regularly assessed to Income-tax and has been claiming credit for TDS and has also claimed credit for the A.Y. under consideration. It has paid advance tax and other taxes as required under the Act. No tax on the returned income for the A.Y. 2008-09 is outstanding. The assessee has produced necessary proof of filing the return and payment of Tax and filing of return and payment of tax by GAIL. In any case, decision of Hon’ble Supreme Court rendered in the case of Hindustan Sugar Mills Ltd. v. State of Rajasthan [1979] 43 STC 13 [on which ld. CIT(A) has placed reliance] also comes to the rescue of the assessee. In this case it has been held that the sale price means the amount payable to a dealer on consideration of the sale of any goods and therefore, the concept of real price or actual price retain able by the dealer is irrelevant. The real test is whether the consideration is passing from the purchaser to the dealer for the sale of goods or not. In our considered opinion, a contract, which is intended to be a contract for sale of goods [for delivery], cannot be construed as anything else but a contract of sale. Accordingly, no duty is cast, in the facts and circumstances of the case, on the assessee company to deduct any TDS either u/s 194C or 194J of the Act. Therefore, interest charged u/s 201(1A) of the Act for alleged short deduction of tax has been correctly set aside by the ld. CIT(A). The fact that the assessee was deducing TDS u/s 194 C was stated to be on account of abundant caution taken by the assessee. This conduct of the assessee, being taken to be on the safer side, cannot be treated adversary to its interest as has been canvassed by the department. The Hon’ble Madras High Court rendered in the case of Sky cell Communications v. Dy. CIT [2001] 251 ITR 53 also supports our above conclusion. A principal officer of a company can be deemed to be an assessee in default u/s 201(1) of the Act only when he does not deduct whole or any part of the tax and such tax has not been paid. The GAIL and IOCL have already deposited tax due on their total income as is evidenced from the copies of its acknowledgment of return available on record. The Hon’ble Supreme Court in the case of Hindustan Coco Cola v. CIT [2007] 293 ITR 226and Eli Lilly & Co. v. CIT [2009] 312 ITR 225 has clearly laid down a law therein that when the primary liability itself ceases to exist there can be no further levy/dis allowance in that regard. Tax deduction at source is transitory tax and it is a mode of collection and recovery of tax under Chapter XVII. Tax deducted at source by buyer is to be allowed credit in the hands of the payee. Explanation to clarify the doubts so raised has been inserted by the Finance Act, 2008 w.r.e.f 1.6.2003 in section 191 of the Act and its plain reading makes it abundantly clear that the deductee can be treated as an assessee deemed to be an assessee in default u/s 201(1) of the Act if the recipient fails to pay such tax directly. In the given case, the assessee company has proved that the recipients have shown these charges as their income and have paid due taxes thereon. Accordingly, the issue involved in these appeals stands fully covered by the decision of the Tribunal [supra] and in view of our above discussions also thus the assessee company cannot be treated as an assessee in default in the given facts and circumstances of the case. Charging of interest u/s 201(1A) in both the years are found not correct and have been correctly deleted by the ld. CIT(A). We approve his action and dismiss both the appeals.
8. In the result, the appeals of the revenue stand dismissed.
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