O/TAXAP/565/2017 ORDER IN HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 565 of 2017 With TAX APPEAL NO. 571 of 2017 PR. COMMISSIONER OF INCOME TAX-6 Appellant(s) Versus HAKMICHAND D AND SONS Opponent(s) Appearance: MRS MAUNA M BHATT, ADVOCATE for Appellant(s) No. 1 MR B S SOPARKAR, CAVEATOR for Opponent(s) No. 1 CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE BIREN VAISHNAV Date : 09/08/2017 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. These tax appeals are filed by Revenue challenging judgement of Income Tax Appellate Tribunal dated 29.07.2016 raising following questions for our consideration: [A] Whether Appellate Tribunal erred in law and facts in quashing re-assessment order passed u/s 143(3) read with section 147 of Income Tax Act, 1961 holding that same was on account of mere change of opinion though notice under section 148 was issued within four years from end of assessment year? Page 1 of 3 HC-NIC Page 1 of 3 Created On Mon Aug 14 09:57:09 IST 2017 O/TAXAP/565/2017 ORDER [B] Whether Appellate Tribunal erred in law and facts in deleting disallowance u/s 40(a)(ia) of Act of Rs.5,42,69,182/- including Rs.83,20,816/- which was confirmed by CIT(A) overlooking fact that confirmed disallowance was in respect of difference between amounts shown by assessee and IRCTC in their books of accounts? 2. first question pertains to reopening of assessment for which notice was issued within period of four years from end of relevant assessment year. There is no clarity on record whether in scrutiny assessment for this year, question of deducting tax at source by assessee on its payment to IRCTC was examined or not. However, on merits of additions deleted by Tribunal, in separate order passed today in Tax Appeal No. 569 of 2017 with Tax Appeal No. 570 of 2017, in case of this very assessee, we have made following observations: 4. Having heard learned advocates for parties, what emerges from record is that assessee was granted contract by IRCTC for providing catering service for which assessee would make payment in nature of licence fee. According to Revenue, on such payments, assessee had to deduct tax at source which admittedly assessee had not done. Section 194J of Act raises requirement for deduction of tax on payment of professional or technical service fee and for obvious reasons therefore this provision would have no applicability in present case. Section 194C of Act pertains to requirement of deduction of tax at source on payments to contractors. Under sub- Page 2 of 3 HC-NIC Page 2 of 3 Created On Mon Aug 14 09:57:09 IST 2017 O/TAXAP/565/2017 ORDER section (1) of Section 194C, any person responsible for paying any sum to any resident for carrying out any work in pursuance of contract between contractor and specified person is required at time of credit of such sum in account of contractor or at time of payment to deduct tax at specified rate. Tribunal was thus right in observing that section 194C of Act would apply in case of payment being made by contractor to contractee and not vice-versa. In present case, payment of licence fee was made by contractee to contractor and therefore section 194C of Act would not apply. 5. We are broadly in agreement with view of Tribunal. In plain terms, section 194C of Act does not cover present situation where assessee was making payment of licence fee to IRCTC for catering service. In that view of matter, we see no reason to interfere. However, this may not be seen as our confirmation of Tribunal s view that IRCTC was government body and therefore also requirement of deducting tax at source did not arise or that proviso to sub-section (1) of Section 201 may have retrospective effect. We keep both these questions open. 3. On this ground, therefore, tax appeals are dismissed. (AKIL KURESHI, J.) (BIREN VAISHNAV, J.) divya Page 3 of 3 HC-NIC Page 3 of 3 Created On Mon Aug 14 09:57:09 IST 2017 Pr. Commissioner of Income-tax-6 v. Hakmichand D and Son