COMMISSIONER OF INCOME TAX Vs. SAMTEL GLASS LTD.

JUDGEMENT

(1.) Both these Income Tax Appeals are directed against the common order dt.27/07/2012 passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur (for short, "ITAT") by which the ITAT, while affirming the common order passed by the Commissioner of Income Tax (Appeal) (for short, "CIT(A)"), has dismissed the appeals filed by the appellant-revenue. It relates to the Assessment Years 2008-09 and 2009-10. Since the issues involved are similar and identical, both these appeals are being decided by this common order.

(2.) In both these appeals, the revenue has raised question and we are called upon to decide the applicability of provisions of Sec. 194(C) and 194(J) of the Income Tax Act (for short, "Act") in respect of the payments made by the respondent-assessee towards the transmission charges and whether it is in the nature of sale or contract in between the respondent-assessee and Gas Authority of India Ltd ( for short "GAIL").

(3.) Brief facts, as emerging on the face of record, are that the respondent-assessee is a private limited company and a survey was carried out at the business premises of the respondent-assessee on 16/12/2008 which was basically with reference to the provisions relating to tax deduction at source (for short, "TDS"). The authorized officer noticed that the respondent-assessee had made huge payments towards transmission transaction charges to GAIL for supply of gas pursuant to an agreement/contract entered into by both the parties. It was further noticed that though the respondent-assessee was deducting TDS on other payments made but did not deduct TDS on the payments made towards the transmission charges to GAIL. The Assessing Officer (for short, "AO") issued a show cause notice to the respondent-assessee requiring, inter-alia, the respondent-assessee to prove as to why huge payments have been made towards the transmission charges in addition to gas price for certain services provided to the respondent-assessee (purchaser) and the terms & conditions contained in the agreement also revealed that the services provided by the GAIL to the respondent-assessee to facilitate the uninterrupted supply of gas is of technical services in nature. Accordingly, the AO was of the view that provisions of Sec. 194(C) and (J) of the Act are applicable. The respondent-assessee, inter-alia, submitted a detailed explanation and contended that it is a sale agreement of gas having been sold between GAIL as seller and with the assessee company as buyer for sale of natural gas (re-gasified LNG) on 23/01/2004. A side letter dt. 23/01/2004 was also issued for revising article 9.2 of the said GSA. There was another side letter of the same date stating that the prices of the Gas are on CIF basis. It was further contended that the price is comprised of following elements: