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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.C. DHARMADHIKARI, B.P. COLABAWALLA, JJ.
The Commissioner of Income Tax (TDS)-1 - Appellant
Versus
M/s Mumbai Metropolitan Regional Development Authority - Respondent
Income Tax Appeal (IT) Nos. 308, 309, 310, 311, 312, 314, 373 of 2016
Decided On : 06-09-2018
Income Tax Act, 1961, - Section 260A, 194LA, 194J, 201(1)/201(1A) - Land Acquisition Act, 1894 - Appeal - Impugned order of assessment - Acquisition of immovable property - Assessing Officer passed impugned order of assessments under section 201(1)/201(1A) of I.T.Act, 1961 - Order of assessments were passed as Assessing Officer was of firm opinion that there has been acquisition of immovable property for various projects by assessee, for which project affected persons were compensated as per Land Acquisition Act, 1894 - Assessee had not deducted Tax at Source as per provisions of section 194L/194LA - Assessing Officer treated assessee as an assessee in default and computed payment of tax under section 201(1) and that for interest under section 201(1A) of Act - Whether on facts and in circumstances of case and in law, Honble ITAT was justified in confirming order by holding that provisions of section 194LA are not applicable, without appreciating fact that cost of construction incurred by assessee is consideration paid for acquiring such rights, interest and titles from such squatters/hutments - Whether on facts and in circumstances of case and in law Honble ITAT was correct in rejecting stand of revenue as squatter were deemed owners of property and land or residental units establishments were compulsorily acquired and hutments have been provided a tenements as consideration, compensation given in form of free of cost construction - As tenement is squarely covered u/s 194LA of IT Act, 1961 - Whether on facts and in circumstances of case and in law Honble ITAT was right in holding that consideration given by assessee to such squatters was not in nature of compulsory acquisition of land as land is not owned by squatters when section 194LA states that TDS is liable to be deducted for compensation given on compulsorily acquisition of immovable property – which includes land, any building or part of building, wherein squatters have rights, interest & title from such hutments on such immovable property - Whether on facts and in circumstances of case and in law, Honble ITAT was correct in confirming stand taken by without appreciating fact that to carry out maintenance work of AC and Lift requires highly qualified specialized technical competency which falls within purview of section 194J and not u/s 194C of I.T. Act, 1961 – Held, Court have heard learned counsel for parties at length and have also perused papers and proceedings in all appeals – Court will deal with both issues separately - Court find that section 194L or section 194LA of I.T. Act, 1961 had absolutely no application to facts and circumstances of present case - Court find that revenue has totally misunderstood law when it assumes that squatters dwellers are deemed owners of land on which they squat or encroach upon - Squatters dwellers have absolutely no title in land on which they squat or build their illegal and unauthorized hutments - There is no question of there being any compulsory acquisition from them under any law either under Land Acquisition Act, 1894 or any other enactments which permit compulsory acquisition of land - Court find that section 194L or section 194LA of I.T. Act, 1961 has absolutely no application to facts and circumstances of present case - Court therefore, find that first three questions of law do not give rise to any substantial question of law which would require us to admit these appeals - Even as far as additional question of law and which was projected as substantial - Court find no merit in same - ITAT correctly held that assessee had made payments only in respect of maintenance contracts which relate to minor repairs, replacement of some spare parts, greasing of machinery etc - These services do not require any technical expertise, and could not be categorized as “technical services” as contemplated under section 194J of the I.T.Act, 1961 - Court must mention here that section 194J of I.T.Act, 1961, deals with fees for professional or technical services - Section 194C of I.T.Act, 1961 deals with payments to contractors - In facts and circumstances of present case, assessee had correctly deducted TDS under provisions of section 194C of I.T.Act, 1961 and not as per provisions of section 194J - Court find that even additional question of law as reproduced above does not give rise to any substantial question of law which would require us to admit present appeals – Appeal Dismissed.
B.P. Colabawalla, J.
1. By these appeals filed by the Revenue under section 260A of the Income Tax Act, 1961, exception is taken to the common order passed by the Income Tax Appellate Tribunal “B” Bench, Mumbai (for short the “ITAT”) for Assessment Years (for short “A.Y.”) 2000-01 to 2009-10 in relation to the very same assessee.
2. Mr. Suresh Kumar, learned counsel appearing on behalf of the Revenue submitted that, as far as Income Tax Appeal Nos. 308, 310, 312, 314 and 373 of 2016 are concerned, they give rise to three substantial questions of law which reads as under:
(a) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in confirming the order of the Ld. CIT (A) by holding that provisions of section 194LA are not applicable, without appreciating the fact that cost of construction incurred by the assessee is the consideration paid for acquiring such rights, interest and titles from such squatters/hutments ?.
(b) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was correct in rejecting the stand of the revenue as the squatters/hutments were deemed owners of the property and the land or residental units/commercial establishments were compulsorily acquired/vacated and the squatters/hutments have been provided a tenements of 225 sq.feet as consideration, the compensation given in the form of 'free of cost construction of 225 sq.ft. As tenement' is squarely covered u/s 194LA of the IT Act, 1961.
(c) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was right in holding that the consideration given by assessee to such squatters/ hutments was not in the nature of 'compulsory acquisition of land/ structure' as the land is not owned by squatters/ hutments, when section 194LA states that TDS is liable to be deducted for compensation given on compulsorily acquisition of 'immovable property – which includes land, any building or part of the building', wherein the squatters have rights, interest & title from such hutments on such immovable property.
3. As far as Income Tax Appeal Nos.309 of 2016 and 311 of 2016 are concerned, Mr. Suresh Kumar would submit that over and above the three substantial questions of law reproduced above, an additional substantial question of law would arise in these two appeals as they relate to A.Y. 2008-09 and 2009-10. This additional question of law that arises in these two appeals and as projected by Mr. Suresh Kumar as being substantial, reads thus :
(d) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was correct in confirming the stand taken by the Ld. CIT (A) without appreciating the fact that to carry out the maintenance work of AC and Lift requires highly qualified specialized technical competency which falls within the purview of section 194J and not u/s 194C of the I.T.Act, 1961.
4. Since common questions of facts and law arise in all these appeals, they are being disposed of by this common order and Judgment. Before we advert to the legal submissions, it would be appropriate to set out some necessary facts.
5. In the present case, the Assessing Officer passed the impugned order of assessments under section 201(1)/201(1A) of the I.T.Act, 1961. The order of the assessments were passed as the Assessing Officer was of the firm opinion that there has been acquisition of immovable property for various projects by the assessee, for which the project affected persons were compensated as per the Land Acquisition Act, 1894. Since, the assessee had not deducted Tax at Source (for short “TDS”) as per the provisions of section 194L/194LA, the Assessing Officer treated the assessee as an assessee in default and computed the payment of tax under section 201(1) and that for interest under section 201(1A) of the Act.
6. Additionally, for A.Y. 2008-09 and 2009-10 the Assessing Officer noticed the assessee had made payment towards Annual Maintenance Contr
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