Indivisible contracts cannot be artificially separated for tax purposes unless explicitly permitted by law; thus, TDS obligations must align with the contract's primary objective.

JUDGMENT

Heard Mr. Gaurav Mahajan, learned counsel for the revenue-appellant and Mr. Rahul Agarwal and Mr. Dev Kaushik, learned counsel for the assessee-respondent.

2. The above Income Tax Appeals have been filed under section 260A of the INCOME TAX ACT , 1961 (hereinafter referred to as the "Act") against the order dated 20th February, 2018 passed by the Income Tax Appellate Tribunal, Delhi Bench "C" New Delhi.

3. The facts are more or less identical in all the above appeals. For the sake of convenience, all appeals have been clubbed and heard together with the consent of the parties and are being decided by this common order. Learned counsel for the parties have been heard on the facts obtaining in Income Tax Appeal No. 111 of 2018 (Assessment Year 2013- 2014).

4. Earlier, the appeal was admitted on Question nos. 1 and 2, as framed in the memo of appeal. Today, with the consent of the parties, those questions have been refined as below:

Question No. 1

Whether the Tribunal has erred in annulling the assessment order and reaching to a conclusion that Tax Deduction at Source (for short "TDS") was required to be made under Section 194C of the Act and not under section 194J of the Income Tax Act, 1961 without first dealing with the reasons and findings recorded by the assessing authority, as affirmed in first appeal?

Question No.2

Whether, in absence of proper books maintained to establish the exact expenditure incurred by the assessee in availing technical services, the Tribunal has erroneously granted relief to the assessee?

5. The facts found by the Tribunal are, the assessee was engaged in business of generation of power. It set up a 3 x 660 MW (Mega Watt) Super Critical Thermal Power Plant at District-Lalitpur, Uttar Pradesh. For that purpose, the assessee was incorporated as a Special Purpose Vehicle (for short "SPV") by the State Government of Uttar Pradesh. Later, its ownership was transferred to a private company.

6. To set up that thermal power plant, the assessee entered into two sets of contracts. First, with Bharat Heavy Electric Ltd. (for short "BHEL") to set up a Boiler Turbine Generator (for short "BTG") and the second with Carbery Infrastructure Pvt. Ltd. (for short "CIPL") to set up Balance of Plant (for short "BOP).

7. The contract entered into between the assessee and the BHEL involved services of Transportation, Insurance, Erection, Installation, Testing and Commissioning of BTG, for consideration Rs. 689/- crores. Similarly, the contract with CIPL involved Erection, Installation and Commissioning of BOP for Rs. 197 crores.

8. It may be further noted, those two contracts included description and execution of other work as well, inasmuch as the contract with BHEL for BTG involved supply of BTG package equipments of value Rs. 5,311/- crores, whereas the contract for BOP with CIPL involved procurement and supply of equipments and civil constructions, structural works, engineering, information, design and drawings and project management of value Rs. 2008/- crores. The supply component under the two contracts entered into by the assessee with BHEL and CIPL do not form subject matter of dispute in these appeal proceedings.

9. On 19th June, 2014, individual orders came to be passed under Section 201 of the Act describing the assessee to be in default of deduction of TDS required to be made by it at the higher rate of 10% (under Section 194J of the Act) against the lower rate of 2% (under Section 194C of the Act) applied by the assessee, to the payments made by the as