ACIT (TDS), TDS Circle-1(1), Hyderabad, Hyderabad V. Greater Hyderabad Municipal Corporation, South Zone, Hyderabad, Hyderabad

ITA 162/HYD/2015

• Counselvise Citation: 16222514 RSA 2015
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-09-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 19-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K GUPTA
• Assessee Lawyers: S RAMA RAO
• Section: 194C; 201(1)

Judgement Text

ITA NOS 161 TO 163 OF 2015 GHMC HYDERABAD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.161/HYD/2015 (ASSESSMENT YEAR: 2011-12) ACIT (TDS), TDS CIRCLE 1(1) HYDERABAD VS. G REATER HYDERABAD MUNICIPAL CORPORATION CENTRAL ZONE, HYDERABAD PAN: HYDGO 8343 G (APPELLANT) (RESPONDENT) ITA NO.162/HYD/2015 (A.Y : 2011-12) ACIT (TDS), TDS CIRCLE 1(1) HYDERABAD VS. GREATER HYDERABAD MUNICIPAL CORPORATION SOUTH ZONE, HYDERABAD PAN: HYDGO 8339 C (APPELLANT) (RESPONDENT) ITA NO.163/HYD/2015 (A.Y : 2011-12) ACIT (TDS), TDS CIRCLE 1(1) HYDERABAD VS. GREATER HYDERABAD MUNICIPAL CORPORATION WEST ZONE, HYDERABAD PAN: HYDGO 8348 W (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI S.K. GUPTA, DR FOR ASSESSEE : SHRI S. RAMA RAO, DATE OF HEARING : 22 .09 .2015 DATE OF PRONOUNCEMENT : 24 .09. 2015 O R D E R PER SMT.P. MADHAVI DEVI, J.M. ALL THESE ARE REVENUE APPEALS FOR THE A.Y 2011-12. THE GRIEVANCE OF THE REVENUE IN THESE APPEALS IS THAT T HE CIT (A) HAS ERRED IN HOLDING THAT THERE WAS NO CONTRACTUAL RELA TIONSHIP ITA NOS 161 TO 163 OF 2015 GHMC HYDERABAD PAGE 2 OF 5 BETWEEN THE PAYEES, I.E. THE SELF HELP GROUPS (SHG) AND GREATER HYDERABAD MUNICIPAL CORPORATION (GHMC) AND CONSEQUE NTLY PAYMENTS MADE TO THE SHGS ARE NOT LIABLE FOR TDS U/ S 194C OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT ALL THE THREE A SSESSEES ARE THE DIFFERENT ZONAL OFFICES OF GHMC. AN INSPECTION WAS CONDUCTED IN THE RESPECTIVE ASSESSEES PREMISES IN THE YEAR 2 010 TO VERIFY WHETHER THE ASSESSEE LOCAL AUTHORITY IS ADHERING TO THE TDS PROVISIONS. DURING THE COURSE OF INSPECTION, IT WAS FOUND THAT THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF TD S IN THE CASE OF PAYMENTS TO SELF HELP GROUPS WHO, ACCORDING TO H IM ARE CONTRACT WORKERS. IT WAS FURTHER FOUND THAT IN A F EW CASES, TDS WAS DEDUCTED BUT AT AN ARBITRARY RATE AND NOT AS PR ESCRIBED UNDER THE ACT. THEREFORE, A QUESTIONNAIRE WAS ADDRE SSED TO THE ASSESSEE CALLING FOR BOOKS OF ACCOUNTS, DETAILS OF EXPENDITURE DEBITED IN THE P&L A/C ALONG WITH THE AMOUNT OF TDS DEDUCTED AND OTHER INFORMATION RELATING TO TDS. ASSESSEE, IN ITS REPLY, SUBMITTED THAT THE TDS WAS NOT MADE FROM THE PAYMEN TS MADE TO THE SHGS BECAUSE THE ASSESSEE FEELS THAT THE ASS ESSEE AND SHGS HAVE EMPLOYEE-EMPLOYER RELATIONSHIP AND NOT C ONTRACTUAL RELATIONSHIP, ATTRACTING TDS PROVISIONS. TO SUBSTAN TIATE AND SUPPORT ITS CLAIM, IT WAS FURTHER SUBMITTED THAT TH E ASSESSEE WAS CREDITING EPF AND ESI ON BEHALF OF THE ASSESSEES TO THE CONCERNED DEPARTMENTS AND THEREFORE, THERE EXISTS E MPLOYER- EMPLOYEE RELATIONSHIP AND THE PROVISIONS OF TDS ARE NOT APPLICABLE. THE AO WAS, HOWEVER, NOT CONVINCED WITH THE ASSESSEES CONTENTIONS AND HELD THAT THE SANITATION WORK IS BEING GIVEN BY GHMC TO SHGS AND EACH OF THE GROUP CONSIST S OF 18 ITA NOS 161 TO 163 OF 2015 GHMC HYDERABAD PAGE 3 OF 5 WORKERS AND ALL OF THEM ARE WORKING AS SANITATION W ORKERS BASED ON THE WORK AWARDED IN THE NAME OF SHG BY THE GHMC. HE OBSERVED THAT THE SUPERVISORS OF THE SHGS ARE NOT GIVEN ANY IDENTIFY CARDS OR ANY EMPLOYEE IDENTIFICATION NO. I SSUED BY THE ASSESSEE AND ALSO AS SEEN FROM THE WORK ORDER COPY, IT IS INITIALLY FOR A PERIOD OF 2 MONTHS ON A TRIAL BASIS AND THE P ERIOD OF ALLOTMENT OF WORK WILL BE EXTENDED, PROVIDED THE C ONDITIONS PRESCRIBED THEREUNDER ARE SATISFIED DURING THE TRIA L PERIOD. HE FURTHER HELD THAT THE PAYMENT BILLS FURNISHED BY TH E ASSESSEE MAKES IT CLEAR THAT THE CONTIGENCY BILL IS IN THE N AME OF A PERSON AS A CONTRACTOR, SUCH AS VENDOR NAME: K. GIRIJA A ND NOT NAMED AS AN EMPLOYEE. HE THEREFORE, HELD THAT THERE IS A CONTRACT BETWEEN THE ASSESSEE AND THE SHGS AND THE TDS IS LI ABLE TO BE MADE U/S 194C OF THE ACT FROM THE PAYMENTS MADE TO THEM. ACCORDINGLY, FOR FAILURE TO COMPLY WITH TDS PROVISI ON, HE TREATED THE ASSESSEE AS ASSESSEE IN DEFAULT U/S 201(1) AN D ALSO LEVIED INTEREST U/S 201(1A) OF THE ACT. AGGRIEVED, ASSESSE E PREFERRED AN APPEAL BEFORE THE CIT (A) WHO GRANTED RELIEF TO THE ASSESSEE. AGGRIEVED BY THE RELIEF GIVEN BY THE CIT (A), THE R EVENUE IS IN APPEAL BEFORE US. 3. THE LEARNED DR SUPPORTED THE ORDERS OF THE AO, W HILE THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDE R OF THE CIT (A). THE LEARNED COUNSEL ALSO RELIED UPON THE DECIS ION OF THE SMC A BENCH OF THIS TRIBUNAL IN THE CASE OF GHMC EAST AND NORTH ZONES, HYDERABAD IN ITA NOS.164 & 165/HYD/2015 DATE D 24.07.2015 WHEREIN THE ISSUE HAS BEEL DEALT WITH AT LENGTH AND THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUN AL IN ASSESSEES OWN CASE IN ITA NOS. 512 & 513/HYD/2014 DATED ITA NOS 161 TO 163 OF 2015 GHMC HYDERABAD PAGE 4 OF 5 24.04.2015 HAS BEEN FOLLOWED TO HOLD THAT THE TDS P ROVISIONS ARE NOT APPLICABLE. THE RELEVANT PARAGRAPH NO.6 IS REPRODUCED HEREUNDER FOR READY REFERENCE: 6. HAVING HEARD THE RIVAL CONTENTIONS AND THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE MAIN ISSUE IS AS TO WHETHER THE SHGS CAN BE CALLED AS CONTRACTORS. THE GHMC HAS ENGAGED AND ISSUED THE POCEEDINGS IN FAVOUR OF THE SHGS BY LOTS AND WORK HAS BEEN ALLOTTED PER UNIT BY FIXING THE WAGES PER PERSON AND ALSO SPECIFYING THE NUMBER OF WORKERS TO BE ENGAGED FOR EACH UNIT AND PER SHIFT. THE WORKING HOURS OF THE WORKERS AS WELL AS THE SHIFTS ARE ALSO SPECIFIED IN THE NOTIFICATION. FROM THE BILLS PAID TO THE SHGS ALSO, IT IS SEEN THAT THE PAYMENT IS MADE ON T HE BASIS OF NUMBER OF MANDAYS AND WAGES PER DAY AND IS NOT A FIXED AMOUNT PER MONTH. THUS, IT IS CLEAR THAT THE ALLOTMENT OF WORK BY THE ASSESSEE TO THE SHGS I S NOT BY WAY OF CONTRACT BUT IS ENGAGEMENT OF WORKER S FOR A FIXED PERIOD. THE WORKERS ARE BEING PAID AS P ER THE AGREED TERMS AND CONDITIONS AND THE AGGREGATE AMOUNT IS PAID TO THE GROUP AND NOT TO ANY PARTICUL AR PERSON. THEREFORE, AS RIGHTLY HELD BY THE CIT (A), THERE IS NO CONTRACTOR-CONTRACTEE RELATIONSHIP BUT IS MOR E IN THE NATURE OF EMPLOYEE-EMPLOYER RELATIONSHIP AS THE ASSESSEE IS ALSO MAKING CONTRIBUTIONS TO THE EPF AN D ESI AND AS RIGHTLY POINTED OUT BY THE LD CIT (A), T HE PAYMENTS MADE TO AN INDIVIDUAL IS NOT EXCEEDING THE PRESCRIBED LIMIT U/S 192 OF THE I.T. ACT, THE TDS PROVISIONS ARE NOT APPLICABLE TO THE FACTS OF THE C ASE BEFORE US. IN VIEW OF THE SAME, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT (A) I N ALL THESE APPEALS. 4. WE FIND THAT THE FACTS AND CIRCUMSTANCES IN THE PRESENT CASE ARE ALSO SIMILAR AND RESPECTFULLY FOLLOWING TH E DECISION OF THE COORDINATE BENCH, WE HOLD THAT THESE PAYMENTS ARE N OT LIABLE FOR TDS PROVISIONS. ITA NOS 161 TO 163 OF 2015 GHMC HYDERABAD PAGE 5 OF 5 5. IN THE RESULT, REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH SEPTEMBER, 2015. S D/ - S D/ - (B. RAMAKOTAIAH) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 24 TH SEPTEMBER, 2015. VNODAN/SPS COPY TO: 1. ASSTT. COMMISSIONER OF INCOME TAX, TDS CIRCLE 1(1), HYDERABAD 2. GHMC, CENTRAL ZONE, KHAIRATABAD, HYDERABAD 3. GHMC, SOUTH ZONE, SARDAR MAHAL, HYDERABAD 4. GHMC, WEST ZONE, SERILINGAMPALLY, HYDERABAD 5. CIT (A)-II HYDERABAD 6. CIT (TDS) HYDERABAD 7. THE DR, ITAT, HYDERABAD 8. GUARD FILE BY ORDER