THE ITO., WARD-3(2) (TDS), VIJAYAWADA., Vijayawada V. THE Panchayat Secretary,

ITA 2/VIZ/2013

• Counselvise Citation: 225314 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 01-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B BABU RAO
• Assessee Lawyers: N O N E
• Keywords: Tax effect
• Section: 2

Judgement Text

ITA NOS.1,2&3/VIZAG/2013 THE PANCHAYAT SECRETARY, BHADRACHALAM IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM BEFORE: SHRI D. MANMOHAN, VICE PRESIDENT ITA NO S . 1, 2 & 3 /VIZAG/ 2013 ASSESSMENT YEARS : 2008-09, 2009-10 & 2010-11 ITO WARD-3(2)(TDS) VIJAYAWADA VS. THE PANCHAYAT SECRETARY BHADRACHALAM (APPELLANT) (RESPONDENT) TAN NO.HYDB 02744A ASSESSEE BY: N O N E REVENUE BY: SHRI B. BABU RAO, ADDL. CIT DATE OF HEARING : 27.10.2014 DATE OF PRONOUNCEMENT : 27.10.2014 ORDER PER D. MANMOHAN, VICE PRESIDENT:- THESE APPEALS ARE FILED AT THE INSTANCE OF THE REV ENUE AND THEY ARE DIRECTED AGAINST THE COMMON ORDER PASSED BY THE CIT (A), VIJAYAWADA. THE FOLLOWING GROUNDS WERE URGED IN THESE APPEALS: 1. THE CIT(A) IS ERRONEOUS BOTH ON FACTS AND ON LAW. 2. THE CIT(A) ERRED IN APPLYING THE BOARD CIRCULAR NO. 502 DATED 27.01.1988 TO WORKS EXECUTED UNDER SHG SCHEME, WHER EAS THE SAID CIRCULAR APPLIES TO WORKS EXECUTED UNDER NREP AND RLEGP SCHEMES ONLY. 3. THE LD. CIT(A) FAILED TO DISTINGUISH THAT UNDER NRE P AND RLEGP SCHEMES THERE IS A SPECIFIC BAN ON EMPLOYMENT OF CO NTRACTORS WHEREAS THE DEDUCTOR HAS ENTRUSTED THE WORK TO VILL AGE COMMITTEE/USER GROUPS AS WELL AS OTHER CONTRACTORS UNDER SHG SCHEME AND DEDUCTED TAX ON PAYMENTS MADE TO SOME OF THE CASES. 4. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 2. AS COULD BE NOTICED, THE ISSUE PERTAINS TO APPLI CATION OF BOARD CIRCULAR TO WORKS EXECUTED UNDER SHG SCHEME. IT DESERVES TO BE NOTICED HERE THAT THE ORDERS PASSED BY THE ASSESSING OFFICER U/S 201( 1) AND 201(1A) OF THE INCOME-TAX ACT, IN ALL THE THREE YEARS, ARE UNDER CH ALLENGE AND ACCORDING TO ITA NOS.1,2&3/VIZAG/2013 THE PANCHAYAT SECRETARY, BHADRACHALAM 2 ASSESSING OFFICER, THE TAX DEDUCTIBLE AND THE INTER EST CHARGEABLE THEREON WORKS OUT TO RS.12,20,375/- INCLUDING THE MANDATORY INTEREST, WHEREAS ON AN APPEAL FILED BY THE ASSESSEE, FULL RELIEF WAS GRANT ED AND IF THE REVENUE IS AGGRIEVED BY THE RELIEF GRANTED BY THE CIT(A), APPE ALS COULD HAVE BEEN PREFERRED ON ALL THE ISSUES WHEREBY THE DISPUTED TA X/INTEREST/PENALTY SHOULD HAVE BEEN MORE THAN RS.4 LAKHS. THE AUTHORIZATION MEMO MERELY SHOWS THE COMMISSIONERS APPROVAL TO FILE AN APPEAL BEFORE TH E TRIBUNAL AGAINST THE ORDER OF THE COMMISSIONER, WITHOUT SPECIFYING AS TO WHAT WERE THE ISSUES ON WHICH THE COMMISSIONER AUTHORIZED THE ASSESSING OFF ICER TO PREFER AN APPEAL. THE DEPARTMENTAL REPRESENTATIVE I.E. MR. BABU RAO, ADDL. CIT WAS NOT ABLE TO PLACE ANY MATERIAL TO SHOW AS TO WHAT WERE THE ISSU ES ON WHICH THE LD. COMMISSIONER HAS AUTHORIZED THE ASSESSING OFFICER T O FILE AN APPEAL BUT GOING BY THE GROUNDS OF APPEAL, IT HAS TO BE ASSUMED THAT THE AUTHORIZATION IS RESTRICTED TO TDS DEMAND RAISED RELATING TO PAYMENT TO SELF-HELP GROUPS (SHGS) FOR LAYING OF ROADS, ETC. THE ASSESSEE MADE PAYMENTS TO SHGS WITHOUT DEDUCTING TAX SINCE THE ASSESSEE IS OF THE IMPRESSION THAT NO TAX IS DEDUCTIBLE IN A CASE WHERE THE WORKS ARE EXECUTED W ITH PARTICIPATION OF PEOPLE OF THE PANCHAYATI RAJ INSTITUTIONS I.E. SELF -HELP GROUPS. THE LD. CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE AND THUS THE REVENUE PREFERRED APPEALS ONLY WITH REGARD TO THE SAID ISSU E. THE TAX EFFECT IN SO FAR AS THAT ISSUE IS CONCERNED APPEARS TO BE LESS THAN RS.50,000/- FOR ALL THE THREE YEARS UNDER CONSIDERATION. AT ANY RATE, FOR EACH YEAR, THE TAX EFFECT BEING LESS THAN RS.3 LAKHS, THE CIRCULAR ISSUED BY THE CBDT IN 2011 IS APPLICABLE TO THE CASES ON HAND. IT IS NOT IN DISP UTE THAT THE TAX EFFECT MEANS AND INCLUDES PENALTY AND/OR INTEREST AND IT HAS TO BE CALCULATED SEPARATELY FOR EVERY ASSESSMENT YEAR. IT WAS FURTHER CLARIFIED THA T NO APPEAL NEED TO BE FILED IN RESPECT OF THE ASSESSMENT YEAR/YEARS IN WH ICH THE TAX EFFECT IS LESS THAN THE MANDATORY LIMIT SPECIFIED IN THE CIRCULAR. IN THE LIGHT OF THE CBDT INSTRUCTIONS (SUPRA), I AM OF THE VIEW THAT THE APP EALS FILED BY THE REVENUE ARE CONTRARY TO THE CBDT GUIDELINES AND THEREFORE L IABLE TO BE DISMISSED. ITA NOS.1,2&3/VIZAG/2013 THE PANCHAYAT SECRETARY, BHADRACHALAM 3 3. BY FOLLOWING THE CIRCULAR ISSUED BY THE CBDT, TH E APPEALS FILED BY THE REVENUE ARE DISMISSED ON THE GROUND THAT THE TAX EF FECT IS BELOW THE LIMITS SPECIFIED IN THE CIRCULAR ISSUED BY CBDT. SD/- (D. MANMOHAN) VICE PRESIDENT VG/SPS VISAKHAPATNAM, DATED 27 TH OCTOBER, 2014 COPY TO 1 THE ITO WARD-3(2)(TDS), VIJAYAWADA 2 THE PANCHAYAT SECRETARY, GRAMPANCHAYAT, BHADRACHA LAM, KHAMMAM DISTRICT. 3 THE CIT, VIJAYAWADA 4 THE CIT (A) , VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 27 TH OCT14