THE ITO(TDS), WARD - 3(3), Guntur V. The Project Director, Ongole

ITA 255/VIZ/2013

• Counselvise Citation: 25525314 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 22-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N O N E
• Assessee Lawyers: R K SINGH
• Section: 133A; 194C

Judgement Text

ITA NOS.255,256&257/VIZAG/2013 THE PROJECT DIRECTOR, ONGOLE IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO.255,256&257/VIZAG/2013 ASSESSMENT YEAR : 2009-10 TO 2011-12 RESPECTIVELY ITO(TDS), WARD-3(3) GUNTUR VS. THE PROJECT DIRECTOR DISTRICT RURAL DEVELOPMENT AGENCY (DRDA&DRDA-IKP) ONGOLE (APPELLANT) (RESPONDENT) PAN NO.HYDDO2149A ASSESSEE BY: SHRI R.K. SINGH, DR REVENUE BY: N O N E DATE OF HEARING : 26.11.2014 DATE OF PRONOUNCEMENT : 26.11.2014 ORDER PER D. MANMOHAN, VICE PRESIDENT:- THESE THREE APPEALS ARE FILED AT THE INSTANCE OF T HE REVENUE AND THEY ARE DIRECTED AGAINST THE COMMON ORDER DATED 07.02.2 013 PASSED BY THE CIT(A) VIJAYAWADA. WHEN THE APPEALS WERE POSTED FO R HEARING NONE APPEARED ON BEHALF OF THE ASSESSEE. A REQUEST WAS MADE ON BEHALF OF THE ASSESSEE THAT THEY WERE UNABLE TO ATTEND THE HEARIN G DUE TO RECEIPT OF NOTICE WITH SHORT TIME. SINCE THE ISSUES INVOLVED IN THES E APPEALS ARE COVERED BY THE DECISION OF THE ITAT, VISAKHAPATNAM BENCH IN TH E CASE OF PROJECT DIRECTOR, DRDA, GUNTUR, NO USEFUL PURPOSE WOULD BE SERVED BY ADJOURNING THE CASE. THEREFORE, WE PROCEED TO DISPOSE OF THES E APPEALS ON MERITS, EX- PARTE. 2. WE HAVE HEARD THE LD. D.R. AND CAREFULLY PERUSED THE RECORD. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PROJECT DIRECTOR O F DISTRICT RURAL DEVELOPMENT AGENCY, CARRYING ON THE POVERTY REDUCTION PROGRAMME S AND RURAL DEVELOPMENT PROGRAMMES IN PRAKASAM DISTRICT, FUNDED BY THE GOVT. OF INDIA ITA NOS.255,256&257/VIZAG/2013 THE PROJECT DIRECTOR, ONGOLE 2 AND GOVT. OF ANDHRA PRADESH. DURING THE COURSE OF SURVEY U/S 133A OF THE INCOME-TAX ACT, 1961, THE A.O. NOTICED THAT THE ASSE SSEE HAS NOT DEDUCTED TAX AT SOURCE ON THE PAYMENTS MADE ON ACCOUNT OF T RAINING FUND TO PRAKASAM ZILLA SAMAKHYA AND VARIOUS MANDAL SAMAKHYA S WHICH ARE NON- GOVERNMENT ENTITIES CARRYING ON THE JOB OF SUPPLYIN G OF VARIOUS WORK EXPERTS ON OUT-SOURCING BASIS AND ALSO PROVIDING TECHNICAL AND PROFESSIONAL SERVICES. IN THE OPINION OF THE AO, PROVISIONS OF SECTION 194C AND 194J OF THE ACT ARE APPLICABLE TO SUCH PAYMENTS. ACCORDINGLY, HE INITI ATED PROCEEDINGS AND OBSERVED THAT THE PROJECT DIRECTOR IS UNDER AN OBLI GATION TO EFFECT TDS AT PRESCRIBED RATES. PRAKASAM ZILLA SAMAKHYA WAS RE GISTERED AS MUTUALLY AIDED CO-OPERATIVE SOCIETY AND MANDAL SAMAKHYAS AR E MERE CONTRACTORS IN THE EYES OF THE PROVISIONS OF SECTION 194C OF THE A CT AND HENCE TAX OUGHT TO HAVE BEEN DEDUCTED ON THE SUMS PAID TO THESE CONTRA CTORS. 3. AGGRIEVED, ASSESSEE CONTENDED THAT DRDA IS AN OF FSHOOT OF GOVERNMENT UNDER THE MINISTRY OF RURAL DEVELOPMENT AND CARRIES ON POVERTY REDUCTION PROGRAMMES OF THE GOVERNMENT THROUGH ITS DECENTRALIZED UNITS SUCH AS, ZILLA SAMAKHYAS (ZS), MANDAL SAMAKHYAS (MS ), VILLAGE ORGANIZATIONS AND SELF-HELP GROUPS (SHGS). THE DECENTRALIZED UNI TS WERE MANNED BY WOMEN. DRDA PRAKASAM DISTRICT IS A PART OF THE MAI N DRDA. THE DISTRICT HAS MORE THAN 50,000 SHGS COMPRISING OF MORE THAN 5 ,00,000 WOMEN MEMBERS. CATEGORY-WISE AND PARTY-WISE DETAILS OF PA YMENTS WERE FURNISHED TO SUBMIT THAT THE PROVISIONS OF SECTION 194J AND 1 94C OF THE ACT ARE NOT APPLICABLE TO THE IMPUGNED PAYMENTS. 4. THE LD. CIT(A) PERUSED THE ORDERS PASSED U/S 201 (1) AND 201(1A) OF THE ACT IN THE BACKDROP OF CBDT CIRCULAR NO.502 DAT ED 27.1.1988 AND OBSERVED THAT THERE IS NO NEED TO DEDUCT TAX U/S 19 4C OF THE ACT IN CASE OF PAYMENTS MADE TOWARDS WORKS EXECUTED UNDER THE NATI ONAL RURAL EMPLOYMENT PROGRAMME (NREP) AND RURAL LANDLESS EMPL OYMENT GUARANTEE PROGRAMMES (RLEGP). IN THE CASE OF THE ASSESSEE ALS O, THE ORGANIZATIONS COMPRISING OF SELF-HELP GROUPS ARE WITHIN THE DISTR ICT TO IMPLEMENT THE RURAL DEVELOPMENT SCHEMES. THE BENEFICIARIES ARE MEMBERS OF SHGS AND VARIOUS ITA NOS.255,256&257/VIZAG/2013 THE PROJECT DIRECTOR, ONGOLE 3 SHGS FORM PART OF THE SAMAKHYAS. THIS BEING THE CA SE, PAYMENTS MADE TO SAMAKHYAS ARE HELD TO BE ESSENTIALLY PAYMENTS MADE TO THE BENEFICIARIES THEMSELVES, USING SAMAKHYA AS A MEDIUM FOR IMPLEMEN TATION OF RURAL EMPLOYMENT SCHEMES AND THERE ARE NO MIDDLEMEN OR CO NTRACTORS, IN WHICH EVENT THERE WOULD BE NO NEED FOR DEDUCTION OF TAX A T SOURCE U/S 194C OF THE ACT. THE A.O. WAS ACCORDINGLY DIRECTED TO VERIFY T HE NATURE OF THE ACTIVITIES OF THE SAMAKHYA AND IF THEY ARE IN THE NATURE OF FEDER ATION OF SHGS, THE PROVISIONS OF SECTION 194C OF THE ACT CANNOT BE MAD E APPLICABLE. 5. WITH REGARD TO THE PAYMENTS MADE TO VARIOUS ORGA NIZATIONS OTHER THAN SHGS, THE PROVISION OF DEDUCTION OF TAX AT SOURCE W AS HELD APPLICABLE. HOWEVER, IN THE LIGHT OF THE DECISION OF THE APEX C OURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES (P) LTD. (2007) 293 I TR 226, THE AO WAS DIRECTED TO GIVE RELIEF, WHEREVER THE ASSESSEE IS A BLE TO PROVE THAT THE AMOUNTS PAID HAVE ALREADY BEEN DECLARED BY THE RECI PIENTS IN THE RETURNS OF INCOME. 6. ASSESSEE HAD ALSO PAID TO THOSE ENTITIES WHO HAV E PROVIDED TRAINING IN VARIOUS FIELDS TO THE BENEFICIARIES OF THE GOVERNME NT SCHEMES. IN THE OPINION OF THE AO, PROVISIONS OF SECTION 194J OF THE ACT AR E APPLICABLE AND IN WHICH EVENT TDS @ 10% OUGHT TO HAVE BEEN MADE, WHEREAS TH E ASSESSEE CONTENDED THAT TDS APPLICABLE IS ONLY @ 2%. THE LD . CIT OBSERVED THAT IMPARTING TRAINING IS A SIMPLE CONTRACT COMING UNDE R THE PROVISIONS OF SECTION 194C OF THE ACT AND THEREFORE DIRECTED THE AO NOT T O APPLY THE PROVISIONS OF SECTION 194J OF THE ACT ON SUCH PAYMENTS. 7. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. FO LLOWING GROUNDS WERE URGED IN THIS REGARD: 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS IN LAW OR FACTS OR BOTH. 2. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ZI LLA SAMAKHYAS OR NGOS ARE NOT COVERED BY ANY OF THE EXCEPTIONS WHIC H ARE NOT LIABLE TO TDS. 3. THE LD. CIT(A) HAS ERRED IN TREATING THE PAYMENTS M ADE TO TRAINING INSTITUTIONS U/S 194C INSTEAD OF U/S 194J, SINCE TH E TRAINING IS IN COMPUTER TECHNOLOGY WHICH HAS TO BE GIVEN BY TECHNI CAL, SKILLED ITA NOS.255,256&257/VIZAG/2013 THE PROJECT DIRECTOR, ONGOLE 4 STAFF/PEOPLE AND ALSO THE PAYMENTS WERE ALSO MADE T O COMPUTER INSTITUTIONS. 8. AT THE TIME OF HEARING, LD. D.R. SUBMITTED THAT ON IDENTICAL ISSUES, THE MATTER WAS CONSIDERED BY THE ITAT, VISAKHAPATNAM BE NCH IN THE CASE OF ITO(TDS) GUNTUR VS. PROJECT DIRECTOR DRDA, GUNTUR ( ITA NOS.492&493/V/2012 DATED 7.7.2014), WHEREIN APPEALS FILED BY THE REVENUE ARE DISMISSED. FACTS BEING IDENTICAL, CONSISTENT W ITH THE VIEW TAKEN THEREIN, WE UPHOLD THE ORDER PASSED BY THE CIT(A); IT DESERV ES TO BE NOTICED THAT THE REVENUE HAD TAKEN ONLY TWO GROUNDS WHICH ARE IDENTI CAL TO THE ISSUES CONSIDERED BY THE ITAT IN THE CASE OF DRDA GUNTUR ( SUPRA) AND HENCE, WE UPHOLD THE ORDERS PASSED BY THE CIT(A) AND DISMISS THE APPEALS FILED BY THE REVENUE. PRONOUNCED IN THE OPEN COURT ON 26 TH NOVEMBER14. SD/- SD/- ( J. SUDHAKAR REDDY ) ( D. MANMOHAN ) ACCOUNTANT MEMBER VICE PRESIDENT VG/SPS VISAKHAPATNAM, DATED 26 TH NOVEMBER, 2014 COPY TO 1 THE ITO (TDS), WARD-3(3), C.R. BUILDINGS, GUNTUR 2 THE PROJECT DIRECTOR, DISTRICT RURAL DEVELOPMENT AGENCY, (DRDA & DRDA- IKP), NH-5, ONGOLE. 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