THE ITO (TDS), WARD - 3(4), Guntur V. The Project Director, Nellore

ITA 429/VIZ/2014

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9709 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 26-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R SRINIVASA MURTHY
• Assessee Lawyers: N O N E
• Section: 133A; 194C; 201(1)

Judgement Text

ITA NO.429/VIZAG/2014 THE PROJECT DIRECTOR, DRDA &APRPRP, NELLORE 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.429/VIZAG/2014 ( / ASSESSMENT YEAR: 2009-10) ITO (TDS), WARD - 3(4), GUNTUR VS. THE PROJECT DIRECTOR, DRDA & ARPRP, NELLORE [ T AN: HYDA05081G] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SRI R. SRINIVASA MURTHY, AR / RESPONDENT BY : N O N E / DATE OF HEARING : 22.11.2016 / DATE OF PRONOUNCEMENT : 25.11.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE AGAINST ORDER OF THE CIT(A), VIJAYAWADA DATED 21.3.2014 FOR THE ASSESSMENT YEAR 2009-10. 2. FACTS ARE IN BRIEF THAT IN THE CASE OF THE ASSES SEE A SURVEY OPERATION U/S 133A OF THE INCOME TAX ACT, 1961 (HER EINAFTER CALLED AS ITA NO.429/VIZAG/2014 THE PROJECT DIRECTOR, DRDA &APRPRP, NELLORE 2 'THE ACT') WAS CONDUCTED. DURING THE COURSE OF SUR VEY, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE DEDUCTOR HAS MADE A PAYMENT TO NELLORE SANGHA RAKSHA ON ACCOUNT OF REIMBURSEMENT O F INTERMEDIATE FEE TO CORPORATE COLLEGE STUDENTS INCLUDING POCKET MONE Y TO ABOUT 250 STUDENTS, VARIOUS CATERERS TOWARDS MESS CHARGES, TE CHNICAL INSTITUTIONS TOWARDS TRAINING CHARGES, TOWARDS VEHICLE HIRE CHAR GES AND FAILED TO DEDUCT TDS ON THESE PAYMENTS AS REQUIRED U/S 194C & 194J OF THE ACT. THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT AFTER RAISING THE DEMAND U/S 201(1) & 201(1A) OF THE ACT AS THE ASSES SEE FAILED TO DEDUCT TAX AT SOURCE AS PER THE PROVISIONS OF SECTI ON 194C OF THE ACT. THE ASSESSEE CARRIED MATTER IN APPEAL BEFORE THE CI T(A). IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSESSEE I S A GOVERNMENT ORGANIZATION CARRYING ON THE ACTIVITY OF POVERTY RE DUCTION PROGRAMMES AND RURAL DEVELOPMENT ACTIVITIES AT DISTRICT LEVEL. IN THE PROCESS OF SUCH IMPLEMENTATION, THE FUNDS WERE GRANTED BY THE GOVER NMENT OF INDIA AND GOVERNMENT OF ANDHRA PRADESH TO THE ASSESSEE. IN TURN, THE ASSESSEE PASSES THE SAME TO SANGHA RAKSHA (ZILLA SA MAKSHYAS) AND SANGHA MITRA (MANDAL SAMAKHYAS). IN FACT, THE PAYM ENTS ARE MADE BY THE SANGHA RAKSHA AND SANGHA MITRA TO THE RESPECTIV E BENEFICIARIES AND NOT BY THE ASSESSEE. THE LD. CIT(A) BY CONSIDERING THE EXPLANATION OF THE ASSESSEE AND ALSO BY CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE ITA NO.429/VIZAG/2014 THE PROJECT DIRECTOR, DRDA &APRPRP, NELLORE 3 CASE, HE HAS DIRECTED THE A.O. TO REDUCE THE DEMAND RAISED U/S 201(1) & 201(1A) OF THE ACT. 3. ON BEING AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. D.R. HAS STRONGLY SUPPORTED THE ORDER PASSED BY THE A.O. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS STRONGLY SU PPORTED THE ORDER PASSED BY THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE CASE OF THE A.O. IS THAT ASSESSEE HAS MADE CERT AIN PAYMENTS TO VARIOUS ORGANIZATIONS AND FAILED TO DEDUCT THE TDS AS PER SECTION 194C OF THE ACT, THEREFORE, HE HAS RAISED A DEMAND U/S 2 01(1) & 201(1A) OF THE ACT. ON APPEAL, A DETAILED SUBMISSION WAS MADE BEFORE THE LD. CIT(A) BY THE ASSESSEE. THE LD. CIT(A) BY CONSIDER ING THE DETAILED SUBMISSION MADE BY THE ASSESSEE, HE GAVE A CATEGORI CAL FINDING THAT THE ASSESSEE HAS NOT MADE ANY PAYMENTS TO THE THIRD PAR TIES, AS A COORDINATOR OF THE IMPLEMENTATION PROGRAMMES OF GOV ERNMENT OF INDIA AS WELL AS STATE GOVERNMENT, FUNDS ARE RELEASED TO SANGHA RAKSHA (ZILLA SAMAKHYAS) & SANGHA MITRA (MANDAL SAMAKHYAS) AND IN TURN, THOSE ORGANIZATIONS MADE PAYMENTS TO THE THIRD PARTIES. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: ITA NO.429/VIZAG/2014 THE PROJECT DIRECTOR, DRDA &APRPRP, NELLORE 4 5.2 AS REGARDS THE DEMAND RAISED BY THE ASSESSING OFFICER ON THE PAYMENTS MADE BY THE APPELLANT TO NELLORE SANGA RAKSHA OF RS.58,11,500/-, SANGHA MITRA, RAPUR OF RS.95,615/- AND NELLORE SANGHA RAKSHA OF RS.2,68,41,238/-, ON A PERUSAL OF THE SUB MISSIONS OF THE APPELLANT AND THE DETAILS FILED THEREON, I FOUND THA T THE APPELLANT IS A GOVERNMENT ORGANIZATION CARRYING ON THE ACTIVITY OF POVERTY REDUCTION PROGRAMMES AND RURAL DEVELOPMENT ACTIVITIES AT THE DISTRICT LEVEL. IN THE PROCESS OF SUCH IMPLEMENTATION, THE FUNDS WERE GRAN TED BY THE GOVERNMENT OF INDIA AND GOVERNMENT OF ANDHRA PRADE SH TO THE APPELLANT AND IN TURN THE APPELLANT IS PASSING THE SAME TO TH E SANGHA RAKSHA (ZILLA SAMAKGHYAS) AND SANGHA MITRA (MANDAL SAMAKHYAS). I N FACT THE PAYMENTS WERE BEING MADE BY THE SANGHA RAKSHAS AND SANGHA MITRAS TO THE RESPECTIVE BENEFICIARIES AND NOT THE APPELLANT AND HENCE THERE IS NO LIABILITY ON THE PART OF THE APPELLANT TO DEDUCT TD S AS IT IS NOT MAKING THE PAYMENTS DIRECTLY TO THE BENEFICIARIES OF THE SCHEM ES, BUT ONLY RELEASING BUDGETARY GRANTS TO THE ZILLA SAMAKHYAS AND MANDAL SAMAKHYAS. FURTHER, IT IS OBSERVED THAT THE PAYMENTS MADE BY THE ZILLA SAMAKHYAS AND MANDAL SAMAKHYAS TO THE RESPECTIVE BENEFICIARIES WERE ALSO BELOW THE TAXABLE LIMITS SO AS TO ATTRACT THE PROVISIONS OF TDS. IN VIEW OF THE FOREGOING DISCUSSION, THE ASSESSING OFFICER IS DIRECTED TO RE DUCE THE DEMANDS RAISED U/S 201(1) AND 201(1A) ON THE PAYMENTS MADE TO NELL ORE SANGHA RAKSHA OF RS.58,11,500/-, SANGHA MITRA, RAPUR OF RS.95,615 /- AND NELLORE SANGHA RAKSHA OF RS.2,68,41,238/-. ACCORDINGLY, THE GROUN DS RAISED IN THIS REGARD ARE ALLOWED. 6. WE FIND THAT THE LD. CIT(A) BY CONSIDERING ALL T HE DETAILS, HE HAS HELD THAT SECTION 194C OF THE ACT HAS NO APPLICATIO N TO THIS CASE. WE ALSO FIND THAT THE DEPARTMENT HAS NOT BROUGHT ANY M ATERIAL TO SHOW THAT SECTION 194C OF THE ACT APPLIES TO THE FACTS OF THE PRESENT CASE. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE O F THE OPINION THAT SECTION 194C OF THE ACT HAS NO APPLICATION AND WE F IND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A). ITA NO.429/VIZAG/2014 THE PROJECT DIRECTOR, DRDA &APRPRP, NELLORE 5 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25 TH NOV16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 25.11.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT ITO(TDS), WARD-3(4), VIJAYAWADA. 2. / THE RESPONDENT THE PROJECT DIRECTOR, DRDA & AP RPRP, COLLECTORATE COMPOUND, BARAKAS, NELLORE. 3. ) / THE CI(TDS), VIJAYAWADA 4. ) ( ) / THE CIT(A), VIJAYAWADA 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM