ITO (TDS), Uttrakhand V. G B Pant University of Agriculture & Technology, Uttrakhand

ITA 5605/DEL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3175 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-05-2017
• Assessment Year: misc
• Appeal Filed On: 17-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Assessee Lawyers: V K TULSIAN

Judgement Text

1 ITA NOS. 5605 & 5706/DEL/2013 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A .NO.5605/DEL/2013 (A.Y- BLOCK PERIOD) & I.T.A .NO.5706/DEL/2013 (A.Y- BLOCK PERIOD) ITO (TDS) HALDWANI, U S NAGAR UTTRAKHAND (APPELLANT) VS G B PANT UNIVERSITY OF AGRICULTURE & TECHNOLOGY PANTNAGAR, U S NAGAR UTTRAKHAND MRTC00388D (RESPONDENT) APPELLANT BY SH. AMRIT LAL, SR. DR RESPONDENT BY SH. V. K. TULSIAN, C.A ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 30/7/2013 PASSED BY CIT(A)-II, DEHRADUN. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOL DING THAT THE CONTRACTUAL TEACHING PERSONNEL ARE NOT COVERED UNDE R THE DEFINITION OF PROFESSION FOR THE PURPOSE OF SECTION 194J OF THE I T ACT IGNORING THE FACTS OF THE CASE AS ALSO THE FACT THAT SUCH TE ACHING PERSONNEL WERE HIGHLY SKILLED PERSONS HAVING SPECIALIZATION I N THEIR PARTICULAR FIELD AND HENCE CLEARLY COVERED UNDER THE DEFINITIO N OF PROFESSION FOR THE PURPOSE OF SECTION 194J. DATE OF HEARING 11.05.2017 DATE OF PRONOUNCEMENT 15.05.2017 2 ITA NOS. 5605 & 5706/DEL/2013 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOL DING THAT PAYMENTS TO FRFS AND SRFS IS EXEMPT U/S 10(16) OF T HE I T ACT IGNORING THE FACTS OF THE CASE AS ALSO THE FACT THA T THE ASSESSEE HAS FAILED TO ESTABLISH BEFORE THE A.O THAT THE PAYMENT S MADE TO FRFS AND ALSO SRFS WERE IN THE NATURE OF SCHOLARSHIP AND THAT THE SAID AMOUNT WAS SPENT BY THEM TO MEET THE COST OF EDUCAT ION. 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS WHILE HOLDING AS ABOVE IGNORING THE FACT THAT ENGAGEMENT OF TEACHING PERSO NALS IS PURELY OF CONTRACTUAL NATURE AND THERE IS NO EMPLOYERS EMPLOY EE RELATIONSHIP BETWEEN THE UNIVERSITY AND THEM THEREFORE ANY PAYME NTS MADE TO THEM WAS LIABLE FOR TDS UNDER THE PROVISION OF THE I T ACT. 3. THE BRIEF FACTS ARE AS UNDER:- DURING THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED B Y THE ASSESSING OFFICER THAT ASSESSEE WAS NOT DEDUCTING TAX ON PAYMENTS MAD E TO RETIRED PROFESSORS, DOCTORS, TEACHING PERSONNELS ETC. ON BEING ASKED T O EXPLAIN THE DISCREPANCY, IT WAS EXPLAINED THAT SINCE PAYMENT IS MADE UNDER T HE HEAD SALARY, TAX IS DEDUCTED IN CASES WHERE IT EXCEEDS THE TAXABLE LIMI T. PERUSAL OF THE RECORDS OF THE ASSESSEE REVEALED THAT PAYMENTS WERE MADE AT FI XED AMOUNT AS REMUNERATION. THERE WERE NO DEDUCTIONS OF GPF ETC. MORE OVER TEACHING PERSONNELS WERE KEPT ON CONTRACTUAL BASIS AND DOCT ORS WERE ALSO PAID A FIXED REMUNERATION. CONSIDERING THIS, THE ASSESSING OFFIC ER OBSERVED THAT THESE PAYMENTS DID NOT QUALIFY AS SALARY BUT PROFESSIONAL PAYMENTS FALLING WITHIN THE PURVIEW OF SECTION 194J. A LETTER WAS ISSUED TO THE ASSESSEE ON 13-02- 2013 COMMUNICATING THE DEFAULT AND ASKING TO DEDUCT THE TAX ACCORDINGLY. FURTHER A SHOW CAUSE NOTICE UNDER SECTION 201/201(1 A) OF THE INCOME- TAX ACT-1961 WAS ISSUED. THE ASSESSEE SUBMITTED THE REP LY THAT RETIRED TEACHERS WERE ON PAY MINUS PENSION AND PAYMENTS ARE MADE FRO M SALARY HEAD. SIMILARLY DOCTORS ARE ALSO PAID AT APPROVED RATES O UT OF SALARY HEAD. TEACHING PERSONNEL AND RESEARCH ASSISTANTS ARE PAID AS PER T HE PRESCRIBED RATES OF ICAR OUT OF RESPECTIVE FUND. THE ASSESSING OFFICER HELD THAT THESE PAYMENT DID NOT FALL WITHIN THE AMBIT OF THE WORD SALARY AND ALSO D ID NOT QUALIFY AS WAGES BECAUSE IT IS NOT MANUAL LABOUR. THE ASSESSING OFFI CER FURTHER OBSERVED THAT 3 ITA NOS. 5605 & 5706/DEL/2013 WORK THEY REQUIRED TO PERFORM, QUALIFICATION FOR TH E WORK REQUIRED CLEARLY ESTABLISHES IT TO BE PROFESSIONAL SERVICES. HENCE, THE ASSESSING OFFICER HELD THAT THESE PAYMENTS FALL WITHIN THE AMBIT OF SECTIO N 194J AND ASSESSEE IS REQUIRED TO DEDUCT TAX @ 10% .SIMILARLY OTHER PROFESSIONALS SUCH AS DOCTORS, RETIRED PROFESSORS, SRFS ARE PAID FIXED REMUNERATIO N. THEY DO NOT POSSES ANY PF NUMBERS AND NO DEDUCTIONS ARE MADE ON THIS ACCOU NT THEY ARE ALSO NOT ENTITLED TO OTHER ALLOWANCES LIKE OTHER REGULAR EMP LOYEES. SIMPLY PAYING THE REMUNERATION OUT OF SALARY HEAD DOES NOT QUALIFY IT TO BE DEFINED AS SALARY AS PER INCOME TAX ACT-1961. HENCE, THE CONTENTION O F THE ASSESSEE THAT THE PAYMENTS UNDER CONSIDERATION AMOUNTS TO SALARY WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THUS, THE ASSESSING OFFICER HELD THAT THE PAYMENTS UNDER CONSIDERATION FALL WITHIN THE AMBIT OF SECTION 194J OF THE I T ACT-1961 AND ASSESSEE WAS LIABLE FOR TAX DEDUCTION UNDER SECTION 194J OF THE I T ACT-1961, WHICH WAS NOT DONE AND THEREFORE, THE ASSESSEE WAS DECLARED TO BE IN DEFAULT UNDER SECTION 201 OF THE I T ACT-1961. 4. BEING AGGRIEVED BY THIS, THE ASSESSEE FILED APPE AL BEFORE THE CIT(A). THE CIT(A) HELD AS UNDER:- 3.3 THE FINDINGS OF LD. AO AND THE AVERMENTS OF LD. AR HAVE BEEN CONSIDERED. THIS ISSUE NEEDS TO BE EXAMINED FROM TH E ANGLE OF THE MANDATE U/S 194J AND THE PECULIAR FACTS OF THIS CAS E. FIRSTLY, THE PROFESSIONALS DESCRIBED IN 194J ARE PERSONS CARRYIN G ON LEGAL MEDICAL, ENGINEERING OR ARCHITECTURAL PROFESSION, OR THE PRO FESSION OF ACCOUNTANCY, TECHNICAL CONSULTANCY, INTERIOR DECORATION, ADVERTI SING OR PROFESSION TO BE SPECIFIED BY CBDT. AS PER NOTIFICATION NO. 88/2008 DATED 21.08.2008 THE PROFESSIONS NOTIFIED ARE: SPORTS PERSONS, UMPIRES A ND REFEREES, COACHES AND TRAINERS, TEAM PHYSICIANS AND PHYSIOTHERAPISTS, EVEN MANAGERS, COMMENTATORS, ANCHORS AND SPORTS COLUMNISTS. THUS, IT IS CLEAR THAT THE SCOPE OF THIS SECTION INCLUDES SPECIFIED PERSONNEL OR SERVICES AND LEAVES VERY LITTLE SCOPE FOR READING IN BETWEEN THE LINES TO INCLUDE PROFESSIONS, SUCH AS TEACHING, AT WILL. SECONDLY, IN THE CASE OF THIS APPELLANT UNIVERSITY THE PAYMENTS TO SUCH TEACHERS ARE MADE FROM THEIR S ALARY HEAD AND THE 4 ITA NOS. 5605 & 5706/DEL/2013 APPOINTMENTS RELIGIOUSLY FOLLOW THE STATES POLICY ON RESERVATION, ETC. ALSO THE UNIVERSITY EXERCISES SIGNIFICANT CONTROL OVER T HE TEACHERS ALMOST AT PAR WITH REGULAR EMPLOYEES. THESE FACTS ALSO BRING THIS CASE SOMEWHAT NEAR TO THE CASE OF MAX MULLER BHAWAN, NEW DELHI REPORTED I N 268 ITR 31 (AAR) WHEREIN IT HAS BEEN RULED THAT SUCH ENGAGEMENTS ARE COVERED U/S 192 FOR THE PURPOSES OF TDS. ALSO THE RELATIONSHIP BETWEEN THE TEACHERS SO EMPLOYED AND THE EMPLOYER IS SEEN TO HAVE THE RIGID ITY OF CONTRACT OF EMPLOYMENT AND NOT THE FLEXIBILITY SEEN IN CONTRA CTS FOR EMPLOYMENT. THUS IT IS HELD THAT THE UNIVERSITYS LIABILITY FOR TDS IS U/S 192 OF THE ACT AND NOT 194J OF THE ACT. THESE GROUNDS ARE ACCORDI NGLY ALLOWED. 4.0. GROUND NO. 5 PROTESTS THE TDS LIABILITY ON FRF S ON SRFS. THE LD. A.O IS SEEN TO NOT HAVE DISCUSSED THIS ISSUE IN THE BODY OF THE IMPUGNED ORDER SPECIFICALLY. HOWEVER, THE LD. AR HAS AVERRE D AS UNDER ON THIS POINT:- IN RESPECT OF PAYMENT FELLOWSHIP TO FRS/SFR, IT IS S UBMITTED THAT THE SAME IS IN THE NATURE OF STIPEND, ELIGIBLE FOR EXEMPTION U/S 10(16 ). THE GOVERNMENT OF INDIA, MINISTRY OF SCIENCE & TECHNOLOGY, DEPARTMENT OF SCIENCE & TECHN OLOGY HAS VIDE OFFICE MEMORANDUM DATED MARCH 31, 2010 REVISED THE EMOLUMENTS AND GUI DELINES ON SERVICE CONDITIONS FOR RESEARCH PERSONNEL, INCLUDING JRFS AND SRFS . TH E OM CLEARLY SPECIFIES THAT THE STIPEND IS EXEMPT U/S 10(16) OF THE INCOME TAX ACT, 1961. T HEREFORE THE REQUIREMENT OF DEDUCTING TAX AT SOURCE DOES NOT ARISE. IN THIS REGARD, A CO PY OF THE AFOREMENTIONED CIRCULAR IS ATTACHED HEREWITH. 4.1. THE FACTS AND THE POSITION OF LAW HAVE BEEN CO NSIDERED. THERE IS NO HESITATION IN HOLDING THAT THE PAYMENTS TO FRFS AND SRFS IS EXEMPT U/S 10(16) OF THE ACT AND THUS THERE CAN BE NO LIABILIT Y FOR TDS ON THIS ACCOUNT. 5.0. IN RESULT, THIS APPEAL IS ALLOWED. 5. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER HAS CORRECTLY STATED THAT THE TEACHING PROFESSIONALS ARE KEPT ON CONTRACTUAL BASIS AND PAYMENT IS MADE ON THE BASIS OF LECTURES DELIVERED WITH A CERTAIN L IMIT, THIS PAYMENT CERTAINLY DOES NOT FALL WITHIN THE AMBIT OF THE WORD SALARY. THEREFORE, THE PAYMENTS UNDER CONSIDERATION FALLS WITHIN THE AMBIT OF 194J OF THE ACT. HENCE, THE ASSESSING OFFICER HAS RIGHTLY DECLARED THE SAID AMO UNT IN DEFAULT U/S 201 OF THE INCOME TAX ACT. 5 ITA NOS. 5605 & 5706/DEL/2013 6. THE LD. AR SUBMITTED THAT THE CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT AS PER CBDT NOTIFICATION NO. 88/08 DATED 21/8/2008, THE PROFESSIONALS SUCH AS TEACHING COMES UNDER THE PURVIEW OF SAID NOTIFIC ATION AND PAYMENTS MADE TO TEACHERS ARE FROM THEIR SALARY HEAD. THEREFORE, THE CIT(A) RIGHTLY HELD THAT THE PAYMENTS MADE TO GRFS & SRFS ARE EXEMPT U/S 10( 16) OF THE ACT AND THUS IS NOT LIABLE FOR TDS. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT AS PER NOTIFI CATION NO. 88/2008 DATED 21.08.2008 THE PROFESSIONS NOTIFIED ARE: SPORTS PER SONS, UMPIRES AND REFEREES, COACHES AND TRAINERS, TEAM PHYSICIANS AND PHYSIOTHE RAPISTS, EVENT MANAGERS, COMMENTATORS, ANCHORS AND SPORTS COLUMNISTS. THUS, THE FINDING OF THE CIT(A) IS JUST AND PROPER THAT THE SCOPE OF THIS SECTION I NCLUDES SPECIFIED PERSONNEL OR SERVICES AND LEAVES VERY LITTLE SCOPE FOR READING I N BETWEEN THE LINES TO INCLUDE PROFESSIONS, SUCH AS TEACHING, AT WILL. SECONDLY, I N THE CASE OF THE ASSESSEE UNIVERSITY THE PAYMENTS TO SUCH TEACHERS ARE MADE F ROM THEIR SALARY HEAD AND THE APPOINTMENTS RELIGIOUSLY FOLLOW THE STATES POL ICY ON RESERVATION, ETC. ALSO THE UNIVERSITY EXERCISES SIGNIFICANT CONTROL OVER T HE TEACHERS ALMOST AT PAR WITH REGULAR EMPLOYEES. THESE FACTS ALSO BRING THIS CASE SOMEWHAT NEAR TO THE CASE OF MAX MULLER BHAWAN, NEW DELHI REPORTED IN 268 ITR 31 (AAR) WHEREIN IT HAS BEEN RULED THAT SUCH ENGAGEMENTS ARE COVERED U/S 19 2 FOR THE PURPOSES OF TDS. ALSO THE RELATIONSHIP BETWEEN THE TEACHERS SO EMPLOYED AND THE EMPLOYER IS SEEN TO HAVE THE RIGIDITY OF CONTRACT OF EMPLOY MENT AND NOT THE FLEXIBILITY SEEN IN CONTRACTS FOR EMPLOYMENT. THUS IT IS HEL D THAT THE UNIVERSITYS LIABILITY FOR TDS IS U/S 192 OF THE ACT AND NOT 194 J OF THE ACT. THE CIT(A) HAS RIGHTLY ARRIVED AT THE CONCLUSION AND ALLOWED THE A PPEAL OF THE ASSESSEE. THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CI T(A). 8. AS REGARDS TO APPEAL NO. 5706/DEL/2013 THE REGIS TRY HAS REGISTERED THIS APPEAL THOUGH THE CONTENTS AND THE GROUNDS AS WELL AS THE ASSESSMENT YEAR AND THE ORDER WHICH IS CHALLENGED IS IDENTICAL TO T HAT OF ITA NO. 6 ITA NOS. 5605 & 5706/DEL/2013 5605/DEL/2013. THEREFORE, ITA NO. 5706/DEL/2013 IS INFRUCTUOUS BEING DUPLICATED ITA NO. 5605/DEL/2013 AND IS DISMISSED. 11. IN RESULT, REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15TH MAY, 201 7 . SD/- SD/- (N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 15/05/2017 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 11/05/2017 PS 2. DRAFT PLACED BEFORE AUTHOR PS 7 ITA NOS. 5605 & 5706/DEL/2013 11/05/2017 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 15.05.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 15.05.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.