PRINCIPAL SRI SATHYA SAI COLLEGE FOR WOMEN, JAIPUR V. INCOME TAX OFFICER, TDS-2, JAIPUR

ITA 684/JPR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4033 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 18-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Non-deduction of tax; TDS
• Section: 201(1); 201

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ T;IQJ U;K;IHB] T;IQJ T;IQJ U;K;IHB] T;IQJ T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH JESK LH-'KEKZ] YS[KK LNL; DS LE{K BEFORE : SHRI RAMESH C.SHARMA, ACCOUNTA NT MEMBER VK;DJ VIHY LA-@ ITA NO.684, 685 & 686/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14, 2014-15 & 2015-16 PRINCIPAL SRI SATHYA SAI COLLEGE FOR WOMEN SECTOR 2, JAWAHAR NAGAR, JAIPUR CUKE VS. THE ITO TDS-2 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: JPRP01273 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY :SHRI P.C. PARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY: SHRI RAJENDER SINGH, ADDL. CIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 02/08/2019 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 19 /08/2019 VKNS'K@ ORDER PER RAMESH C. SHARMA, AM THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAIN ST THREE DIFFERENT ORDERS OF THE LD. CIT(A)-3, JAIPUR DATED 15-03-20 18 FOR THE ASSESSMENT YEARS 2012-13 TO 2014-15, IN THE MATTER OF ORDER PA SSED U/S 201(1)/201(1A) OF THE I.T. ACT, 1961. 2.1 THE COMMON GROUND RAISED BY THE ASSESSEE IN ALL THE THREE ASSESSMENT YEARS RELATE TO TREATING THE ASSESSEE IN DEFAULT U/S 201(1)/ ITA NO.684/JP/2018 PRINCIPAL SRI SATHYA SAI COLLEGE FOR WOME N VS ITO, TDS-2, JAIPUR 2 201(1A) OF THE ACT BY THE AO FOR NON-DEDUCTION OF TAX AT SOURCE U/S 194J ON PAYMENTS MADE TO EMPLOYEES. 2.2 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE R UNS A COLLEGE UNDER THE NAME AND STYLE OF SRI SATHYA SAI P.G. COLLEGE FOR W OMEN. DURING THE ASSESSMENT YEARS UNDER CONSIDERATION, THE ASSESSEE PAID SALARY TO ITS EMPLOYEES WHO ARE TEACHING THERE ON WHICH ASSESSEE DEDUCTED THE TAX AT SOURCE U/S 192 OF THE ACT. THE AO HELD THAT THE EMP LOYEES TO WHOM ASSESSEE PAID SALARY ARE NOT HAVING ANY EMPLOYER-EM PLOYEE RELATIONSHIP BETWEEN THE COLLEGE TEACHERS/LECTURERS/ STAFF. THER EFORE, THE ASSESSEE IS LIABLE TO DEDUCT TAX AT SOURCE U/S 194J OF THE ACT IN PLACE OF 192 OF THE I.T. ACT, 1961. ACCORDINGLY, THE DEMAND WAS RAISED BY THE AO U/S 201(1) /201(1A) OF THE I.T. ACT, 1961. 2.3 BY IMPUGNED ORDERS, THE LD. CIT(A) CONFIRMED TH E ACTION OF THE AO AGAINST WHICH THE ASSESSEE HAS FURTHER FILED TH E APPEALS BEFORE THIS BENCH. 2.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND FOUND FROM THE RECORD THAT TH E ASSESSEE COLLEGE HAS ISSUED APPOINTMENT LETTERS TO TEACHERS/ LECTURERS/ STAFF MEMBERS FROM TIME TO TIME TO WHOM SALARY WAS PAID. THE MONTHWISE SALA RY SHEET WAS ALSO PREPARED BY THE COLLEGE ON THE BASIS OF THE ATTENDA NCE REGISTER OF THE ITA NO.684/JP/2018 PRINCIPAL SRI SATHYA SAI COLLEGE FOR WOME N VS ITO, TDS-2, JAIPUR 3 EMPLOYEES. THE SALARY WAS PAID TO THE EMPLOYEES AND DUE TAXES ARE BEING DEDUCTED U/S 192 OF THE I.T. ACT, 1961. FROM THE RE CORD, I FOUND THAT THE ASSESSEE IS RUNNING A COLLEGE FOR WOMEN UNDER A RE GISTERED SOCIETY IN THE NAME SRI SATYHA SAI COLLEGE FOR WOMEN AT JAWAHA R NAGAR, JAIPUR. THE ASSESSEE HAS APPOINTED TEACHERS/ LECTURERS AND STAFF FOR FULL TIME EMPLOYMENT AS PER TERMS OF APPOINTMENT LETTER ISS UED BY THE COLLEGE. THE ASSESSEE IS PAYING MONTHLY FIXED SALARY AS PER THE TERMS OF EMPLOYMENT OF SERVICE. THE APPOINTMENT IS MADE UNDE R AN EMPLOYER- EMPLOYEE RELATIONSHIP BETWEEN THE COLLEGE AND THE T EACHERS/LECTURERS/ STAFF. I ALSO FOUND THAT THE COLLEGE AUTHORITIES HA S FULL CONTROL OVER THE TEACHERS/ LECTURERS/ STAFF AS PER THEIR WORKING HOU RS AND WORKING DAYS FIXED BY THE EMPLOYER AND THEY WERE ALSO SUPPOSED T O DO OTHER WORK RELATED TO THE COLLEGE ACTIVITIES AS AND WHEN REQUI RED. SINCE THERE WAS EMPLOYEE AND EMPLOYER RELATIONSHIP BETWEEN THE COLL EGE TEACHERS/LECTURERS/STAFF, THEREFORE, TAX ON THE SAL ARY PAID TO THEM WAS CORRECTLY DEDUCTIBLE U/S 192 OF THE ACT. I ALSO FOU ND THAT IN ORDER TO ESTABLISH EMPLOYEE AND EMPLOYER RELATIONSHIP BETWEE N THE COLLEGE TEACHERS/LECTURERS/STAFF, THE ASSESSEE ALSO PRODUCE D SALARY REGISTERS AND APPOINTMENT LETTERS BEFORE THE LOWER AUTHORITIES. T HE LD.AR OF THE ASSESSEE DURING THE COURSE OF HEARING RELIED ON THE ORDER OF THE ITAT ITA NO.684/JP/2018 PRINCIPAL SRI SATHYA SAI COLLEGE FOR WOME N VS ITO, TDS-2, JAIPUR 4 CHANDIGARH BENCH (ITA NO. 512 TO 514/CHD/2014 DATED 12-08-2014) IN THE CASE OF ACIT (TDS) VS M/S. MCM DAV COLLEGE FOR WOMEN WHEREIN THE ITAT, CHANDIGARH BENCH HELD AS UNDER:- 14. WE ARE IN CONFORMITY WITH THE FINDINGS OF THE CIT (APPEALS) IN THIS REGARD THAT IN VIEW OF VARIOU S RATIO LAID DOWN BY THE HON'BLE SUPREME COURT AND THE HON'BLE D ELHI HIGH COURT AND IN VIEW OF THE FINDINGS OF THE CIT( APPEALS) VIDE PARA 5.6 THAT THE RELATIONSHIP BETWEEN THE MAN AGEMENT AND TEACHING STAFF INVOLVED AN OBLIGATION TO OBEY O RDERS IN THE WORK TO BE PERFORMED, THE SAID RELATIONSHIP COU LD NOT BE CALLED CONTRACT FOR SERVICE SINCE THE TEACHING STAF F HAD NOT UNDERTAKEN TO RENDER ANY PROFESSIONAL OR TECHNICAL SERVICE. AS THERE WAS A CONTRACT OF SERVICE BETWEEN THE ASSE SSEE DEDUCTOR AND ITS TEACHING STAFF APPOINTED ON ADHOC BASIS AND THE SALARY PAID TO THEM BEING BELOW THE TAXABLE LIM IT, DOES NOT WARRANT DEDUCTION OF TAX AT SOURCE AND SUCH NON - DEDUCTION OF TAX AT SOURCE DOES NOT INVALIDATE THE PROVISIONS OF ACT MAKING THE ASSESSEE LIABLE FOR THE DEMAND RA ISED UNDER SECTION 201(1)/201(1A) OF THE ACT. WE ARE IN AGREEMENT WITH THE OBSERVATION OF THE CIT(APPEALS) THAT MERELY BECAUSE THE ASSESSEE HAD NOT MAINTAINED SEPA RATE BOOKS OF ACCOUNT FOR FINANCIALLY ADDED COURSES AND SELF FINANCING COURSES WAS NOT RELEVANT, AS THERE WAS NO REQUIREMENT UNDER THE ACT AND BY NOT MAINTAINING SE PARATE BOOKS OF ACCOUNT, THE NATURE OF PAYMENT WOULD NOT G ET CHANGED. FURTHER IN VIEW OF THE TEACHING STAFF BEIN G APPOINTED ON ADHOC BASIS, FOR A SHORT PERIOD, THERE WAS NO ENTITLEMENT FOR ANY OTHER BENEFITS LIKE PF, GRATUIT Y, HRA, INCREMENT ETC. UPHOLDING THE ORDER OF THE CIT(APPEA LS), WE HOLD THAT THE ASSESSING OFFICER WAS NOT CORRECT IN TREATING THE PAYMENTS MADE TO THE TEACHERS ON ADHOC BASIS AS PROFESSIONAL PAYMENTS IN LINE WITH THE PROVISIONS O F SECTION 194J OF THE ACT. THE ASSESSEE IS THUS NOT IN DEFAUL T AND THERE IS NOT MERIT IN RAISING OF DEMAND UNDER SECTION 201 (1) OF THE ACT AND CHARGING OF INTEREST UNDER SECTION 201(1A) OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE REVENUE AR E THUS DISMISSED. ITA NO.684/JP/2018 PRINCIPAL SRI SATHYA SAI COLLEGE FOR WOME N VS ITO, TDS-2, JAIPUR 5 15. THE FACTS, CIRCUMSTANCES AND ISSUES IN ITA NO. 513 TO 517/CHD/2014 ARE IDENTICAL TO THE FACTS IN I TA NO. 512/CHD/2014 AND OUR DECISION IN ITA NO.512/CHD/201 4 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS. 513 TO 517/CHD/2014. 16. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE DISMISSED. BEFORE PARTING WITH THE ISSUE, I OBSERVE THAT THE A O HAS WRONGLY TREATED THE SALARY PAID TO ITS TEACHERS/ LECTURERS/STAFF AS PROFESSIONAL SERVICES WHICH IS REPRODUCED AS UNDER:- PROFESSIONAL SERVICES MEANS SERVICES RENDERED B Y A PERSON IN THE COURSE OF CARRYING ON LEGAL, MEDICAL, ENGINEERING OR ARCHITECTURAL PROFESSION OR THE PROFESSION OF ACCOU NTANCY/ COMPANY SECRETARY OR TECHNICAL CONSULTANCY OR INTERIOR DECO RATION OR ADVERTISING OR INFORMATION TECHNOLOGY OR FILM ARTIS TS OR AUTHORIZED REPRESENTATIVES. FURTHER, AS PER THE NOTIFICATION NO. 88/2008 F. NO. 275/43/2008-IT(B) DATED 21-8-2008 (S.O. 2085 (E) DA TED 21-08- 2008) PROFESSIONAL SERVICES INCLUDE SPORTS PERSON , UMPIRES & REFEREES, COACHES & TRAINERS, TEAM PHYSICIANS & PHY SIOTHERAPISTS, EVEN MANAGERS, COMMENTATORS, ANCHORS AND SPORTS COL UMNISTS. IN VIEW OF ABOVE DISCUSSIONS, THE BENCH OBSERVES TH AT THE PAYMENTS MADE TO TEACHERS/ LECTURERS/ STAFF BY THE ASSESSEE IS CO VERED U/S 192 OF THE ACT AND NOT COVERED U/S 194J OF THE ACT. THE ISSUE IS C OVERED BY THE DECISION OF ITAT CHANDIGARH BENCH (SUPRA) BECAUSE OF THE SIM ILAR FACTS AND ITA NO.684/JP/2018 PRINCIPAL SRI SATHYA SAI COLLEGE FOR WOME N VS ITO, TDS-2, JAIPUR 6 CIRCUMSTANCES OF THE CASE. HENCE, THE SOLITARY GROU ND OF THE ASSESSEE RAISED IN ALL THE ABOVE APPEALS IS ALLOWED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE ARE A LLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 19/08/20 19. SD/- JESK LH 'KEKZ (RAMESH C. SHARMA) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 19 /08/ 2019 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- PRINCIPAL SRI SATHYA SAI COLLEGE FOR WOMEN, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD-TDS, JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.684 TO 686/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR