The Deputy Conservator of Forest (North), Udaipur V. ITO (TDS), Udaipur

ITA 86/JODH/2020

AI Insights

The case involves multiple appeals by the Deputy Conservator of Forests against the orders of the Income Tax Officer, TDS, Udaipur, which demanded tax deductions at source on payments made to various Eco Development Committees (EDCs) and other similar bodies. The primary legal contention was whether these payments were subject to TDS under Section 194C of the Income Tax Act, 1961. The assessee argued that these payments were reimbursements for expenses and not taxable income, thus not liable for TDS. The Commissioner of Income Tax (Appeals) upheld the ITO's decision, leading to the current appeals. The tribunal found merit in the assessee's request for a detailed examination of the nature of the payments and the relationship with the Government of Rajasthan, leading to the remand of the case to the ITO.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122734 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-01-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 18-03-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Non-deduction of tax; TDS
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND Dr. S. SEETHALAKSHMI, JUDICIAL MEMBER ITA Nos. 75 & 76/Jodh/2020 (ASSESSMENT YEARS- 2011-12 & 2012-13) The Deputy Conservator of Forest (South), Chetak Circle, Udaipur. Vs Income Tax officer TDS, Udaipur. (Appellant) (Respondent) PAN NO. JDHD01240B ITA Nos. 84/Jodh/2020 (ASSESSMENT YEARS- 2011-12 ) The Deputy Conservator of Forest, Tulsi Sadhan, Shikhar Road, Rajsamand. Vs Income Tax officer TDS, Udaipur. (Appellant) (Respondent) PAN NO. JDHD01870B ITA Nos. 85 & 86/Jodh/2020 (ASSESSMENT YEARS- 2011-12 & 2017-18) The Deputy Conservator of Forest ( North), Near Govt. Press, Udaipur. Vs Income Tax officer TDS, Udaipur. (Appellant) (Respondent) PAN NO. JDHF00101D Assessee By Shri Amit Kothari-C.A. Revenue By Ms. Nidhi Nair, JCIT-DR 2 Deputy Conservator of Forest & Ors.vs. ITO ITA Nos. 103/Jodh/2020 (ASSESSMENT YEARS- 2011-12 ) The Deputy Conservator of Forest, Gandhi Ashram Road, Dungarpur (Raj.) Vs Income Tax officer TDS, Udaipur. (Appellant) (Respondent) PAN NO. JDHD02304B ITA Nos. 116 & 117/Jodh/2020 (ASSESSMENT YEARS- 2011-12 & 2012-13 The Deputy Conservator of Forest, Dahod Road, Custom Choraha, Banswara (Raj.) Vs Income Tax officer TDS, Udaipur. (Appellant) (Respondent) PAN NO. JDHD03104D Assessee By Shri Amit Kothari - CA Revenue By Ms. Nidhi Nair, JCIT-DR Date of hearing 19/01/2023 Date of Pronouncement 13/03/2023 O R D E R PER: Dr. S. Seethalakshmi, JM These are eight appeals filed by the assessee arising out of the order of the learned Commissioner of Income Tax (Appeals)-1, Udaipur [hereinafter referred to as ld.’CIT(A)’] passed on dates as mentioned here in below for the assessment year mentioned as tabulated here in below which in 3 Deputy Conservator of Forest & Ors.vs. ITO turn arises from the order passed by the Income Tax Officer, TDS, Udaipur under the provision of Income Tax Act, 1961 (in short 'the Act') and dated referred here in below: Asstt. Year Department Appeal No. Reference to the dated of order of the ld. CIT(A) Reference to the order of the ld. AO date and section under which the order is passed 2011-12 75/Jodh/2020 24.01.20209 28.03.2018 U/s 201(1) & 201(1A) 2012-13 76/Jodh/2020 24.01.2020 30.01.2019 U/s 201(1) & 201(1A) 2011-12 84/Jodh/2020 24.01.2020 20.03.2018 U/s 201(1) & 201(1A) 2011-12 85/Jodh/2020 12.03.2020 20.03.2018 U/s 201(1) & 201(1A) 2017-18 86/Jodh/2020 12.03.2020 29.12.2017 U/s 201(1) & 201(1A) 2011-12 103/Jodh/2020 27.01.2020 23.03.2020 U/s 201(1) & 201(1A) 2011-12 116/Jodh/2020 27.01.2020 20.03.2018 U/s 201(1) & 201(1A) 2012-13 117/Jodh/2020 27.01.2020 07.02.2019 U/s 201(1) & 201(1A) 2. As it is seen that for all these appeals grounds are similar, facts are similar and arguments were similar and were heard on the same day we consider the facts and ground taken in ITA No. 84/Jodh/2020 for A. Y. 2011- 12 and considering the said case as lead case. 4 Deputy Conservator of Forest & Ors.vs. ITO 3. For deciding these appeals, we taken ITA No. 84/Jodh/2020 for the A.Y. 2011-12 as lead case for wherein following grounds have been raised by the assessee: “ 1.The ld. CIT(A) has erred in sustaining the order passed by ld. AO under section 201(1)/201(1A)/ The order passed by ld. AO was bad in law and bad on facts. 2. The ld. CIT(A) has erred in sustaining the action of ld. AO that there was liability of deduction of tax at source on reimbursement to various EDC/VFMC under the instruction of Government of Rajasthan. There was no contract liable to TDS under section 194C. 3. There was no liability of TDS also in view of the fact that the same is also not taxable even in the hands of the recipient and the appellant cannot be treated as assessee is default. 4. The appellant pray for suitable costs. 5. The Appellant crave, leave or reserving the right to amend modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.” 4. Briefly the facts of the case are that the assessee is an office of State Government of Rajasthan, Forest Department for conservation of forest and increasing the forest area through re-foresting. A Spot verification was conducted u/s 133A(2A) of the Act in the office of the assessee on 22.01.2018. During the course of spot verification, statement of Shri Kumar Swami Gupta, who as the incumbent officer in the seat of the Deputy 5 Deputy Conservator of Forest & Ors.vs. ITO Conservator of Forest, Rajasamand was recorded. The AO found that the assessee-deductor was paying large sums of money to some association of persons which are called Eco Development Committee (EDCs) or Van Suraksha and Prabandh Samiti (VFPMC), but no TDS was made on these payments. The AO issued show cause notice and after considering the assessee’s reply, passed order u/s 201(1)/201(1A) of the Act creating a demand of Rs. 40,51,180/- vide order dated 20.03.2018. 5. The relevant part of the assessment order is reproduced as under:- “In view of the above discussion and facts in this case, the deductor is treated as assessee in default u/s 201(1)/201(1A) for non deduction and deposition of tax deducted at source on which IDS of Rs. 21,63,960/- and interest thereon u/s 201(1A) of the I.T. Act of Rs.18,87,221/-, totaling demand to Rs. 40,51,180/-( details as under) in FY 201011 is hereby levied. Issue demand notice and challan accordingly. MONTH FOR FY 2016-17 Amount paid to VFPMCs Months TDS to be Made @20% Interest on late payment upto date of Order Jun-10 1422991 94 284598 267522 July-10 43000 93 8600 7998 Aug-10 175935 92 35187 32372 Sep-10 144525 91 28905 26304 Oct -10 1537632 90 307526 276774 Noy-10 0 89 0 0 Dec-10 127217 88 25443 22390 Jan-11 82750 87 .16550 14399 Feb-11 442666 86 88533 76139 Mar-11 6843082' 85 85 1368616 1163324 TOTAL 10819798 2163960 1887221 6 Deputy Conservator of Forest & Ors.vs. ITO Since deductor failed to deduct tax at source his case is referred for penalty u/s 271C to office of additional CIT, TDS Rage, Udaipur with separate covering letter.” 6. Being aggrieved by the AO the assessee preferred appeals before the ld. CIT(A) and he confirmed the orders of AO with the following observations:- “Keeping in view the facts and circumstances of the case, provisions of section 194C of the Act and judicial precedents cited (supra), it is held that the assessee deductor was obliged to deduct TDS as per section 194C of the Act on payment made to VFPMCVs, the AO has correctly levied the liabilities u/s 201(1)/201(1A) of the Act for non-deduction of tax, the total demand of Rs. 40,51,180/- raised on this account is confirmed. The grounds of appeal raised by the appellant regarding this issue are dismissed.” 7. Now the assessee is in appeal before us . The Ld AR for the assessee submitted that there is no element of profit and the income is not taxable in the hands of the assessee as the grant was being received towards reimbursement of expenses. He further submitted that the assessee was acting as agent of Government of Rajasthan and acted in collaboration with state Government. Accordingly, he submitted the assessee herein is not liable to deduct TDS from these payments. He submitted that the assessee would be in a position to explain these details before the AO, if one more opportunity is given. 8. Per contra, the ld. DR relied upon the orders of the lower authorities. She submitted that the letter given by the State Government appears to be a contract given to the assessee. In that case, the responsibility to deduct TDS 7 Deputy Conservator of Forest & Ors.vs. ITO shall lie upon the assessee. However, in view of the contentions raised by Ld A.R, the Ld D.R also agreed that these issues may be remanded back to the file of AO for examining the claim of the assessee with regard to its relationship with the Government of Rajasthan and deciding the issues afresh. 9. We have heard both the parties, perused materials available on record. In view of the submissions made by Ld A.R, we are of the view that, in the interest of equity and justice, all the issues need to be restored to the file of the AO to examine them afresh, by providing adequate opportunity of being heard to the assessee. The assessee is also directed to produce the documentary evidences concerning the issues in question and to cooperate with the AO for completing the proceedings in expeditious way. Thus the appeal of the assessee is allowed for statistical purposes 10. In ITA Nos. 75,76, 84 to 86, 103, 116 & 117/Jodh/2020 pertaining to A.Ys 2011-12, 2012-13 & 2017-18, the Bench noted that the facts and circumstances of the case are exactly identical to the facts and circumstances of the case in ITA No. 84/Jodh/2020. Therefore, our findings and directions contained therein shall apply mutatis mutandis to these appeals also. 8 Deputy Conservator of Forest & Ors.vs. ITO 11. In the result, all the appeals of the assessee are treated as allowed for statistical purpose . Order pronounced on 13/03/2023. Sd/- Sd/- (B. R. BASKARAN) (Dr. S. SEETHALAKSHMI) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 13/03/2023 *S antosh Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR 6. Guard File Assistant Registrar Jodhpur Bench