ITO (TDS), Ward-1 Tirupathi, Tirupathi V. AP State Housing Corporation Limited, Chittoor, Chittoor

ITA 921/HYD/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1896 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 09-10-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 06-07-2015
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: S RAMA RAO
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NOS. 918, 919, 920 & 921/HYD/2015 ASSESSMENT YEARS: 2008-09, 2009-10, 2010-11 & 2011- 12 INCOME TAX OFFICER (TDS) , TDS WARD-I, TIRUPATI VS AP STATE HOUSING CORPORATION LIMITED, COLLECTORATE, CHITTOOR [PAN: HYDA05038F] (APPELLANT) (RESPONDENT) FOR REVENUE : S HRI M. SITA R AM , D R FOR ASSESSEE : SHRI S. RAMA RAO, AR DATE OF HEARING : 0 9 - 1 0 - 201 5 DATE OF PRONOUNCEME NT : 14 - 1 0 - 2015 O R D E R THIS FOUR APPEALS ARE BY REVENUE AGAINST THE ORDER S OF THE COMMISSIONER OF INCOME TAX (APPEALS), TIRUPATI (I/C ) DATED 21-04-2015 EMANATING FROM THE ORDERS OF THE ITO/TDS -I, TIRUPATI U/S. 201(1) AND 201(1A) OF THE INCOME TAX ACT [ACT] FOR AYS. 2008- 09 TO 2011-12. 2. BRIEFLY STATED, ASSESSEE IS ENGAGED IN THE ACTI VITIES OF PROMOTION OF HOUSING ON BEHALF OF A.P. GOVERNMENT A ND HAS A PROJECT OFFICE IN CHITTOOR DISTRICT AND ITS MAIN OB JECT IS TO CONSTRUCT HOUSES TO WEAKER SECTIONS UNDER VARIOUS GOVERNMENT PROGRAMMES. ASSESSEE BRANCH SEEMS TO HAVE INCURRED CERTAIN EXPE NSES TOWARDS SALARIES OF OUTSOURCED PERSONS THROUGH A NODAL AGEN CY NAMED ZILLA I.T.A. NOS. 918 TO 921/HYD/2015 AP STATE HOUSING CORPORATION LIMITED :- 2 -: MAHILA SAMAKHYA / ZILLA SAMAKHYA WHICH WAS HELD BY THE ASSESSING OFFICER (AO) TO BE THE CONTRACT PAYMENT A ND FOR NOT HAVING DEDUCTED THE TAX ON THE PAYMENTS MADE, THE A O TREATED THE PROJECT DIRECTOR, APSHC, CHITTOOR AS ASSESSEE IN DE FAULT AND RAISED DEMAND U/S. 201(1) AND INTEREST U/S. 201(1A) SIMULT ANEOUSLY FOR ALL THE YEARS UNDER REFERENCE. 2.1. WHEN AO HAS ISSUED SHOW CAUSE NOTICE CONSEQUE NT TO SURVEY OPERATIONS CONDUCTED ON 23-12-2010, ASSESSEE OBJECTED TO THE SHOW CAUSE NOTICE AND SUBMITTED THAT MD OF APSH C, HYDERABAD INSTRUCTED THE LOCAL HEAD TO PAY WAGES / SALARIES TO OUTSOURCED PERSONNEL SUCH AS IT MANAGERS, WORK INSP ECTORS, ADDITIONAL ENGINEERS AND ACCOUNTS ASSISTANTS THROUG H ZILLA MAHILA SAMAKHYA / ZILLA SAMAKHYA, WHILE DULY DEDUCTING THE PF FROM WAGES AND PROFESSIONAL TAX FROM SALARIES. IT WAS S UBMITTED THAT ZILLA SAMAKHYA WAS ACTING AS A DISBURSING AGENT AND AS SUCH DOES NOT AMOUNT TO CONTRACT PAYMENTS AS PER THE PROVISIO NS OF SECTION 194C OF THE IT ACT. ASSESSEE ALSO SUBMITTED THE DE TAILS OF PAYMENTS MADE AND RELIED ON THE ORDER OF CIT(A)-GUN TUR, ON SIMILAR ISSUE WHEREIN THE PAYMENTS OF SIMILAR NATUR E PAID BY PALAMANERU MUNICIPALITY ON A MONTHLY BASIS WERE HEL D TO BE NON- CONTRACT PAYMENTS AND NOT ATTRACTING DEDUCTION OF T AX U/S. 194C. AO HOWEVER, DID NOT AGREE AND PASSED ORDERS U/S. 20 1(1) AND 201(1A). 2.2. ASSESSEE REPRESENTED BY THE PROJECT DIRECTOR MADE SIMILAR SUBMISSIONS TO THE CIT(A). LD. CIT(A) CONS IDERED THE SUBMISSIONS AND ALLOWED THE APPEALS BY STATING AS U NDER: I.T.A. NOS. 918 TO 921/HYD/2015 AP STATE HOUSING CORPORATION LIMITED :- 3 -: 5.2 PERUSED THE SUBMISSIONS OF THE APPELLANT AND THE ORDERS OF THE AD, ON THE SUBJECT MATTER. AS COULD B E SEEN FROM THE ORDER U/S 201(1) THERE WAS A SURVEY IN THIS CAS E ON 23/12/2010 AND THE AD SHOWN TO HAVE NOTICED THAT CE RTAIN PAYMENT WERE MADE TO OUTSOURCED EMPLOYEES, ON WHICH NO TDS WAS MADE. AS PER THE AD, THE AMOUNTS ARE PAID THROU GH ZILLA SAMAKHYA WHICH IS REGISTERED SOCIETY, AS SUCH THE P AYMENTS TO OTHER THAN GOVT WOULD ATTRACT TDS AS PER THE PROVIS IONS OF SEC. 194 C . EXCEPT, OBSERVING SO THE AD DID NOT BRING O UT ANY FACTS TO PROVE THAT SUCH AMOUNTS CONSTITUTE PAYMENTS TO C ONTRACTORS AS AS DEFINED U/S 194C OF IT ACT. IN FACT THE AD HI MSELF WAS ON RECORD TO SHOW THAT SUCH AMOUNTS WERE PAID AS WAGES / SALARIES ETC FOR EMPLOYING THE SERVICES OF PERSONS SUCH AS COMPUTER OPERATORS, CLERICAL STAFF AND OTHERS ETC, AND ALSO THE LEAD OF THE TEAMS AND, THE AMOUNTS WERE PAID BY DED UCTING THE PF AND PROFESSIONAL TAX, WHILE CONTRIBUTING THE EMP LOYEES SHARE OF PF. THE PAYMENT PAID BY THE APPELLANT CORPORATION FOR V ARIOUS ASST. YEARS ARE SHOWN AS UNDER: A) AY 2008-09 RS 1,35,89,000 B) AY 2009-10 RS 2,53,88,000 C) AY 2010-11 RS 1,93,55,000 D) AY 2011-12 RS 1,08,97,000 5.3 AS OBSERVED, THE AMOUNTS WERE SHOWN AS PAYMENTS MADE TO VARIOUS OUTSOURCED SERVICES AND DRAWN AS WAGES/ SAL ARIES, ON CONSOLIDATION BASIS AND PAID THROUGH ZILLA MAHILA S AMAKHYA / ZILLA MAHILA SAMAKHYA AS ORDERED FROM THE HEAD QUARTERS O F THE ORGANIZATION AT HYDERABAD AND PROVIDENT FUND PAYME NTS AS WELL AS THE PROF TAXES WERE CONTRIBUTED/ DEDUCTED AS AP PLICABLE, WHILE PREPARING THE CONSOLIDATED CHEQUE ISSUED TO ZILLA M AHILA SAMAKHYA WHICH INTURN MAKES PAYMENTS TO THE OUTSOURCED PERS ONNEL DIRECTLY THROUGH THEIR RESPECTIVE BANK ACCOUNTS. THE DETAIL S INDICATED CLEARLY REVEAL THAT THE AMOUNTS UNDER REFERENCE WE RE PAID AS WAGES OR SALARIES TO OUTSOURCED EMPLOYEES THROUGH A NODAL AGENCY CALLED ZILLA MAHILA SAMAKHYA OR ZILLA SAMAKHYA, WHE RE PAYMENTS ARE DIRECTLY CREDITED IN TO THE INDIVIDUAL BANK ACC OUNTS OF EMPLOYEES WITHOUT ANY INDICATION OF CONTRACT/CONTRA CTEE RELATIONSHIP ESTABLISHED BE BETWEEN THE APPELLANT AND THE NODAL AGENCY. HENCE IT IS REASONABLE TO HOLD THAT THE PAY MENTS DO NOT FALL IN THE PROVISIONS OF THE 194C OF IT ACT. THE ORDER OF CIT(A) GUNTUR ON SIMILAR LINES IN CASE OF PALAMANER MUNICIPALITY AL SO SUGGESTS THIS ANGLE. HENCE THE PENALTY U/S 201(1) AND INTEREST U/ S 201(LA) ARE I.T.A. NOS. 918 TO 921/HYD/2015 AP STATE HOUSING CORPORATION LIMITED :- 4 -: NOT CHARGEABLE, SINCE THE APPELLANT HELD TO BE NOT TREATED AS ASSESSEE IN DEFAULT. REVENUE IS AGGRIEVED. 3. LD. DR RELIED ON THE ORDERS OF AO TO SUBMIT THA T THERE WERE CONTRACT PAYMENTS TO ZILLA SAMAKHYA AND RELIED ON PARA 5 OF THE AOS ORDERS WHEREAS LD. COUNSEL RELIED ON THE F INDINGS BY THE CIT(A) THAT PAYMENTS ARE DIRECTLY CREDITED TO THE I NDIVIDUAL BANK ACCOUNTS OF THE EMPLOYEES AND PF AND PROFESSIONAL T AXES WERE DEDUCTED. HE ALSO RELIED ON THE CO-ORDINATE BENCH DECISION IN THE CASE OF GREATER HYDERABAD MUNICIPAL CORPORATION, HY DERABAD IN ITA NOS. 161 TO 163/HYD/2015 DT. 24-09-2015. 4. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE DETAILS ON RECORD. THERE IS NO DISPUTE WITH REFERE NCE TO THE NATURE OF PAYMENTS. THE ONLY ISSUE IS WHETHER THE PAYMENT S, MADE THROUGH ZILLA SAMAKHYA THROUGH WHICH THE SAID PERSO NS WERE EMPLOYED BY ASSESSEE, WAS ON CONTRACT BASIS OR WAGE S? THERE IS A FINDING BY THE LD. CIT(A) THAT THE AMOUNTS WERE CRE DITED TO THE EMPLOYEES DIRECTLY AND THE ZILLA SAMAKHYA WAS GETTI NG RS. 20/- PER PERSON FOR THE SERVICES RENDERED. THEREFORE, I AM OF THE OPINION THAT THERE IS NO DIRECT CONTRACT BETWEEN ASSESSEE-P ROJECT DIRECTOR AND THE SAID ZILLA SAMAKHYA FOR THE WHOLE OF THE AM OUNT PAID TO VARIOUS EMPLOYEES. SIMILAR ISSUE WAS CONSIDERED BY THE CO- ORDINATE BENCH WHEREIN ALSO AMOUNTS PAID THROUGH SE LF-HELP GROUP BY THE GREATER HYDERABAD MUNICIPAL CORPORATION, WHE RE ALSO PROVISIONS OF SECTION 194C INVOKED BY THE REVENUE, WERE EXAMINED. THE ORDERS OF CO-ORDINATE BENCH IN PARA 3 & 4 ARE AS UNDER: I.T.A. NOS. 918 TO 921/HYD/2015 AP STATE HOUSING CORPORATION LIMITED :- 5 -: 3. THE LEARNED DR SUPPORTED THE ORDERS OF THE AO, WHILE THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT (A). THE LEARNED COUNSEL ALSO RELIED UPON THE DECIS ION OF THE SMC A BENCH OF THIS TRIBUNAL IN THE CASE OF GHMC EAST AND NORTH ZONES, HYDERABAD IN ITA NOS.164 & 165/HYD/2015 DATED 24.07 .2015 WHEREIN THE ISSUE HAS BEEL DEALT WITH AT LENGTH AND THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 512 & 513/HYD/2014 DATED 24.04.2015 HAS BEEN F OLLOWED TO HOLD THAT THE TDS PROVISIONS ARE NOT APPLICABLE. TH E RELEVANT PARAGRAPH NO.6 IS REPRODUCED HEREUNDER FOR READY RE FERENCE: 6. HAVING HEARD THE RIVAL CONTENTIONS AND THE RELE VANT MATERIAL ON RECORD, WE FIND THAT THE MAIN ISSUE IS AS TO WHETHER THE SHGS CAN BE CALLED AS CONTRACTORS. THE GHMC HAS ENGAGED AND ISSUED THE POCEEDINGS IN FAVOUR OF THE SHGS BY LOTS AND WORK HAS BEEN ALLOTTED PER UNIT BY FIXING THE WAGES PER PERSON AND ALSO SPECIFYING THE NUMBER OF WORKERS TO BE ENG AGED FOR EACH UNIT AND PER SHIFT. THE WORKING HOURS OF THE W ORKERS AS WELL AS THE SHIFTS ARE ALSO SPECIFIED IN THE NOTIFI CATION. FROM THE BILLS PAID TO THE SHGS ALSO, IT IS SEEN THAT THE PA YMENT IS MADE ON THE BASIS OF NUMBER OF MANDAYS AND WAGES PER DAY AND IS NOT A FIXED AMOUNT PER MONTH. THUS, IT IS CLEAR THA T THE ALLOTMENT OF WORK BY THE ASSESSEE TO THE SHGS IS NO T BY WAY OF CONTRACT BUT IS ENGAGEMENT OF WORKERS FOR A FIXED PERIOD. THE WORKERS ARE BEING PAID AS PER THE AGREED TERMS AND CONDITIONS AND THE AGGREGATE AMOUNT IS PAID TO THE GROUP AND N OT TO ANY PARTICULAR PERSON. THEREFORE, AS RIGHTLY HELD BY TH E CIT (A), THERE IS NO CONTRACTOR-CONTRACTEE RELATIONSHIP BUT IS MORE IN THE NATURE OF EMPLOYEE-EMPLOYER RELATIONSHIP AS THE ASS ESSEE IS ALSO MAKING CONTRIBUTIONS TO THE EPF AND ESI AND AS RIGH TLY POINTED OUT BY THE LD CIT (A), THE PAYMENTS MADE TO AN INDI VIDUAL IS NOT EXCEEDING THE PRESCRIBED LIMIT U/S 192 OF THE I.T. ACT, THE TDS PROVISIONS ARE NOT APPLICABLE TO THE FACTS OF THE C ASE BEFORE US. IN VIEW OF THE SAME, WE DO NOT SEE ANY REASON TO IN TERFERE WITH THE ORDER OF THE CIT (A) IN ALL THESE APPEALS. 4. WE FIND THAT THE FACTS AND CIRCUMSTANCES IN THE PRESENT CASE ARE ALSO SIMILAR AND RESPECTFULLY FOLLOWING TH E DECISION OF THE COORDINATE BENCH, WE HOLD THAT THESE PAYMENTS ARE N OT LIABLE FOR TDS PROVISIONS. 5. SINCE FACTS AND CIRCUMSTANCES IN THE PRESENT CAS E ARE SIMILAR TO THE FACTS OF THE ABOVE CASE AND AS LD. CIT(A)S ORDER IS IN TUNE WITH THE FINDINGS OF THE CO-ORDINATE BENCH ON SIMIL AR I.T.A. NOS. 918 TO 921/HYD/2015 AP STATE HOUSING CORPORATION LIMITED :- 6 -: CIRCUMSTANCES, I DID NOT FIND ANY REASON TO INTERFE RE WITH THE SAID ORDER. IN VIEW OF THIS, REVENUES GROUNDS ARE REJE CTED. 6. IN THE RESULT, ALL THE APPEALS OF REVENUE ARE D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH OCTOBER, 2015 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 14 TH OCTOBER, 2015 TNMM COPY TO : 1. INCOME TAX OFFICER (TDS), TDS WARD-I, OLD D.NO. 5-5-292, NEW D.NO. 5-13-M20-13, INCOME TAX OFFICE, RESERVOIR ROAD, SAROJINI DEVI NAGAR, TIRUPATI. 2. THE PROJECT DIRECTOR, A.P. STATE HOUSING CORPORA TION LIMITED, COLLECTORATE, CHITTOOR. 3. CIT(APPEALS), TIRUPATI. 4. CIT-TDS, VIJAYAWADA. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.