2013 (6) TMI 820 - AT - Income Tax

Summary

Issues involved:

1. Applicability of Section 194C to the agreement.
2. Legality and validity of the demand u/s 201(1) and 201(1A).
3. Delay in filing appeals.
4. Nature of the agreement between the assessee and the society.
5. Dismissal of infructuous appeal.

Summary:

1. Applicability of Section 194C to the agreement:

The assessee challenged the order passed by the ITO (TDS) u/s 201(1) and 201(1A) for alleged failure to deduct TDS u/s 194C on the amount retained by Akola Pravasi Malvahatuk Sahakari Sanstha Maryadit. The CIT(A) held that Section 194C was applicable to the agreement between the assessee and the society, justifying the demand raised by the Assessing Officer.

2. Legality and validity of the demand u/s 201(1) and 201(1A):

The CIT(A) confirmed the demand raised by the Assessing Officer, stating that the assessee should have deducted TDS u/s 194C. The AO treated the agreement as a contract covered u/s 194C and raised demands for various financial years totaling Rs. 53,90,743/-.

3. Delay in filing appeals:

The appeals numbered 1888, 1889, 1890, and 1891/PN/2012 were delayed, but the delay was condoned as they were substitutions for the original appeal ITA No. 717/PN/2011, which was filed within the period of limitation.

4. Nature of the agreement between the assessee and the society:

The agreement assigned the right to ply city buses to the society in exchange for royalty payments. The society bore all operational costs and retained the income after depositing it in a joint account. The Tribunal found that the agreement did not create a contractual relationship as contemplated u/s 194C, as the assessee did not make any payments to the society but collected royalty. Therefore, Section 194C was not applicable.

5. Dismissal of infructuous appeal:

Appeal No. 717/PN/2011 was dismissed as infructuous since separate appeals were filed for the respective years.

Conclusion:

The Tribunal concluded that the agreement was an assignment of rights rather than a contract under Section 194C. The grounds taken by the assessee were allowed, and the demands raised by the Assessing Officer were not upheld. ITA No. 717/PN/2011 was dismissed, and ITA Nos. 1888, 1889, 1890, and 1891/PN/2012 were allowed.