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Issues involved: Appeal against order of CIT(A)-VI, Ahmedabad regarding TDS u/s 194C and interest u/s 201(1A) for assessment year 2008-09.
TDS u/s 194C: The appellant was required to make TDS u/s. 194C for grant-in-aid provided to GMDC and GMRDS. During a survey, it was found that tax was not deducted as required u/s. 194C for payments made to GMDC and GMRDS. The AO held that these payments were contractual and TDS should have been deducted. The CIT(A) confirmed the AO's order based on the judgment in Associated Cement Company case. The appellant argued that the payments were grant-in-aid, not for work done under a contract. The appellant's belief that TDS was not required due to the nature of payments was considered a reasonable cause for non-deduction. The state government resolutions also supported that the payments were grant-in-aid, not for services rendered. The Tribunal allowed the appellant's ground, stating that section 194C did not apply in this case, and hence, the provisions of section 201(1) and 201(1A) were not applicable. Interest u/s 201(1A): The AO levied interest of &8377; 1,45,692 for non-deduction of TDS. The CIT(A) upheld this decision along with the addition of &8377; 15,72,059 u/s 201(1). However, the Tribunal allowed the appeal of the assessee, stating that since the payments were grant-in-aid and not for services under a contract, the provisions of section 201(1A) were not applicable. The Tribunal considered the appellant's belief and the state government resolutions as supporting evidence for the non-applicability of TDS provisions in this case. Separate Judgment: No separate judgment was delivered by the judges in this case.
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