2014 (1) TMI 935 - AT - Income Tax

Applicability of Section 194C of the Act Payments made for construction work Held that - The appellant has made payments to Rajasthan State Agriculture Marketing Board, the Body which has executed the construction work through its Executive Engineer or PWD - The agencies entered into contract with the contractor for construction for providing facilities - the works of planning and development of infrastructure i.e. construction and maintenance of roads within market area and approach road etc. are executed and carried out by the Board - Thus, these works are carried out by the Boards and not by the committee - Hence, section 194C will not be applicable in the case of the assessee - It is an Agricultural Marketing Board who is executing and carrying out the works thus, there was no requirement of making deduction u/s. 194C of the Act by the assessee - the appellant cannot be held to be in default u/s. 201(1) of the IT Act, 1961 Relying upon CIT vs. KUMS, Gajsinghpur & Ors. 2009 (1) TMI 781 - RAJASTHAN HIGH COURT Decided against Revenue.

Summary

Issues:
Appeal against CIT(A) order regarding applicability of section 194C of the IT Act, 1961 for payments made for construction work.

Analysis:
1. The Department appealed against the CIT(A) order concerning the applicability of section 194C of the IT Act, 1961 for payments made for construction work during the assessment year 2009-10.
2. The Assessing Officer found that TDS had not been deducted on certain payments for construction work made by the assessee. The assessee argued that the payments were made by Rajasthan Rajya Krishi Vipnan Board, Chittorgarh, and therefore, no TDS was deducted under section 194C of the Act.
3. The Assessing Officer raised a demand under section 201(1) of the Act, holding the assessee as an assessee in default. The CIT(A) considered the submissions of the assessee and deleted the addition after examining the nature of payments made by the assessee to the Rajasthan State Agriculture Marketing Board for construction work.
4. The CIT(A) observed that the payments were made to the Board, which executed the construction work through its Executive Engineer or PWD. The CIT(A) referred to a similar issue decided by the ITAT, Jaipur Bench 'B', where it was held that section 194C would not be applicable as the works were carried out by the Board and not the committee.
5. The Department appealed the CIT(A) order, but the Tribunal dismissed the appeal, stating that the issue was already covered by a previous decision of the ITAT Jaipur Bench 'B' and the judgment of the Hon'ble jurisdictional High Court. The Tribunal upheld the CIT(A)'s decision to delete the addition.
6. The Tribunal considered the written submissions provided by both parties and concluded that since the issue was already settled by previous judgments, the appeal of the Department was dismissed.
7. The Tribunal's decision was based on the precedent set by the earlier judgments, confirming that the provisions of section 194C were not applicable in the case of the assessee regarding the payments made for construction work.