2017 (12) TMI 1226 - AT - Income Tax

Competent authority to deduct TDS - TDS liability on salary - payments made to the Pharmacists and Civil Assistant Surgeons deployed on contract - Held that - CIT(A) has considered the details and submissions made by the assessee and gave a categorical finding that the assessee is a Government organization and head of Medical & Health Depart for Khammam District and appointing contract employees in the designations of MPHA(M), MPHA(F), Lab Technician Grade-II, Pharmacist Grade-II and Medical Officer for carrying out the activities relating to rural family welfare services. In the process of implementation of the said welfare services, funds were being granted by the Government of Andhra Pradesh to the assessee, who in turn allocated the budget amongst the Medical Officers of various Primary Health Centres working under his control. In fact, the payments to the contract employees were being made by the respective Medical Officer of various Primary Health Centres and not the assessee and, therefore, the demand raised by the Assessing Officer is not correct on the ground that TDS is not deducted under section 201(1) & 201(1A) and allowed the appeals of the assessee. We also find from the paper book at page Nos. 29 & 30, wherein it is clearly mentioned that who are the DDOs to make the payments to various parties, therefore, the assessee is not a competent person to deduct TDS. In view of the above, we find no infirmity in the order of the ld. CIT(A). Thus, this ground of appeal raised by the revenue is dismissed.

Summary

Issues:
- Competent authority to deduct TDS on payments made to various parties

Analysis:
The case involved appeals by the revenue and Cross Objections by the assessee against separate orders of the Commissioner of Income Tax. The Assessing Officer raised a demand on the assessee for failing to deduct tax under various sections of the Income Tax Act. The assessee contended that the District Medical & Health Officer was not the Drawing & Disbursing Officer for the payments made, and the Medical Officers of Primary Health Centres were responsible for deducting TDS. The Assessing Officer rejected the rectification application, stating no apparent mistake. The ld. CIT(A) considered the explanation given by the assessee and details submitted, concluding that the Medical Officers, not the assessee, were liable for TDS deduction. The ld. CIT(A) directed the Assessing Officer to reduce the demands raised against the appellant and consider raising demands on the Medical Officers instead.

The revenue appealed to the Tribunal, with the Departmental Representative supporting the Assessing Officer's order. The counsel for the assessee reiterated the ld. CIT(A)'s decision, emphasizing that the competent authority for TDS deduction was the Medical Officers of Primary Health Centres, not the assessee. The Tribunal examined the submissions and orders, focusing on the competent authority to deduct TDS. It upheld the ld. CIT(A)'s decision, noting that the assessee was a government organization appointing contract employees, and the Medical Officers were responsible for payments, not the assessee. The Tribunal found no fault in the ld. CIT(A)'s order and dismissed the revenue's appeal.

Regarding the Cross Objections by the assessee, they were supportive of the ld. CIT(A)'s orders. As the Tribunal's decision in the appeals covered the issues raised in the Cross Objections, no separate adjudication was necessary, leading to the dismissal of the Cross Objections. Consequently, the appeals by the revenue and the Cross Objections by the assessee were both dismissed in the judgment pronounced on December 22, 2017.