2018 (10) TMI 727 - AT - Income Tax

Short deduction of TDS - TDS u/s 194C OR 194I - Held that - There is no dispute even as per assessee s stand that it had entered into contract with its principal followed by its sub-contracts with the payee parties. We make it clear that it has not placed on record the said sub-contracts indicating it to have not passed over the corresponding liabilities to the payees concerned. We make it clear that sec. 194C of the Act in assessment year 2007-08 question duly applied in case of sub-contractual payments as well. Coupled with this, there is no evidence much less cogent one on record which could suggest that payees concerned had themselves retained all control and possession of the vehicles, tractors, bulldozer, JCD and other machineries qua sec. 194I issue. Case file makes it clear that the Assessing Officer has passed his consequential order / received on 05.10.2016 reducing the impugned demand from ₹14,03,537/- to ₹6,26,719/- only. We therefore do not see any merit in assessee s above sole substantive grievance in these peculiar facts and circumstances. - Decided against assessee.

Summary

Issues:
Assessment of short deduction of TDS under sections 201(1) and 201(1A) of the Income Tax Act, 1961 for the assessment year 2007-08.

Analysis:
The appeal before the Appellate Tribunal ITAT Kolkata involved the challenge to the correctness of the Commissioner of Income Tax (Appeals)'s decision affirming the assessing authority's findings regarding short deduction of TDS. The appellant contested the levy of tax and interest totaling to ?14,03,527 under sections 201(1) and 201(1A). The appellant argued that TDS could not be deducted on the entire composite amount paid for hiring machinery and manpower as it could not be segregated. Additionally, the appellant claimed that section 194I and 194C were not applicable due to the nature of the payments made. However, the Tribunal found that the appellant's claims were not valid as substantial amounts were indeed paid for hiring various machines, and the provisions of section 194I and 194C were applicable. The Tribunal directed the Assessing Officer to recompute the shortage of tax and interest on certain specific amounts. The Tribunal also highlighted that the appellant had not provided sub-contracts indicating that corresponding liabilities were not passed over to the payees, and there was no evidence to suggest that the payees retained control and possession of the machinery. Consequently, the Tribunal dismissed the appellant's appeal, upholding the assessing authority's decision to reduce the demand from ?14,03,537 to ?6,26,719.

In conclusion, the Appellate Tribunal ITAT Kolkata upheld the assessing authority's decision regarding the short deduction of TDS under sections 201(1) and 201(1A) of the Income Tax Act, 1961 for the assessment year 2007-08. The Tribunal found that the appellant's arguments regarding the non-applicability of sections 194I and 194C were unfounded, as substantial amounts were paid for hiring machinery, making the provisions applicable. The Tribunal also noted the lack of evidence supporting the appellant's claims regarding sub-contracts and control over the machinery by the payees. Consequently, the Tribunal dismissed the appeal and affirmed the reduced demand determined by the assessing authority.