2023 (9) TMI 909 - AT - Income Tax

TDS u/s 194C - non deduction of TDS on payment made for purchase of packing material - Demand u/s 201(1) plus demand u/s 201(1A) against the assessee - HELD THAT - The provision of section 194C of the Act is applicable to work and not for purchase made which are liable for VAT. Based on the evidences so produced and argument advanced before us we are of the considered view that all are purchases of material with some specifications supported by the levy of the value added tax on material and therefore, the same is no for any work contract. Since, the assessee has discharged the burden that all these payments made by the assessee is not for any work contract the provision of section 194C of the Act is wrongly invoked by the lower authorities and therefore, the levy TDS made by the ld. AO is quashed - Decided in favour of assessee.

Summary

Issues Involved:
1. Delay in Filing Appeal
2. Non-Deduction of TDS u/s 194C on Purchase of Packing Material
3. Validity of Levy of Tax and Interest u/s 201(1)/201(1A)

Summary:

1. Delay in Filing Appeal:
The appeals were filed with a delay of 11 days. The assessee submitted that the appeal was filed online within the prescribed time limit, and the physical copy was filed later. The Tribunal accepted the online filing as valid and proceeded to decide on the merits.

2. Non-Deduction of TDS u/s 194C on Purchase of Packing Material:
The assessee was considered in default for non-deduction of TDS u/s 194C on payments made for the purchase of packing material. The assessee argued that these payments were for the purchase of goods and not for any work contract, thus not liable for TDS u/s 194C. The Tribunal noted that the purchases were supported by invoices indicating VAT payment, implying they were purchases of goods and not services. Therefore, the Tribunal held that the provisions of section 194C were wrongly invoked by the lower authorities and quashed the levy of TDS.

3. Validity of Levy of Tax and Interest u/s 201(1)/201(1A):
The lower authorities had imposed tax and interest u/s 201(1)/201(1A) on the assessee for non-deduction of TDS. The Tribunal, however, found that the payments were for purchases and not for any work contract. Consequently, the Tribunal quashed the levy of tax and interest, allowing the appeals filed by the assessee.

Conclusion:
The Tribunal allowed the appeals of the assessee for all the assessment years involved, holding that the provisions of section 194C were not applicable to the purchases of packing material, and thus, the levy of TDS and consequent tax and interest was quashed. The decision in the lead case (ITA No. 321/JPR/2023) was applied mutatis mutandis to the other appeals (ITA Nos. 322 to 325/JPR/2023).