9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (11) TMI 538 - AT - Income TaxTDS u/s 194C - payments made to Eco Development Committee (EDCs) and Van Suraksha and Prabandhan Samiti (VFPMC) - non deduction of TDS u/s 40(a)(ia) - whether payments made for preservation of forest/reforestation by employing self help groups as per implementation of panchayti raj/NREP/RLEGP can be constituted as contract payment within the meaning of section 194C or not? - HELD THAT - The Van Samitis are instituted as per Rajasthan State Government Notification S.No. F/7(39)/VAN/90 dated 17.08.1999 for various conservation / forestation programme consisting people of local / village area for their upliftment through employment. As per notification these Van Samitis are not in the category of 'thekedar' i.e. contractor. Thus, work was executed through participation of people and government as per notification framed by the State Government as per National Forest Policy (1988) of the Central Government. Therefore, conditions for exemption u/s 194C are satisfied in this case in view of the CBDT circular no. 502 (F.No. 385/49/86-ITC dated 27.01.1988), as these payments were not contract payments. AO merely based on the fact that these payments were made for the work and relying the statement given by the AAO u/s 131 fasten the liability u/s 194C which is against the various facets argued by the ld. AR of the assessee. It Also noted here that in the statement recorded the AAO in answer to Question no 4 denied of involvement of contractor in his department. Considering these facts, and CBDT circular no 502 dated 27.01.1988, we are of the considered view that payments made to these Van Samitis are not contract payments and provisions of section 194C thus do not apply. As decided in M/s. Santur Infrastructure Pvt. Ltd 2019 (12) TMI 1106 - ITAT DELHI assessee was not required to deduct TDS as the payment of EDC was not made out of any statutory and contractual liability to HUDA with whom the assessee has no privity of contract - Decided against revenue.
Issues Involved:
1. Condonation of Delay 2. Applicability of Section 194C on Payments to EDCs/VFPMCs 3. Reliance on CBDT Circular No. 502 4. Nature of Payments to EDCs/VFPMCs Summary: 1. Condonation of Delay: The revenue filed an appeal with a delay of 30 days, citing technical glitches as the reason. The assessee did not object, and the tribunal condoned the delay based on the Supreme Court's decision in the case of Collector, Land Acquisition vs. Mst. Katiji and Others, 167 ITR 471 (SC), admitting the appeal. 2. Applicability of Section 194C on Payments to EDCs/VFPMCs: The revenue challenged the deletion of tax demand under Section 201(1)/201(1A) by the CIT(A), arguing that payments made to Eco Development Committees (EDCs) and Van Suraksha and Prabandhan Samitis (VFPMCs) should be considered contract payments under Section 194C of the Income Tax Act, 1961. The AO had determined that these payments required TDS deduction, as the EDCs/VFPMCs did not fall under the exemptions provided by Sections 10(20), 10(46), 11, 12, or 80P of the Act. 3. Reliance on CBDT Circular No. 502: The CIT(A) allowed the assessee's appeal based on CBDT Circular No. 502 (F.No. 385/49/86-ITC dated 27.01.1988), which exempts payments under the National Rural Employment Programme (NREP) and Rural Landless Employment Guarantee Programme (RLEGP) from TDS provisions. The CIT(A) noted that these programs are executed with public participation and do not involve contractors, thus not constituting contract payments under Section 194C. 4. Nature of Payments to EDCs/VFPMCs: The tribunal found that the payments made to EDCs/VFPMCs were for forest preservation and reforestation, executed by self-help groups under government schemes without involving contractors. These payments are not considered contract payments under Section 194C, aligning with the CBDT Circular No. 502. The tribunal also noted that the AO's reliance on statements from the accounting officer did not override the legal exemptions provided by the circular. Conclusion: The tribunal upheld the CIT(A)'s decision, stating that payments made to EDCs/VFPMCs are not subject to TDS under Section 194C, as they are not contract payments. The appeals filed by the revenue for the assessment years 2016-17 to 2018-19 were dismissed.
|
