2013 (6) TMI 934 - AT - Income Tax

Summary

Issues:
Appeals against CIT(A) order for A.Y. 2008-09 to 2010-11 regarding non-deduction of tax at source u/s 194C and liability of interest u/s 201(1A).

Analysis:
1. The assessee appealed against the CIT(A) order holding them in default for not deducting tax at source u/s 194C, leading to a demand u/s 201(1) and interest u/s 201(1A) for A.Y. 2008-09 to 2010-11.
2. The CIT(A) partially allowed the appeal, deleting the liability u/s 201(1) due to taxes paid by the recipient but upheld the interest u/s 201(1A) based on short payment of tax, citing the Hindustan Coco Cola Beverages Pvt. Ltd. case.
3. The appellant argued that funds were transferred to Government Agencies who acted as nodal agencies, deducting tax at source before paying contractors, thus not making the assessee liable for TDS u/s 194C, referencing relevant case laws like U.P. State Industrial Development Corporation Ltd. vs. ITO.
4. The authorities contended that non-deduction of tax at source u/s 194C justified treating the assessee in default u/s 201(1A).
5. The ITAT found that the Government Agencies acted as agents for the assessee, deducting tax at source before paying contractors, preventing double taxation. The matter was remanded to the AO for fresh consideration based on these observations.
6. Consequently, all appeals were allowed for statistical purposes, emphasizing no liability for TDS u/s 194C on payments made through nodal agencies.

This detailed analysis of the judgment highlights the issues, arguments, legal references, and the final decision of the ITAT regarding the non-deduction of tax at source and the liability of interest under relevant sections of the Income Tax Act.