2024 (2) TMI 47 - AT - Income Tax

TDS u/s 194J or u/s 194C - payments made towards maintenance of X-Ray machine and CVC machine - assessee in default u/s 201(1) - HELD THAT - We observe that the contentions and the case laws relied on by the assessee was not considered by the CIT(A) in proper perspective. We also noticed that in the course of appellate proceedings assessee submitted that the assessee furnished return of income filed by the payee to show that the income has been accounted for in their returns and paid the tax dues on income declared by them and assessee is in the process of furnishing of certificate to this effect from an Accountant in Form No. 26A, however, the Ld.CIT(A) has not considered the submissions of the assessee. In the grounds of appeal the assessee also contended that the AO failed to consider the amount already deposited by the assessee even before passing the order u/s 201(1) and 201(1A) of the Act. We observe that as per the mandate of the Hon ble Supreme Court in the case of Hindustan Coca Cola Beverage Pvt. Ltd 2007 (8) TMI 12 - SUPREME COURT if the payee has taken into consideration the amounts received by payer in their return of income and paid taxes on such amounts the assessee cannot be treated as an assessee in default u/s 201(1) of the Act. CIT(A) appears to have not considered all these submissions of the assessee and the evidences placed before him. In the absence of any evidence furnished before us to show that the payees have already considered these amounts in their returns, in the interest of justice, we restore this matter to the file of AO for fresh adjudication in accordance with law. The assessee is at liberty to file all the evidences to support their contentions before the AO. All the issues in the appeal are left open for fresh adjudication in accordance with law after providing adequate opportunity of being heard to the assessee. Appeals of the assessee are allowed for statistical purpose.

Summary

Issues involved:
The judgment involves the issue of TDS deduction under section 194J or 194C of the Act on payments made for maintenance of X-Ray machine and CVC machine.

Issue 1: TDS Deduction under Section 194J or 194C
The appeals were filed against the order of the Ld. CIT(Appeals) for short deduction of TDS under sections 201(1) and 201(1A) of the Act. The Assessing Officer held that TDS should have been deducted under section 194J at 10% for maintenance of X-Ray and CVC machines as fees for professional and technical services. The Ld.CIT(A) sustained this view, stating that the payments made were considered charges for professional services and should attract TDS at 10% under section 194J. The contention that TDS should be deducted under section 194C was rejected.

Issue 2: Consideration of Assessee's Submissions
The assessee contended that the payments for maintenance of X-ray machine and CVC machine should attract TDS under section 194C and not 194J. The assessee provided detailed submissions, relying on various case laws and circulars to support their argument. The Ld.CIT(A) did not consider the submissions and evidence presented by the assessee in proper perspective. Additionally, the assessee argued that the payees had included the amounts received in their returns and paid taxes on them, thus the assessee should not be treated as in default under section 201(1) of the Act. However, these submissions were not adequately considered by the Ld.CIT(A).

Issue 3: Fresh Adjudication
In light of the above issues, the Tribunal observed that the Ld.CIT(A) did not properly consider the contentions and submissions of the assessee. As per the mandate of the Hon'ble Supreme Court, if the payees have accounted for the amounts received in their returns and paid taxes on them, the assessee cannot be treated as in default. Therefore, the matter was restored to the file of the AO for fresh adjudication in accordance with the law. The assessee was given the opportunity to provide all necessary evidence to support their contentions before the AO. All issues in the appeal were left open for fresh adjudication.

Conclusion
The appeals of the assessee were allowed for statistical purposes, and the matters were remanded back to the AO for fresh adjudication in accordance with the law. The Tribunal emphasized the importance of considering all submissions and evidence presented by the assessee in such cases.