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TMI Blog2013 (10) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... main performed by the assessee, which falls within the ambit of clause F & I of Explanation-1 to section 194C - Decided against Revenue. In case there is a difference of opinion regarding rate of deduction under various provisions of Chapter-XVII-B, there are separate TDS provisions under the Income Tax Act and matter can be separately examined by ITO(TDS). But that legal debate cannot be made a basis for applying section 40(a)(ia). Section 40(a)(ia) has no role to play in such circumstances when the assessee under bonafide belief complied the provisions of Chapter-XVII-B & deposited the tax in time. - Decided against the revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... ing soil sample test from any soil testing laboratory and submission of the report to the assessee. That the above job awarded to M/s RB Computers was performed by non skilled workers. As regards work performed by M/s SIPP it was submitted that the work related to the field inspection, door to door waste collection, information collection and this work was also undertaken by non skilled workers as the work does not require any technicality. As regards the works awarded to M/s Pushpa Enterprises, it was submitted that the job involved was marking nod numbers on map, length and dia of pipe on computer and delivering prints of the same on the basis of engineering design data given by the assessee. In view of the above, it was submitted that assessee had rightly deducted the tax u/s 194C and there was no violation. The Assessing Officer, however, did not agree with the contentions of assessee and made proportionate disallowance u/s 40a(ia) of the Act for short deduction of tax and consequent non payment thereof. 4. Dissatisfied with the order, the assessee filed appeal before Ld CIT(A) and reiterated his submissions. It was further submitted that section 40a(ia) applied only when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se parties requires any professional or technical skills. The counsel of the assessee further submitted before me that the work performed by these six parties pertains to the work before & after the work of technical nature performed by the assessee in between. He further argued that the work performed by these parties can never be considered to be of a level sufficient to be called as professional services particularly when neither any professional qualification was required for same nor could the AO bring anything on records which shows that such services were rendered by any professionals. The assessee placed its reliance in the case of R.S.Suriya Vs. DCIT (2010) 2 ITR (Trib) 746 (Chennai) I further examine the issue, 1 referred to the case of S.R.F. Finance ltd. Vs. CBDT(1995) 211 ITR 861(Del) where the Hon'ble court observed that there are qualitative differences between the subject, referred as work u/s 194C & the subject referred as Services u/s 194J. The two words convey different ideas. In' the former (i.e. work) the activity is predominantly physical; it is tangible. In the activity referred as Services, the dominant feature of the activity is intellectual, or at least ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be deducted on which tax is deductible at source under chapter XVTT-B or after deduction the same has to be paid. In present case, the assessee has deducted the tax under chapter XVII-B (though u/s 194C instead of sec. 194J as per AO) & deposited the same in time. The counsel of the assessee also invited my attention to the CBDT Circular nO.5 of 2005, dt. 15th July 2005 where the Board has clarified that the provision of sec. 40(a)(ia) is to augment compliance of TDS provision in the case of residents & curb bogus payments to them. He further argued that sec. 40a (ia) being. a penal provision that disallows bonafide expenses. In computing the total income, it needs to be interpreted strictly keeping in the section. My attention was also invited to the assessment of A. Y. 2005-06 when the assessee 's case was completed 1u/s 143(3) * similar nature of expenses, where TDS was deducted u/s 194C only, were duly accepted by the Department. Thus looking to the underlying objective of the provision with corresponding interpretation of the sec·. 40(a)(ia) and particularly in view of the fact that payment made and TDS made therein and deposited into Govt. Coffer; is not in dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 6 of ITAT order in which the nature of payment included payments for making of land markings, computer job and field inspection etc. The issue involved in the subsequent year was also same wherein the assessee had deducted tax u/s 194C and revenue argued that tax should have been deducted u/s 194J of the Act. The Hon'ble Tribunal has decided this issue in favour of the assessee and has dealt in I.T.A. No.86/Del/2012 by holding as under:- "The bare perusal of section 194C would reveal that in case payment is being made with regard to a contract entered for the purpose of dealing with and satisfying the need for housing accommodation for the purpose of planning, development or improvement of cities, towns and villages then such payment would come within the ambit of section 194C. On the other hand, explanation appended to section 194J suggest that professional service would be constituted, all those services which are rendered by a person in the course of carrying on legal, medical, engineering or architectural profession etc. The jobs availed by the assessee from the persons did not fall within the ambit of this explanation, rather they are ancillary jobs connected with main p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deducting tax, inter alia, the assessee has to pay into Government Account. There is nothing in the said section to treat, inter alia, the assessee as defaulter where there is a shortfall in deduction. With regard to the shortfall, it cannot be assumed that there is a default as the deduction is not as required by or under the Act, but the facts is that this expression, 'on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction has not been paid on or before the due date specified in sub-section (1) of section 139'. This section 40(a)(ia) of the Act refers only to the duty to deduct tax and pay to government account. If there is any shortfall due to any difference of opinion as to taxability of any item or the nature of payments falling under various TDS provisions, the assessee can be declared to be an assessee in default u/s 201 of the Act and no disallowance can be made by invoking the provisions of section 40(a)(ia) of the Act." We find that the facts and circumstances of the present case are similar to the facts and circumstances of the case as decided by the Tribunal in assessment year 2008-09. Therefore, we do not see ..... X X X X Extracts X X X X X X X X Extracts X X X X
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