The Director General Health, Dehradun vs Department Of Income Tax

ACIT(TDS), The Director General 13-A, Subhash Road, Health, Near IT Park, Dehradun. Vs. Sahastradhara Road, Dehradun. MRTD00478C (Appellant) (Respondent)

Appellant by: Sh. Rajiv Nanda, Standing Counsel Respondent by: Sh. B.R.R. Kumar, Sr. DR

ORDER

PER S.V. MEHROTRA, A.M.

This appeal filed by the Revenue is directed against the order of ld.

CIT(A)-1, Dehradun dated 30/03/2013 for A.Y. 2012-13.

2. The assessee is a Government Department dealing in various

activities related to health department. The assessee's premises was

surveyed u/s 133A on 7th September, 2011. During the survey proceedings

it was noticed that the assessee had made contractual payments amounting

to Rs. 12,28,58,000/- to various public sector undertakings of the

Government of Uttarakhand and Uttar Pradesh but did not deduct tax at

source from such payments. Accordingly, the AO passed the order u/s ITA No. 4936/D/ 2013 2

201(1)/201(1A) treating the assessee in deafult and a demand of Rs.

79,21,918/- (short charge of Rs. 64,57,160/- and interest of Rs. 14,64,778/-)

was created. This demand has been created in respect of non deduction of

tax u/s 194C @ 2% on the total payments of Rs. 12,28,58,000/- and u/s

194J @ 10% on total payments of Rs. 4 crores.

3. Brief facts apropos the issue relating to non-deduction of tax u/s 194C

are that the AO noticed that the assessee had made contractual payments to

various organizations of Government as noted in page 3 to 5 of his order.

He observed that the assessee's contention that the various Nirman Units

were only allotted budget by the office and, therefore, no TDS was

deductible as the allocation was under the orders of Govt. of Uttarakhand,

was not accetable as the payments had been made for construction of

hospitals, dispensaries, blood banks, transit hostels etc. As regards the non-

deduction of TDS u/s 194J brief facts are that there was memorandum of

understanding executed between Department of Health and Family Welfare,

Government of Uttarakhand & Emergency Management & Research Institute

(EMRI), Secunderabad for providing Emergency response services to the

entire population of the state of Uttarakhand as a Nodal Agency and to

operationalise Emergency Medical services. The AO observed that Gross

contractual payments made to EMRI were subject to TDS u/s 194J @ 10%

as they were in the nature of fees for professional and technical services.

Before ld. CIT(A) in respect of the issue relating to TDS u/s 194C it was, ITA No. 4936/D/ 2013 3

inter-alia, submitted that there was no revenue loss in this case because of

the deductees were liable for income tax and submitted their return of

income regularly and also deposited tax.

4. Ld. CIT(A) held that since entire contract value was actually paid to the

Government entities they were assessee's contractors and, therefore, TDS

was required to be made. As regards default in deduction u/s 194J, the ld.

CIT(A) did not accept the assessee's contention that the TDS provisions

were not applicable to EMRI. He held that the MOU signed between the

Department of Health & Family Welfare Government of Uttarakhand and

EMRI showed clearly that EMRI was simply a transport contractor but it was

its responsibility to provide for "the development, management and

functioning of all the facilities and services" mentioned in the MOU. Thus, it

was providing specialized 'comprehensive emergency response services' to

the people of the state in pursuance of the MOU which comes within the

ambit of technical/professional services.

5. Ld. CIT(A) also did not accept the assessee's contentions that EMRI

should be exempted from TDS as it was a Charitable Institution registered

u/s 12AA of the Income Tax Act. However, he accepted the alternate

contention of the assessee and directed the assessee to furnish the

documentary evidence in support of its contentin before the AO regarding

tax being paid by deductees. He also held that interest would be chargeable ITA No. 4936/D/ 2013 4

in respect of tax that was paid by the payee directly, for the period between

the time when the tax was deductible and the time it was actually paid.

6. The Department is in apepal before us and has taken following

grounds of appeal:

1. "The CIT(A) has erred in law and on facts in directing the assessee to furnish the documentary evidence in support of its contention (to the effect the payee has disclosed the receipt in his return of income and paid tax due thereon) before the AO and also directing the AO to satisfy himself about the correctness of the same in light of the decision of the Apex Court in the case of Coca Cola Beverage Pvt. Ltd. vs. CIT (2007) 293 ITR 226 (SC) without appreciating the facts that the same is tantamount to set a said of the case."

7. At the time of hearing, ld. Counsel filed before us Tribunal's order in

assessee's own case for A.Ys. 2011-12 & 2012-13 and for the department's

appeal for A.Y. 2011-12. We find that the Tribunal following the order for

A.Y. 2011-12 has set aside the order for A.Y. 2012-13 and restored the

matter to the file of AO observing as under:

8. "In both these appeals, the grounds raised by the assessee are identical to the grounds raised by the assessee and the Revenue for AY 2011-12. For the detailed discussion therein, the orders of the authorities below for A.Y. 2010-11 as well as AY 2012-13 are also set aside and he is directed to readjudicate the issue in the light of our direction in paragraph nos. 4 to 6 abvoe."

Therefore, the Department's appeal is also restored to the file of AO. ITA No. 4936/D/ 2013 5

8. In the result, the Department's appeal is allowed for statistical

purposes.

Order pronounced in the open court on 23/02/2015

Sd/- Sd/-

(GEORGE GEORGE K) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated: 23/02/2015 *Kavita

Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, New Delhi. TRUE COPY By Order

ASSISTANT REGISTRAR