Gujarat Sickle Cell Anemia Control Society Vs DCIT (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the provisions of TDS under section 194J and 194C of the Income Tax Act, 1961 applicable to the payments made to medical labs and technicians as per an agreement for the screening of sickle cell anemia in tribal district under a Government program.
The assessee is a society under the control of Commissioner of Health, Gandhinagar and various agencies were appointed for carrying out work of screening and subsequently submission of report to concerned authority. TDS on these payments was deducted @2% or at lower rate of 1% under section 194C of the Act. the assessee has entered into an agreement with the some entities for the purpose of carrying out screening (i.e. DTT test, HPLC test etc.) of Sickle Cell Anemia in tribal district of Gujarat. The department held that the function performed by the above entities fall under the purview of professional services/managerial and consultancy services as per section 194J of the Act and therefore liability of the deduction of tax arises @ 10% u/s 194J instead of u/s 194C.
The Tribunal observed that Shri Mahavir Prasad, Judicial Memebr & Shri Waseem Ahmed, Accountant Member observed that the screening test is conducted as per the guideline of the Government of Gujarat in this regard.
“The tests conducted by the personnel of the agencies in the field can be performed by medically qualified personnel and their report is submitted to society after approval of local Medical Officer. On the other hand, assessee’s contention is that it has availed service of labour class and these labours don’t have any technical qualification.”
“As after going through it, it is apparent and clear from the terms of the agreement that technical persons carried out tests and Laboratory Technician will be with minimum qualification of MLT/DMLT with science graduate while paramedical worker will be with minimum qualification of SI. It is clear that aforesaid services come within Section 194J and 194C of the Act. Therefore, we do not find any ambiguity in the order passed by the learned CIT(A). In our considered opinion, learned CIT(A) has passed a detailed and reasoned order and same does not required any interference at our end,” the Tribunal said.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The captioned three appeals have been filed at the instance of the assessee against the orders of the Commissioner of Income Tax (Appeals)-8, Ahmedabad (‘CIT(A)’ in short) vide Appeal Nos. CIT(A)-8/423/15-16, CIT(A)-8/424/14-15 & CIT(A)-8/425/15- 16; respectively, all dated 22.02.2017 arising in the assessment order dated all 08.01.2016 passed by the Assessing Officer (AO) under s. 201(1)/201(1A) of the Income Tax Act, 1961 (the Act) concerning AYs. 2013-14 to 2015-16.
2. Since, in all appeals facts & circumstances & issues are common, therefore, for the sake of brevity, we would like to dispose of these matters by way of a common order. ITA No. 1072/Ahd/2017 for A.Y. 2013-14 is taken as lead case for disposal of the above appeals.
3. The grounds of appeal raised by assessee in A.Y. 2013-14 read as under:
“1. Both the lower authorities have erred in law and on the facts of the case in confirming the nature of Service agreement entered by the appellant with various agencies for supply of labour and work as “professional in nature” U/S.194J instead of 194C while framing the assessment u/s 201(1) /201(1 A) of the Act and while passing the appellate order under the facts and circumstances of the case the action of both the authority are required to be quashed.
2. The Ld CIT (A) has erred in law and on facts of the case has confirmed the interest charged U/s.201 (1A) of IT Act which otherwise not warranted as appellant has rightly deducted and paid required TDS and there is no loss to the revenue.
3. Both the lower authorities have failed to appreciate the facts and nature of work and held as professional work.
4. Both the lower authorities have erred in law and on facts in passing the orders without properly appreciating the facts and that he further erred in grossly ignoring various submissions, explanations and information agreement with various agencies submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of both the authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed.”
4. Facts of the case are that the assessee is a society under the control of Commissioner of Health, Gandhinagar and various agencies were appointed for carrying out work of screening and subsequently submission of report to concerned authority. TDS on these payments was deducted @2% or at lower rate of 1% UNDER s.194C of the Act. In this regard, details were gathered during the course of survey as well as after the survey by issuing notices on various dates. The details of parties to whom payments were made under the project in different years starting from F.Y. 2012-13 to F.Y. 2014-15 and TDS deducted thereon is as per the table below:
