Case Law Details
The Bheemunipatnam Mutually Aided Cooperative Building Society Ltd. Vs ITO (ITAT Visakhapatnam)
Chapter XVIIB of the Act covers the deduction of tax at source which includes section 194J also. The contention of the Ld. AR that when the provisions of section 195A are applied, applying the provisions of section 206AA is not valid due to the fact that the provisions of section 195A is very clear that the income shall be increased to such amount as would, after deduction of tax thereon at the rates in force for the financial year in which such income is payable, be equal to the net amount payable under such agreement or arrangement. The Ld. AR also admitted that there is no written agreement of arrangement with the payee Mr. A. Venkateswarlu. The amount paid by the payer is based on the oral agreement entered into with the payee. Secondly, section 206AA specifies higher of the three rates viz., (i) at the rate specified in the relevant provision of this Act; or (ii) at the rate or rates in force; or (iii) at the rate of twenty per cent. Section 206AA considers “at the rate or rates in force” as mentioned U/s. 195A of the Act and stipulates that out of the three rates, higher rate needs to be applied, in the absence of furnishing of PAN. In the instant case since the PAN of the payee is not available, the rate of 20% deduction shall be applicable for deducting the tax at source from the income credited to the payee. Further, the argument of the Ld. AR could not be accepted, as section 195A is only a grossing up section for the purpose of deduction of tax when it has to be borne by the deductor. The decision of the Hon’ble Delhi High Court relied on by the Ld. AR in the case of Danisco India Pvt Ltd (supra) is not relevant for the present case as it applies to taxation for non-residents in accordance with DTAA. Further, the contention of the Ld. AR could not be accepted on the ground that section 194C is applicable in lieu of section 194J due to the fact that the nature of services to be provided by Sri A. Venkateswarlu is of professional nature such as liaisoning and coordination in connection with getting necessary approvals. Further, various Hon’ble High Courts and various Bench of the Tribunal held that human interaction is a necessary factor for the applicability of section 194J of the Act and in the present case Sri A. Venkateswarlu has to intervene and coordinate and liaise with the Government Authorities for allotment of land by the Government. Hence, the provisions of section 194C is not applicable in the instant case.
FULL TEXT OF THE ORDER OF ITAT VISAKHAPATNAM
This appeal is filed by the assessee against the orders of the Ld. CIT(A)-2, Visakhapatnam in ITA No.1252/2013-14/ITO-W-6(3) VSP/2014-15, Date 17/12/2014 passed U/s. 201(1)/201(1A) r.w.s 250(6) of the Act for the AY 2013-14. The assessee has raised the following grounds of appeal:
1. The appellant claimed before the CIT(A) that reasonable opportunity was not given by the AO before passing orders U/s. 201(1) & 201(1A) of the IT Act and CIT (A) also refused to grant further time to submit factual position.
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