If Payees Accounted for Received Amounts & Paid Taxes, Assessee Not in Default under Sec. 201(1)

Satya Kiran Healthcare Private Ltd Vs ITO (ITAT Delhi)

Introduction: The case of Satya Kiran Healthcare Pvt. Ltd. vs. ITO, adjudicated by the ITAT Delhi, revolves around disputes regarding Tax Deducted at Source (TDS). The Assessee challenged the order of the Ld.CIT(A) regarding short deduction of TDS under sections 201(1) and 201(1A) of the Income Tax Act, pertaining to assessment years 2017-18 and 2019-20.

Detailed Analysis: The core contention of the case was whether TDS should be deducted under section 194J or section 194C of the Act on payments made for maintenance of X-Ray and CVC machines. The Assessee argued for TDS deduction under section 194C, while the Assessing Officer (AO) insisted on section 194J.

The AO’s stance was based on the view that payments made for maintenance constituted fees for professional and technical services, warranting TDS deduction at a higher rate of 10% under section 194J. Despite the Assessee’s compliance with TDS deduction at 1% under section 194C, the AO raised demands under sections 201(1) and 201(1A), citing short deduction of TDS.

In the appellate proceedings, the Ld.CIT(A) upheld the AO’s order, disregarding the Assessee’s arguments and case laws. However, crucial aspects, including the consideration of amounts by payees in their returns and payment of taxes, were overlooked.

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