Case Law Details
Bharatpur Dugdha Utpadak Sahkari Sangh Ltd. Vs ITO (ITAT Jaipur)
ITAT Jaipur held that the provision of section 194C of the Income Tax Act is applicable to work and not for purchase made which are liable for VAT. Hence, TDS u/s. 194C is not leviable as payments were made for purchase of material and not for any work contract.
Facts- A TDS survey u/s. 133A(2A) of the Income-tax Act 1961 was conducted at the business premises of the assessee. During the course of the survey, it was found that the assessee/deductor M/s Bharatpur Dugdh Utpadak Sahakari Sangh Ltd. Bharatpur, has made the contract through the government to supply the packing material and payment made for purchase of packing material, but TDS not deducted under the head contractor payment as per Section 194C of the I.T. Act and TDS required to be deducted @1%/2% as applicable as per section 194C amounts to Rs. 63,700/-.
In this regard the show cause was issued to the assessee and the assessee filed the reply which was considered but AO held the assessee in default for short/non-deduction of TDS of Rs. 63,700/- u/s. 194C of the Act. The interest u/s. 201(1A) was also worked out at Rs. 36,309/-. As the assessee did not find any favour from the order of the ld. CIT(A) the assessee has preferred the present appeal.
Conclusion- Held that the provision of section 194C of the Act is applicable to work and not for purchase made which are liable for VAT. Based on the evidences so produced and argument advanced before us we are of the considered view that all are purchases of material with some specifications supported by the levy of the value added tax on material and therefore, the same is no for any work contract. Since, the assessee has discharged the burden that all these payments made by the assessee is not for any work contract the provision of section 194C of the Act is wrongly invoked by the lower authorities and therefore, the levy TDS made by the ld. AO is queshed for an amount of Rs. 63,700/- and therefore the appeal filed by the assessee in ITA NO. 321/JPR/2023 stands allowed.
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