TDS under section 194C of the Income Tax Act,1961- Amendment, Articles, News Notifications, Judgments and Detailed Analysis at one place
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Allahabad HC ruling in ACIT (TDS) Vs. Lotus Valley Education Society clarifies TDS on School Bus Fees under Section 194C, not 194I. Full text available for download.
There is no contract between the assessee and the transporter and the section 194C is applicable to work contract. The learned CIT(A) has found that in the instant case the clearing and forwarding contractor appoints for transportation of goods
In fact, it is clarified that the definition of the word work will not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person other than such customer. However, this amendment came into force only with effect from 1st October, 2009, which will not apply to the period in question in the present case(s).
The agreement between the assessee and GAIL is a contract for sale of gas and not a works contract. VAT which is charged by the seller is on the composite price and not only on the price of the gas. The assessee is required to disclose the price of the gas and transmission charges separately in the same invoice. GAIL is a Government of India undertaking and regularly files its Sales Tax Returns declaring sale of gas inclusive of transmission charges. GAIL is regularly assessed to Income-tax and has been claiming credit for TDS and has also claimed credit for the A.Y. under consideration.
The assessees are availing loans from SNBFCL and passing over the loans to various Self Help Groups (SHGs) working under them. In fact, the loan amounts are not utilized by the assessee trusts. They are utilized by the SHGs working under the trusts. The ultimate payer of the interest is not the assessee trusts, but the SHGs.
In Cargo Linkers (supra), it was contended on behalf of the assessee that the assessee was not the ‘person responsible’ for making payment in terms of section 194C of the said Act. In that case, the Tribunal had also noted and found as a matter of fact that the assessee was nothing but an intermediary between the exporters and the airlines as it booked cargo for and on behalf of the exporters and mainly facilitated the contract for carrying goods.
CIT(Appeals) and the ITAT had the benefit of examining the entire documentary evidence which consisted of the various lease deeds and the c & f agents agreements. The conclusions drawn by these authorities on the basis of such scrutiny are concurrent. Even otherwise, if the revenue was of the opinion that any consideration paid to the c & f agent comprised of some elements such as rent, such a conclusion ought to have been supported by facts.
The Tribunal, upon detailed examination of the nature of relationship between the assessee and the transporter, came to the conclusion that this is not a case of sub-contract. The Tribunal noted that none of the responsibilities of the contractor vis-a-vis the execution of the work were fastened on the transporters.
In the case before the Kerala High Court, the question arose for consideration was whether a transport contract for mere carriage of goods without loading and unloading facility would amount to carrying out any work within the meaning of section 194C(1) of the Act.
In the instant case, the assessee was not under an obligation to carry out the work as it was not under the control of the lender and the possession of the machinery temporarily was passed to the assessee after entering into agreement with the lender. Therefore, in the present case, taking of the machinery and equipment on hire would not amount to a contract for carrying out any work as contemplated in s. 194C of the Act.
