Itta/350/2015 Of Commissioner Of Income Tax [Tds] v. The Executive Engineer

THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN AND THE HON’BLE SRI JUSTICE M.SEETHARAMA MURTI I.T.T.A.No.350 of 2015 JUDGMENT: (per Hon’ble Sri Justice Ramesh Ranganathan) This appeal under Section 260-A of the Income Tax Act, 1961 (forshort “the Act”) is preferred against the order passed by the Tribunalin I.T.A.No.334/V/2012 dated 03.07.2014. Against the order passed by the Assessing Authority levying interestfor failure to deduct tax at source, and in levying interest underSection 201(1A) of the Act for a sum of Rs.5,95,985/-, the ExecutiveEngineer, Panchayatraj Department, Government of AndhraPradesh, carried the matter in Appeal to the Commissioner of IncomeTax (Appeals) who, by his order dated 31.07.2012 following theCircular of the CBDT dated 27.01.1998, held that there was no needto deduct tax on the payments made under Assembly ConstituencyDevelopment Programme (ACDP), as the beneficiaries haveconstituted themselves into Village Committees, Self-help groups etcand had executed the work, having taken the same from the StateGovernment; there was no contract per se as the beneficiariesthemselves had executed the work, and there was no middlemen ora contractor, in effect; and, therefore, the provisions of Section 194Cof the Act were not attracted and the Assessing Officer was notjustified in raising the demand under Section 201(1) of the Act inrespect of such payments. The Assessing Officer was directed toverify the claim of the assessee to the effect that all the contracts hadbeen executed by the beneficiaries themselves through the mediumof Village Committees, self-help groups etc. and, thereafter, to reducethe demand raised under Section 201(1) of the Act with regard to theworks executed under the ACDP scheme by the beneficiariesthrough the medium of Village Committees, Self-help groups etc. Section 194C(1) of the Act provides that any person responsible forpaying any sum to any resident for carrying out any work inpursuance of a contract between the contractor and a specifiedperson shall, at the time of credit of such sum to the account of thecontractor or at the time of payment thereof in cash or by issue of acheque or draft or by any other mode, whichever is earlier, deduct taxat source. Section 194C(1) of the Act is attracted only in cases where paymentis made pursuant to a contract between the contractor and aspecified person. The contention of the assessee was that nocontract was involved for execution of works under the ACDPscheme, as the beneficiaries had formed themselves into VillageCommittees and Self-help groups, and were executing works on theirown. All that the Commissioner and the Tribunal have held is that theAssessing Authority should verify whether, in fact, these works wereexecuted by the beneficiaries forming themselves into VillageCommittees or Self-help groups and, in such an event, to reduce theamount of interest levied under Section 201(1) of the Act. Noquestion of law, much less a substantial question of law, arises forconsideration in this appeal necessitating interference under Section260-A of the Act. The appeal fails and is, accordingly, dismissed. The miscellaneouspetitions pending, if any, shall also stand dismissed. There shall beno order as to costs. ________________________RAMESH RANGANATHAN, J Date:18.11.2015. JSU _____________________M.SEETHARAMA MURTI, J THE HON’BLE SRI JUSTICE RAMESH RANGANATHANAND THE HON’BLE SRI JUSTICE M.SEETHARAMA MURTI JSU I.T.T.A.No.350 of 2015 Date: 18.11.2015