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of <h1>Tribunal rules payments to self-help groups for sanitation work akin to wages, not subject to TDS.</h1> <h3>Dy. CIT, Circle 14 (2) Hyderabad Versus Greater Municipal Corporation, Central Zone Hyderabad</h3> Dy. CIT, Circle 14 (2) Hyderabad Versus Greater Municipal Corporation, Central Zone Hyderabad - TMI Issues:Revenue appeals against deletion of demand raised by AO under sections 201 and 201(1A) of the IT Act for AYs 2009-10 and 2010-11.Analysis:1. The assessee, a Municipal Corporation, faced a demand raised by the AO for not deducting TDS on payments to sanitation contractors following a circular by the GHMC Municipal Commissioner. The AO held the TDS should be on gross amounts, not just profit margins. The CIT (A) later allowed the appeal, stating the payments were akin to wages, not subject to section 194C, but rather section 192 of the Act, pertaining to employer-employee relationships.2. The Revenue contended that payments to self-help groups (SHGs) for sanitation work were contract amounts liable for TDS under section 194C. The AO treated the assessee as 'assessee in default' for failure to deduct TDS. The assessee argued the SHGs were not contractors but groups of workers paid consolidated wages, supported by documents showing wages and EPF/ESI contributions, similar to a case in Mahaboobnagar where the CIT (A) granted relief.3. The Tribunal analyzed whether the SHGs could be considered contractors, finding the engagement to be more of an employer-employee relationship. The workers were paid per terms agreed upon, with payments made to the group collectively, not individual contractors. As the payments did not exceed limits under section 192 of the IT Act, TDS provisions were deemed inapplicable. The Tribunal upheld the CIT (A) decision, dismissing the Revenue appeals.In conclusion, the Tribunal ruled in favor of the assessee, dismissing the Revenue appeals and upholding the CIT (A) decision based on the nature of the relationship between the Municipal Corporation and the workers from self-help groups engaged for sanitation work.
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