Statutory contributions to marketing authority are outside TDS under section 194J and do not trigger default treatment.

Statutory contributions paid to RSAMB under section 18A of the Rajasthan Agricultural Produce Marketing Act, 1961 were held not to be consideration for professional or technical services, so section 194J did not apply. The Tribunal treated the payment as a statutory levy rather than a contractor-contractee payment and noted that RSAMB had no tax liability on its returned income, so no revenue loss arose. On that basis, the machinery for treating the payer as an assessee in default under sections 201(1) and 201(1A) was not attracted, and the demand was deleted in favour of the assessee.

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Issues: Whether the payments made by the assessee to RSAMB were liable for deduction of tax at source under section 194J of the Income-tax Act, 1961, and whether the assessee could be treated as an assessee in default under section 201(1) and section 201(1A) for non-deduction of tax.

Analysis: The payments to RSAMB were held to be statutory contributions arising from the assessee's obligation under section 18A of the Rajasthan Agricultural Produce Marketing Act, 1961. Such contribution was not regarded as payment for professional or technical services, and the relationship was not treated as one of contractor and contractee. The Tribunal also noted that the deductee RSAMB had no tax liability on its returned income and was otherwise exempt, so no loss of revenue was shown. In that situation, the statutory machinery for treating the deductor as an assessee in default was not attracted.

Conclusion: The provisions of section 194J were not applicable to the statutory contribution paid to RSAMB, and the assessee could not be treated as an assessee in default under section 201(1) or section 201(1A). The deletion of the demand was upheld in favour of the assessee.

Ratio Decidendi: A statutory contribution paid under a marketing law, which is not consideration for professional or technical services and does not cause any revenue loss because the recipient has no tax liability, is not subject to tax deduction at source under section 194J, and non-deduction in such circumstances does not justify action under section 201.

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