2016 (12) TMI 944 - AT - Income Tax

Appeal Dismissed on TDS Deduction, Assessee Partially Successful

The Tribunal dismissed the general nature appeal and appeals regarding non-deduction of TDS on Effluent Treatment Expenses, Legal and Professional ... TDS u/s 194C or 194J - Non-deduction of TDS from the expenditure incurred for Effluent Treatment - short deduction of tds - Held that:- In deciding appeal in the case of Vapi Waste & Effluent Management Company Ltd. (VWEMCL), the ld.CIT(A) held that the said entity does not qualify for the concept of mutuality and thereby the profits earned by the company is subject to tax. In view of this, the contention of the ld.AR is rejected and the action of the AO is confirmed by the ld.CIT(A). TDS u/s 194A - interest and bill discount expenses - Held that:- There is a force in the submissions made by the ld.AR. Sec. 194A of the IT Act is not applicable in the case of Banking Company to which the Banking Regulation Act 1949 applies. Thus, the ld.CIT(A) held that the tax and interest levied in this connection merits deletion and allowed the ground raised by the assessee TDS u/s 194J - legal & professional charges - Held that:- AO stated that the appellant had debited Legal & Professional Charges of ₹ 7,22,275/- for which the appellant had deducted TDS @ 2.06% by applying sec. 194C instead of at the rate 10.33% as prescribed in sec.194J. The ld.CIT(A) held that the action of the AO cannot be faulted because the provisions u/s.194J is very clear to this effect. Thus assessee’s ground of appeal is dismissed by the ld.CIT(A). TDS u/s 194I - TDS on hiring expenses - Held that:- The assessee-company has already deducted and paid TDS u/s.194C of the Act. The A.O. in the order has stated that the assessee had agreed for this charge of levy TDS and interest thereon, the contest before the appellate authority became infructuous and the ground raised by the assessee was dismissed by the ld.CIT(A). Issues Involved:1. General nature of the appeal.2. Non-deduction of TDS on Effluent Treatment Expenses.3. Non-deduction of TDS on Legal and Professional Charges.4. Non-deduction of TDS on Rent/Hiring Expenses.Detailed Analysis:1. General Nature of the Appeal:The first ground of appeal was deemed general in nature and required no independent adjudication. Consequently, it was dismissed.2. Non-deduction of TDS on Effluent Treatment Expenses:The assessee contended that the payment made to Vapi Waste & Effluent Management Company Limited (VWEMCL) for effluent treatment expenses should not be covered under the definition of 'contract' for the purpose of Section 194C of the Income Tax Act. The CIT(A) had confirmed the Assessing Officer's (AO) action, stating that VWEMCL does not qualify for the concept of mutuality, and thus, the profits earned by the company are subject to tax. The Tribunal found that the CIT(A)'s decision was consistent with the facts and law, and thus, the appeal on this ground was dismissed.3. Non-deduction of TDS on Legal and Professional Charges:The assessee argued that no legal and professional charges were debited during the year, and the details of such expenses were not provided by the AO. The CIT(A) confirmed the AO's action, stating that the appellant had debited legal and professional charges of Rs. 7,22,275 and deducted TDS under Section 194C instead of the required rate under Section 194J. The Tribunal upheld the CIT(A)'s decision, noting that the provisions under Section 194J were clear, and the appeal on this ground was dismissed.4. Non-deduction of TDS on Rent/Hiring Expenses:The assessee contended that the expenditure for providing plastic/tarpaulin sheets on a rental basis was not covered under Section 194I of the Act. The CIT(A) confirmed the AO's action, stating that the appellant had agreed to the charge of levy TDS and interest thereon, making the contest before the appellate authority infructuous. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the appeal on this ground.Conclusion:The Tribunal concluded by dismissing the general nature appeal and the appeals related to non-deduction of TDS on Effluent Treatment Expenses, Legal and Professional Charges, and Rent/Hiring Expenses. The appeal of the assessee was partly allowed, with specific grounds being dismissed due to the lack of merit or acceptance of default by the assessee.Order Pronouncement:The order was pronounced in the Court on 19th October 2016 at Ahmedabad.