Tribunal rules in favor of Assessee, directs deletion of demand for non-TDS deduction on payments to Guest Faculties

The Tribunal allowed the appeal of the Assessee, ruling in their favor, and set aside the order of the CIT(A). It directed the Assessing Officer to delete the demand under Section 201(1)/201(1A) concerning the non-deduction of TDS from payments made to Guest faculties under Section 194J for AY 2017-18. The Tribunal determined that the remuneration paid to Guest Faculties was not subject to TDS deduction due to being below the taxable limit on an individual basis, emphasizing the nature of services rendered and the control over their work.

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Issues involved:
Non-deduction of TDS from payments made to Guest faculties under Section 194J of the Income Tax Act, 1961 for AY 2017-18.

Detailed Analysis:

1. Nature of Payments and Applicability of TDS:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding alleged default in non-deduction of TDS from payments made to Guest faculties under Section 194J. The Assessee argued that the payments to Guest Faculties were not subject to TDS as their income was below the taxable limit. They contended that the payments were in the nature of remuneration under Section 192 instead of Section 194J. The Assessee cited a government order and a previous decision by a Coordinate Bench in their favor.

2. Arguments by the Revenue:
The Revenue supported the order of the CIT(A) and argued that payments to professionals for their services fell under Section 194J, justifying the default in TDS deduction on payments to Guest faculties.

3. Consideration of Submissions:
The Tribunal carefully considered the submissions. It noted that the regular faculty staff's remuneration was shown under the head 'salary,' while Guest Faculty's remuneration was categorized under 'Professional and Special Services.' The Tribunal analyzed the nature of services rendered by Guest Faculties and the relationship between the management and teaching staff. It concluded that the remuneration paid to Guest Faculties was akin to a 'contract of service' and not subject to TDS deduction due to being below the taxable limit on an individual basis.

4. Legal Precedents and Decision:
The Tribunal referred to a judgment by the Hon'ble Supreme Court and a decision by a Coordinate Bench, emphasizing the importance of the right to supervise and control the work done by the Guest Faculties. It found substantial merit in the Assessee's plea and concluded that the Assessee could not be treated as in default under Section 201(1)/201(1A). Consequently, the Tribunal set aside the order of the CIT(A) and directed the Assessing Officer to delete the demand under Section 201(1)/201(1A).

5. Final Decision:
The Tribunal allowed the appeal of the Assessee, ruling in their favor and pronouncing the order in the open court on 14/02/2023.

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