2014 (2) TMI 899

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.... 24 August 2011. The Assessing Officer had called for details of the payments made by the Basic Shiksha Adhikari to various NGO's towards the Mid-day-Meals from 2004-05 to 2007-09. The Assessing Officer held that the Basic Shiksha Adhikari was liable to deduct tax at source under Section 194-C of the Income Tax Act, 1961 and having failed to do so, was liable to pay tax and interest under Section 201(1). In appeal before the CIT (A), the assessee relied upon the Board's circular dated 27 January 1988 (Circular 502) which states that programmes under the NREP and RLEGP are executed with the participation of the people and Panchayati Raj Institutions under the active supervision of the State Government in conformity with the guidelines of the....

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.... such persons and bodies assumed the character of the contractors and are hit by the provisions of section 194C. (iii) The Board's Circular referred to by the AR specifically talks about the programmes under the NREP and RLEGP executed with the participation of people and Panchayati Raj Institution. The Circular directs that provisions of section 194C are not to be invoked in case of payments made in respect of the works executed under the NREP and RLEGP. The Basic Shiksha Adhikari has not been able to clarify and convince me that the Mid Day Meal programmes are part of NREP. The Basic Shiksha Adhikari had also not been able to clarify as to how the BSA could be considered as a part of the Panchayati Raj Institution. (iv) The job of p....

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....osit the tax since ultimately the tax liability of the assessee is nil. Hence the Tribunal was of the view that it was important to first arrive at a conclusion in regard to the question as to whether charitable institutions to whom payment was made by the Basic Shiksha Adhikari were exempted from the payment of tax. The Tribunal has, accordingly, restored the proceedings back before the Assessing Officer with the following observations:- "..........Keeping in view the totality of the facts and circumstances of the cases, we are of the view that the appeals of the assessee be remitted back to the office of Assessing Officer for re-adjudication. The Assessing Officer should obtain the information regarding NGOs to whom payments were made ....