2015 (11) TMI 266

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....abad Municipal Corporation (GHMC) and consequently payments made to the SHGs are not liable for TDS u/s 194C of the Act. 2. Brief facts of the case are that all the three assessee's are the different zonal offices of GHMC. An inspection was conducted in the respective assessee's premises in the year 2010 to verify whether the assessee local authority is adhering to the TDS provisions. During the course of inspection, it was found that the assessee has not complied with the provisions of TDS in the case of payments to Self Help Groups who, according to him are contract workers. It was further found that in a few cases, TDS was deducted but at an arbitrary rate and not as prescribed under the Act. Therefore, a questionnaire was add....

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.... a contractor, such as "Vendor Name: K. Girija" and not named as an employee. He therefore, held that there is a contract between the assessee and the SHGs and the TDS is liable to be made u/s 194C of the Act from the payments made to them. Accordingly, for failure to comply with TDS provision, he treated the assessee as "assessee in default" u/s 201(1) and also levied interest u/s 201(1A) of the Act. Aggrieved, assessee preferred an appeal before the CIT (A) who granted relief to the assessee. Aggrieved by the relief given by the CIT (A), the Revenue is in appeal before us. 3. The learned DR supported the orders of the AO, while the learned Counsel for the assessee supported the order of the CIT (A). The learned Counsel also relied upon....