TaxTMI 
TaxTMI 
2016 (5) TMI 979
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....d order. 2. The Revenue has raised the following common grounds of appeal:- "1. The order of the Ld. CIT(A) is opposed to the facts and law. 2. The Ld CIT(A) has erred in holding that the payees i.e. M/s. RITES Ltd and M/s. KHB are not contractors of the payer i.e Director of Technical Education, as envisaged in Section 194C. 3. The Ld CIT(A) has erred in holding that the payees i.e. M/s. RITES Ltd and M/s. KHB are rendering technical and managerial services for the payer. 4. The Ld CIT(A) has erred in holding that the payees i.e. M/s RITES Ltd and M/s KHB are acting as agents vis-a-vis the contractors actually executing the construction work of buildings for the payer. 5. The Ld CIT(A) has er....
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.... aside and orders of the Assessing officer are restored." 3. Briefly the facts are as under. The respondent-assessee had entered into an agreement with M/s. KHB and M/s. RITES Ltd. for rendering of services in connection with construction of Engineering and Polytechnic College buildings in the State of Karnataka. The TDS Officer noticed that the respondent-assessee had not deducted tax at source on the payments made to the above parties under the provisions of section 194C of the Act and he therefore held the respondent-assessee as an "assessee in default" for not deducting tax at source and raised demand as under:- Demand raised by way of separate orders Assessment Year Section 201(1) Section 201(1A) Total 20....
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....ned order. 7. On the other hand, the ld. AR of the respondent-assessee submitted that the CIT(Appeals) has passed the impugned order after perusing the relevant clauses of the agreements entered by the respondent-assessee with KHB and RITES Ltd. He submitted that KHB / RITES Ltd. had not undertaken any works with the respondent-assessee. They have rendered only technical services in connection with the execution of the construction works for Engineering & Polytechnic College buildings in the state of Karnataka. In this connection, he has drawn our attention to the relevant clause of the agreements and also the order of CIT(Appeals). He also relied on the decision of the coordinate Bench of Lucknow in the case of M/s U.P. State Industrial....
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....contractors for construction, supervise the construction for quality and design and also certify the bills for payment to contractors executing the construction of college buildings. The agreement also specifies the remuneration for services rendered by KHB and RITES (10% of the built up cost) with regard to and a percentage of the project cost, and the provision for payment on actual basis in the nature of re-imbursement. I concur with the argument of Ld. AR that the issue is squarely covered by the Hon'ble ITAT- Lucknow Bench decision in the case of U.P. State Industrial Development Corpn. Ltd. v. ITO reported in 81 ITD 173. The payees in the present case are not contractors within the meaning of section 194C of the Income Tax Act. Th....