TaxTMI 
TaxTMI 
2017 (10) TMI 244
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....booking venues for pre recruitment processing services like conducting examinations, interviews etc. The services are provided at Kolkata and other cities and locations. The AO while concluding the assessment noticed that as a service provider the assessee would get the work done through third parties and that would be a case of sub-contract. The assessee provided services to an entity by name Merit Trac services Pvt. Ltd (Merit Trac for short) of Bangalore. The assessee has two agreements with the aforesaid party dated 12.07.2012 and 30.04.2012. The main terms of the contract between the assessee and Merit Trac is that the assessee will provide man power for all the recruitment events and all pre and post events as directed by Merit Track.....
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....ng such payments etc. These details are placed at pages 24 to 78 of the assessee's paper book. The AO after analyzing all the details came to the conclusion that there is a TDS violation in so far as the payment of Rs. 1,18,000/- in respect of payment made for a venue at Nepal and Rs. 86,000/- paid to the principal of an institution at Nepal. Thereafter after getting the reply from the assessee, the AO disallowed the payments of Rs. 1,18,000 for venue charges at Nepal and Rs. 86,000/- paid to the principal of the institution at Nepal because there is violation of section 195 of the Act. In the order of assessment however this has been referred to disallowance u/s 40(a)(ia) of the Act. The following are the conclusions of the AO in the order....
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....Education Foundation Charpane-1, Birtmod, Jhapa(Nepal) 15 2800 2900 Kalika Higher Secondary School Kalikanagar Rupandehi District Lumbini Zone 19 4500 5730 Public Youth Campus Ward No.4, Kadam Chowk, Janakpur 22 5500 5800 Manipal College of Medical Sciences Deep Heights, Pokhara-16 25 10500 12000 Campion Kathmandu College Ghanapokhari, (Beside Naxal Police Hqrs) Naxal 26 31000 20000 Campion Academy Lagankhel, (Beside Patan Hospital),Lalitpur 26 52000 86000 Campion College Kupondole (Near Room to Read), lalipur ....
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....s 40(a)(ia) of the Act should not be revised. 5. In reply to the aforesaid show cause notice, the Assessee explained that there was no TDS obligation in respect of the payments set forth in the show cause notice by CIT, as each of the payments made was well below the limits prescribed u/s 194C of the Act for deduction of tax at source. The CIT however did not agree with the contentions put forth on behalf of the assessee. In the reply to the show cause notice the assessee also took a plea that the provisions of section 194C of the Act are not attracted to the payments in question as what the Assessee paid was on behalf of Merit Trac which was reimbursed by them to the Assessee. 6. The CIT however was not satisfied with the reply and h....
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....tic institutions. That apart, TDS violation to the extent of Rs. 1,18,000/- on venue charges at Nepal and Rs. 86000/- paid to Principal of an institution situated at Nepal were detected. 5.3. Show cause and Reply of AR: The assessee vide letter dated 08/03/2015 was requested to explain as to why she failed to deduct TDS u/s 194C of the Act on the above mentioned cases (stated at Para-5.2 above). In response, The AR instead of explaining the factual position, submitted an elaborative reply consisting of 9{nine) pages misplacing the interpretation of the statute, exemplifying a Barber's hair cutting with provisions of Section 194C and relying on various court cases his own contention about of the applicability of section 194C read with....
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....awn such inference. Therefore we agree with the submissions of the ld. Counsel for the assessee that it was a conscious decision of the AO not to make any disallowance in respect of these payments by invoking the provisions of Section 40(a)(ia) of the Act. In fact in reply by the assessee to the show cause notice u/s 263 of the Act, the assessee has specifically highlighted the following aspects :- "From the Order of Assessment it will be evident that the A.O. has made thorough enquiry on the issue of payment of 'Venue Charges', "Payment of Principal' and 'payment to Examiners '. He had issued the Show Cause Notice on the points on 08. 03.2015 and the assessee's reply dated 12.03.2015 was made part of the assessme....