A reconsideration is been ordered by the Delhi bench of the Income Tax Appellate Tribunal (ITAT) asking for a new adjudication. The same decision arrives as the submissions for the Tax Deducted at Source ( TDS ) deductions u/s 194J or 194C for payments related to X-ray and CVC machine maintenance were not regarded.
The taxpayer made certain payments for ambulance rent and maintenance of X-ray machines and CVC machines. The taxpayer deducted TDS on the X-ray machine and CVC machine @ 1% u/s 194C of the Income Tax Act, 1961. However, the Assessing Officer (short referred to as the “AO”) with the opinion that the taxpayer must have deducted TDS u/s 194J at 10% on payments made for maintenance of X-Ray and CVC machines as fees paid for professional and technical services.
U/s 201(1) and 201(1A) AO passes an order treating the payments incurred for the maintenance of the x-ray machine as well as the CVC machine as charges for professional services and deducted TDS at a 10% rate u/s 194J of the Income Tax Act.
The taxpayer’s view is been noted by the bench that the payments incurred for the maintenance of the X-ray machine and CVC machine draw TDS u/s 194C and rather than Section 194J as professional charges were denied and were treated as fees for professional and technical services according to section 194J of the Act drawing TDS at 10% rate as against 1% incurred via the taxpayer u/s 194C of the Income Tax Act. The views and the case laws laid on by the taxpayer were not regarded by the CIT (A) in proper perspective.
In the course of appellate proceedings, the taxpayer’s paper book presented that the taxpayer furnished income return filed by the payee to demonstrate that the income has been accounted for in their returns and paid the tax dues on income asserted through them and the taxpayer is in the procedure of providing the certificate to this effect from an Accountant in Form No. 26A, however, the CIT (A) has not deemed the taxpayer’s submissions.
According to the Supreme courts mandate in the matter of Hindustan Coca-Cola Beverage Pvt. Ltd. Vs. CIT if the payee has regarded the amounts obtained via payer in their income return and paid taxes on such amounts then the taxpayer could not be treated as a taxpayer in default u/s 201(1) of the Income Tax Act.
The bench of G.S.Pannu ( Vice President ) and C.N.Prasad ( Judicial member ) restored the same case to the file of AO for fresh adjudication following the law. The taxpayer is at liberty to file all the proof to reinforce their views before the AO.
In the appeal, all the issues are left open for fresh adjudication following the law post providing an adequate chance of being heard to the taxpayer. As per that, the appeal for AY 2019-20 is also restored to the file of the AO for fresh adjudication, and taxpayers’ appeals are permitted for statistical objectives.
| Case Title | Satya Kiran Healthcare Private Ltd Vs. ITO |
| Citation | I.T.A Nos.9143 & 9144/Del/2019 |
| Date | 30.01.2024 |
| Revenue by | Shri Anuj Garg, Sr. DR |
| Delhi ITAT | Read Order |