ACCOUNTS OFFICER (O&M), SHRIGANGANAGAR, JODHPUR VIDYUT VITRAN NIGAM LIMITED,SRIGANGANAGAR vs. DCIT-TDS, JODHPUR, JODHPUR

The order u/s 201/201 (1A) of the Income Tax Act, 1961 has been passed by the ITO-TDS-II, Jodhpur resulting in demand of tax u/s 201 interest u/s 201(1A). The matter reached to the Ld. CIT(A) and held that the total payments made by the assessee are liable to the provisions u/s 194C of the IT Act.

The Hon’ble High Court of Rajsthan at Jodhpur, has remanded the matter to the Tribunal to adjudicate afresh on merits. On going through the record, we find that the payments made by the assessee concern are of payments for purchase of machinery and payments for installation of machinery under works contract. The Ld. CIT(A) held that entire purchase is a composite contract and held that going to the nature that the activity is a composite contract, hence, the provisions of TDS are attracted on the entire amount.

On the contrary, we find that no TDS is deductible on the purchase of machinery, hence, keeping in view the facts on record, we remand the matter to the file of ITO-TDS-II to exclude the amounts paid for purchase of machinery and reiterate that no provisions of TDS are attracted for the purchase of machinery. The ITO-TDS-II is hereby directed to re-compute the tax deductible as per the provisions of 194C to the extent of work contract given in the erection/installation of the machinery. 5. In the result, all the appeals of the Assessee are allowed for statistical purposes.