COMMISSIONER OF INCOME TAX vs. THE DEPUTY CONSERVATOR OF FOREST SOUTH,

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ITA/88/2025HC RajasthanRJHC02054530202506 November 2025Bench: SANJEEV PRAKASH SHARMA,BALJINDER SINGH SANDHU2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Commissioner of Income Tax. The Tribunal's decision, which upheld the CIT (Appeals)'s finding that Section 194C of the Income Tax Act, 1961, is not applicable to payments made to VFPMCs for plantation and forestation, was affirmed. The reasoning was based on the applicability of CBDT Circular No. 502 dated 27.01.1988, which exempts certain schemes from TDS provisions under Section 194C. Furthermore, the High Court noted a prior decision by the ITAT, Jaipur Bench, in the case of ITO, TDS Ajmer Vs. Divisional Forest Officer, Ajmer (ITA No.358-360/JP/2023), which had already settled the issue by holding that payments relating to VFPMCs are not to be treated as contract payments and therefore Section 194C is not attracted. The High Court also observed that appeals against further orders in similar matters were dismissed by it on valuation grounds. No further substantial question of law was found to be made out, leading to the dismissal of the appeal as devoid of merit.

What were the facts?

The appeal is filed by the Commissioner of Income Tax (CIT) against an order dated 24.03.2025 passed by the Income Tax Appellate Tribunal (ITAT). The ITAT upheld the order of the CIT (Appeals), holding that Section 194C of the Income Tax Act, 1961, is not applicable to payments made to Van Urja Evam Vanopaj Sanvardhan Sahakari Samitiyan (VFPMCs) for plantation and forestation activities. The CIT contends that payments were made under contracts entered into between various departments and VFPMCs. The ITAT relied on CBDT Circular No. 502 dated 27.01.1988 and a previous ITAT decision in ITO, TDS Ajmer Vs. Divisional Forest Officer, Ajmer (ITA No.358-360/JP/2023), which held similar payments to VFPMCs were not contract payments attracting TDS under Section 194C. The High Court notes that appeals against further orders in similar matters were dismissed by it on valuation grounds.

What were the issues?

1. Whether the Tribunal erred in holding that the provisions of Section 194C of the Income Tax Act, 1961, are not applicable to payments made to VFPMCs for plantation and forestation activities, despite the existence of contracts between departments and VFPMCs? (Question of law). Assessee's Contention (Revenue's Contention in this context): The Tribunal was not justified in treating the entire payments as not falling under Section 194C, as contracts were entered into between various departments and VFPMCs. Revenue's Contention (Assessee's Contention in this context): The Tribunal correctly applied CBDT Circular No. 502 dated 27.01.1988 and the ITAT's decision in ITO, TDS Ajmer Vs. Divisional Forest Officer, Ajmer (ITA No.358-360/JP/2023), which held that payments to VFPMCs for forestation activities are not contract payments and thus Section 194C is not attracted. No appeal was filed against this precedent before the High Court.

Which sections of the Income-tax Act were involved?

Section 194C

AI-generated summary — verify with the full judgment below

[2025:RJ-JP:44485-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 88/2025 Commissioner Of Income Tax, TDS, NCR Building, Statue Circle, Jaipur ----Appellant Versus The Deputy Conservator Of Forest South, Van Bhawan Parisar,in Front Of Mohta Park, chetak Circle, Udaipur, Rajasthan ----Respondent For Appellant(s) : Mr. Shantanu Sharma with Mr. Parth Vashisth For Respondent(s) : HON'BLE THE ACTING CHIEF JUSTICE MR. SANJEEV PRAKASH SHARMA HON'BLE MR. JUSTICE BALJINDER SINGH SANDHU Order 06/11/2025 1. This is an appeal filed assailing the order dated 24.03.2025 passed by the Income Tax Appellate Tribunal (for short ‘the Tribunal’) whereby, the Tribunal upheld the order passed by the CIT (Appeals) and held that the provisions of Section 194C of the Income Tax Act, 1961 (for short ‘the Act of 1961’) would have no application in cases where payments are made to VFPMCs which perform plantation and forestation. 2. Learned counsel for the appellant submits that the Tribunal was not justified in dealing the entire payments as there were contracts entered between the various departments of VFPMCs. 3. For the purpose, we notice that the CIT (Appeals) as well as the Tribunal have taken into consideration the CBDT Circular No.502 dated 27.01.1988, which states that payments under

[2025:RJ-JP:44485-DB] (2 of 2) [ITA-88/2025] schemes to be executed without attracting the provisions of TDS in terms of Section 194C of the Act of 1961. The ITAT, Jaipur Bench in the case of ITO, TDS Ajmer Vs. Divisional Forest Officer, Ajmer (ITA No.358-360/JP/2023) held that the payments relating to the VFPMCs would not be treated as contract payments and therefore, Section 194C of the Act of 1961 would not be attracted. Thus, the law as settled, wherein no appeal has been filed before this Court, would apply to the present case. 4. We notice that the appeals filed against the further orders passed by the Tribunal were dismissed by this Court on the ground of valuation. 5. No further question of law is said to be made out. The appeal being devoid of merit is, accordingly, dismissed. (BALJINDER SINGH SANDHU),J (SANJEEV PRAKASH SHARMA),ACTING CJ RAHUL MIRKHANI/31

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