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

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ITA/90/2025HC RajasthanRJHC02057470202506 November 2025Bench: SANJEEV PRAKASH SHARMA,BALJINDER SINGH SANDHU2 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal upheld the order of the CIT (Appeals) and held that Section 194C of the Income Tax Act, 1961, is not applicable to payments made to VFPMCs for plantation and forestation. The reasoning was based on CBDT Circular No. 502 dated January 27, 1988, which exempts certain scheme payments from TDS under Section 194C. Furthermore, the Tribunal relied on its own prior decision in ITO, TDS Ajmer Vs. Divisional Forest Officer, Ajmer (ITA No. 358-360/JP/2023), which had held similar payments to VFPMCs as not being contract payments, thereby not attracting Section 194C. The Revenue had not filed an appeal against this precedent. The High Court noted that appeals against further orders by the Tribunal in similar matters were dismissed by the High Court on the ground of valuation. Finding no further question of law and deeming the appeal devoid of merit, the High Court dismissed the appeal.

What were the facts?

The Revenue, Commissioner of Income Tax, TDS, has filed an appeal against an order dated March 24, 2025, passed by the Income Tax Appellate Tribunal (ITAT). The ITAT had upheld the order of the CIT (Appeals), which held that Section 194C of the Income Tax Act, 1961, regarding Tax Deducted at Source (TDS) on contractual payments, was not applicable to payments made to Van Sanrakshan Evam Paryavaran Sanvardhan Samiti (VFPMCs) for plantation and forestation work. The Revenue contends that the Tribunal erred in treating all payments as non-contractual, given the contracts between departments and VFPMCs.

What were the issues?

1. Whether the Tribunal was justified 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. Assessee (Revenue) Contentions: The Revenue argued that the Tribunal was not justified in treating the entire payments as non-contractual, as there were contracts entered into between various departments and VFPMCs. Respondent (Assessee) Contentions: The Respondent relied on CBDT Circular No. 502 dated January 27, 1988, which states that payments under certain schemes are not subject to TDS under Section 194C. They also cited the ITAT, Jaipur Bench decision in ITO, TDS Ajmer Vs. Divisional Forest Officer, Ajmer (ITA No. 358-360/JP/2023), which held that payments relating to VFPMCs are not contract payments and thus Section 194C is not attracted. The Respondent noted that no appeal was filed by the Revenue against this precedent.

Which sections of the Income-tax Act were involved?

Section 194C

AI-generated summary — verify with the full judgment below

[2025:RJ-JP:44487-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 90/2025 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:44487-DB] (2 of 2) [ITA-90/2025] 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/33

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