DISTT WOMAN & CHILD DEV OFFICER VIDISHA,VIDISHA vs. INCOME TAX OFFICER (TDS-2), BHOPAL

3 That the assessee being aggrieved by the “impugned order” has preferred the instant second appeal before this Tribunal and has raised following grounds of appeal in the Form No.36 against the “impugned order” which are as under:- “1. The order passed by the Learned CIT (Appeal) bad in law, arbitrary and is unenforceable under the law.

That the Learned CIT (Appeal) has passed the order ignoring the fact that all the notices were sent through electronic modes. The Assessee being a Government department is not acquainted

That the Learned Assessing Officer erred in holding that TDS 3 under Section 194C of the Income Tax Act, 1961 is applicable to the payments made to SHGs for providing catering service.

That the Learned Assessing Officer further erred in categorizing the payments made by the appellant to the Self Help Groups (SHGs) as falling within the scope of Section 4 194C, when the payment where made under a Government sponsors scheme for the preparation and supply of nutritional foods for Anganwadis, as approved by the State Government and other organizations.

That the Learned Assessing Officer also erred in failing to recognize that the payment made to SHGs pertain to the sale of goods and therefore exempt from TDS under section 194C, as per the clarification provided in Circular No. 715 (Clarification No. 11)dated 08/08/1995 which explicitly states that: "No TDS is required to be deducted under Section 194C for contracts that are purely for the sale of goods." Since the payments made by the appellant are for the sale of prepared food items to beneficiaries, the transactions are purely of a commercial nature and do not constitute a "work contract" as defined under Section 194C of the Act.

The agreements executed with the Self-Help Groups clearly specify the obligation to provide nutritious, high-quality, and freshly prepared food in line with government-mandated nutritional and caloric standards. The contract explicitly prohibits the provision of raw materials or resources by the assessee for food preparation, further reinforcing that the nature of the transaction is the sale of finished goods.

That the Learned Assessing Officer erred in applying the provision of Section 194C concerning that: "Manufacturing or supplying of a product according to the requirement or specification of a customer". But no materials were provided by 7 the appellant to the Self-Help Groups for food preparation. The SHGs procured their own raw materials and delivered the final product (cooked food) as per the terms of the agreement. Thus, the transaction constitutes a sale of goods and not a "work contract."

Further reliance is placed on the following case laws which support the appellant's contentions Pharmaceuticals Ltd. (2010) 324 ITR 199 (SC): The Hon'ble Supreme Court held that where a transaction is purely in the nature of the sale of goods, TDS provisions under Section 1940 are not applicable. ITO. vs. V.S. Dempo& Co. Ltd. (2006) 104 TTJ 913 (Mum): The ITAT ruled that when the primary purpose Re of the contract is the sale of goods and no raw material or resource is supplied by the buyer, the provisions of Section 194C do not apply. K.S. Hotels (P) Ltd., New Delhi vs Department of Income Tax: The ITAT ruled that merely supplying cooked food, without additional services like serving, preparation at the client's premises, or other service elements, does not constitute catering services under Section 194C.

The Learned Assessing Officer failed to appreciate that the appellant acted in good faith and complied with all procedural 9 requirements under the Income-tax Act, 1961. The reasons provided by the Learned Assessing Officer for the imposition of TDS are arbitrary, unjustified, and legally flawed.

That the Learned CIT (Appeal) failed to consider the specific explanations and clarifications provided by the appellant during the course of the proceedings.

The appellant respectfully prays that the CIT (Appeal) set aside the impugned order, thereby removing the demand raised for non-deduction of TDS under Section 194C, and accept the appellant's submissions that the payments made to the SHGS were solely for the sale of prepared food items, which are not subject to TDS under Section 194C, as clarified in Circular No. 715 (Clarification No. 11). 12. The appellant craves leave to add, amend, alter vary and/or withdraw any or all the above grounds of appeal”.

Record of Hearing 3.1 The hearing in the matter took place before this Tribunal on 20.11.2025 when the Ld. AR for and on behalf of the assessee appeared before us and interaliasubmitted that the assessee

Observations,findings& conclusions. 4.1 We now have to decide the legality, validity and the proprietery of the “impugned order” basis records of the case and rival contentions canvassed before us. 4.2 We have carefully perused the records of the case as presented to this Tribunal by both the Ld. AR &the Ld. DR to determine the legality, validity of the “impugned order” basis law and by following the due process. 4.3 We basis records of the case and after hearing and upon examining the contentions are of the considered view that both the Ld. AR and Ld. DR are“Ad idem” that the “impugned order” should be set aside and that the matter should be remanded back to the file of Ld. A.O so as to enable him to pass a fresh order after taking into the consideration the entire gamut of the case from all the angles on denovobasis. Assessee is directed to cooperate with the department. 4.4 In view of the premises drawn up by us, we set aside the “impugned order” and remand the case back to the file of Ld. A.O on denovo basis with a direction to the assessee to fully cooperate with the department and not to seek any adjournment on flimsy grounds.

Order

1 In result the“impugned order” is set aside as and by way of remand back to the file of Ld. A.O on denovo basis. 5.2 The appeal of the assessee is allowed for statistical purpose. 5.3 ITA No.252/Ind/2025 (Assessment Year 2012-13) & Since the facts and circumstances are almost identical and similar these two appeals too were heard simultaneously and is beingdisposed off by this common/consolidated order are remandedback to the file of Ld. A.O on denovo basismutadis mutandis. 5.4 Finally in result all the appeals are allowed for statistical purpose. Order pronounced in open court on 28.11.2025. (B.M. BIYANI) (PARESH M JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER