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IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ‘A‘ Bench, Hyderabad
ITA No.161, 162, 163/Hyd/2015(Assessment year: 2011-12)
ACIT (TDS) (Appellant) vs Greater Hyderabad Municipal Corporation (Respondent)
Date of Order: 24-09-2015
ORDER
Per Smt.P. Madhavi Devi, J.M.
All these are Revenue appeals for the A.Y 2011-12. The grievance of the Revenue in these appeals is that the CIT (A) has erred in holding that there was no contractual relationship between the payees, i.e. the Self Help Groups (SHG) and Greater Hyderabad Municipal Corporation (GHMC) and consequently payments made to the SHGs are not liable for TDS u/s 194C of the Act.
2. Brief facts of the case are that all the three assessee’s are the different zonal offices of GHMC. An inspection was conducted in the respective assessee’s premises in the year 2010 to verify whether the assessee local authority is adhering to the TDS provisions. During the course of inspection, it was found that the assessee has not complied with the provisions of TDS in the case of payments to Self Help Groups who, according to him are contract workers. It was further found that in a few cases, TDS was deducted but at an arbitrary rate and not as prescribed under the Act. Therefore, a questionnaire was addressed to the assessee calling for books of accounts, details of expenditure debited in the P&L a/c along with the amount of TDS deducted and other information relating to TDS. Assessee, in its reply, submitted that the TDS was not made from the payments made to the SHGs because the assessee feels that the assessee and SHG’s have employee-employer relationship and not contractual relationship, attracting TDS provisions. To substantiate and support its claim, it was further submitted that the assessee was crediting EPF and ESI on behalf of the assessees to the concerned Departments and therefore, there exists employer employee relationship and the provisions of TDS are not applicable. The AO was, however, not convinced with the assessee’s contentions and held that the sanitation work is being given by GHMC to SHGs and each of the group consists of 18 workers and all of them are working as sanitation workers based on the work awarded in the name of SHG by the GHMC. He observed that the Supervisors of the SHG’s are not given any identify cards or any employee identification No. issued by the assessee and also as seen from the work order copy, it is initially for a period of 2 months on a trial basis and the period of allotment of work will be extended, provided the conditions prescribed thereunder are satisfied during the trial period. He further held that the payment bills furnished by the assessee makes it clear that the contingency bill is in the name of a person as a contractor, such as “Vendor Name: K. Girija” and not named as an employee. He therefore, held that there is a contract between the assessee and the SHGs and the TDS is liable to be made u/s 194C of the Act from the payments made to them. Accordingly, for failure to comply with TDS provision, he treated the assessee as “assessee in default” u/s 201(1) and also levied interest u/s 201(1A) of the Act. Aggrieved, assessee preferred an appeal before the CIT (A) who granted relief to the assessee. Aggrieved by the relief given by the CIT (A), the Revenue is in appeal before us.
3. The learned DR supported the orders of the AO, while the learned Counsel for the assessee supported the order of the CIT (A). The learned Counsel also relied upon the decision of the SMC ‘A’ Bench of this Tribunal in the case of GHMC East and North zones, Hyderabad in ITA Nos.164 & 165/Hyd/2015 dated 24.07.2015 wherein the issue has beel dealt with at length and the decision of the Coordinate Bench of this Tribunal in assessee’s own case in ITA Nos. 512 & 513/Hyd/2014 dated 24.04.2015 has been followed to hold that the TDS provisions are not applicable. The relevant Paragraph No.6 is reproduced hereunder for ready reference:
“6. Having heard the rival contentions and the relevant material on record, we find that the main issue is as to whether the SHGs can be called as contractors. The GHMC has engaged and issued the poceedings in favour of the SHGs by lots and work has been allotted per unit by fixing the wages per person and also specifying the number of workers to
be engaged for each unit and per shift. The working hours of the workers as well as the shifts are also specified in the notification. From the bills paid to the SHGs also, it is seen that the payment is made on the basis of number of mandays and wages per day and is not a fixed amount per month. Thus, it is clear that the allotment of work by the assessee to the SHGs is not by way of contract but is engagement of workers for a fixed period. The workers are being paid as per the agreed terms and conditions and the aggregate amount is paid to the group and not to any particular person. Therefore, as rightly held by the CIT (A), there is no contractor-contractee relationship but is more in the nature of employee-employer relationship as the assessee is also making contributions to the EPF and ESI and as rightly pointed out by the ld CIT (A), the payments made to an individual is not exceeding the prescribed limit u/s 192 of the I.T. Act, the TDS provisions are not applicable to the facts of the case before us. In view of the same, we do not see any reason to interfere with the order of the CIT (A) in all these appeals”.
4. We find that the facts and circumstances in the present case are also similar and respectfully following the decision of the Coordinate Bench, we hold that these payments are not liable for TDS provisions.
5. In the result, Revenue’s appeals are dismissed.
Order pronounced in the Open Court on 24th September, 2015.
Sd/- Sd/-
(B. Ramakotaiah) (P. Madhavi Devi)
Accountant Member Judicial Member
Hyderabad, Dated 24th September, 2015
ITAT-Not Contractual but Employee Employer Relationship between Self Help Groups and Greater Municipal Corporation Hence no TDS Liability u/s 194C | 25-09-2015 |
