Delhi ITAT holds
assessee-society (formed for organizing South Asian Federation Winter Games,
2009) liable to deduct TDS u/s. 194C on amount tendered as ‘advance’ to various
PSUs (Public Sector Undertakings) w.r.t. various works relating to construction
of the infrastructure for winter games for AYs 2009-10 & 2010-11; Rejects
assessee’s stand that it was merely a pass through entity that has been granted
sum for organizing the winter games and it did not enter into any contract with
the parties to whom payments were made; ITAT acknowledges that grants / sponsorship
received by the assessee, are in turn, disbursed to various recipients (i.e.
PSUs) who got the work done through contractors and deducted TDS on payments
made to such contractors; However, ITAT remarks that “Though the contractor may
be identified and engaged by the other organization, however, the
implementation and utilization is the sole responsibility of the assessee.
Otherwise, there is no other reason for the formation of the assessee society”;
Observes that as required u/s. 194C, assessee is the person responsible for
payments of sums to the PSUs, which infact was paid by the assessee; Clarifies
that “Merely because the assessee is provided grant for onward distribution to
these parties does not exclude the assessee from the liability for deduction of
tax at source u/s 194C”; W.r.t. assessee’s alternative argument that all the
recipients have already received the grant and if tax is recovered from the
assessee it ought to be refundable in the hands of the recipients, ITAT directs
the AO to verify as to whether due taxes have been paid by the recipients in
terms of the proviso to Sec. 201(1); Lastly, ITAT deletes penalty levied u/s.
271C absent contemptuous conduct on assessee’s part for non-deduction of TDS;
Separately in context of payments made to non-resident parties for equipment
supply, ITAT rules that Sec. 195 TDS shall not apply as no income has accrued
to those parties in India, in terms of Sections 5 & 9 of the Act and title
of the goods has passed outside India.:ITAT
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