The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) has deleted the order against educational institution holding that the remuneration to guest faculties would not come under salary.
The assessee Government Polytechnic Education Society was running an educational institute.in this case the appeal has been filed by the appellant against order under Section 201(1)/201(1A) of the Act for alleged default towards non deduction of TDS from payments made to Guest faculties with reference to Section 194J of the Income Tax Act, 1961 (the Act) concerning AY 2017-18.
Naveen Kumar Goyal, on behalf of the assessee submitted that the monthly remuneration as approved by the Government in respect of Guest Faculty/Guest Instructors will be paid from the contingency/wages head as their engagement was against teaching load and not against the sanctioned post.
He further contended that, Section 192 would apply instead of Section 194J and was incorrectly applied by the Assessing Officer and therefore no default for non-deduction of TDS could be reckoned and provision of Section 201/201(1A) was a complete non-starter.
R.K. Jain, on behalf of the assessee contended that, the payment made to the professionals for obtaining their services were covered by Section 194J and therefore default had been rightly attributed to the assessee for non-deduction of TDS on payments to such Guest Faculty rendering professional services.
The Division Bench of Challa Nagendra Prasad, (Judicial Member) And Pradip Kumar Kedia, (Accountant Member) allowed the appeal observing that assessee could not be treated as assessee in default in terms of Section 201(1)/201(1A) where the right in the master exists to supervise and control the work done by the Guest Faculties month after month.
“The monthly remuneration paid to the Guest Faculties are in the nature of ‘contract of service’ between the assessee deductor and its teaching staff appointed on adhoc basis and such adhoc salary paid to them being below taxable limit on individual basis, does not warrant deduction of tax at source and as such non deduction of tax at source does not trigger default under Section 201(1)/201A) of the Act”, the Bench further observed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
