The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the provisions of TDS under section 194J and 194C of the Income Tax Act, 1961 applicable to the payments made to medical labs and technicians as per an agreement for the screening of sickle cell anemia in tribal district under a Government program.
The assessee is a society under the control of Commissioner of Health, Gandhinagar and various agencies were appointed for carrying out work of screening and subsequently submission of report to concerned authority. TDS on these payments was deducted @2% or at lower rate of 1% under section 194C of the Act. the assessee has entered into an agreement with the some entities for the purpose of carrying out screening (i.e. DTT test, HPLC test etc.) of Sickle Cell Anemia in tribal district of Gujarat. The department held that the function performed by the above entities fall under the purview of professional services/managerial and consultancy services as per section 194J of the Act and therefore liability of the deduction of tax arises @ 10% u/s 194J instead of u/s 194C.
The Tribunal observed that Shri Mahavir Prasad, Judicial Memebr & Shri Waseem Ahmed, Accountant Member observed that the screening test is conducted as per the guideline of the Government of Gujarat in this regard.
“The tests conducted by the personnel of the agencies in the field can be performed by medically qualified personnel and their report is submitted to society after approval of local Medical Officer. On the other hand, assessee’s contention is that it has availed service of labour class and these labours don’t have any technical qualification.”
“As after going through it, it is apparent and clear from the terms of the agreement that technical persons carried out tests and Laboratory Technician will be with minimum qualification of MLT/DMLT with science graduate while paramedical worker will be with minimum qualification of SI. It is clear that aforesaid services come within Section 194J and 194C of the Act. Therefore, we do not find any ambiguity in the order passed by the learned CIT(A). In our considered opinion, learned CIT(A) has passed a detailed and reasoned order and same does not required any interference at our end,” the Tribunal said.
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