We pay guest lecturers monthly. Should we deduct under 194J, and are we in default if we didn't?
No. The Tribunal found the guest faculty did the same work as the regular staff, under the institution's control and supervision, so the engagement was a contract of service and not a contract for services and they rendered no professional or technical service - s.194J was not attracted. It added that each person's ad hoc remuneration was below the taxable limit anyway, so nothing fell to be deducted and no default under s.201(1) or s.201(1A) could be visited on the institute. The demand was directed to be deleted.
Decided by the ITAT (ITAT Delhi Bench 'H' - Challa Nagendra Prasad (Judicial Member) and Pradip Kumar Kedia (Accountant Member), order delivered by Pradip Kumar Kedia) on 2023-02-14, reported as (2023) 200 ITD 134 (Delhi)(Trib.); [2023] 149 taxmann.com 152 (Delhi)(Trib.); ITA No. 1850/Del/2021. It bears on section 194J, section 201(1), section 201(1A) of the Income Tax Act 1961, in Salary & Perquisites and TDS Defaults matters.
This is the answer to a demand under s.201(1) and s.201(1A) raised on the theory that visiting or guest teaching staff are professionals covered by s.194J. It matters because the characterisation decides whether there is any deduction obligation at all: s.194J bites from the first rupee over the threshold, whereas an engagement that is a contract of service is outside it altogether. The second limb matters as much in practice - where the amount paid to each individual stays below the taxable limit there is nothing to deduct, so the demand fails twice over. Educational institutions, hospitals and coaching bodies face this demand routinely.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee society runs an educational institute at Sampla, District Rohtak, Haryana, and engaged guest faculty during the year relevant to assessment year 2017-18. Remuneration to the regular faculty was drawn from the salary head; remuneration to the guest faculty was drawn from the contingency or wages head under a State government order, and so appeared in the accounts under professional and special services. By an order of 2 February 2021 under s.201(1) and s.201(1A) the Assessing Officer took the view that these were payments for professional or technical services attracting deduction at source under s.194J and raised a demand of Rs. 6,74,633 on guest-faculty remuneration of Rs. 24,94,090. The Commissioner (Appeals) confirmed the demand on 29 October 2021. The institute's case was that the guest faculty were engaged on the same footing as its regular teaching staff, working under its control and supervision, and that the ad hoc amount paid to each individual was below the taxable limit.
The Commissioner (Appeals)' order was set aside and the Assessing Officer directed to delete the demand of Rs. 6,74,633 raised under s.201(1) and s.201(1A) on guest-faculty remuneration of Rs. 24,94,090. The guest faculty rendered services identical to the regular staff and the relationship involved an obligation to obey orders and work that was supervised, so the engagement was a contract of service and not a contract for services and the teaching staff rendered no professional or technical service; s.194J was therefore not attracted. Separately, the guest faculty were appointed on an ad hoc basis and the amount paid to each was below the taxable limit on an individual basis, so no deduction was warranted and no default arose. The Tribunal decided the point and restored nothing.
The Tribunal held first that the head under which a payment appears in the accounts does not decide its character: remuneration to the regular faculty was drawn from the salary head and that to the guest faculty from the contingency or wages head under a State government order, so it appeared under professional and special services, and that told against nothing. On the substance, the guest faculty rendered identical services to the regular staff, and the relationship between the management and the teaching faculty involves an obligation to obey orders and work that is supervised, so it could not be called a contract for services, the teaching staff rendering no professional or technical service; s.194J was therefore not attracted. It adopted the Supreme Court's supervision-and-control test in Dharangadhra Chemical Works Ltd. v. State of Saurashtra, as a co-ordinate bench had applied it to a college on the same facts, and held that where the right to supervise and control the work of the guest faculty rests with the institution the payer cannot be treated as an assessee in default under s.201(1) or s.201(1A). The second limb is independent of the first: the guest faculty were appointed on an ad hoc basis and the salary paid to each was below the taxable limit on an individual basis, so no deduction of tax at source was warranted. The Tribunal also recorded that the regular assessment for the year had been completed under s.143(3) on 9 July 2019 without any adjustment to the returned income. Whether the obligation instead arose under s.192 was counsel's submission and the Tribunal did not decide it.
However, the Guest Faculties are rendering the identical services and relationship between the management and the teaching faculties involve an obligation to obey orders and the work to be supervised and consequently the said relationship could not be called 'contract for services' since the teaching staff does not render any professional or technical service.
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Handle my notice → Ask a CA on WhatsAppNo. The Tribunal found the guest faculty did the same work as the regular staff, under the institution's control and supervision, so the engagement was a contract of service and not a contract for services and they rendered no professional or technical service - s.194J was not attracted. It added that each person's ad hoc remuneration was below the taxable limit anyway, so nothing fell to be deducted and no default under s.201(1) or s.201(1A) could be visited on the institute. The demand was directed to be deleted. This was decided by the ITAT (ITAT Delhi Bench 'H' - Challa Nagendra Prasad (Judicial Member) and Pradip Kumar Kedia (Accountant Member), order delivered by Pradip Kumar Kedia) and bears on section 194J, section 201(1), section 201(1A) of the Income Tax Act 1961. It is reported as (2023) 200 ITD 134 (Delhi)(Trib.); [2023] 149 taxmann.com 152 (Delhi)(Trib.); ITA No. 1850/Del/2021. This is the answer to a demand under s.201(1) and s.201(1A) raised on the theory that visiting or guest teaching staff are professionals covered by s.194J. It matters because the characterisation decides whether there is any deduction obligation at all: s.194J bites from the first rupee over the threshold, whereas an engagement that is a contract of service is outside it altogether. The second limb matters as much in practice - where the amount paid to each individual stays below the taxable limit there is nothing to deduct, so the demand fails twice over. Educational institutions, hospitals and coaching bodies face this demand routinely. If it applies to you, the first step is this: Document that the guest faculty perform work identical to the regular staff and do so under the institution's control and supervision - that is the finding the case turns on.
The assessee society runs an educational institute at Sampla, District Rohtak, Haryana, and engaged guest faculty during the year relevant to assessment year 2017-18. Remuneration to the regular faculty was drawn from the salary head; remuneration to the guest faculty was drawn from the contingency or wages head under a State government order, and so appeared in the accounts under professional and special services. By an order of 2 February 2021 under s.201(1) and s.201(1A) the Assessing Officer took the view that these were payments for professional or technical services attracting deduction at source under s.194J and raised a demand of Rs. 6,74,633 on guest-faculty remuneration of Rs. 24,94,090. The Commissioner (Appeals) confirmed the demand on 29 October 2021. The institute's case was that the guest faculty were engaged on the same footing as its regular teaching staff, working under its control and supervision, and that the ad hoc amount paid to each individual was below the taxable limit. The matter was decided on 2023-02-14 by the ITAT (ITAT Delhi Bench 'H' - Challa Nagendra Prasad (Judicial Member) and Pradip Kumar Kedia (Accountant Member), order delivered by Pradip Kumar Kedia). On those facts the ITAT held as follows. The Commissioner (Appeals)' order was set aside and the Assessing Officer directed to delete the demand of Rs. 6,74,633 raised under s.201(1) and s.201(1A) on guest-faculty remuneration of Rs. 24,94,090. The guest faculty rendered services identical to the regular staff and the relationship involved an obligation to obey orders and work that was supervised, so the engagement was a contract of service and not a contract for services and the teaching staff rendered no professional or technical service; s.194J was therefore not attracted. Separately, the guest faculty were appointed on an ad hoc basis and the amount paid to each was below the taxable limit on an individual basis, so no deduction was warranted and no default arose. The Tribunal decided the point and restored nothing.
The Tribunal held first that the head under which a payment appears in the accounts does not decide its character: remuneration to the regular faculty was drawn from the salary head and that to the guest faculty from the contingency or wages head under a State government order, so it appeared under professional and special services, and that told against nothing. On the substance, the guest faculty rendered identical services to the regular staff, and the relationship between the management and the teaching faculty involves an obligation to obey orders and work that is supervised, so it could not be called a contract for services, the teaching staff rendering no professional or technical service; s.194J was therefore not attracted. It adopted the Supreme Court's supervision-and-control test in Dharangadhra Chemical Works Ltd. v. State of Saurashtra, as a co-ordinate bench had applied it to a college on the same facts, and held that where the right to supervise and control the work of the guest faculty rests with the institution the payer cannot be treated as an assessee in default under s.201(1) or s.201(1A). The second limb is independent of the first: the guest faculty were appointed on an ad hoc basis and the salary paid to each was below the taxable limit on an individual basis, so no deduction of tax at source was warranted. The Tribunal also recorded that the regular assessment for the year had been completed under s.143(3) on 9 July 2019 without any adjustment to the returned income. Whether the obligation instead arose under s.192 was counsel's submission and the Tribunal did not decide it. In the words reproduced by the source cited on this page: "However, the Guest Faculties are rendering the identical services and relationship between the management and the teaching faculties involve an obligation to obey orders and the work to be supervised and consequently the said relationship could not be called 'contract for services' since the teaching staff does not render any professional or technical service." The decision followed or applied Dharangadhra Chemical Works Ltd. v. State of Saurashtra AIR 1957 SC 264 — followed at para 6.
It was decided by the ITAT on 2023-02-14 and is reported as (2023) 200 ITD 134 (Delhi)(Trib.); [2023] 149 taxmann.com 152 (Delhi)(Trib.); ITA No. 1850/Del/2021. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 194J, section 201(1), section 201(1A), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Commissioner (Appeals)' order was set aside and the Assessing Officer directed to delete the demand of Rs. 6,74,633 raised under s.201(1) and s.201(1A) on guest-faculty remuneration of Rs. 24,94,090. The guest faculty rendered services identical to the regular staff and the relationship involved an obligation to obey orders and work that was supervised, so the engagement was a contract of service and not a contract for services and the teaching staff rendered no professional or technical service; s.194J was therefore not attracted. Separately, the guest faculty were appointed on an ad hoc basis and the amount paid to each was below the taxable limit on an individual basis, so no deduction was warranted and no default arose. The Tribunal decided the point and restored nothing. It arises in Salary & Perquisites and TDS Defaults matters, on section 194J, section 201(1), section 201(1A) of the Income Tax Act 1961, and was decided by ITAT Delhi Bench 'H' - Challa Nagendra Prasad (Judicial Member) and Pradip Kumar Kedia (Accountant Member), order delivered by Pradip Kumar Kedia. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Do not let the accounting head decide the argument: payment out of a contingency or wages head rather than the salary head does not make the engagement professional. Keep the individual payment record for each person, to show that the amount paid to each stayed below the taxable limit; that was a second and independent ground here. Attack the characterisation before the quantum: if the engagement is a contract of service and not a contract for services, s.194J does not apply at all.
Searched for later treatment; none was found. That is not the same as a source affirming it. Every particular in this entry is taken from the order itself: the date of 14 February 2023, the appeal number, the bench, the assessment year, the demand of Rs. 6,74,633 on guest-faculty remuneration of Rs. 24,94,090, and the direction to delete it. Later treatment is another matter. No decision applying, following, affirming or doubting the order has been found, and there is no record of an appeal to the High Court. Absence of contrary authority is not the same as good law, so the status stays as it is. One adjacent authority is worth naming and has not been run down: Government Chandra Vijay College v. ITO (2022) 219 DTR 177 / 329 CTR 545 (MP)(HC), a writ against an order treating a government college as in default for failure to deduct at source. Its text has not been read, so nothing is said here about what was decided in it. A practitioner arguing this point before a Bench in Madhya Pradesh should read it first, because a High Court decision on the same species of demand outranks this order whichever way it went. Two further things are untried rather than answered. The current text of s.192 and of s.194J has not been established for this entry, nor has the successor provision in the Income-tax Act 2025; and no Board circular on deduction from payments to teaching staff has been traced. Neither gap affects the reasoning, which turns on the character of the engagement rather than on the wording of either section, but both matter to anyone computing a liability. What would displace the order: a decision holding that guest or visiting faculty engaged for a fixed term render professional services within s.194J notwithstanding supervision by the institution, or facts in which an individual's remuneration exceeds the taxable limit, which removes the second and independent ground on which this demand failed. That finding was checked against a published source, which is linked on this page, on 2026-08-24. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The sentence quoted on this page is the Tribunal's own language, from paragraph 5 of the order. The date, the appeal number and the names of the Members are taken from the order itself. Note what the Tribunal did NOT hold: that the obligation arose under s.192. That was counsel's submission, and the Tribunal left it where it found it. The sections recorded on this entry are the ones actually in issue — s.194J, s.201(1) and s.201(1A) — and a reader should not take from this page any view about whether a salary deduction obligation arose instead. If the engagement was a contract of service, as the Tribunal held, the question of s.192 is a live one; it simply was not decided, and the order gives no comfort on it. The reasoning has two limbs and both are needed to state it fairly. The first is characterisation: the guest faculty rendered services identical to the regular staff, the relationship involved an obligation to obey orders and work that was supervised, so the engagement was a contract of service and not a contract for services, and no professional or technical service was rendered. The second is quantum: the guest faculty were appointed on an ad hoc basis and the amount paid to each was below the taxable limit taken individually, so nothing fell to be deducted in any event. The second limb is independent of the first, and in a case where an individual's remuneration crosses the taxable limit only the first survives. The order also records that the regular assessment for the year was completed under s.143(3) on 9 July 2019 with no adjustment to the returned income. That is context rather than a ground, and the Tribunal did not rest on it. The supervision-and-control test is the Supreme Court's in Dharangadhra Chemical Works Ltd. v. State of Saurashtra, adopted here as a coordinate Bench had applied it to a college on the same facts. Neither of those decisions has been read for this entry, so what is said about them is taken from this order. No later decision applying this order has been found and no appeal is recorded, so check its current standing before resting a reply on it alone. Two figures fix the scale of the case. The demand was Rs 6,74,633 on guest-faculty remuneration of Rs 24,94,090 for assessment year 2017-18, which is why the second limb mattered: spread across a year's guest faculty, the individual amounts stayed below the taxable limit. The order does not decide whether, if there were an obligation, it would arise under s.192, and it does not say what happens where an individual's remuneration exceeds the taxable limit, when only the characterisation limb would remain. It does not deal with visiting faculty engaged for a fee per lecture rather than on an ad hoc monthly basis, and whether the department appealed is not recorded. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Commissioner (Appeals)' order was set aside and the Assessing Officer directed to delete the demand of Rs. 6,74,633 raised under s.201(1) and s.201(1A) on guest-faculty remuneration of Rs. 24,94,090. The guest faculty rendered services identical to the regular staff and the relationship involved an obligation to obey orders and work that was supervised, so the engagement was a contract of service and not a contract for services and the teaching staff rendered no professional or technical service; s.194J was therefore not attracted. Separately, the guest faculty were appointed on an ad hoc basis and the amount paid to each was below the taxable limit on an individual basis, so no deduction was warranted and no default arose. The Tribunal decided the point and restored nothing.
TaxSphere, “Government Polytechnic Education Society v ITO (TDS)”, https://taxnotice.vittsphere.com/caselaw/case/government-polytechnic-education-society-v-ito-tds/ (validity last checked 2026-08-24)
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