2018 (12) TMI 451 - AT - Income Tax

TDS u/s 194J OR 194C - treating annual maintenance contracts AMC payments made to various payees as fee for technical services - TDS liability - Held that - We find no merit in Revenue s instant argument. There is no dispute about the assessee having made the impugned payments in lieu of availing annual maintenance services from the payees in issue. It deducted TDS thereupon u/s 194C of the Act. The Revenue s endeavour herein is that the payee(s) party had rendered technical service and therefore sec. 194J steps in. We notice in this backdrop of facts this tribunal s decision in DCIT vs. Parasrampuria Synthetics 2007 (11) TMI 436 - ITAT DELHI rejected Revenue s similar substantive grievance seeking to treat contractual payments as fee for technical services The person rendering certain services has only maintained machinery or converted yam but that knowledge is not now vested with the assessee by which itself it can do research work. In the circumstances, the amount paid cannot be considered as fees for technical services within the meaning of section 194J. We offered sufficient opportunities to the learned departmental representative for indicating any technical expertise to have been made available to the assessee payer forming sine qua non to invoke sec. 194J r.w.s. 9(1)(vii) of the Act. There is no such evidence forthcoming from the case file. We therefore follow the above referred co-ordinate bench s decision to affirm the CIT(A) s findings under challenge in all three instant case(s). - decided against revenue.

Summary

Issues:
- Delay in filing appeals
- Treatment of payments as fees for technical services

Analysis:
1. Delay in filing appeals:
The judgment addresses the three Revenue's appeals for assessment years 2011-12, 2012-13, and 2013-14, which were filed with a delay of three days each. The Tribunal considered the condonation petitions submitted by the Revenue, citing reasons for the delay, which were not disputed by the assessee. Consequently, the Tribunal condoned the delay in filing the appeals.

2. Treatment of payments as fees for technical services:
The core issue in the appeals revolved around whether the payments made by the assessee under annual maintenance contracts (AMCs) should be treated as fees for technical services under section 194J of the Income Tax Act, 1961. The Revenue contended that the payments involved specialized knowledge in maintenance of thermal power units, justifying the application of section 194J. However, the Tribunal disagreed with the Revenue's argument. It noted that the payments were made for availing annual maintenance services and were subject to TDS deduction under section 194C. The Tribunal referred to a previous decision where similar contractual payments were not considered as fees for technical services. The Tribunal emphasized that the mere use of technically qualified persons to render services did not automatically classify the payments as fees for technical services. It highlighted that the technical knowledge was used to provide services to the assessee and was not transferred to the assessee. As a result, the Tribunal dismissed the Revenue's appeals and upheld the CIT(A)'s findings in all three cases.

In conclusion, the Tribunal dismissed the Revenue's appeals, emphasizing that the payments made under the AMCs were not to be treated as fees for technical services under section 194J. The judgment provides a detailed analysis of the legal provisions and precedents to support its decision, ensuring clarity on the treatment of such payments under the Income Tax Act.