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2015 (9) TMI 1000 - AT - Income TaxTDS liability - u/s 192 or 194J - whether the payment made to the Creative Consultants was in the nature of professional fee paid? - as per the Assessing Officer the terms of the employment of the consultant showed that it was a case of employer-employee relationship and, therefore, the payments made by the assessee were liable to be subjected to tax deduction at source in terms of section 192 - Held that:- The restrictive covenants which are sought to be interpreted by the Assessing Officer to mean that it establishes an employer-employee relationship between assessee and the consultants have to be understood in the context of the business realities in which the assessee operates. Such restrictions cannot imbibe an employer-employee relationship to the contract with consultants. It is also quite clear that that the benefits of an employer-employee relationship which are normally available, do not apply to the impugned consultants, for instance, provident fund, leave encashment, gratuity benefits, etc. In a similar situation, our Coordinate Bench in the case of DCIT vs. Madison Communication Pvt. Ltd (2015 (9) TMI 945 - ITAT MUMBAI) has also upheld the stand of the assessee that such payments are subject to deduction of tax at source under section 194J of the Act and not under section 192 of the Act. In conclusion, we therefore, uphold the plea of the assessee and set aside the order of CIT(A) and direct the Assessing Officer to treat the payments made to the Creative Consultants as liable for deduction of tax at source under section 194J of the Act and not under section 192 of the Act. As a consequence, the demand raised on account of shortfall of deduction of tax at source under section 201(1) of the Act and interest under section 201(1A) of the Act qua the aforesaid issue is hereby set aside. - Decided in favour of assessee.
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