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2017 (10) TMI 1441 - AT - Income TaxTDS u/s 194C OR 194J - short deduction of tds - work under taken by the sub-contractor - demand u/s 201 and 201(l A) - whether sub-contractor company is doing civil construction work and payment for that is covered u/s 194C of the act only? - HELD THAT:- Section 194J mandates deduction of tax at 10% in respect of payments made towards "fee for technical services". Technical services has been defined in Explanation 2 to clause (vii) of sub-section (l) of section 9 In the instant case, the appellant is executing a works contract (Thermal Power Plant) for its customer. This involves men, machinery, material and other tangible and intangible in goods. For the construction of a Thermal Power Plant, the services of technical personnel including engineers is inevitable. The scope of the sub-contract was actual execution of work involving the services of technical personnel as well as non-technical personnel. However. what the appellant intended to get from its subcontractor was a physical output, a tangible structure and not merely the services of its qualified, professional engineers/staff. The contract between the two parties is for work which clearly satisfies the provisions of section 194C and does not by any stretch of imagination attract the provisions of section 194J In any case, the sub-contractor has already offered the payments received from the appellant tax. as per the evidence furnished by the AR. As per section 191 of the Act. A person shall be treated as assessee in default only when (i) he does not deduct tax at source as required under the Act from the payments made to the assessee: and (ii) the assessee has also failed to pay such tax directly. In view of the above, the appellant cannot be deemed as an assessee in default and the disputed short deduction of tax cannot be demanded from the appellant as per the case law of Hon’ble Supreme Court in Hindustan Coca Cola Beverages (P.) Ltd. V. CIT. [2007(8) TMI 12 Supreme Court]. This ratio has also been inserted subsequently w.e.f. 01.07.2012 as proviso to section 201 (I) of the Act. We confirm the finding of the Id CIT(A) that tax on such payment to subcontractor was required to be deducted 194C of the Act and same was complied with by the assessee. Therefore, there is no short deduction of tax at source u/s 201 of the Act and hence, there cannot be any interest liability a/s 201(IA) of the Act. Hence we dismiss the appeal Of the Revenue.
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