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2016 (5) TMI 1500 - AT - Income TaxTDS u/s 194C OR 194J - payment made by the assessee on account of data storage charges, processing charges, call centre operation and business services - default u/s 201(1) - DR argued that that since these services involved special managerial skills to carry out the work in specialised manner - HELD THAT:- CIT(A) after having examined and perused agreements with the service providers and after going into the various services provided reached a conclusion that the outsourced services do not require any kind of technical and professional expertise and are just simple and repetitive nature of work such as document storage, documents delivery and collection services and documents management services. CIT(A) examined the contract with Writer Information Management Services and found that very basic services were contracted and rendered by the said party involving no special technical skill or professional qualification. On the basis of the rival arguments and perusal of the various records as placed before us we find that the work assigned to the service provider was not a technical or professional work which required special skills but simple, basic and repetitive nature of work and we are inclined to opine that the order of CIT(A) is correct and deserved to be upheld. We dismiss the ground no 1 raised by the revenue by upholding the order of FAA on this point. Event management expenses attract the provisions of section 194C or 194J - HELD THAT:- As is seen from the nature of services availed, we do not find any sort of professional or technical or consultancy but rather routine services which are provided by the travel agents in the normal course of business which were purely of contractual nature. It can be seen from nature of reimbursement for the services availed that these are in the nature of simple contractual case where only the provisions of 194C could be applied to deduct and deposit TDS and not 194J which deals with the deduction and deposit of TDS in case of technical, professional and consultancy services. Looking to the facts in the light of provisions of section 194C vis a vis 194J we find that the order of FAA is correct and needs to be upheld. Accordingly we dismiss the ground as raised by the revenue. Applicability of TDS provisions u/s 194D on Service Tax element in respect of ‘insurance commission' - HELD THAT:- TDS is required to be deducted and paid to the Govt Treasury on the income payable only which means that certainly the service tax component on the commission is not liable to TDS as the same is not an income of the assessee. The provisions of section 194D and 194I have to be seen in the light of the two circulars no 4/2008 dated 28.04.2008 and circular no 1/2014 [F.No. 275/59/2012-IT(B)] dated 13.1.2014. In circulars no. 4/2008 dated 28.04.2008 CBDT has clarified that TDS is not required to be deducted on service tax on rent u/s 194I. Similarly in circular no 1/2014[F.No. 275/59/2012-IT(B)] dated 13.1.2014 the CBDT has clarified that TDS is required to be deducted on the amount paid/payable under an agreement/contract between the payer and the payee without including the service tax amount. In the case of CIT(TDS) V Rajasthan Urban Infrastructure [2013 (8) TMI 12 - RAJASTHAN HIGH COURT] has held that service tax is not subject to deduction of tax at source and the circular no 1/2014[F.No. 275/59/2012-IT(B)] dated 13.1.2014 has been brought by the CBDT after the above decision of the high court and also referred to in para no 2 of the circular. After considering the facts of the case before us in the light of circulars as referred to above and decision of the Rajasthan High Court and also the relevant provisions of the Finance Act which provides for ―Reverse Charge Mechanism‖, we are of the opinion that the order of CIT(A) is correct and does not suffer from any infirmities and we,therefore, uphold the same. In result, the appeal of the revenue is dismissed.
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