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2017 (10) TMI 98 - HC - Income TaxTDS u/s 194J - payments made by the assessee to HRTC - arrangement arrived at inter se M/s. Himachal Pradesh Bus Stand Management Development Authority (Development Authority) and Himachal Pradesh Road Transport Corporation (HRTC) can be said to be in the nature of latter providing professional or technical services to the former? - whether reimbursement of expenditure incurred by the latter would not attract the provisions of Section 194J - Held that:- The arrangement inter se the development authority and HRTC was clear and simple. It was by way of a stop gap arrangement. Till such time the authority developed its infrastructure and recruited the staff, the work of development and management was required to be carried out by HRTC. Hence, employees of HRTC were called upon to continue to discharge such duties. It is in this backdrop, two entities decided to share their resources by arriving at an arrangement, whereby salaries of certain staff and other expenditure incurred by HRTC was to be shared proportionately. Such an arrangement arrived at between two entities cannot be said to be that of rendering professional services. No legal, medical, engineering, architectural consultancy, technical consultancy, accountancy, nature of interior decoration or development was to be rendered by HRTC. Similarly, no service, which can be termed to be technical service, was provided by HRTC to the development authority, so also no managerial, technical or consultancy services were provided. The arrangement was purely simple. The staff of HRTC was to carry out the work of development and management of the development authority till such time, the said authority developed its infrastructure and the expenditure so incurred by HRTC was to be apportioned on the agreed terms. It is only pursuant to such arrangement, the development authority disbursed the payment to HRTC and, as such, in our considered view, no amount of TDS was required to be deducted on the same. It is only a reimbursement of an expense so incurred by HRTC. - Decided in favour of assessee.
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