2023 (1) TMI 517 - AT - Income Tax

TDS u/s 194J - Disallowance u/s 40(a)(ia) - nature of payments - professional services or not - services rendered, viz. tabulation, checking and preparation of marksheets etc. which involved usage of computers and online services - HELD THAT:- The services rendered by the processing agency to the assessee, i.e., tabulation, checking and preparation of mark sheets and other computer assisted work could not have been brought within the meaning of “professional services” as contemplated in “Explanation (a)” of Section 194J.

As observed hereinabove, term “professional services” had been specifically defined in “Explanation (a)” of Section 194J - On a perusal of the aforesaid definition, it transpires that the same either refers to certain specified services, i.e., services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section.

The services in order to fall within the meaning of “professional services” for the purpose of triggering the provisions of Section 194J are either to be those which finds a specific mention in the “Explanation (a)” of the said section; or had been notified by the CBDT either for the purpose of Section 44AA or Section 194J of the Act.

Not able to concur with the view taken by the lower authorities that the services rendered by the processing agency requires any professional expertise or skill, much the less those specified in “Explanation (a)” of Section 194J, AND also is unable to persuade myself to conclude that the services in question could be brought within the meaning of “technical consultancy” [as forms part of the definition of “professional services” in Explanation (a) of Section 194J], therefore, the same in my considered view could not have been brought within the meaning of Section 194J - We set-aside the order of the CIT(A) to the extent he had concluded that the assessee was liable to deduct tax at source on the payments made to the processing agency u/s.194J.

As concluded that the services rendered by the processing agency, i.e., tabulation, checking and preparation of mark sheets and other computer assisted work provided to the assessee could not be brought within the meaning of “professional services” and thus, the assessee could not have been saddled with any obligation to deduct tax at source on the payments made to the processing agency u/s.194J.