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2021 (11) TMI 1104 - AT - Income TaxTDS u/s 194C OR 194J - short deduction of tax and for interest u/s 201(1A) imposed - payments made for supply and installation of computers, commissioning of computer laboratories and technical manpower and to Vimal Electronics for supply and installation of solar photo voltaic panels - HELD THAT:- Entire contract is for supply of computer hardware, software, connected accessories, UPS, furniture, stationary, consumables, etc., and this contract is to be carried out by the contract through its own personnel. Thus, it is a simple contract of carrying out a work. Section 194J applies to a person responsible for paying to any resident any sum by way of fees for professional/technical services. In the present case, the contractor has not made available any technical services to the assessee but has only provided the computer hardware, software, etc., and employed his own personnel for implementing the same in various schools as per the terms and conditions of the contract. Hence, section 194J is not applicable and the assessee has rightly deducted tax at source under section 194C. We draw strength from the decision of Senior Manager (Finance), Bharat Heavy Electricals Ltd. [2016 (12) TMI 955 - PUNJAB AND HARYANA HIGH COURT] where contract was for erection, installation, commissioning, testing and trail operations of various equipment and other related machinery and that under the terms of the contract it was the duty of the contractor to provide all type of labour, supervisors, engineers, inspectors, etc., for execution of the project, the AO held that section 194J is applicable as the level of human interaction was high and sophisticated. Commissioner of Income-tax (Appeals) however held that the scope of the work given to the sub-contractor did not fall in the scope of technical services merely because technical persons were employed in execution of contract and therefore, tax is deductible only under section 194C. No professional or technical services were rendered to the assessee rather the persons were employed by the parties for execution of the contract and thus tax is deductible under section 194C of the Act. While reaching to this conclusion, we also relied upon the decision in the case of Rajasthan Council of Elementary Education wherein on the same facts, it was held that the agreement is a contract for carrying out a work and therefore, taxes required to be deducted at source under section 194C and not under section 194J of the Act, therefore, we direct to delete the addition. Hence, grounds raised by the assessee are allowed.
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