Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (1) TMI 20 - AT - Income TaxShort deduction of TDS - TDS u/s 194C OR 194J - information technology outsourcing services in the nature of technical, managerial and consultancy services - Held that:- It is an undisputed fact that this “LSA” has been executed as per the Master Services Agreement “MSA” (supra) between assessee's parent and the very payee. We notice that this MSA is basic foundation which nowhere forms part of the case file. Nor has the assessee placed it on lower authorities’ record. The above following “LSA” aimed to regulate necessary terms of information technology and related services to be rendered by the payee in lieu of assessee’s payments. The assessee is fair enough in not disputing the fact that it has not handled or operated even a fraction of services on its own throughout all these assessment years. It seeks to take refuge under the contractual format on the other hand to come out of rigor of Section 194J of the Act. We are of the opinion that it is not the medium of contract or payment but the nature of services rendered by the payee which is the crucial factor to determine whether or not they amount to technical or professional services. The assessee cannot succeed in treating its payments u/s.194C by taking recourse to a written contract document. More particularly when it has come on record the payee itself had been issuing press release(s) alike the one already extracted hereinabove. The assessee has not made even a single attempt in the course of hearing to rebut the same. We therefore observe that its recipient’s information technology related integrated service activities amount to technical services only. The assessee’s reliance on its itemized billings of the above services in classifying the same as bundled payments/services cannot be accepted in view of the forgoing discussion that it is the recipient only who is wholly responsible for handling / providing all information technology related services. We also deem it appropriate to observe that hon’ble Delhi high court’s judgment DIT vs. Rio Tinto Technical Services [2012 (1) TMI 5 - DELHI HIGH COURT] has held that the above exclusion clause in Section 9(1)(vii) explanation 2 is to be read as a project in the nature of construction, assembly, mining only. We thus reject assessee’s argument seeking to invoke the above exclusion clause u/s.9(1)(vii) explanation 2 of the Act. We find no merit in assessee’s next argument of having acted in bonafide belief as well in deducting TDS @2% only qua its impugned payments as based on judgment Gwalior Rayon Silk Co. Ltd. (1983 (9) TMI 24 - MADHYA PRADESH High Court) case as well as all the abovesaid facts/circumstances discussed leave no doubt much less formation of such relief that the payee “CSCIPL” had in fact rendered technical services only requiring TDS deduction u/s.194J of the Act. We thus affirm both the lower authorities’ findings holding the payee recipient to have rendered technical and professional services. The assessee’s further plea that such technical services are nowhere in the nature of consultancy only is without any substance as there is no such isolated condition provided in the Act wherein all the relevant facts and circumstances have to be appreciated.
|