TMI Blog2010 (1) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices liable to deduction of tax at source under section 194J. 3. The learned Commissioner of Income-tax (Appeals) erred in not relying on the decision of the hon ble Supreme Court in Associated Cement Co. Ltd. v. CIT [1993] 201 ITR 435 wherein it was held that the provision for deduction of tax is not restricted to payments in relation to works contract, under section 194C(1) of the Income-tax Act, 1961. 4. The learned Commissioner of Income-tax (Appeals) ought to have held that the cases relied on by the assessee-company are not applicable to the facts of the case. 5. The learned Commissioner of Income-tax (Appeals) erred in holding that the assessee-company is not liable for tax deduction at source on accrual entries. 6. For th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company had entered into a specific contract with the internet service providers for the installation and maintenance of telecommunication services. In the case of network failure, the service provider takes care of repair and maintenance work. The network of the assessee is being monitored and maintained every second by the information technology professionals. The Assessing Officer collected details regarding the nature of the services provided by service providers and also sought explanation from the assessee in this regard. Finally, after show-causing the assessee as to why demand under section 201(1) and 201(1A) be not made; and after considering the explanation of the assessee the Assessing Officer has concluded that the internet char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a common user are entirely different than corporate users like this assessee. So, according to him by no stretch of imagination, it cannot be said that the assessee-company is using a standard facility and not a specific contractual service. Per contra, the learned authorised representative, after placing heavy reliance on the reasonings given in the appellate order has further submitted that the assessee-company has made the payments to internet service providers for usage of standard facilities of broad band, data lines, half circuit charges, etc. These payments, according to the learned authorised representative, are not at all in the nature of technical services and so, provisions of section 194J or section 194C are not attracted. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ps carry on a business activity, which is a highly technical and regulatory industry which is based on highly improved and sophisticated technology. The popular meaning of internet is that it is an international computer network connecting other networks and computers from companies, etc. An ISP is a company that provides you with an internet connection and service such as e-mail, etc. There is one another term intranet which means a computer network that is private to a company, etc. but is connected to and uses the same software as the internet. The decision of the hon ble Madras High Court in the case of Skycell Communications Ltd. v. Deputy CIT [2001] 251 ITR 53 (Mad), would definitely help in arriving at a just decision provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntries were credited to sundry creditors accounts and the company would not be in a position to clearly ascertain the vendors as well as the amount payable to them and that tax was deducted at the time of payment. The learned Commissioner of Income-tax (Appeals) has held as under : 6.3 I have carefully considered the facts of the case and rival submissions. The learned Assessing Officer s contention is that under sections 194J and 194C, as soon as an amount/payment is credited in the suspense account for services rendered or for contract work, TDS is to be deducted. However, the appellant denies the same and relies on the hon ble Supreme Court judgment in the case of CIT v. Shoorji Vallabhdas and Co. [1962] 46 ITR 144 wherein it is held ..... X X X X Extracts X X X X X X X X Extracts X X X X
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