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TMI Blog2012 (7) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... and the facts that the payee deductee has already paid the tax on his income element comprised in the payment made to him by the appellant deductor and thereby no demand for short deduction of TDS could be raised against the deductor." 2. Briefly, the facts of the case are that the assessee challenged the order of the AO u/s. 201(1)/201(1A) of the IT Act before the ld. CIT(A) whereby the assessee has been treated as assessee in default for short deduction and late payment of tax along with interest chargeable thereon under the above provisions. The dispute is with regard to the short deduction of tax in respect of payment of Rs.5,00,000/- made to one Shri Tanuj Agarwal. On the above payment of Rs.5,00,000/- to Shri Tanuj Agarwal, the assessee has deducted taxes @ 2.06% as per section 194C of the IT Act treating it as supervision charges. However, as per the AO, the same is covered by section 194J of the IT Act. Since the assessee has paid the said amount on account of supervision for his construction work in a professional manner, therefore, TDS was to be made @ 10.3%. Accordingly, the AO has worked out short deduction of Rs.41,200/- and interest thereon at Rs.15,450/- and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Hon'ble Gujrat High Court in the case of Allgvjrj Federation of Tax Consultant vs. CBDT (1995) 214 ITR 270 (Guj.). Also the expression "any work" occurring in Sec. 194C cannot include a contract for rendering of services which is the fact found in case of the appellant as Shri Tanuj Agarwal has rendered managerial services by way of supervision of construction work of the appellant deductor. Thus, payment made to Shri Tanuj Agarwal is not found covered under the provisions of sec. 194C & instead TDS rates, as applicable for payments made u/s. 194J, apply to the payment of Rs.5,00,000/- made to Shri Tanuj Agarwal, which incidentally the appellant himself has also shown as such in its original TDS return. In view of facts & circumstances of the case & after perusal of records, order of the AO working out short deduction of Rs.41,200/- u/s. 201(1) along with interest thereon u/s. 201(1A) at Rs.15,450/- is, hereby, confirmed. 7. In the result, the appeal is dismissed." 3. The ld. counsel for the assessee reiterated the submissions made before the authorities below and submitted that the payment was made to Mr. Tanuj Agarwal for supervision work of a routine and normal nature, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law because merely applying a wrong provision of law would not be sufficient to fasten a liability upon the assessee. The AO in the remand report stated that in fact such payment is in the nature of fees for technical services as is specified in Explanation 2 to section 9(1)(vii) of the IT Act. However, it is not explained as to how the supervision charges simpliciter would be covered by the definition of fees for technical services. Similarly, it is not a case of providing professional services. For clarification, we reproduce section 194J of the IT Act as under : "Fees for professional or technical services. 194J. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of- (a) fees for professional services, or (b) fees for technical services or (ba) any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company; or (c) royalty, or (d) any sum referred to in clause (va) of section 28, shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum referred to in sub-section (1) is credited to any account, whether called "suspense account" or by any other name, in the books of account of the person liable to pay such sum, such crediting shall be deemed to be credit of such sum to the account of the payee and the provisions of this section shall apply accordingly." 4.1 Prima facie, the case of the assessee may not fall within the definition of professional services or technical services as per the definition and we find that the authorities below have not considered the case of the assessee as per section 194J(1)(d) of the IT Act. Section 28(va) provides for the sum received or receivable for provisions for services and definition of service has been provided in its Explanation (ii) that the service means "service of any description which is made available to potential users and includes the provisions of service in connection with business of any.................. "construction"...................." However, the ld. CIT(A) has not given any finding in the appellate order as to which of the clauses of section 194J would apply in the case of assessee. Therefore, in our view, the matter requires reconsideration at the leve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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