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TMI Blog2013 (6) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... oviding services for annual maintenance of sophisticated medical equipments was a simple contractual work covered u/s 194C of the I.T. Act. The Ld CIT(A) has erred on facts and in law in overlooking the fact that the nature of work i.e. installation of machinery, AC system fitting for dialysis, ACC system installation and Air conditioner etc was possible only due to the involvement of highly skilled technical & experts persons and therefore all these activities were covered by section 194-J of the IT Act and not by Sec. 194C of the I.T. Act. The Ld CIT(A) has erred on facts and in law in overlooking the head note of sec. 194J which clearly speaks that TDS provision u/s 194J are applicable in respect of fees for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 194J are not applicable to work undertaken by the parties as work contract, therefore, the same will not fall in the category of professional or technical services. The Ld. CIT(A) further held that rendering of services by using technical knowledge or skill is different from charging of fees for technical services. Where the services of technically qualified persons were rendered only for maintaining machinery but the knowledge did not vest in the assessee so that assessee itself could make use of it, the amount cannot be considered as fees for technical services within the meaning of section 194J. The Ld. CIT(A) also stated that one should not go by the nomenclature given to particular head of payment for subjecting such paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2011 u/s 201(1) and 201(1A) of the Income-tax Act shows that TDS verification was carried out by the Department at the premises of the assessee-hospital on 30.07.2009 during which it was found that the assessee had made payment to various parties for maintenance of various hospital equipments. It was also found that the assessee had deducted tax at source u/s 194C out of these payments at the rate of 2% treating the nature of job as works contract. The Revenue, however, treated the aforesaid nature of job as technical services within the meaning of section 194J and therefore held that the tax ought to have been deducted at source u/s 194C. The Revenue worked out the amount of tax deductible u/s 194J at Rs.6,03,709/- as against which the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same will not fall in the category of professional or technical services. Further, it is noticed that though the work involved is of specialization, still as the AO has failed to bring on record any evidence which shows that technical services received enhanced the knowledge of the appellant, these will also not be charged u/s 194J. Rendering of services by using technical knowledge or skill is different than charging fees for technical services. Where the services of technically qualified person were rendered only for maintaining machinery but that knowledge did not vest in the assessee so that assessee itself could make use of it, the amount cannot be considered as fees for technical services within the meaning of section 194J. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground of appeal is allowed. 4. In the second ground of appeal, the appellant has challenged charging of interest u/s 201(1A) on short deduction of various contract payments made as alleged disregarding the evidence of return filed by other parties. 4.1 As these transactions are held to be not subjected to the provisions of section 194J, there will not be any question of charging of interest u/s 201(1A). Therefore, the interest charged u/s 201(1A) will also have to be cancelled. Accordingly the A.O. is directed to cancel the demand raised on this account as well. It is also seen that the appellant has submitted copies of returns of income for the relevant period in respect of M/s. Blue Star Ltd. and M/s. Siemens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coming to the conclusion that the nature of job awarded by the assessee-hospital for which payments were made and tax was deducted at source was not in the nature of seeking technical services payments but in the nature of works contract. We are in agreement with the reasoning given by him for coming to the aforesaid conclusion. In our considered view, the assessee has rightly deducted the tax at source u/s 194C of the Income-tax Act. On the facts of the case, it is held that the sum and substance of the job awarded by the assessee-hospital to the deductees is in the nature of works contract within the meaning of section 194C and not in the nature of seeking technical services within the meaning of 194J. In this view of the matter, we confi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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