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TMI Blog2015 (10) TMI 2051X X X X Extracts X X X X X X X X Extracts X X X X ..... liable for tax of interest thereon. However, in respect of other payments, the CIT(A) accepted assessee's contention and held that the tax was deducted at proper rate, therefore, the assessee is not in default u/s.201(1)/201(1A) of the I.T.Act. 4. Against the above order of CIT(A), the assessee and revenue are in appeals before us. 5. We have considered rival contentions and found that assessee has entered into contract and providing catering and allied services, confined to serving food and beverages to its staff members, patients and visitors with Monginis Hospitality (Contractor), vide "Facility Management Agreement" executed on 01.04.2009. The costs of materials, services and other utilities are borne by the assessee Hospital. The services of the contractor are monitored and governed as per agreement executed by the assessee and the contractor. The contractor is required to provide the services within the premises of the Hospital by preparing the food as per the instructions of the Hospital and serving the same to the patients, customers, relatives of patients and visitors. For the said services, assessee pays 15% over and above the gross wage bill on monthly basis for the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent any sum by way of (a) fees for professional services, or (b) fees for technical services, shall at the time of credit of such sum to the account of the payee or a: the time of payment thereof cash or by issue of a cheque or draft 'or by any other mode whichever is earlier, deduct an amount equal to ten percent of such sum as income-tax on income comprised therein. This 10% has been inserted by the Finance Act w.e.f 01.06.2007 in place of 5%. As per Explanation of section 194J, professional services and fees for technical services has been defined as under: Explanation - for the purposes of this section: (a) "professional services" means services rendered by a person in the course of 'carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section; (b) "fees for technical services" 50011 have the same meaning as in Explanation 2 to clause (vii) of sub-section (l) of section 9; 6.3 As per section 9(1)(vii) - Explanation (2) - the technical services have been define ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alized. Therefore, they cannot be maintain or normal manner, but a technical person is required for maintenance, of such equipments. Therefore, in my considered opinion it is held that these contracts cannot be the contracts in a routine or normal manner but for which technical service has been rendered and provisions of section 194J read with ,section 9(1) of Explanation-2 are attracted, read with section 201 (1) and 201 (1A), which the AO has rightly applied. Accordingly, the action of the A.O.is upheld. Ground is dismissed." 7. We have considered rival contentions and also gone through the terms of agreement entered with the contractor reflecting the nature of services rendered, which clearly shows that the principle services rendered by the contractor Monginis are cooking of food and supply of trained workforce to serve the said food. By no stretch of imagination such services of preparation of food and serving them to people amounts to professional fees as alleged by the AO. The definition of the term 'work' in respect of which the provisions of s.194C of the Act are applicable includes the services in the nature of catering. As already noted in the clauses of the agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsultancy basis for providing various services to the hospital. We also found that the services rendered by such doctors are only for specified time which may be mutually agreed upon between the parties. Further the agreement also permitted the consultants to carry out their independent professional services. The above understanding is evident from the following clauses of the agreement which are reproduced below: "(3) The consultant shall be paid a retainer fees/consultancy fee of Rs. 27,563/- per month for her consultancy services to the hospital subject to tax and other applicable deductions at source from the retainer fee / consultancy fee at the rates as applicable from time to time as advised to the hospital. However, professional tax or any other tax, cess or duty (including but not limited to service tax, if applicable) shall be the individual responsibility and shot! be borne by the consultant along without any liability on the part of the hospital. ........ ........ (6) The consultation timing allotted to the consultant shall be mutually agreed between the hospital and the consultant. The time slot so allotted to the consultant may be changed or rescheduled by the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in doctor's account, in view of the express provision of law, TDS cannot be done on mere assumption, conjecture and surmises. The concept of preponderance of probability does not hold good for TDS provisions. In absence of any tangible evidence and n:aterial on the issue that the amount of professional fees as envisaged by the A.O. is credited or paid in the Doctor's account the AO is not justified in invoking the provisions of section 194J. Since no evidence is brought on record to show that the amount is credited to the account of doctor or any payment is. made to doctor, the addition of Rs. 32, 93,247 stands deleted as the condition stipulated u/s.194J is not satisfied." 13. We have considered rival contentions and found that as a practice, the doctors are entitled to fees for the services rendered by them to the patients admitted in the hospital, based on the fees negotiated between the doctors and the hospital. These fees are negotiated based on the nature of services rendered, the number of visits, the class of the ward where the patient is admitted, etc. These fees are either charged through the hospital or recovered directly by the doctors from the patients. 14. After re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue relating to applicability of s. 194J of the Act in respect of the payment towards AMC contract, observed as under: "In the present case, it is seen that there may be use of services of technically qualified persons to render the services but that itself do not bring the amount paid as 'fees for technical services within the meaning of Explanation 2 to section 9(l)(vil). The amounts paid are towards annual maintenance contract of certain machinery or for converting POY into textured/twisted yarn. The technology or the technical knowledge of the persons is not made available to the assessee but only by using such technical knowledge services are rendered to the assessee. In such a case, it cannot be said that the amount is paid as 'fees for technical services'. Rendering services by using technical knowledge or skill is different than charging fees for technical services. In a latter case, the technical services are made available due to which the assessee acquired certain right which can be further used. In the present case, it is not so. The persons rendering certain services has only maintained machinery or converted yarn but that knowledge is not now vested with the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actor for carrying out its work which would have fallen outside 'work' but for specific inclusion in the sub-section. 15. Now let us see what is the meaning of "fee for technical services". The meaning of "fee for technical services provided in Explanation (2) of section 9(1)(vii) reads as under: ""Explanation (2) - For the purposes of this clause, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but dopes not include consideration for any construction, assembly, mining or like project undertaken by the Recipient or consideration which would be income of the recipient chargeable under the head "Salaries". From the above discussion we find that fee for technical services includes payment of consideration for rendering of following services: (a) managerial, (b) technical or consultancy services (c) provision of services of technical or other personnel. 16. 'Fee for technical services' does not includes following consideration - (i) Construction (ii) Assembly (iii) Mining or lik ..... 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