TMI Blog2012 (10) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... , CIT DR For the Respondent : Sh. Ashwani Taneja, FCA Sh. Tarun Kumar, Adv. ORDER PER RAJPAL YADAV, JM The revenue is in appeal before us against the order of Ld. CIT(A), Ghaziabad dated 24.10.2011 passed for AY 2008-09. The grounds of appeal taken by the revenue are not in-consonance with Rule 8 ITAT Rules. They are descriptive and argumentative in nature. In brief the grievance of revenue is that Ld. CIT(A) has erred in deleting the disallowance made u/s 40(a)(ia) of the Income Tax Act, 1961. This disallowance was made by the AO on the ground that assessee has deducted the tax at source u/s 194C @ 1 %, whereas it ought to have deductive the tax u/s 194J @ 10 %. The difference calculated on the basis of the rate has been disallowed u/s 40(a)(ia). 2. The brief facts of the case are that assessee is running a proprietorship concern in the name and style of M/s Alps Engineers, which is engaged in providing consultancy services to its clients related to planning, development or improvement of cities, towns and villages as per terms of the letter of award granted to him. He has filed his return of income electronically on 29.09.2008 declaring income of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion-collection, which were, then, feeded into the technical design being prepared by the appellant. This itself implies that these parties were, rather than giving any professional/technical consultancy, performing composite work-order to suit the technical requirement of the appellant. Thus, the services rendered can more appropriately be characterized as work contract u/s 194C, than as technical professional services u/s 194J. Here, it is important to mention that the two parties treated by the AO as performing professional/technical work in A.Y 2007-08 has now been accepted by the AO himself as not performing any professional/technical work after the parties were produced by the assessee for which no addition is made by the AO after verification. Thus looking to the entire facts of the case legal interpretation above, though the contention of the assessee appears to be correct that the payments in question are attracted by provisions of sec. 194C not by sec. 194J. 4. Ld. DR relied upon the order of the AO. He pointed out that AO has arrived at a conclusion that assessee availed skilled/technical work from the persons to whom payments were made. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... using accommodation. In order to fulfill these contracts, assessee has to out-source certain non-technical works such as collection of data, locating and marketing of certain buildings, office etc. The assessee further contended that the persons to whom work was out-sourced has performed following activities:- (i) marking of landmarks such as important monuments, institutional buildings, offices, hospitals, schools, college, culverts, water bodies etc., naming of major roads, mohallas etc. on map provided by assessee. (ii) Computer job work i.e marking node nos. on map, length or dia of pipe on computer delivering number of sets of the print thereof on the basis of engineering design data given by assessee. (iii) Field inspection, door to door waster collection, information collection regarding existing facility, collection of soil sample getting soil sample test from any soil testing laboratory submission of the test report to assessee i.e simply a door to door data collection. 6. Thus, according to the assessee all technical work was performed by himself and the parties from whom work was out-sourced has only performed, non-skilled work either by supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as in notified by the Board for the purposes of section 44AA or of this section; (b) fees for technical services shall have the same meaning as in Explanation 2 to clause (vii) of sub-section(1) of section 9. 8. The bare perusal of section 194C would reveal that in case payment is being made with regard to a contract entered for the purpose of dealing with and satisfying the need for housing accommodation for the purpose of planning, development or improvement of cities, towns and villages than such payment would come within the ambit of section 194C. On the other hand, explanation appended to section 194J suggest that professional service would be constituted, all those services which are rendered by a person in the course of carrying on legal, medical, engineering or architectural profession etc. The jobs availed by the assessee from the persons did not fall within the ambit of this explanation, rather they are ancillary jobs connected with main performed by the assessee, which falls within the ambit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to pay into Government Account. There is nothing in the said section to treat, inter alia, the assessee as defaulter where there is a shortfall in deduction. With regard to the shortfall, it cannot be assumed that there is a default as the deduction is not as required by or under the Act, but the facts is that this expression, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction has not been paid on or before the due date specified in sub-section (1) of section 139 . This section 40(a)(ia) of the Act refers only to the duty to deduct tax and pay to government account. If there is any shortfall due to any difference of opinion as to taxability of any item or the nature of payments falling under various TDS provisions, the assessee can be declared to be an assessee in default u/s 201 of the Act and no disallowance can be made by invoking the provisions of section 40(a)(ia) of the Act. 12. Taking into consideration all these aspects, we do not find any merit in this appeal and accordingly it is dismissed. 13. In the result, the appeal of the revenue is dismissed. Order pronounced in the Open Court on 26.10.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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