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TMI Blog2017 (1) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... the demand raised u/s.201(1)/201(1A) of the Act in respect of payments made to 'M/s. Pravin Electricals Pvt. Ltd.' holding that the agreement of the assessee with 'M/s. Pravin Electricals Pvt. Ltd.' is not in the nature of professional or technical services without appreciating the fact that work assigned to the said party comprises of supply and installation of HT and LT electrical installation equipments, supply laying and termination of HT and LT electrical cables, etc. which requires the services of technically qualified person, thereby falling within the purview of section 194J of the I. T. Act." (ii) "On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the demand raised u/s.201(1)/201(1A) of the Act in respect of payments made to 'M/s. Brandtherapist' holding that expenses incurred in respect of advertisement are in the nature of "work contract" and fall under the provisions of section 194C of the Act without appreciating that the services rendered by 'M/s. Brandtherapist' are for production/designing of artwork which is undoubtedly professional as well as technical in nature and hence, squarely covered by section 194J of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est),Mumbai-400058 on 4th October, 2010 with respect to the verification of proper TDS compliance by the assessee-deductor. During the course of proceedings u/s. 201/201(1A) of the Act, the assessee was asked to furnish copies of ledger accounts and bills/invoices of the parties mentioned in the notice. The assessee was also asked as to why the assessee should not be treated as the assessee-in-default as the assessee had deducted tax at source @ 2% instead of 10% on the payments made to the said parties while the services rendered by the said parties were professional/technical services in nature. The assessee in reply thereof made submissions enclosing the ledger accounts and sample bills of the specific parties wherein it was contended that the assessee has rightly deducted tax at source from various payments made. The assessee submitted that the payments made to the parties were covered under the segment of supply of material/works contracts u/s 194C of the Act wherein these parties supplied material and/or had executed works contract and hence TDS @ 2% is applicable . It was also submitted that in case of supply of material, no TDS was required to be deducted. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as approved by architect with 9 W PL - 9 Lamp complete (for landscape lighting) (Supply of lighting fixture with. lamps by client) or equivalent. The A.O. thus observed that services rendered by M/s Pravin Electricals Pvt. Ltd. are technical in nature. Further, the A.O. observed that a amount of expenditure Rs. 1,16,96,440/- were claimed to have been incurred by the assessee with respect to advertising charges paid to M/s Brandtherapist and tax was deducted at source u/s. 194C of the Act @ 2%. In this regard, on examination of the copy of bill/invoice No. 20090012070017 dated 29.06.2009 and the copy of the relevant service entry of the assessee, it was observed by the AO that the service rendered by the party is production/designing of artwork and the party M/s Brandtherapist is a division of famous professional agency, M/s. Mudra Communications Pvt. Ltd., which is engaged in the professional services for advertising. The A.O. observed that the professional/technical services related to or in the course of advertising are covered by section 194J of the Act and not by section 194C of the Act and in the instant case, the services rendered by the party are for production/designing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of specialized elevators and lifts and the said company had provided services for comprehensive annual maintenance of the lifts/elevators along with the lobby vision (CCTV) services for security of the hospital. The services rendered were for the preventive maintenance & upkeep of the specialized elevators, ensuring working of the alarm system, security measures to prevent sudden breakdown and overall inspection of the machinery. The specialized elevators /lifts of the assessee were maintained and monitored by the technically skilled personnel of the said company providing technical and professional services, hence, the AO observed that deduction of tax at source under section 194C of the Act is contrary to the provisions of law which has specific section 194J for the deduction of tax at source from payments for professional/technical services. The A.O. accordingly held that the payments made to the above mentioned parties cannot be termed as contract of work and it has been proved that the said payments were in the nature of technical or professional services as technical element in the services is predominant in these services, hence, the assessee should have deducted tax at so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the vendor; nor any technical knowledge, design etc is imparted while performing such activities, Hence, circular No. 681 dated 08.03.1994 and circular No. 715 dated 08.08.1995 issued by the CBDT, both, will apply to the payments under consideration. In view of above discussion therefore, I hold that the expenses in respect of advertisement incurred by the appellant are in the nature of payments towards a 'work contract' and the tax deduction at source in respect thereof has been correctly made under section 194C of the Act." Absortherm Facility Management Pvt. Ltd. "I have considered the above submissions of the appellant and agree with the same. I agree that the services rendered by M/s Absortherm for operation and Maintenance, including the provision of facility manager, shift supervisor and technical assistant which include supply of personnel of different levels are in the nature of a 'works contract'. Hence, the same shall fall under the provisions of section 194C for the purposes of tax deduction at source. It has to be noted that in the process of rendering these services, neither any technical information is provided by the vendor; nor any technical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these services, neither any technical information is provided by the vendor; nor any technical knowledge, design etc is imparted while performing such activities. Hence circular No. 681 doted 08. 03.1994 and Circular No. 715 dated 08.08.1995 issued by the CBDT, both, will apply to the payments under consideration. In view of above discussion therefore, I hold that the expenses in respect of installation, maintenance, testing and commissioning of HVAC work incurred by the appellant are in the nature of payments towards a 'work contract and the tax deduction at source in respect thereof has been correctly made under section 194C of the Act." Thus, the appeal of the assessee was allowed by the ld. CIT(A) vide his appellate orders dated 4th July, 2014. 6. Aggrieved by the appellate orders dated 04-07-2014 passed by the ld. CIT(A), the Revenue is in appeal before the Tribunal. 7. The ld. D.R. relied on the order of the A.O. while the ld. Counsel for the assessee relied on the order of the ld. CIT(A). 8. We have considered the rival contentions and also perused the material available on record. We have observed that the assessee has made the following payments to the parties:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract'. Hence, the same shall fall under the provisions of section 194C for the purposes of tax deduction at source. It has to be noted that in the process of rendering these services, neither any technical information is provided by the vendor; nor any technical knowledge, design etc is imported while performing such activities. Thus, same provisions tax deduction will apply to the payments under consideration, as are applicable to the services in respect of electrical installations and AMC thereof (as discussed above in Ground No. 1 ). Hence, circular No. 681 doted 08. 03.1994 and Circular No. 715 dated 08.08.1995 issued by the CBDT, both, will apply to the payments under consideration. In view of above discussion therefore, I hold that the expenses in respect of operation and maintenance,including the provision of facility manager, shift supervisor and technical assistance incurred by the appellant are in the nature of payments towards a 'work contract' and the tax deduction at source in respect thereof has been correctly made under section 194C of the Act." Blue Star Ltd. "I have considered the above submissions of the appellant and agree with the same. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee including supply of labour for carrying out work by these vendors as detailed above and hence the assessee has rightly deducted tax at source u/s 194C of the Act. Reference is drawn to decision of the Hon'ble Supreme court in the case of Associated Cement Co. Ltd. v. CIT in (1993) 201 ITR 435(SC), wherein Hon'ble Apex Court has held that there is nothing in the section which could make the Court hold that the contract to carry out a work or the contract to supply labour to carry out a work should be confined to 'works contract'. The Hon'ble Apex Court held that 'Any work' means any work and not a 'works contract', which has a special connotation in the tax law. Indeed, in the sub- section, the 'work' referred to therein expressly includes supply of labour to carry out a work. It is a clear indication of Legislature that the 'work' in sub- section is not intended to be confined to or restricted to 'works contract'. 'Work' envisaged in the sub-section, therefore, has a wide import and covers 'any work' which one or the other of the organizations specified in the sub- section can get carried out through a contractor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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