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Sri Gowtham Academy of General and Technical Education, Secunderabad Versus Dy. Commissioner of Income Tax, Circle 15 (1) , Hyderabad

2017 (2) TMI 281 - ITAT HYDERABAD

TDS u/s 194J or 194C - payments made towards various services rendered by M/s K12 Techno Services Pvt. Ltd. - difference between the TDS deducted and the TDS that ought to have been deducted - assessee in default - Held that:- We find that M/s K12 Techno Services Pvt. Ltd, has rendered various services to the assessee for the efficient and effective running of the educational institution. - The services rendered by M/s K12 Techno Services Pvt. Ltd. are distinguishable from each other and tho .....

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nts. - Even the CBDT circular relied upon by the Ld. DR provided that the all the payments cannot be covered under one section. Therefore, in our opinion, the Assessing Officer and CIT(A) have erred heard in holding that the assessee ought to have made TDS u/s 19J of the Act on the entire payment to M/s K12 Techno Services Private Limited. - Decided in favour of assessee - ITA No.433/Hyd/2015 - Dated:- 3-2-2017 - Smt. P. Madhavi Devi, Judicial Member AND Shri B. Ramakotaiah, Accountant Membe .....

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rendered by M/s K12 Techno Services Pvt. Ltd. 2. Brief facts of the case are that the assessee is a society engaged in the business of running educational institutions in the name and style of M/s Sri Gowtham Academy of General & Technical Education. To verify the compliance of the TDS provisions of the I.T. Act by the assessee, a survey operation u/s 133A was conducted on 19.10.2011. On verification of the details furnished by the assessee, it was noticed that the assessee has made TDS u/s .....

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it for running of the educational institutions. On close examination of the services rendered by M/s K12 Techno Services Pvt. Ltd to the assessee, the AO observed that they include both works contracts as well as professional and technical services and the assessee has affected the TDS by treating its services partly as professional u/s 194J and partly as works contracts u/s 194C of the Act. The AO observed that the entire services are rendered by one single entity i.e M/s K12 Techno Services P .....

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35 v) CBDT Circular No.715 dated 8.8.1995 4. Thereafter, he worked out the difference between the TDS deducted and the TDS that ought to have been deducted u/s 194J and treated the assessee as the assessee in default u/s 201(1) and also computed the interest thereon u/s 201(1A) and brought it to tax. Aggrieved, the assessee preferred an appeal before the CIT (A) who confirmed the order of the AO and the assessee is in second appeal before us. 5. The learned Counsel for the assessee, while reiter .....

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below have erred in holding that TDS for all the services ought to have been made @ 10% as prescribed u/s 194J of the Act. 6. The learned DR, on the other hand, supported the orders of the authorities below and submitted that the agreement was a composite agreement and therefore, the TDS provisions u/s 194J ought to have been applied on the aggregate of the amount paid by the assessee. 7. Having regard to the rival contentions and the material on record, we find that M/s K12 Techno Services Pvt. .....

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asis and periodicity of the time of billing is also varying from service to service. And thus, it is seen that it is not a lump sum payment by the assessee to M/s. K12 Techno Services Pvt. Ltd. for all the services being rendered under the agreement but it is a payment on the basis of each of the services and per person. The TDS is to be made on the payment made and the TDS rates are fixed on the basis of nature of the services or contract and not on the basis of the number of recipients of the .....

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of TDS TDS Amount Programs % Functions 194C 19,86,180.00 2% 39,723.00 Electronic Media, other publicity & Marketing services 194C 3,42,01,453.00 2% 6,84,029.00 Print Media 194C 83,58,616,.00 2% 1,67,172.32 General Maintenance services 194C 2,45,13,898.00 2% 4,90,277.96 Provision of Education services - AV lab, computer lab, Multimedia 194C 4,09,46,320.00 2% 8,18,926.40 Expenditure TDS Section Gross Rate of TDS TDS Amount Teacher training service 194J 11,48,749.00 10% 1,14,874.90 Staff hiring .....

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10% 5,18,850.00 8. From the perusal of the above, it is clear that the services rendered by M/s K12 Techno Services Pvt. Ltd. are distinguishable from each other and though the recipient of all the payments is a single party, the nature of the services are discernible and different. If the contention of the Revenue was to be accepted, then why should the TDS be deducted u/s 194J and not u/s 194C for all the payments treating the entire agreement as a work contract?. When the basket of services i .....

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