TMI Blog2018 (5) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Act, it is to facilitate the collection of tax lawfully leviable under the Act.” In view of the factual finding of the appellate authorities that the payment made by KSL and ML to HSL for various expenses incurred would be a reimbursement and not a fee for technical services, Section 194J is not attracted. Assessee falls outside the scope of Section 194J r/w Section 200 of the Act during the relevant assessment years. Consequently, the provisions of Sections 201 and 201(1A) of the Act are not attracted. We do not find any material irregularity or infirmity in the orders passed by the appellate authorities. - Decided in favour of assessee - ITA No.260/2013 C/W ITA Nos.289/2014, 263/2013, 265/2013, 208/2014 AND 262/2013 - - - Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntegrated steel plant for KSL and ML. The required labour and staff for the services has been employed by HSL. HSL has used its assets and machineries for rendering the agreed services. The amounts received towards service charges has been accounted in the P L account of HSL and the same is offered to tax. Hence, the Assessing Officer held that, assessee is in default under Section 201 for not deducting TDS under Section 194J of the Act and consequently, interest under Section 201(1A) of the Act was computed. Being aggrieved by the same, appeal was preferred by the assessee/respondent before the Appellate Commissioner. The Appellate Commissioner arrived at a conclusion that the payment made by the assessee to HSL is reimbursement of expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made. The nomenclature given by the assessee or HSL does not change the applicability of the provisions. Any amount credited towards fee for professional or technical services attracts the provisions of Section 194J of the Act. Taxability or otherwise of the said amount in the hands of the recipient is not the requirement of Section to be looked into while applying the said provisions. 5. Learned counsel Sri.Chythanya K.K. appearing for the assessee submitted that HSL acts as an agent of KSL and ML to manage the affairs of the steel plant. Strategic Alliance Agreement (SAA) entered into between KSL and ML with HSL indicates that both companies installed their plants in close by and in pursuance of the said SAA, the assessee along with M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay to JVC service charges as may be agreed upon between the parties and the JVC. In the supplementary agreement (dated 10.08.1999) to SAA dated 16.05.1998, sub-para 2. 2(c) of Chapter 2 on Page 24 of the Principal Agreement was substituted by the following paragraph: It is agreed by and between the parties to this Agreement that JVC is an outcome of the Strategic Alliance between the parties and will only be acting as conduit pipe for and on behalf of the Strategic Alliance constituents and no remuneration will be paid to JVC. 6. In terms of the aforesaid, share capital of HSL was held by the assessee and ML in equal proportion and the investment in the said steel making facilities has been made by SAA constituents in the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er mode, whichever is earlier, deduct an amount equal to (ten) per cent of such sum as income-tax on income comprised therein: 9. A reading of this provision discloses that, an amount equal to ten percent of such sum as income-tax has to be deducted on income comprised therein, by a person not being an individual or a HUF, who is responsible for paying a resident any sum towards fees for technical services as per Clause (b) of Section 194J(1) of the Act, the relevant factor is income comprised . To attract this provision, there must be an income comprised therein. Section 2(24) of the Act defines the income. The reimbursement of expenses incurred by HSL cannot be categorized as income under Section 2(24) of the Act. 10. Section 190 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ude element of income or not. This approach of the Assessing Officer is contrary to Section 194J of the Act, which in unequivocal terms describes deduction of income tax on income comprised therein. 13. It is trite that, if there is no income embedded in a payment, then TDS provisions would not apply as TDS is only an alternative method of collection of taxes. It is beneficial to refer to the judgment of this Court in the case of Hyderabad Industries Ltd., Vs Income Tax Officer and Another 188 ITR 749 (kar), wherein it is held that, an amount which will not be included in the total income of a person cannot be considered as income for the purpose of deduction of tax at source at all. The purpose of deduction of tax at source is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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