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2018 (12) TMI 451

TDS u/s 194J OR 194C - treating annual maintenance contracts “AMC” payments made to various payees as fee for technical services - TDS liability - Held that:- We find no merit in Revenue’s instant argument. There is no dispute about the assessee having made the impugned payments in lieu of availing annual maintenance services from the payees in issue. It deducted TDS thereupon u/s 194C of the Act. The Revenue’s endeavour herein is that the payee(s) party had rendered technical service and therefore sec. 194J steps in. We notice in this backdrop of facts this tribunal’s decision in DCIT vs. Parasrampuria Synthetics [2007 (11) TMI 436 - ITAT DELHI] rejected Revenue’s similar substantive grievance seeking to treat contractual payments as fee f .....

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01(1) r.w.s 201(1A) of the Income Tax Act, 1961; in short the Act . 2. We notice at the outset that Revenue s all three instant appeal(s) suffer from three days delay each in filing. It has placed on record condonation petitions citing reasons thereof which are not dispute at assessee s behest. We therefore condone the impugned delay of three days filing in each of these cases. 3. We now advert merits involved in these cases. The Revenue s identical sole substantive ground pleads that CIT(A) has erred in law as well as on facts in reversing Assessing Officer s action treating annual maintenance contracts AMC payments made to various payees as fee for technical services. as follows:- 3. The AO' order u/s 201(1)/201(1A) has merely repeate .....

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. The grounds are allowed as services provided cannot be treated as ones for fees for technical services u/s194J. 4. Learned CIT-DR vehemently contends that the Assessing Officer had rightly invoked sec. 194J of the Act on assessee s payment made to various payees / persons since the AMC in question involved specialized knowledge in maintenance of its thermal power units. We find no merit in Revenue s instant argument. There is no dispute about the assessee having made the impugned payments in lieu of availing annual maintenance services from the payees in issue. It deducted TDS thereupon u/s 194C of the Act. The Revenue s endeavour herein is that the payee(s) party had rendered technical service and therefore sec. 194J steps in. We notice .....

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rm 'fees for technical services' as per Explanation 2 to section 194J means as defined in Explanation 2 below clause (vii) of sub-section (1) of section 9, extracted herein: '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 does not include consideration for any construction, assembly, mining or like project undertaken by the recipient chargeable under the head 'salaries '. " Hon'ble Madras High Court in the case of Skycell Communications Ltd. (supra) observed thus: "In the modem d .....

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ors are used to generate electricity, transmission lines to carry the transformers to regulate the flow of current, meters to measure the consumption) be regarded as amounting to provision of technical services to the consumer resulting in the consumer having to deduct tax at source on the payment made for power consumed and remit the same to the revenue. Installation and operation of sophisticated equipments with a view to earn income by allowing customers to avail of the benefit of the user of such equipment does not result in the provision of technical service to the customer for a fee. When a person decides to subscribe to a cellular telephone service in order to have the facility of being able to communicate with others he does not con .....

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es for technical services'. Rendering services by using technical knowledge or skill is different than charging fees for technical services. In: a later 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 person rendering certain services has only maintained machinery or converted yam but that knowledge is not now vested with the assessee by which itself it can do research work. In the circumstances, the amount paid cannot be considered as fees for technical services within the meaning of section 194J of the Act. In the result, the appeal is dismissed. 5. We offered sufficient opportunities to the learned departmental represent .....

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