DISTRICT PROJECT OFFICER DHOLPUR vs. THR PR COMMISSIONER OF INCOME TAXand ANR

Judgment 18/12/2018 Both the appeals are directed against the order dated 30.06.2017 of the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur, consisting of two members, in ITA Nos.84 & 85/JP/2017. These appeals were admitted by this court vide order dated

(2 of 5) [ITA-32/2018] 03.07.2018 for hearing on the following substantial questions of law:- “In D.B. Income Tax Appeal No.32/2018

and circumstances

in case

of ITA titling ITO (TDS-2), Jaipur Vs. the Controller Finance, Rajasthan Council of Elementary Education?” In D.B. Income Tax Appeal No.33/2018

and circumstances

in case

of ITA titling ITO (TDS-2), Jaipur Vs. the Controller Finance, Rajasthan Council of Elementary Education?” Learned counsel for the appellant has invited attention of the court towards the judgment dated 30.06.2017 passed by the ITAT, Jaipur Bench (SMC), Jaipur, in ITA Nos.471&472/JP/2016, consisting of different member, which passed the impugned order. Both the orders were passed on the same date, i.e., 30.06.2017, however, in (3 of 5) [ITA-32/2018] a contrary view was taken therein. The view taken in ITA Nos.84 & 85/JP/2017 reads thus:- “8. 3. We have heard rival contentions and perused the material available on record. The AO observed that on perusal of bills and vouchers and copy of agreement with Pearson Education Services Pvt. Ltd. and Compucom Software pvt. Ltd., it is evident that the aforesaid companies have to provide computers along with the installation and commission of the computer labs, and also to provide technical manpower and all the technical and management

assistance

in successful implementation of the above programme at the State level. Thus the nature of work and services as per the AO is covered under the category of Technical Services as described under the provisions of section 194J of the Act. This view was affirmed by the ld.CIT(A). There is no dispute that the assessee entered into a contract. The terms of the contract is for supply of computers, installation, commissioning of computer lab with brand new equipments on BOOT (Build, Own, Operate and Transfer) basis to maintain working condition of the hardware, software and necessary infrastructure such as UPS, furniture, etc., supply of personnel to manage project. For the sake of clarity, it would be appropriate to reproduce the definition of Technical Service as per section 9(1)(vii) of the Act read with Explanation 2.: “Fee for Technical Services” means any consideration for 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 or consideration which would be income of the recipient chargeable under the head “Salaries”. In the present case, admittedly, the contract includes the supply of personnel to manage project. Therefore, the contract also included managerial services, which clearly falls under the category of “Fee for Technical Services”. Under these facts, we are unable to accept the contention of the ld. Counsel for the assessee that the contract did not include managerial services since the managerial service falls under the category of Technical Services. The tax ought to have been deducted under section 194J of the Act. We do not find any infirmity in the order of ld. CIT(A). Same is hereby affirmed. The ground raised by the assessee is dismissed.” The view taken in ITA Nos.471&472/JP/2016 reads thus:- “….

(4 of 5) [ITA-32/2018] From the above terms and conditions it can be noted that the entire contract is for supply of computer hardware, software, connected accessories, UPS, furniture, stationary, consumables, etc. and this contract is to be carried out by the contractor through its own personnel. Thus, it is a simple contract of carrying out a work. Section 194J applies to a person responsible for paying to any resident any sum by way of fees for professional/technical services. In the present case, the contractor has not made viable any technical services to the assessee but has only provided the computer hardware, software, etc. and employed his own personnel for implementing the same in various schools as per the terms and conditions of the contract. Hence, section 194J is not applicable and the assessee has rightly deducted tax at source u/s 194C.