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Facts
The assessee, Chhaya Prakashani Limited, deducted TDS at 2% under Section 194C for payments made for composing and DTP work. The AO and Ld. CIT(A) held that TDS should have been deducted at 10% under Section 194J, considering these as technical services, and made an addition under Section 40(a)(ia) for short deduction. The assessee appealed, relying on a previous Co-ordinate Bench order in its own case on the same issue.
Held
The Tribunal, relying on its Co-ordinate Bench's previous decision in the assessee's own case, ruled that composing and DTP services for publishing books are not "technical services" under Section 194J. Therefore, the assessee correctly deducted TDS at 2% under Section 194C. The addition made by the AO and confirmed by the Ld. CIT(A) under Section 40(a)(ia) was accordingly deleted.
Key Issues
Whether the services for composing and DTP work fall under Section 194C or Section 194J for TDS deduction purposes, and consequently, if an addition under Section 40(a)(ia) for short deduction of TDS is sustainable.
Sections Cited
194C, 194J, 40(a)(ia), 201
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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
आदेश / O R D E R Per Bench: This is an appeal filed by the assessee against the order passed by the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 26.06.2025 for the assessment year 2018-2019. 2. It was submitted by the ld. AR that the issue is against the addition made by the AO and confirmed by the ld.CIT(A) invoking the provisions of Section 40(a)(ia) of the Act on account of short deduction of TDS. It was the submission that in the course of survey, it was noticed that the assessee had deducted TDS @ 2% of the payment, whereas the Assessing Officer was of the view that the TDS @ 10% is liable to be deducted in view provision of section 194J of the Act. It was the submission that the assessee has deducted TDS @ 2% by applying the provisions of section 194C of the Act. Ld AR of the assessee drew our attention to the decision of the Co- ordinate Bench of this Tribunal in the case of the assessee in 2 ITANo.1736/Kol/2025 to 583/Kol/2025 order dated 4.11.2025 in respect of an order u/s. 201 of the Act and has held that the TDS is liable to be deducted u/s.194C and not u/s.194J of the Act The Co-ordinate Bench has held in para 6 as follows: “06. After hearing the rival contentions and perusing the materials available on record, we find that the assessee is engaged in the business of publishing of books mainly education books and sale thereof. For the purpose of composing and DTP work of the assessee company, it had entered into a contract with Publishing Services Pvt. Ltd. for typing and DTP jobs on behalf of the assessee, for which manuscripts were provided by the assessee company. The assessee company has entered into an agreement with the said publisher dated 16.09.2011. We have perused the agreement entered into with the publisher/ recipient and also Provisions of Section 194J of the Act and 194C of the Act and found that the printing services are not technical services within the definition as provided in the explanation to Section 194J of the Act. Therefore, the assessee has correctly deducted the tax at source at the rate of 2% from the contractual payments made to Publishing Services Pvt. ltd. Consequently, we set aside the order of the ld. CIT (A) and direct the ld. AO to delete the demand raised on account of short deduction of tax at source as the assessee is covered under Section 194C of the Act so far as the deduction of TDS is concerned and not u/s 194J. Accordingly, the appeal of the assessee is allowed. “ 3. It was the submission as the order u/s.201 of the Act itself has been held to be quashed and the assessee is liable to be deducted u/s.194C of the Act, the addition, the addition as made by the Assessing Officer under the provisions of section 40 (a)(ia) of the Act does not survive. It was the prayer that the addition as made by the AO and as confirmed by the ld.CIT(A) is liable to be deleted.
In reply, ld Sr DR supported the order of the Assessing Officer and ld CIT(A).
We have considered the rival submissions. As it is noticed that the issue of TDS u/s.201 of the Act in the case of the assessee has already been decided by the Co-ordinate Bench in favour of the assesse, wherein, it has been held that the TDS is liable to deducted @ 2% under section