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Income Tax Appellate Tribunal, “D” Bench, Mumbai
Before: Shri B.R. Baskaran (AM)& Ramlal Negi (JM)
O R D E R Per B.R. Baskaran (AM) :-
The appeal filed by the assessee is directed against the order dated 01- 03-2015 passed by Ld CIT(A)-59, Mumbai and it relates to the assessment year 2010-11. The assessee is aggrieved by the decision of Ld CIT(A) in partially confirming the demand raised u/s 201(1) and interest charged u/s 201(1A) of the Act.
We heard the parties and perused the record. The assessee entered into certain contracts for maintenance of equipments and office maintenance systems. The assessee deducted tax at source u/s 194C of the Act. The AO took the view that the assessee has availed technical services and hence the tax should have been deducted u/s 194J of the Act. Accordingly he raised demand
2 J.M. Financial Institutional Securities Private Limited u/s 201(1) of the Act towards short deduction of tax and also charged interest u/s 201(1A) of the Act. The Ld CIT(A) deleted the demand partially, i.e., he held that the payments made for maintenance of Electrical and Air condition systems are liable for tax deduction u/s 194C of the Act. In respect of other maintenance contracts, the Ld CIT(A) held that the assessee is receiving technical services and accordingly upheld the view taken by the AO.
The Ld A.R submitted that the assessee has entered into routine annual maintenance contracts with the parties and the service provider has not imparted any technical knowledge to the assessee. Accordingly, by placing reliance on the following case law, the Ld A.R submitted that the routine maintenance contracts shall fall under the category of Contracts requiring tax deduction at source u/s 194C of the Act:- (a) Nuclear Power Corporation of India Ltd Vs. ITO (ITA No.3059 – 2061/Ahd/2009 dated 30-09-2011.
(b) ACIT Vs. M/s Merchant Shipping Services P Ltd (129 ITD 109) (c) Glaxosmithkline Pharmaceuticals Ltd Vs. ITO (ITA No.552- 555/PN/2010 dated 07-10-2011).
On the contrary, the Ld D.R placed strong reliance on the decision rendered by Ld CIT(A).
We have gone through the decisions relied upon by the assessee and we notice that the various benches of the Tribunal have held that the payment for technical services, in order to be covered u/s 194J of the Act, should be a consideration for acquiring or using technical knowhow simplicitor provided or made available by human element. In the instant case, the payments have been made for rendering services in connection with maintenance of equipments. By offering the said services, the service provider has not imparted
3 J.M. Financial Institutional Securities Private Limited any technical knowledge to the assessee nor did the assessee acquire any technical information. Merely because a technician having knowledge of functioning of equipments renders maintenance service, the same shall not result in rendering of technical services contemplated u/s 194J of the Act. Accordingly, we find merit in the contentions of the assessee. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the demand raised u/s 201(1) of the Act as well as the interest charged u/s 201(1A) of the Act.
In the result, the appeal filed by the assessee is allowed. Order has been pronounced in the Court on 20.7.2016