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of <h1>Tribunal Upholds No Default on Tax Deduction, Distinguishing Between Technical Services and Contract Payments.</h1> <h3>Deputy Commissioner of Income-tax, Circle 51 (1), New Delhi Versus Parasrampuria Synthetics Ltd.</h3> Deputy Commissioner of Income-tax, Circle 51 (1), New Delhi Versus Parasrampuria Synthetics Ltd. - [2008] 20 SOT 248 (DELHI) Issues:Assessment under section 201(1) for non-deduction of tax at source under the correct section 194J instead of 194C.Analysis:The appeal by revenue challenged the order treating the assessee as in default for not deducting tax under section 194J for payments made. The Assessing Officer contended that the payments were for 'fees for technical services' and not merely to a contractor. The CIT(A) held that the payments were not for technical services based on a judgment and a circular. The revenue appealed, arguing that the payments were indeed for technical services under section 194J.The revenue contended that the work involved sophisticated equipment and skilled labor, requiring technical skill or special knowledge. The revenue sought to set aside the CIT(A)'s order and restore the Assessing Officer's decision.The Tribunal considered the definition of 'fees for technical services' under Explanation 2 to section 194J. Referring to a judgment by the Madras High Court, the Tribunal highlighted examples where the use of technology does not necessarily constitute technical services. The Tribunal noted that the technical knowledge used to render services did not transfer to the assessee, distinguishing it from fees for technical services. The Tribunal concluded that the payments made were not for technical services under section 194J.In conclusion, the Tribunal dismissed the appeal, upholding that the payments made did not fall under the category of fees for technical services as per section 194J of the Income-tax Act, 1961.
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