Appeal allowed for statistical purposes, directions for tax liability and disallowance issues. Assessing Officer to determine fair market value.

The appeal was treated as allowed for statistical purposes, with directions for further assessment on the tax liability and disallowance issues. The Assessing Officer was tasked with determining the fair market value of rent and amenities included in the payment to the holding company, and reassessing the applicability of section 40(a)(ia) on the entire payment amount based on a relevant case precedent.

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Issues:
Assessment of tax liability under section 194J of the Act on payment to holding company; Disallowance under section 40(a)(ia) for non-deduction of tax at source.

Analysis:
The appeal concerns the liability of the assessee to deduct tax at source under section 194J of the Act on a payment of Rs.12,00,000/- to its holding company, leading to a disallowance under section 40(a)(ia) for non-deduction of tax at source. The assessee argued that the payment was made to compensate the holding company for services provided, not falling under professional or technical services as defined under the Act. The holding company had a "no deduction certificate" under section 194C(2), assuming section 194J did not apply. The dispute revolved around whether the services provided by the holding company constituted technical services under section 194J. The CIT(A) upheld the tax liability, considering the services as technical services, including managerial and consultancy services. However, the payment also included compensation for rent and amenities, not falling under technical services. The issue of determining the fair market value of rent and amenities was remanded to the Assessing Officer for further assessment. Additionally, the applicability of section 40(a)(ia) on the entire payment amount was to be reexamined by the AO based on the decision of the Special Bench in a relevant case.

In conclusion, the appeal was treated as allowed for statistical purposes, with directions for further assessment on the tax liability and disallowance issues.

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