TDS on separately charged service tax under consultancy contracts was not deductible under Section 194J.

Service tax separately payable under a consultancy agreement did not form part of the fee for professional or technical services, so tax deduction at source under Section 194J was not required on that component. The court treated the contractual stipulation for separate payment as decisive and held that the circular invoked on Section 194-I did not change the position because the dispute turned on the terms of the agreement and the application of Section 194J. As the concurrent findings disclosed no legal error, no substantial question of law arose and the appeals failed.

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Issues: Whether tax deducted at source under Section 194J of the Income-tax Act, 1961 was payable on the amount of service tax separately payable under the consultancy agreement, and whether any substantial question of law arose in the appeals.

Analysis: The payment of service tax was stipulated in the agreement to be made separately and was not part of the fees for professional or technical services. On that factual finding, the amount representing service tax did not form part of the sum on which tax was deductible under Section 194J. The reliance placed on the circular concerning Section 194-I did not alter the position, since the dispute was governed by the factual terms of the contract and the application of Section 194J. In the absence of any legal error in the concurrent findings, no substantial question of law arose.

Conclusion: The service tax amount was not subject to deduction of tax at source under Section 194J, and the appeals failed.

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