Tribunal upholds TDS recovery on surrogacy payments, emphasizes parties' responsibilities

The tribunal upheld the lower authorities' action invoking Section 201(1) and 201(1A) for TDS recovery on surrogacy payments, treating them as contractual under Section 194C. The tribunal dismissed the appeals, affirming the TDS recovery demands for surrogacy payments and emphasizing judicial consistency. The decision highlighted the roles and responsibilities of parties in surrogacy agreements, as well as discrepancies and exploitation of surrogate mothers. The tribunal also ruled out the applicability of Section 194J for technical services in the surrogacy process.

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Issues:
Challenging correctness of lower authorities' action invoking Section 201(1) and 201(1A) TDS recovery mechanism for surrogacy payments.

Analysis:
The appeals arose against the CIT(A)-4, Hyderabad's orders for AYs 2011-12 and 2012-13, concerning proceedings under Section 201(1) & 201(1A) of the Income Tax Act, 1961. The primary grievance in both appeals was the correctness of invoking Sections 201(1) and 201(1A) for TDS recovery on surrogacy payments. The Revenue contended that TDS should have been deducted on surrogacy payments, while the assessee argued that Section 194C did not apply. A co-ordinate bench decision upheld the lower authorities' action, treating surrogacy payments as contractual under Section 194C.

The tribunal delved into the historical and legal aspects of surrogacy, highlighting its evolution and legislative framework. It was noted that surrogacy involves genetic parents, surrogate mothers, and infertility clinics. The tribunal examined the surrogacy agreement, emphasizing the roles and responsibilities of the parties involved. The tribunal also scrutinized the arrangement between the assessee and the NGO facilitating surrogate mothers, revealing discrepancies and exploitation of surrogate mothers.

Regarding TDS deduction, the tribunal analyzed the nature of payments made for surrogacy and concluded that the assessee's arguments regarding the taxability of surrogate mothers were not valid. The tribunal upheld the lower authorities' action under Section 194C for TDS disallowance. Additionally, the tribunal ruled out the applicability of Section 194J for technical services in the surrogacy process, reversing the lower authorities' decision on this aspect.

Ultimately, the tribunal dismissed the assessee's appeals, upholding the TDS recovery demands for surrogacy payments. The judgment emphasized judicial consistency and affirmed the lower authorities' decisions on TDS disallowance. No other arguments were raised, and the appeals were concluded with the order pronounced on September 20, 2021.

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