2025 (3) TMI 49 - HC - Income Tax

Appeal Dismissed: Call Center Services Not Subject to Section 194J Tax Deduction, No Substantial Law Question Found

The Bombay HC dismissed the appeal concerning the assessment year 2008-2009, where the issue was whether tax should have been deducted under Section 194J ... TDS u/s 194C OR 194J - payments made by the assessee to IGSPT for services received - ITAT justiciation in not upholding the order of the A.O. that tax was deducted at source by the assessee from the above payments u/s 194J wherein services received by the assessee is technical and professional in nature. HELD THAT:- In this case, the CIT (Appeals) and ITAT have recorded concurrent findings that the agreement entered into by the assessee with the IGSPT did not involve providing any professional / managerial / technical expertise services to the assessee. The two authorities have recorded concurrent findings of fact that the agreement concerned providing a call centre. The service executives were generally undergraduates or graduates of any stream who would act in a particular manner consistent with the prescribed guidelines when attending to the subscribers' complaints. The above findings of fact are supported by the terms of the agreement between the assessee and IGSPT and the other material on record, such as the details of the call service executives, their qualifications, and the nature of work they discharged. Therefore, the concurrent findings of fact cannot be said to suffer from perversity either because they are based on no evidence or because they are contrary to the weight of the evidence on record. ITAT has recorded that the service providers to whom the assessee made the payments have already paid the appropriate taxes by way of advance tax / self-assessment tax. Thus, the ITAT has held that the law laid down by the Hon’ble Supreme Court in the case of Hindustan Coca-Cola Beverage (P.) Ltd. [2007 (8) TMI 12 - SUPREME COURT] has also been substantially complied with by the assessee. Accordingly, we are satisfied that this case does not involve any question of law. The appeal before the Bombay High Court concerned the assessment year 2008-2009 and revolved around the issue of whether tax should have been deducted at source under Section 194J of the Income Tax Act, 1961, instead of Section 194C, in relation to payments made by the assessee to IGSPT for services received. The key legal question proposed by the Appellant was whether the ITAT was justified in not upholding the order of the Assessing Officer regarding the tax deduction.The Appellant contended that the agreement between the assessee and IGSPT clearly pertained to availing professional/managerial/technical expertise services, necessitating tax deduction under Section 194J. On the other hand, the Respondent argued that there were concurrent findings of fact indicating that the payments did not involve such services, as evidenced by the agreement and other materials on record.The High Court noted that both the CIT (Appeals) and ITAT had unanimously found that the agreement did not entail the provision of professional/managerial/technical services but rather related to call center services. The service executives were described as undergraduates or graduates who followed prescribed guidelines when addressing subscriber complaints. These factual findings were supported by the agreement terms and other relevant evidence, indicating no perversity in the conclusions reached.The Court emphasized that the factual issue had been thoroughly examined by the lower authorities, considering both the legal framework and the evidence presented. Given the absence of any perversity in the concurrent factual findings, the Court concluded that no question of law arose in the appeal. Additionally, the ITAT had noted that the service providers had already paid the appropriate taxes, aligning with the principles established in the Hindustan Coca-Cola Beverage case. Consequently, the Court determined that the appeal lacked any substantial question of law, leading to its dismissal without costs.In summary, the High Court analyzed the factual and legal aspects of the case, highlighting the importance of factual findings in determining the tax treatment of the payments made by the assessee. The Court's decision was based on the lack of a substantial legal question and the compliance with tax obligations by the service providers, ultimately resulting in the dismissal of the appeal.