TaxTMI 
TaxTMI 
2015 (11) TMI 1451
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.... 201(1A) of the Income Tax Act. 3. For the sake of conveniences, we consider the facts as narrated in ITA No.564/Mds/2015 for the assessment year 2013-2014 for adjudication. 4. The facts of the case are that a survey u/s 133A was conducted in the business premise of M/s Vodafone Essar Cellular Limited at 1046, Avinashi Road, Coimbatore-641 018 on 17.09.2013. During the course of survey, it was noticed that in the assessee's business premises, the services of the most of the personnel were provided by outsourcing agencies. The work relating to front office management, liaison work, data entry was being manned by the outsourced personnel. The assessee was deducting tax at source at the rate of 2% u/s.194C on the payments made. The assessee, during the course of hearings, was questioned on this nature of business model and was asked to provide the details of manpower availed for these services and also its objection, if any, to invoke Section 194J. The assessee's submission was that wherever the services of technical personnel were utilized as in the case maintenance of mobile towers, tax @ 10% u/s 194J was deducted and in other cases tax u/s 194C @ 2% was deducted. The ....
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....ed Representative for assessee submitted that the assessee has entered into agreements with various contractors for supply of manpower. Manpower services provided by the aforesaid service providers include provision of temporary staff who render services to the Assessee, including inter-alia the following: (i) attending to subscribers who visit the stores of the Assessee; (ii) keeping a track of number of subscribers of the Assessee on a daily basis; (iii) reaching prospective customers; (iv) collecting dues from customers, etc. 5.1 In consideration for such services, the Assessee makes payment at a specified amount, per personnel, per month. Thus, any person responsible for paying any sum to any resident for 'carrying out any work' including supply of labour for carrying out any work in pursuance of a contract was liable to deduct tax at source at the specified rate under Section 194C of the Act. Since, the service provider was providing personnel/ labour to the assessee for carrying out certain specified activities under the contract, the same gets squarely covered under the provisions of the section 194C of the Act. Further, the ter....
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....ves supplied by the service provider are generally under graduates or simple graduates, who are trained to act in a particular manner and as per given set of guidelines when attending to a subscriber or to a prospective customer of the Assessee. There was nil or negligible intellectual element involved in the task undertaken by the executives, the predominant element being conversing with the subscribers of the assessee, based on non-technical training provided to them by the Assessee. The service provided by the executive's is of a mechanical routine nature carried out by semi-skilled executives.In view of the above, it was clearly evident that the executives do not provide any technical or consultancy services, as there is nil or negligible application of mind by the executives while discharging their duties. Moreover, even the training and guidelines provided to the executives to assist them in performing their task is also provided by the assessee. Further, the word 'manage' has been defined to mean "to control, to guide, to administer, to conduct or direct affairs, carry on business" as per the Shorter Oxford Dictionary and Websters' New World Dictionary. As yo....
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...., under section 201 (1A) of the act that may be levied, should be charged up to the date of payment of taxes by the payee/recipient of such income". 5.3 The ld. Authorised Representative for assessee relied on the following judgments. (1) Associated Cement Company Ltd. vs. CIT 201 ITR 435 (SC) (2) ITO vs Bharat Sanchar Nigam Ltd, 64 SOT 138, Mumbai. (3) Khaitan & Co vs. CIT, 12 SOT 120, Delhi. (4) Glaxo Smithkline Consumer Health Care Ltd. vs. ITO, 12 SOT 221, Delhi. (5) ACIT vs. Merchant Shipping Services (P) Ltd, 135 TTJ 589, Mumbai. (6) East India Hotels Ltd. And Authorised Representative. V. CBDT and Anr.320 ITR 526 (Bom) (7) Skycell Communications Ltd and Another vs. DICT, 251 ITR 53 and also Circular No.715, dated 08.08.1995 issued by CBDT. 6. On the other hand, the ld. Departmental Representative submitted that the assessee's claim that no finding has been given by the Assessing Officer that there was a failure on the part of the deductees to pay tax directly which is a pre- requisite for assuming jurisdiction was not correct. Section 201(1) treats any non-deduction /short deduction on the part of a per....
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....as to check if there was any human interface or managerial service provided. In the same view, it cannot be held that normal day today services like security services and sanitation can be termed as technical service. In this context the assessee was asked to furnish the details of service availed and payments made in this regard. The assessee has furnished the details vide his letter dated 16.01.2015 as under:- Sl. No Name F.Y. 2012-13 (amount) F.Y. 2013-14 (amount) Nature of Manpower 1 Cameo Corporate Services Limited 9,79,005/- 2,99,903/- Support services such as field activations, vendor payment queries, entering receipts into SAP, field verification etc 2 Forte Private Solutions Limited 4,27,08,092/- 3,57,70,557/- 3 Sukhvarsha Management services 5,88,39,000/- 2,50,66,617/- 4 Caliber Point Business Solutions 7,06,96,268/- 2,15,58,974/- Customer support services such as telecalling for bill payments, telecalling for new activation. It can be seen, the payment can be made for three kinds of service. They are (1) Support services such as filed activations, vendor payment queries, entering r....
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....ting will be given to the service provider. b. Placement and relocation VECL will intimate the locations in oral or writing where the deputees need to be deputed. VECL reserves the right to relocate any of the deputees at any time during the term of Agreement. c. Performance assessment / feedback VECL may offer an assessment on each deputee after every 180 days. d. Withdrawal of a deputee VECL will request through its designated personnel for withdrawal of deputee in case of theft, fraud and acts that constitute moral turpitude. VECL will brief Service Provider on the full details in such that month would be payable by VECL. cases. In such cases, Service Provider will immediately withdraw the deputee and fee proportionate to the number of days worked by the deputee in that month would be payable by VECL. In all other cases, VECL may request for withdrawal of a deputee subject to payment of one month's service fee to Service Provider. In case of relieving a Deputee, VECL shall conduct all the formalities required to be done at their end and inform Service Provider duly of the same. No pending formal....
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....tions from the assessee. The service provider shall maintain and use the confidential information only for the purpose of this agreement and only as permitted herein. The service provider only make copies as specifically authorised by the prior written consent of the other party and with the same confidential or proprietary notices as may be printed or displaced on the original, to restrict access and disclosures of confidential information to such of their employees, agents and third parties on a "need to know" basis and upon the execution of a written undertaking from such employees, agents, and third parties to maintain confidentiality of the confidential information disclosed to them in accordance with this clause 8 and to treat the confidential information as confidential for a period of five years from the date of receipt. In the event of earlier termination of this agreement, the parties hereby agree to maintain the confidentiality of the confidential information for a further period of three years from the date of such termination. The service provider agrees that any of assessee's technical or business information that service provider's employees or agents acquire....
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....ivities of the company. It is an admitted fact that the services provided by the assessee are highly technical in nature of services cannot be carried out by a person without requisite knowledge. Therefore the payments made for 1 & 2 will be covered for tax deduction u/s.194J. The third activity i.e. the house keeping services shall not constitute technical services as these would involve only normal house keeping services, like security/sanitation which is provided for any organization. Therefore, it was held by the Commissioner of Income Tax (Appeals) that the payments made towards housekeeping services shall be subject to tax u/s.194C and he also held that the assessee should deduct tax u/s.194J for technical services for the services provided "1) Support services such as filed activations, vendor payment queries, entering receipts into SAP, field verification etc. and 2) Customer support services such 'as tele- calling for bill payments, tele- calling for new activation". 9. In our opinion, the findings of the Commissioner of Income Tax (Appeals) is to be confirmed as the activities undertaken by the service provider for the assessee company discussed as per the agreemen....