TaxTMI 
TaxTMI 
2012 (10) TMI 1079
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....n providing consultancy services to its clients related to planning, development or improvement of cities, towns and villages as per terms of the letter of award granted to him. He has filed his return of income electronically on 29.09.2008 declaring income of Rs. 13,95,360/-. On scrutiny of the accounts, it revealed to the AO that the assessee has shown total turn over of Rs. 1,14,03,987/-. In the immediately preceding year, the net profit rate shown by the assessee was 15.29%, whereas this year such rate is 12.25%. The Ld. AO found that assessee has made payment of service charges as well as commission. The Ld. AO was of the opinion that services availed by the assessee from different individual are of technical nature, therefore, while making the payment, he ought to have deducted the tax u/s 194J instead of deducting the tax u/s 194C of the Act. The Ld. AO directed the assessee to produce some of the parties to whom the design charges, survey charges and commission have been paid. According to the AO only two persons were produced before him, who have deposed that they have carried out non-technical work for the assessee. The AO thereafter issued summons and in response to the ....
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....ed by provisions of sec. 194C & not by sec. 194J." 4. Ld. DR relied upon the order of the AO. He pointed out that AO has arrived at a conclusion that assessee availed skilled/technical work from the persons to whom payments were made. Therefore, he ought to have deducted the TDS u/s 194J. On the other hand, Ld. Counsel for the assessee raised three propositions. In his first fold of contention, he apprised us about the nature of work performed by the assessee and how that nature of work falls within the ambit of clause F & I of Explanation-1 to section 194C. According to him, if the complete work undertaken by the assessee, under an award falls within the ambit of section 194C then, how sub assignment of such work would fell within the ambit of section 194J. In his next fold of submission, he submitted that assessee has made payments to sixteen parties, out of those two parties were produced before AO, they confirmed about the performance of non-skilled work. Out of the remaining 14, the AO could procure the persons of two parties, their statements were recorded from the back of assessee and no opportunity to crossexamination, of those persons were granted. He further submitted t....
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....ssessee i.e simply a door to door data collection. 6. Thus, according to the assessee all technical work was performed by himself and the parties from whom work was out-sourced has only performed, non-skilled work either by supplying non-skilled labours at the site for helping assessee to monitor the work or by specialized machines operated by nontechnical persons. Now the question for adjudication is, whether the work performed by the persons to whom payment was made by the assessee was of technical nature or a simple work contract. In order to adjudicate this dispute, it is imperative upon us to take note in section 194C and 194J. The relevant part of section 194C read as under :- "194C(1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall-------------- Explanation-For the purposes of this section:- "Specified Person "shall mean,- (a)------------ (b)------------ (f) any authority, constituted in India by or under any law, engaged either for....
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....ssee from the persons did not fall within the ambit of this explanation, rather they are ancillary jobs connected with main performed by the assessee, which falls within the ambit of clause F & I of Explanation-1 to section 194C. The Ld. First Appellate Authority has examined this aspect in detail. Considering the finding of CIT(A) on this issue, we do not see any reason to interfere in the order of the Ld. CIT(A). 9. As far as the second fold of submissions raised by the Ld. Counsel for the assessee is concerned, we are of the opinion that evidence possessed by the Ld. AO is not sufficient to say that all these persons have performed technical duties. The AO has been harping upon the statement given by representative of Jai Ambey and S.K. Nigam HUF. Both these persons have given undertaking that they have performed non-technical works which include computer job work, data entry etc. The copies of the undertakings are available on page Nos-32 to 40B of the paper book. 10. In view of this contrary stand, it is difficult to infer that all the entities were rendering technical services. The Ld. First Appellate Authority has examined the quality of evidence available on the record vi....