TaxTMI 
TaxTMI 
2017 (1) TMI 955
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.... short deduction of TDS and interest on payments in the nature of "production charges" and " AMC charges u/s 194J of the Act, treating the same as TOS payment u/s 194C, without properly appreciating the factual and technical issues of the case, as clearly brought out by the AO in his order u/s.201(1)1201(1A) of the Income Tax Act, 1961. 2. On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in not appreciating the fact that production of TV commercials require highly technical job of professionals such as director and cameramen, and payments for this purpose should fall within the ambit of section 194J of the IT Act. 3. On the facts and in the circumstances of the case and in law ,the Ld. CIT(A) has erred in not appreciating the fact that the maintenance of laptop, computer, servers and specialized software require the services of highly professional and technical persons and cannot be done by non-qualified persons , therefore the payments fall within the ambit of section 194J of the Act. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not properly considering the CBDT's clarificatory circular No. ....
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....e brief background is that the assessee is engaged in the business of communication services; including advertising, marketing research, sales promotion, direct marketing and corporate communication. During the year under consideration, the assessee had incurred expenses on computation charges, annual maintenance charges and parking charges on which TDS was deducted u/s 194C. The AO initiated proceedings u/s 201 and held that TDS should have been deducted u/s 194J on payments made for production charges and AMC charges and u/s 194I on payments made for parking charges. 5.2. In appeal before the Ld. CIT(A) part relief was allowed to the assessee. Ld. CIT(A) held that TDS on payment of production charges and annual maintenance charges was to be deducted u/s 194C of the Act. However, payments relating to dubbing charges warranted deduction of tax u/s 194J of the Act. Further, it was also held that tax was to be deducted u/s 194I of the Act on payment of parking charges. Lastly, the Ld. CIT(A) held that the assessee would not be considered as an assessee in default u/s 201 of the Act in case the payees have paid tax on the payment made to them. Both the parties have come in appeal bef....
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....ex Court's decision in the case of Hindustan Coca Cola Beverages Private Limited Accordingly, the A.O. is hereby directed to allow relief on this count in respect of the invoices specifically mentioned in the preceding paragraph after due verification as to whether the payees have actually offered the corresponding income to tax in their respective returns of income for the year. Notwithstanding the above, the appellant shall be liable for the liability of interest u/s 201(1A) of the Act as per the decision cited supra. Thus, the relevant Ground No.3 of appeal stands partly allowed. 5.4. In this regard Ld. counsel has supported the view taken by the Ld. CIT(A) with the judgment of Hon'ble Allahabad High Court in the case of Jagran Prakashan Ltd. (supra) wherein similar view was taken with following observations: "Section 191 provides that in the case of income in respect of which provision is not made under this chapter for deducting income tax at source and where income tax has not been deducted in accordance with the provision of this chapter, income tax shall be payable by the Assessee direct. Thus, both the conditions i.e. (i) in the case of income in respect of which p....
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....he Assessee has not paid the tax directly." 5.6. It was also stated before us that the aforesaid order was carried by the department to the Hon'ble Supreme Court, where SLP filed by the department has been dismissed by the Hon'ble Supreme Court. Thus, the view that merges before us is that where TDS has been deducted by the deductor in most bona file manner as applicable and no revenue leakage has been pointed out, then the deductor should not be penalized for any unintended short fall in deduction of TDS so long as the payees are income tax assessee and they have included the impugned payments as part of their income offered to tax. In the case before us, the admitted case of the assessee is that all the payees are properly identified and duly assessed with the income tax department. Ld. CIT(A) has already followed this view and accordingly directed the AO to verify these facts and exonerated the assessee from the liability of short fall under such cases. Under these circumstances, respectfully following aforesaid judgments we uphold the view taken by in this regard by Ld. CIT(A), and direct the AO to exercise his powers under the law to make requisite verification with the paye....