AI Drafter 
TaxTMI 
TaxTMI 
2016 (8) TMI 1332
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.... on the commission paid to agents without considering the corresponding service tax of the commission amount. The Assessing Officer noted that in the assessment year 2008-09 to 2010-11, the demands were raised under section 201(1) / 201(1A) on similar short deduction of tax on commission payment. Though, the assessee in its reply submitted that the learned Commissioner (Appeals) while deciding assessee's appeal for the assessment year 2008-09 to 2010-11, had deleted the addition made on account of short deduction of tax under section 194D, however, the Assessing Officer observed that as the Department is contesting the decision of learned Commissioner (Appeals) before the Tribunal, for keeping the matter alive, he held that assessee was required to deduct TDS on service tax deposited on behalf of agent. In this connection, he raised the demand under section 201(1) amounting to ` 4,65,21,907, alleging short deduction of tax. Further, he also levied interest amounting to ` 1,36,40,926 under section 201(1A). Being aggrieved of the order passed by the Assessing Officer under section 201(1) / 201(1A), assessee preferred appeal before the learned Commissioner (Appeals). 4. Learned Com....
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....l or a Hindu undivided family, who is responsible for paying to a resident any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of- 22. A careful perusal of the above provisions reveal that the TDS is required to be deducted and paid to the Govt Treasury on the income payable only which means that certainly the service tax component on the commission is not liable to TDS as the same is not an income of the assessee. The provisions of section 194D and 194I have to be seen in the light of the two circulars no 4/2008 dated 28.04.2008 and circular no 1/2014 [F.No. 275/59/2012-IT(B)] dated 13.1.2014. In circulars no. 4/2008 dated 28.04.2008 CBDT has clarified that TDS is not required to be deducted on service tax on rent u/s 194I.The relevant para 3 of the circular is re-produced as under:- ― 3. Service tax paid by the tenant doesn„t partake the nature of "income" of the landlord. The landlord only acts as a collecting agency for Government for collectio....
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....covered by the aforesaid observations of the co-ordinate bench in assessee's own case, respectfully following the same, we uphold the order of the learned Commissioner (Appeals). 7. The next issue raised in ground no.(ii) is challenging the decision of the learned Commissioner (Appeals) in deleting the demand raised for short deduction of tax under section 194C in respect of payment made towards out sourcing expenses. 8. Brief facts are, the Assessing Officer noticing that the assessee has deducted tax on payment made towards out sourcing expenses such as processing charges, call centre operation and business service charges by applying the provisions of section 194C instead of section 194J called upon the assessee to explain why demand should not be raised under section 201(1) / 201(1A). In reply, it was submitted by the assessee, as the services rendered are in the nature of contract and not fee for technical service or professional services it has deducted tax u/s 194C. The assessee also relied upon the order of the learned Commissioner (Appeals) in its own case for earlier assessment year. The Assessing Officer, however, stating that the decision of the learned Commission....
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.... no technical or professional qualification whereas the AO came to the conclusion that these are technical services and were required to be subjected to TDS under the provisions of section194J of the Act and finally treated the assessee in default under the provisions of section 201(1) of the Act and raised the demand accordingly. The ld CIT(A) after having examined and perused agreements with the service providers and after going into the various services provided reached a conclusion that the outsourced services do not require any kind of technical and professional expertise and are just simple and repetitive nature of work such as document storage, documents delivery and collection services and documents management services. The ld CIT(A) examined the contract with Writer Information Management Services and found that very basic services were contracted and rendered by the said party involving no special technical skill or professional qualification. On the basis of the rival arguments and perusal of the various records as placed before us we find that the work assigned to the service provider was not a technical or professional work which required special skills but simple, bas....