TaxTMI 
TaxTMI 
2019 (3) TMI 1356
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....act that the work entrusted upon the subcontractor can be executed only by the qualified engineers including Civil Engineer, Testing Engineer & Safety Engineer and highly skilled technical staff as per the instructions and technical specifications given by the assessee? b) Whether in the facts and circumstances of the case, the learned ITAT has erred in law in comparing the construction of sophisticated thermal power plant with construction of a mere building? c) Whether in the facts and circumstances of the case, the learned ITAT has erred in law in relying upon the decision of Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages Pvt. Ltd. v/s CIT reported as (2007) 293 ITR 226 that payee had included the receipts from assessee in its return of income and the assessee company could not be treated as assessee in default in view of insertion of proviso under Section 201(1) w.e.f. 01.07.2012? 2. Briefly stated, the facts necessary for adjudication of the instant appeal as narrated therein may be noticed. The assessee is a contractor engaged in constructing Thermal Power Plant for Jhajjar Power Limited. On 2.2.2012, a TDS inspection was conducted....
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....reproduce Section 194C of the Act which is as under:- "194C. (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor1) 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, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to- (i) one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family; (ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family, of such sum as income-tax on income comprised therein. 2 to 7 XX ....
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....n to Section 194C, 'work' shall include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer. 6. The contention of the revenue was that the amount which was paid to the sub-contractor M/s IOT Engineering Project Ltd. was for professional and technical services within the ambit of provisions of Section 194J of the Act read with Explanation 2 to Section 9(1)(vii) of the Act for which tax was to be deducted at the rate of 10% of the payments made. 7. It would, thus, be expedient to refer to these provisions for effective adjudication of the appeal. Section 194J of the Act mandates deduction of tax at source at the rate of 10% in respect of payments made towards fees for technical services. The relevant portion thereof effective for the assessment year 2011-12 reads thus:- "194J. Fees for professional or technical services.- (1) Any person, not being an individual or a Hindu undivided family....
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....s for technical services payable by- (a) to (c) XX XX XX Explanation 1.- XX XX &n....