TaxTMI 
TaxTMI 
2019 (5) TMI 1502
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....r called "the tribunal") read as under:- "i) Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in directing to delete the disallowance u/s. 40(a)(ia) in respect of payments made to field agents without appreciating that the aforementioned payments were made for conducting market research survey and on data analysis/tabulation, thus falling under section 194J of the Act and warranting deduction of tax at 10%. ii) Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in directing to delete the disallowance u/s. 40(a)(ia) without even examining the issue of applicability of proper provisions under TDS Chapter to the payments under dispute. iii) Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in directing to delete the disallowance u/s. 40(a)(ia) and there by holding that the short deduction of tax will not result into disallowance u/s 40a(ia) of the Act, without appreciating that the Hon'ble Kerala High Court in its judgment dated 20.07.2015 in the case of CIT-1, Kochi Vs PVS Memorial Hospital Ltd. [2015] 60 taxmann.com ....
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....ion of the said two section 194C and 194J is apparent; 194C is labour dominated and sec. 194J is technical / professional service oriented. Thus, providing 'Field Agents for conducting research survey and Data Analysis & Tabulation services' which is covered u/s 194J, as the element of technical/ professional service is present. Services provided by the vendors in all these cases are standard and normal services which are performed mechanically through sophisticated equipments for which machines are already placed in operation. However, service for 'Field Agents for conducting research survey and Data Analysis & Tabulation', as is being done in instant case, application of human mind by a technical person is essential and the same cannot be done merely by mechanical means. This type of work cannot be done by the layman and very specialized skills are needed to accomplish work in proper manner to maximized revenue. Hence, it does come within the ambit of that service as application of human mind by a technical person is essential for doing so and this service is squarely coming within the ambit of section 194J for the purpose of TDS. It is thus seen that assessee'....
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.... been deducted in any subsequent year or, has been deducted in the previous year but paid in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. Explanation. - For the purposes of this sub-clause, - (i) "commission or brokerage" shall have the same meaning as in clause (i) of the Explanation to section 194H; (ii) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (I) of section 9; (iii) "professional services" shall have the same meaning as in clause (a) of the Explanation to section 194J; (iv) "work" shall have the same meaning as in Explanation HI to section 194C;" 6.6. The Memorandum explaining the provisions in the Finance Bill explained the rationale of the insertion of the new provision in following words:- "With a view to augment compliance of TDS provisions, it is proposed to extend the provisions of section 40(a)(i) to payments of interest, commission or brokerage, fees for professional servi....
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.... above discussion the following conclusions are drawn: 1) The very intention of the introduction of provision of section 40(a)(i) and 40(a)(ia) is to augment tax collection as well as TDS compliance. 2) The very provision of Section 40(a)(ia) refers to the deduction of Tax at source in accordance with the Provisions of Chapter XVII-B. 3) Chapter XVII-B of the Act read with the corresponding rules, specify and lay down series of Provisions, Procedures and Compliances including specification of the rates of applicable TDS in respect of different types of expenditure such as Section 192, 194A, 194 C,194J, 195 etc 4) If the assessee is permitted to short deduct TDS, then the very intended purpose of the Provisions of Chapter XVII-B and the consequence prescribed U/s.40(a}(i) / 40(a)(ia) stand defeated. Further, if this be the case, an assessee who is liable to deduct TDS, say at 20%, shall go scot free by applying a token rate of 1% TDS, and get away from true and correct compliance. This surely was not the intention of the legislators. Furthermore, this would also result in a "CHAOS" situation as all the Tax payers would find short deduction as a co....
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....arned DR that income-tax was deducted at source by the assessee u/s. 194C which ought to have been deducted u/s. 194J as payments were made to various field agents for conducting research surveys, data compilation and translation etc. which services are professional in nature. It was submitted by learned DR that keeping in view provision of section 40(a)(ia), these expenses cannot be allowed. The Ld. DR relied upon the decision of Hon'ble Kerala High Court in the case of CIT v. PVS Memorial Hospital (2015) 60 taxmann.com 69 (Ker). 6. The Ld. Counsel for the assessee on the other hand had relied upon the decision of Tribunal in assessee's own case for the earlier years viz. AY 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 and 2011-12, detailed as hereunder:- 1. Hindustan Thompson Associates P. Ltd. v. AC1T [ITA No. 6184, 1302, 6185/Mum./2011 - Assessment Year 2005-06, 2006-07, 2007-08, Order dated 25th May, 2012] 2. ACIT v. Hindustan Thompson Associates Pvt. Ltd.[ITA No. 1208/Mum/2017 - Assessment Year 2011-12 Order dated 4th July, 2018] 3. ACIT v.. Hindustan Thompson Associates Pvt. Ltd. [ITA No. 6729/Mum/2014 - Assessment Year 2010-11 Order dat....
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....tently submitting before the authorities that the payments were made to field agents for conducting research surveys, data compilation and translation etc. which was in the nature of contracts, including supply of labour and were covered by provisions of Section 194C and income-tax has been correctly deducted at source u/s 194C but Revenue is contending that these are payments for professional services covered u/s 194J for deductibility of income-tax at source. There was thus clearly difference of opinion between assessee as well Revenue as to the true nature of these payments made by the assessee to field agents as to whether these are contractual payments, including for supply of labour or professional services. However, in the case of CIT v. P V S Memorial Hospital Limited (supra), there was a categorical finding by the Hon'ble Kerala High Court based on appreciation of facts that payments were made for professional services at para 5 of the judgment and it was clearly held by Hon'ble High Court that income-tax was deducted under wrong provisions of the 1961 Act. The finding of the Court on nature of services for which payments were made in the case of P V S Memorial Hospital....
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....rties. The rate of income-tax to be deducted at source is only provided at a nominal rate of 1% of consideration amount of immovable property transferred. The Memorandum explaining provisions of Finance Bill, 2013 provides as under: "E. Widening of tax base and anti tax avoidance measures TAX DEDUCTION AT SOURCE (TDS) ON TRANSFER OF CERTAIN IMMOVABLE PROPERTIES (OTHER THAN AGRICULTURAL LAND) There is a statutory requirement under section 139Aof the Income-tax Act read with rule 114B of the Income-tax Rules, 1962 to quote Permanent Account Number (PAN) in documents pertaining to purchase or sale of immovable property for value of Rs. 5 lakh or more. However, the information furnished to the department in Annual Information Returns by the Registrar or Sub-Registrar indicate that a majority of the purchasers or sellers of immovable properties, valued at Rs. 30 lakh or more, during the financial year 2011-12 did not quote or quoted invalid PAN in the documents relating to transfer of the property. Under the existing provisions of the Income-tax Act, tax is required to be deducted at source on certain specified payments made to residents by way of sal....