2017 (4) TMI 1363 - HC - Income Tax

TDS u/s 194H or u/s 194J - payment made to various mil societies on account of milk price difference - TDS liability - Services Charges the RCDF - Held that - As decided in assessee s own case 2015 (7) TMI 1074 - ITAT JAIPUR as far as assessee s business is concerned, there is no rendering of any managerial services by RCDF as alleged by the AO u/s 194H and upheld ld. CIT(A) u/s 194J. Since there is no rendering of any services and the payment is not made for any managerial services to RCDF, therefore, payment can neither be held as liable for TDS u/s 194H of the Act as commission/brokerage as held by the AO nor u/s 194J for rendering any managerial services as held by the ld. CIT(A). In view thereof, we hold that assessee s impugned payment to RCDF are not liable for TDS. This ground of the assessee is allowed.

Summary

Issues:
Challenge to Tribunal's judgment and order regarding TDS liability on payments made to RCDF for various services.

Analysis:
The appellant challenged the Tribunal's decision dismissing the department's appeal. The appellant referred to a previous case between the same parties where substantial questions of law were framed regarding the liability of TDS on specific payments made. The CIT (Appeals) reasoned that the payments made to RCDF were for various services, including managerial services and promotion of products, and not mere expense reimbursements. The CIT (Appeals) concluded that the payments were in the nature of fees for professional or technical services, making them subject to TDS under section 194J. However, the CIT (Appeals) also acknowledged that section 40(a)(ia) did not apply to payments made before the end of the previous year, as per a previous ITAT decision. The Tribunal, in its order, noted that the department failed to demonstrate the rendering of managerial services by RCDF in connection with the payments. As RCDF was an apex cooperative body, the Tribunal held that the payments were not liable for TDS under sections 194H or 194J, as alleged by the AO and CIT (Appeals). The Tribunal allowed the appellant's ground regarding the payments to RCDF not being subject to TDS. Consequently, the Court found no substantial question of law in the present appeal and dismissed it for lack of merit.

This detailed analysis of the judgment showcases the appellant's challenge to the Tribunal's decision on TDS liability, the CIT (Appeals)'s interpretation of payments made to RCDF for various services, and the Tribunal's ultimate ruling based on the lack of evidence of managerial services rendered by RCDF. The legal nuances of TDS provisions under sections 194H and 194J, along with the application of section 40(a)(ia) and the precedent set by previous decisions, were crucial in determining the outcome of the appeal.