2014 (12) TMI 1359 - AT - Income Tax

TDS u/s 194J - payments to the stockiests - order u/s 201(1) read with section 201(1A) - Whether relationship between the assessee and the stockiest is of principal to principal‟ basis ? - HELD THAT - As decided in PIRAMAL HEALTHCARE LTD. 2012 (5) TMI 203 - ITAT MUMBAI relationship between the assessee and the stockiests is in the nature of principal to principal‟ relationship and not that the appointment of the Manager by the assessee. The same was answered by the assessee and against the Revenue. It is the finding of the Hon‟ble High Court 2015 (1) TMI 873 - BOMBAY HIGH COURT .that the provisions of section 194J of the Act are not to be invoked with assessee is not making any payments to the stockiests. When the provisions of section 115J are not attracted by such transactions, it is the finding of the Hon‟ble High Court that the question is to whether there is a relationship of principal to principal‟ or relationship of Manager becomes academic. TDS u/s 194J to the payments made by the assessee towards Director‟s Sitting Fees - Non deduction of tds - HELD THAT -Provisions of section 194J of the Act need not be invoked in respect of the payments made to the Director‟s sitting fees considering the newly inserted provisions of section 194J(1)(ba) of the Act. Accordingly, we grant relief to the assessee in respect of ground no.2.

Summary

Issues:
- Requirement of passing an order u/s 201(1) / 201(1A) of the Act when no payments made to stockiests
- Applicability of provisions of section 194J to Director's Sitting Fees

Analysis:

Issue 1: Requirement of passing an order u/s 201(1) / 201(1A) of the Act when no payments made to stockiests

The case involved 8 appeals, 4 by the Revenue and 4 Cross Objections by the assessee, concerning the requirement of passing an order under section 201(1) / 201(1A) of the Act when no payments were made to stockiests. The Revenue contended that managerial services rendered by stockiests necessitated invoking section 194J of the Act. The CIT (A) relied on the Tribunal's decision in a similar case, emphasizing the "principal to principal" relationship between the parties. The Tribunal concurred with the CIT (A) and dismissed the Revenue's appeals for all the assessment years under consideration (2007-08 to 2010-11).

Issue 2: Applicability of provisions of section 194J to Director's Sitting Fees

Regarding the applicability of section 194J to Director's Sitting Fees, the assessee made payments without TDS, leading the Assessing Officer to demand tax under section 201(1A) of the Act. The CIT (A) held that such payments constituted "fees for technical services" and attracted section 194J. However, the Tribunal, after considering the amended provisions of section 194J(1)(ba) inserted by the Finance Act, 2012, ruled that these provisions need not be invoked for Director's Sitting Fees. Citing precedents and relevant material, the Tribunal granted relief to the assessee for this issue, partially allowing the Cross Objections for the assessment years 2007-08 to 2009-10, and treating the Cross Objection for 2010-11 as allowed.

In conclusion, the Tribunal dismissed all four appeals filed by the Revenue, partially allowed the Cross Objections for the assessment years 2007-08 to 2009-10, and treated the Cross Objection for 2010-11 as allowed. The judgment was pronounced on 15th December 2014.