2019 (1) TMI 864 - HC - Income Tax

TDS u/s 194C or 194J - nature of services rendered by ONGC for which charges are paid come - Held that - The activity carried by M/s. ONGC Ltd. was in the nature of installation work and could not be considered as fees for technical services. Besides, reliance was placed upon the CBDT Circular No.681/94, dated 3rd March, 1994 to the effect that repairs, renovation and installation of plant and machinery are in the nature of contract for work and income tax will have to be deducted from such payment under Section 194C of the Act. Being aggrieved, the Revenue filed further appeal to the Tribunal. By the impugned order dated 16th October, 2015, the Tribunal upheld the view of the CIT(A) and dismissed the Revenue s appeal. It is not disputed before us that the CBDT Circular No.681/94 dated 3rd March, 1994 is applicable to the present facts. The question as proposed by the Revenue does not give rise to any substantial question of law as the tax has been properly deducted at source under Section 194C of the Act in terms of the CBDT Circular No.681/94 dated 3rd March, 1994. Thus, not entertained. Both the CIT(A) and the Tribunal have concurrently come to the conclusion that the services rendered are not in the nature of technical services, therefore, not covered by Section 194J as contended by the Revenue. In the absence of these findings of the CIT(A) and the Tribunal being shown to be perverse, the question as proposed does not give rise to any substantial question of law. Thus, not entertained.

Summary

Issues:
1. Determination of whether services provided fall under Section 194C or Section 194J of the Income Tax Act, 1961 for Assessment Year 2009-10.

Analysis:
1. The first issue pertains to services provided by ONGC, where the appellant argued that the services were technical in nature and tax should have been deducted under Section 194J instead of Section 194C. However, the CIT(A) and the Tribunal held that the services were routine repair and installation work, falling under Section 194C as per CBDT Circular No.681/94. The appeal was dismissed as the tax was correctly deducted under Section 194C, and the proposed question did not raise any substantial legal issue.

2. The second issue involved services provided by Arya Offshore Services Pvt. Ltd. (AOSPL), where the appellant contended that tax should have been deducted under Section 194J instead of Section 194C. The CIT(A) determined that the services were not technical but akin to C&F agent services, falling under Section 194C. The Tribunal upheld this decision, stating that the services were not technical and did not warrant deduction under Section 194J. As both the CIT(A) and the Tribunal found the services were not technical, the proposed question did not present any substantial legal issue.

3. In conclusion, the appeal challenging the Tribunal's order was dismissed, with no costs awarded. The judgments emphasized the importance of correctly categorizing services under the appropriate sections of the Income Tax Act to ensure proper tax deduction, as determined based on the nature of services provided.