2021 (9) TMI 1170 - AT - Income Tax

TDS u/s 194C - TDS on surrogacy payments made to the concerned payee(s) - HELD THAT - This tribunal's co-ordinate bench decision in assessee's cases 2021 (4) TMI 454 - ITAT HYDERABAD itself has upheld the learner lower appellate authorities' action invoking Section 194C of the Act thereby treating the surrogacy payments as contractual in nature - We thus adopt judicial consistency and uphold the impugned TDS recovery demands in issue.

Summary

Issues:
Challenging correctness of lower authorities' action invoking Section 201(1) and 201(1A) TDS recovery mechanism for surrogacy payments.

Analysis:
The appeals arose against the CIT(A)-4, Hyderabad's orders for AYs 2011-12 and 2012-13, concerning proceedings under Section 201(1) & 201(1A) of the Income Tax Act, 1961. The primary grievance in both appeals was the correctness of invoking Sections 201(1) and 201(1A) for TDS recovery on surrogacy payments. The Revenue contended that TDS should have been deducted on surrogacy payments, while the assessee argued that Section 194C did not apply. A co-ordinate bench decision upheld the lower authorities' action, treating surrogacy payments as contractual under Section 194C.

The tribunal delved into the historical and legal aspects of surrogacy, highlighting its evolution and legislative framework. It was noted that surrogacy involves genetic parents, surrogate mothers, and infertility clinics. The tribunal examined the surrogacy agreement, emphasizing the roles and responsibilities of the parties involved. The tribunal also scrutinized the arrangement between the assessee and the NGO facilitating surrogate mothers, revealing discrepancies and exploitation of surrogate mothers.

Regarding TDS deduction, the tribunal analyzed the nature of payments made for surrogacy and concluded that the assessee's arguments regarding the taxability of surrogate mothers were not valid. The tribunal upheld the lower authorities' action under Section 194C for TDS disallowance. Additionally, the tribunal ruled out the applicability of Section 194J for technical services in the surrogacy process, reversing the lower authorities' decision on this aspect.

Ultimately, the tribunal dismissed the assessee's appeals, upholding the TDS recovery demands for surrogacy payments. The judgment emphasized judicial consistency and affirmed the lower authorities' decisions on TDS disallowance. No other arguments were raised, and the appeals were concluded with the order pronounced on September 20, 2021.