2015 (9) TMI 1100 - AT - Income Tax

Non deduction of TDS as per the provisions of section 194L/194LA - Held that - First issue of payment of compensation vis-a-vis TDS under section 194L/194LA of the Act is concerned, the facts on the record show that to implement the scheme of the Government relating to the road widening near the railway tracks, the assessee evacuated the illegal/unauthorised persons in the form of squatters/hutments for which the assessee paid certain compensation to these persons. The fact of the matter is that these occupants were unauthorised and illegal, they were not the real owners of the land, therefore, there is no question of acquiring the land. The land always belonged to the State. It was only the encumbrance which was removed by the assessee by making payment of certain compensation. Therefore, we agree with the learned Commissioner of Income-tax (Appeals) that provisions of section 194L/194LA do not apply to the facts of the case. We confirm the findings of the learned Commissioner of Income-tax (Appeals) on this issue. The appeal filed by the Revenue on this issue is accordingly dismissed. - Decided against revenue. Assessing Officer has applied the provisions of section 194J whereas the assessee has deducted tax under section 194C of the Act - assessment years 2008-09 and 2009-10 - Held that - We find that the payments have been made by the assessee only in respect of annual maintenance contract which relates to minor repairs, replacement of some spare parts, oiling and greasing of the machinery. In our understanding of the fact, these services do not require any technical expertise and therefore cannot be categorised under the head Technical services . We, therefore, decline to interfere with the findings of the learned Commissioner of Income-tax (Appeals)deleting the demands of tax under section 201(1) and of interest under section 201(1A) . The appeal filed by the Revenue for this issue is also dismissed - Decided against revenue.

Summary

Issues:
1. Applicability of provisions of section 194L/194LA of the Income-tax Act, 1961 for assessment years 2000-01 to 2009-10.
2. Application of section 194J or 194C of the Act for assessment years 2008-09 and 2009-10.

Analysis:

Issue 1:
The primary issue in the appeals pertains to the applicability of sections 194L/194LA of the Income-tax Act, 1961 for the assessment years 2000-01 to 2009-10. The Assessing Officer contended that the assessee failed to deduct tax at source under these provisions concerning compensation paid for acquisition of immovable property. However, the assessee argued that the payments were made for resettlement of squatters/hutments on government land, not for land acquisition. The Commissioner of Income-tax (Appeals) agreed with the assessee, noting that no compensation was paid for land acquisition, leading to the deletion of the demand raised by the Assessing Officer under section 201(1)/201(1A) of the Act. The Tribunal upheld this decision, emphasizing that the squatters were illegal occupants, not landowners, and thus, the provisions of section 194L/194LA did not apply.

Issue 2:
The second issue concerns the application of section 194J or 194C of the Act for the assessment years 2008-09 and 2009-10. The Assessing Officer insisted that tax should have been deducted under section 194J for certain services, while the assessee had deducted tax under section 194C. The services in question were related to annual maintenance contracts for AC and lift, which the Assessing Officer deemed as technical services requiring TDS under section 194J. However, the Commissioner of Income-tax (Appeals) disagreed, stating that these services did not fall under technical services and cited precedents to support this view. Consequently, the demands of tax and interest under section 201(1) and 201(1A) of the Act were deleted. The Tribunal concurred with the Commissioner's decision, highlighting that the services provided were for routine maintenance and minor repairs, not technical in nature. As a result, the appeals filed by the Revenue were dismissed in both instances.

In conclusion, the Tribunal upheld the decisions of the Commissioner of Income-tax (Appeals) on both issues, leading to the dismissal of the appeals filed by the Revenue.