2019 (4) TMI 710 - HC - Income Tax

TDS u/s 194J - services rendered by the supplier for maintenance of medical equipments - nature of services - HELD THAT - These services being of routine nature, would not be qualified to be called technical services which would require deduction under Section 194J of the Act. Purpose of this services was only to ensure a proper maintenance of the machinery/equipment so as to ensure long life for the same. Commissioner of Income Tax (Appeals) as well as the Tribunal have on facts come to the conclusion that the services rendered in respect of the equipments are only in nature of maintenance services provided to ensure they function properly and would be able to provide services for a long period of time. This does not involve any technical service. These concurrent findings of the fact has not been shown to be perverse - No substantial question of law

Summary

Issues:
- Interpretation of Section 194J of the Income Tax Act regarding deduction for services rendered for maintenance of medical equipment.
- Classification of payments made to a supplier for maintenance of medical equipment under Section 194J or Section 194C.
- Determination of tax deduction on payments made to doctors under Section 194J.
- Deletion of demand under Section 201(1A) of the Income Tax Act.
- Assessment of default and levy of interest under Section 201(1) on tax deductions not made.

Interpretation of Section 194J - Maintenance Services:
The Appeals challenged the Tribunal's order dismissing the Revenue's appeal for tax deduction under Section 194J for services related to medical equipment maintenance. The Tribunal's decision was based on a previous order regarding the same assessee for a different assessment year, where it was established that routine maintenance services do not qualify as technical services necessitating deduction under Section 194J. The purpose of these services was deemed to be ensuring proper equipment maintenance for longevity. Both the Commissioner of Income Tax (Appeals) and the Tribunal concurred that the services were solely for maintenance, not technical in nature, and thus not subject to Section 194J. Consequently, the proposed question did not present a substantial legal issue and was not entertained.

Classification of Payments - Technical Services vs. Work Contract:
The questions regarding payments made to a supplier for medical equipment maintenance and to M/s Monginis Hospitability Services Pvt. Ltd. were found to be identical to those in a previous appeal for a different assessment year. A separate order was issued disposing of the earlier appeal, where it was determined that the questions did not raise substantial legal issues. As a result, the current questions were also deemed not to present any significant legal matters and were not entertained.

Tax Deduction on Payments to Doctors and Deletion of Demand:
Regarding the tax deduction on payments made to doctors under Section 194J and the deletion of demand under Section 201(1A) of the Act, it was established that these issues were interconnected with the previous questions and were considered academic due to the lack of substantial legal questions raised in the earlier assessments. Consequently, these issues were also not entertained.

Assessment of Default and Levy of Interest:
The Tribunal's decision to reject the Assessing Officer's order and hold that the assessee was not in default under Section 201(1) for failing to deduct tax from payments did not lead to levy of interest under section 201(1A). This decision was based on the earlier findings that did not raise substantial legal questions. As a result, the Appeals were dismissed without any order as to costs.