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TMI Blog2004 (11) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... t s. 194J envisages is that what the recipient receives must not be salary whether professional services are rendered or whether technical services are rendered. So far as professional services are concerned, the amount must have been received in the course of carrying on the specified profession. So there is no question of deducting tax at source u/s 194J from the salary paid to an accounts executive, legal officer, etc. of the company. Likewise, amount received by a technical personnel must not be chargeable to tax under the head salaries . In the present case, what has been paid to the deputed personnel is a salary and hence, the assessee was not liable to deduct tax at source from the payment made by it to IHC as reimbursement of salari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... render certain services. Nine employees were deputed from Taj Palace Hotel and seventeen were deputed from Taj Mahal Hotel. The employees ranged from the category of telephone operator to chief engineer including account executive, housekeeper, chef, front office cashier, account assistant, etc. The AO was of the view that by deputing these personnel, the two hotels had rendered professional and technical services to the assessee. According to him, such services fell within the definition of professional and technical services as provided in s. 194J, s. 44AA and Expln. 2 to cl. (vii) of sub-s. (1) of s. 9 of the Act. Therefore, according to him, the assessee was liable to deduct tax at source under s. 194J of the Act from the payment of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Department. The learned counsel then took us through the other clauses, particularly to ss. 1 and 2 in art. VII of the agreement. Sec. 1 provided that IHC were to receive 5 per cent of the gross income of the hotel per annum as technical consultancy fees. Sec. 2 provided that the assessee was to reimburse to IHC certain expenses like travelling, telephone, telegraph, payroll costs, etc. It was contended that whereas the assessee had deducted tax at source under s. 194J from the technical fees paid by it to IHC (5 per cent of the gross revenues), reimbursement of abovementioned expenses did not warrant similar treatment as there was no element of profit embedded therein. In support of these contentions, the learned counsel relied on the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 310 (Guj), Associated Cement Co. Ltd. vs. ITO (2000) 68 TTJ (Bom) 220 : (2000) 74 ITD 369 (Bom) and Asstt. CIT vs. Dwarkadas Ghasiram (HUF) (1995) 53 TTJ (Ind) 20. 4. In his counter-reply, the learned counsel contended that both the authorities below had proceeded on the belief that the amount of Rs. 39,55,161 was the only consideration paid to IHC. In fact, the employees who were deputed, represented as the assessee s employees before the customers of the assessee s hotel. In short, the personnel were the de facto employees of the assessee, actually the employees of IHC, but certainly not the consultants to the assessee. Finally, it was contended that the impugned amount was not a part of the consideration for technical services to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head salaries . 6. In the light of the above provisions, let us consider the facts of the case. Clause (a) of the Explanation to s. 194J postulates that the person rendering professional services must have received the fees in the course of carrying on any of the professions mentioned therein. In the present appeal, it is not the case of the Revenue that the persons deputed in the assessee s hotel were carrying on any profession. If an accounts executive was deputed, he was doing the duty as was assigned to him by his employer. It cannot be said that he was carrying on the profession of accountancy and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees for technical services are concerned, there is another aspect to it also. The meaning assigned to the expression fees for technical services is the same as is given in Expln. 2 to s. 9(1)(vii) as we have noted earlier. The case of the Revenue is that the persons who were deputed were technically qualified to do the job they were performing and hence the amount which was reimbursed to IHC was nothing but fees for technical services. For a moment, if this argument of the Revenue is accepted, even then it cannot fall within the scope of fees for technical services . This is because Expln. 2 clearly excludes consideration which would be income of the recipient chargeable under the head salaries . In the present case, it is not in dispute th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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