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TMI Blog2012 (11) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... on the amount of Rs.12,00,000/- paid by the assessee-company to its holding-company and consequently, confirming the disallowance made u/s. 40(a)(ia) of the Act for non-deduction of tax at source on such payment. 3. The facts relating to the said issue are stated in brief. The assessee-company is a subsidiary company of M/s Steel Industrials Kerala Ltd. It is engaged in the business of manufacturing of steel forging. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has paid a sum of Rs. 12.00 lakhs to its holding company and claimed the same as expenses. The Assessing Officer took the view that the assessee is liable to deduct tax at source on the said payment u/s. 194J of the Act and since the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. 40(a)(ia) shall not apply to the said payment. In this regard, he relied on the Special Bench of ITAT, Visakhapatnam Bench in the case of M/s. Merilyn Shipping and Transports vs. ACIT (136 ITD (SB) 23). 5. On the contrary, the Ld. DR submitted that the assessee has been receiving various types of services such as recruitment and training to staffs and other HR activities, liaisoning with the Government Departments etc. The Ld. DR submitted that these kinds of services would fall in the category of technical services and hence, the provisions of sec. 194J shall squarely apply to the assessee. 6. We have heard the rival contentions and perused the record. Before the Assessing Officer, the assessee has explained the purpose for which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount of Rs.12.00 lakhs was paid in connection with various types of services referred supra and it is claimed that part of the said amount is paid towards rent also. 7. Now the question that arises is Whether the services mentioned above would fall in the category of "Technical services", which would attract the provisions of sec. 194J of the Act. According to sec. 194J of the Act, the fee for technical services shall have the same meaning as given in Explanation 2 to clause (vii) of sub-section(1) of section 9. The Explanation 2 to clause (vii) of sub-section (1) of section 9 reads as under: Explanation 2. For the purposes of the clause, "fees for technical services" means any consideration (including any lump sum consideration) for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4J r.w.s. 9(1) and Board's Circular the payment made by the appellant is that of payment for technical services. The assessee was required to deduct tax from the payment of Rs. 12,00,000/- to SILK which attracts the provision of sec. 40(a)(ia)". 9. We are also of the view that the various types of services rendered by the holding company to the assessee would fall either in the category of "managerial services" or "Consultancy services" and in any case both the types of services would fall under the definition of "Fee for technical services". However, on a careful consideration of the explanation furnished before the AO, we notice that the amount of Rs.12.00 lakhs also includes compensation paid towards "Rent and other amenities" provided ..... X X X X Extracts X X X X X X X X Extracts X X X X
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