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TMI Blog2016 (7) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT(A) for Assessment year 2007-08 and the addition made by the Assessing Officer under section 40(a)(ia) was deleted saying that TDS has been deducted at appropriate rate. The certificate issued under section 197 by the Department to Adlabs itself mentions that TDS has to be deducted under section 194C and the annexures also mentions the name of the present assessee. Thus we find no force in the conclusion of the Assessing Officer. - Decided against revenue - ITA Nos. 2720 & 2721/Mum/2015 - - - Dated:- 13-7-2016 - Before Shri Joginder Singh, Judicial Member For the Revenue : Shri Rajesh Ojha, JCIT For the Assessee : Shri Vishal Shah ORDER Per Joginder Singh ( Judicial Member ) Both these appeals are by the Revenue, aggrieved by the impugned orders both dated 23/02/2015 for Assessment year 2009-10 and 2010-11 of Ld. Commissioner of Income Tax, Mumbai. The Revenue has elaborated the grounds but the same pertains to considering the payment made for processing charges to Adlab for supplying copies of final negative as per the provisions of section 194C of the Income Tax Act, 1961 (hereinafter the Act) as against the provisions of section 194J of the Act w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducing hereunder the relevant provisions of section 194C and 194J of the Act for ready reference and analysis. 194C. (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to- (i) one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family; (ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family, of such sum as income-tax on income comprised therein. (2) Where any sum referred to in sub-section (1) is credited to any account, whether called Suspense account or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India by or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both; or (g) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India; or (h) any trust; or (i) any university established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a university under section 3 of the University Grants Commission Act, 1956 (3 of 1956); or (j) any Government of a foreign State or a foreign enterprise or any association or body established outside India; or (k) any firm; or (l) any person, being an individual or a Hindu undivided family or an association of persons or a body of individuals, if such person,- (A) does not fall under any of the preceding sub-clauses; and (B) is liable to audit of accounts under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such sum is credited or paid t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, in the case of sum referred to in clause (d) : Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such sum by way of fees for professional services or technical services is credited or paid, shall be liable to deduct income-tax under this section : Provided also that no individual or a Hindu undivided family referred to in the second proviso shall be liable to deduct income-tax on the sum by way of fees for professional services in case such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family. (2) [***] (3) [***] Explanation.-For the purposes of this section,- (a) professional services means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pes of processing charges, one being negative processing and other being positive processing. Negative processing requires professional skill for which the assessee deducted tax at source as required under section 194J of the Act. Whereas positive processing means number of copies required of prints from one original which does not require any professional or technical skill but just a machine. It is also noted that the assessee operated two ledger accounts in the Tally software, one for negative processing and other being print processing. As per section 194J the concerned company has to provide some technical input, as stated by Assessing Officer himself in the assessment order, that print processing charges included professional work such as processing of colour negative, etc., which is not the case in such process. The system is that one master print, number of prints are taken and send to the various distributors for exhibition. Thus printing of various prints from the master piece is known as print processing. However, as per section 194C, sub-clause 7(iv)(e) the work shall include manufacturing and supplying a product according to the requirement or specification of a custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to the requirement or specification of a customer by using material purchased from such customer but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person other than such customer. No contrary decision or facts were brought to our notice by the Revenue. The CBDT Circular No. 619 dated 04.12.1991 also clarifies that the commission retained will be subjected to TDS as per the provisions of section 194H of the Act. Therefore, I find no infirmity in the conclusion drawn by the learned CIT(A). Both the appeals of the Revenue are therefore dismissed. 5. Even on the issue of tax effect the learned counsel produced copies of the demand notice under section 156 of the Act wherein it has been mentioned that there is nil demand for both the assessment years. Thus in view of latest CBDT instruction No.21 of 2015, dated 10/12/2015 (F No.279/ Misc./142/2007-IT(PT), applicable with retrospective effect, wherein, the Department was advised/directed by the Board not to file appeal in the cases where the tax effect does not exceed the monetary limit, both these appeals of the Revenue do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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