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TMI Blog2016 (12) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... choose a place for the purpose of foreign travel. The said incentive does not in any manner has an object of benefiting the individual but has been incurred on the group as a whole and also the same is not a voluntary act on the part of insurance agents; therefore, the expenditure cannot be considered as income in the hands of the individual insurance agent. Thus we do not find any merit in the action of lower authority for treating the payment made to travel agent for getting the accommodation and ticket booking for the insurance agent causing for treating and holding them liable to deduction of tax at source under section 194D of the Act. The assesse has already deducted tax at source under section 194C, accordingly there is no justification in the order of lower authorities holding the assessee in default under section 201(1) & (1A). TDS in respect of service tax component on insurance commission paid to the insurance agent - Held that:- No tax is required to be deducted at source in respect of component of service tax so paid to the commission agent. TDS u/s 194C or 194J - payment made for annual maintenance contract / routine repair - Held that:- No infirmity in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreign travelling expenditure and halting charges incurred on agents, brokers and employees of SBI and therefore it was liable for tax deduction at source under section 194D of the Act. 6. The Ld. CIT(A) confirming the action of the AO by observing that during such foreign trips, the sole purpose in the name of training was dissemination of information. The assessee has not furnished any other details of any such training provided to the insurance agents through experts in the said field, if any like the name of the expert faculty who provided the training, the subjects covered, the training material distributed, if any etc. Thus, it can be said that the foreign trip of the insurance agents was largely a sightseeing trip i.e. an incentive given so as to inspire them to solicit more business for the assessee. The places in respect of which the foreign trips were organized are largely the famous tourist places of the world and the visit to these places was largely for sightseeing purposes/pleasure trip, although it may have been coupled with one or two sessions of information sharing in regard to the business of the assessee. The expenditure on foreign travel incurred by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... component on insurance commission so paid. 11. By the impugned order Ld. CIT(A) held that no tax is required to be deducted at source in respect of service tax component of commission so paid to the commission agent after having the following observation: 4.26 I have considered the facts of the case the order of the AO, the written submissions and the arguments of the AR on this issue. The appellant is engaged in Life Insurance Business through a network of brokers and agents. The Life Insurance agents do not pay service tax as it has to be paid by Life Insurance Company under reverse charge mechanism. As per the Service Tax Regulations, the service tax on insurance commission payable to Insurance Agents is required to be paid by the Insurance Company as per section 68(2) of the Service Tax Act read with Rule 2(1)(d)(ii) of Service Tax Rules, 1994. The clause (iii) of Rule 2(1)(d) of the Service Tax Rules 1994 is as person liable for paying the service tax means- (iii) in relation to insurance auxiliary service by an insurance agent, any person carrying on the general insurance business or life insurance business, as the case may be, in India. 4.27 The Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... text of section 194J of the Act issued .by the CBOT would not apply to the appellant. 4.30 It is not in dispute that the amount paid to and receivable by Insurance Agent is the commission amount without the Service Tax Component. The accounting entries passed by the appellant Company have the effect of credit of the net amount of insurance commission payable to the Insurance agents. The Service Tax component liability on the said commission has been separately discharged by way of payment to Government Treasury directly by the appellant. In case of any default in this payment of Service Tax, it will be the Insurance Company which will be liable to penal consequences under the Service Tax Act and Regulations. The Insurance Agents do not face any consequences of non-payment or default in payment of the said ServiceTax. Thus the appellant has rightly deducted the tax at source on the actual amount payable to or receivable by the Insurance Agent at the applicable rates under section 1940 of the Act. Various case laws cited by the appellant in this regard on this issue, also support the argument and submissions of the appellant. 4.31 In view of the above discussion therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndividual or a Hindu undivided family, who is responsible for paying to a resident any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of- 22. A careful perusal of the above provisions reveal that the TDS is required to be deducted and paid to the Govt Treasury on the income payable only which means that certainly the service tax component on the commission is not liable to TDS as the same is not an income of the assessee. The provisions of section 194D and 194I have to be seen in the light of the two circulars no 4/2008 dated 28.04.2008 and circular no 1/2014[F.No. 275/59/2012-IT(B)] dated 13.1.2014.In circularsno.4/2008 dated 28.04.2008 CBDT has clarified that TDS is not required to be deducted on service tax on rent u/s 194I.The relevant para 3 of the circular is re-produced as under:-― 3. Service tax paid by the tenant doesn t partake the nature of income of the landlord. The landlord only acts as a collecting agency or Government for collection of serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on are same as considered by the Tribunal in the above order, we do not find any infirmity in the order of Ld. CIT(A) for holding that no tax is required to be deducted at source in respect of component of service tax so paid to the commission agent. 13. In the result ground taken by the Revenue in all the year under consideration are dismissed. 14. Common grievance of Revenue in all the years also pertains to CIT(A) s action for holding that payment made for annual maintenance contract / routine repair is not free from technical services under section 194J and holding that assessee has correctly deducted tax at source under section 194C of the Income Tax Act. 15. Rival contention have been heard and record perused, in the order passed under section 201(1), the AO held that assessee was liable to deduct tax at source on payment of annual maintenance contract / routine repair under section 194J, in so far as the same was in the nature of technical services. The AO held that assessee has wrongly deducted tax at source under section 194C. 16. By the impugned order CIT(A) held that assessee has correctly deducted tax at source under section 194C, after observing as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process, call inbound and outbound , tele-calling for answering customer queries about product , follow and maintaining dealers network etc. As is clear from the said outsourced services, these are a sort of clerical and basic administrative work. The assessee made the payment for these services after deducting TDS under the provisions of section 194C of the Act believing these are basic type of services involving no technical or professional qualification whereas the AO came to the conclusion that these are technical services and were required to be subjected to TDS under the provisions of section194J of the Act and finally treated the assessee in default under the provisions of section 201(1) of the Act and raised the demand accordingly. The ld CIT(A) after having examined and perused agreements with the service providers and after going into the various services provided reached a conclusion that the outsourced services do not require any kind of technical and professional expertise and are just simple and repetitive nature of work such as document storage, documents delivery and collection services and documents management services. The ld CIT(A) examined the contract with Writ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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