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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 ..... ct was conducted on 20/11/2009 at its office premises. While passing order under section 201, the AO observed that assessee has not deducted tax at source on payment of foreign travelling expenses and halting charges, accordingly assessee was held to be in default under section 201(1) and 201(1)(a) of the Act. 4. By the impugned order CIT(A) confirming the action of the AO and assessee is in further appeal before us in all the years under consideration. 5. Rival contentions have been considered and record perused. From the record we find that to boost to its business, the assessee organized foreign travel for its insurance agents. The details of the foreign travel of these groups (in Financial years 2007-08, 2008-09, 2008-09 and 2009-10) which have been so far provided by the assessee was furnished before AO. The AO was of the view that the foreign travelling and halting expenditure incurred by the assessee on its insurance agents and SBI employees are in the nature of income in the hands of such agents and falls within the provisions of section 194D of the Act. The AO further held that the word 'income by way of remuneration or reward, whether by way of commission or otherwise' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. In view of the above discussion 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). 9. In the result ground taken by assessee in all the years under consideration are allowed. 10. In the appeal filed by the Revenue, Revenue is aggrieved by the action of CIT(A) for holding that no TDS is required to be deducted in respect of service tax component on insurance commission paid to the insurance agent. The AO held that assessee was required to deduct tax at source on the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said aspect. 4.29 Further, it is seen that the CBDT had issued circular No.4/2008 dated 29th April, 2008 analyzing the applicability of the provisions of section 1941, on the service tax component on rent wherein it has been clarified that service tax paid by the tenant does not partake the character of income of the landlord and hence TDS u/s 1941 would be required to be made only on the amount of rent paid without including the service tax. The subsequent clarification by the CBDT 'that the said benefit cannot be extended to section 194J of the Act' would not apply to the appellant because the provisions of section 194J are materially different from those of section 1940 and 194-1. Thus there is sufficient force in the contention of the appellant. It can be noted that the provisions of sections 1940 and 194-1 are identical in the sense that the words used therein are "any income by way of....... " However, in section 194J of the Act the words used are "any sum by way of ......" Hence, I agree with the Appellant that Circular No.4/2008 dated 29th April, 2008 applies to the present case related to section 194D of the Act and later clarification vide circular F No. 275/7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be deducted on the gross amount of commission paid including the service tax component which was reversed by the CIT(A).Now the issue before us is whether TDS is required to be deducted on the service tax component on the commission paid to insurance agents u/s 194Dof the Act. We shall first refer to the provisions of section 194D & 194I of Act for the purpose of better understanding which are reproduced as under for the sake of convenience :-― Insurance commission. 194D.Any person responsible for paying to a resident any income by way of remuneration or reward, whether by way of commission or otherwise, for soliciting or procuring insurance business (including business relating to the continuance, renewal or revival of policies of insurance) 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 issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force: Similarly the provisions of section 194 I of the Act are also reproduced below for the sake of better understanding of the issue in hand:-― 194I. Rent.-Any person, not being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in terms of the agreement/contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component." The Hon„ble High Court of Rajasthan in the case of CIT(TDS) V Rajasthan Urban Infrastructure(2013)37taxmann.com154(Raj) has held that service tax is not subject to deduction of tax at source and the circular no 1/2014[F.No. 275/59/2012-IT(B)] dated 13.1.2014 has been brought by the CBDT after the above decision of the high court and also referred to in para no 2 of the circular. After considering the facts of the case before us in the light of circulars as referred to above and decision of the Rajasthan High Court and also the relevant provisions of the Finance Act which provides for ―Reverse Charge Mechanism" , we are of the opinion that the order of CIT(A) is correct and does not suffer from any infirmities and we ,therefore , uphold the same. In result , the appeal of the revenue is dismissed. As the facts and circumstances during the year under consideration are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and of Rs. 94,22,206/- raised by the AO in this regard is deleted. 17. We have considered rival contention and found that the issue is squarely covered by the decision of coordinate bench in case of M/s Reliance Life Insurance Co. Ltd. (supra), wherein Tribunal observed as under: 9. We have heard both the parties and perused the orders of the Revenue Authorities as well as the relevant material placed before us. From the orders of authorities below , rival submissions and records before us , we find that the assessee engaged in the life insurance business needs various types of services such as storage of data, scanning and sorting of documents, processing charges, call centre operations and business services besides other basic works connected and incidental therewith which were outsourced by the assessee to outside agencies on contractual basis. The various services outsourced were cash & bank reconciliation, commission querry handling, cash cheque collection charges , commission processing and document despatch, data processing, policy despatch, document scanning , printing ,emails of documents, infra support and outsourcing staffing, policy serving process, call inbound and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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