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TMI Blog2018 (2) TMI 1522X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)/201(1A) in respect of "Data Storage" Expenses" without appreciating the fact that the nature of services received by the assessee requires certain parameters of technical/managerial skill of highly qualified specialized competency and falls within the purview of sec 194J and not u/s 194C of the I.T.Act. 3. Assessee had taken following grounds in its cross objection:- 1. On the facts and circumstances of the case, the learned AO has erred in not appreciating the order of the learned CIT{A), who held that various payments are liable for deduction of tax at source under Section 194C of the Act as against Section 194J of the Act; 2. Without prejudice to the above, if as a result of the department's appeal, any of the payments are held to be liable for deduction of tax at source u/s 194J as against Section 194C of the Act, relief in terms of section 201{1) read with rule 31ACB, shall be granted to the Assessee as appropriate taxes on the said payments are already paid by the recipients; 3. That the learned CIT(A) has erred in confirming that the following payments are liable for deduction of tax at source under Section 194J of the Act as against Section 194C of the Act: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor Vehicle) Services (8) Risk Management/Risk Inspection (9) Man Power Training Services (10) Workstation Services. 8. It was argued by learned AR that in respect of each of the above stated services, the rate of payment for each of the services are separately defined in the Agreement, for which the total payment made by the assessee company is Rs. 4,33,68,512/- on which the assessee company has correctly deducted Tax at source u/s. 194C of the I.T. Act @ 2%. However, the Ld. A.O. concluded that the above stated services are Professional Services and Tax is to be deducted u/s. 194J @ 10% and Consequentially, has worked out the Tax liability thereof of Rs. 34,61,481/- . 9. The Ld. A.O. has further calculated the interest payable on the said liability of Rs. 34,61,481/- u/s. 201(1A) @ 35% amounting to Rs. 12,11,518/- for the period beginning from April 12 to Feb. 15. 10. The AO also concluded that the payment made by the assessee company to M/s. Viniyog Insurance Services for its online Publicity, which is in the nature of advertising is also covered u/s. 194J for the purpose of deduction of Tax at source and not u/s. 194C, thereby in both the cases i.e. Software & Host ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. 4.5 It deserves consideration that a website of a customer-based company is not a standard product. The website designers or developers draw upon their technical skills to offer a host of activities ranging from domain registration, web designing of HTML or Flash sites, multimedia presentation, portals, backend services, etc. Another factor that needs to be borne in mind is that such websites and their online content is completely customized as per the unique specification of companies such as that of the appellant. In other words, it is also not that the facility 'offered by the vendor remains the same for everyone availing it, regardless of who the subscriber is. Next, the appellant claimed that the payment made in respect of Exchange Server charges was in the nature of reimbursement. However, no tangible evidences in this regard have been furnished in the absence of which, this remains a facile claim. The appellant itself has deducted tax at source under section 194C of the Act. Hence, the conflicting claim of same being in the nature of reimbursement is not tenable. Moreover, the Internet Service Provider is not a relevant third party in what is essentially a bilater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies 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 query handling, cash cheque collection charges, commission processing and document despatch, data processing, policy dispatch, document scanning, printing, emails of documents, infra support and outsourcing staffing, policy serving 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 the services after deducting TDS under the provisions of section 194C of the Act believing these are basic type of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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