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TMI Blog2016 (8) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... ering the corresponding service tax of the commission amount. The Assessing Officer noted that in the assessment year 2008-09 to 2010-11, the demands were raised under section 201(1) / 201(1A) on similar short deduction of tax on commission payment. Though, the assessee in its reply submitted that the learned Commissioner (Appeals) while deciding assessee's appeal for the assessment year 2008-09 to 2010-11, had deleted the addition made on account of short deduction of tax under section 194D, however, the Assessing Officer observed that as the Department is contesting the decision of learned Commissioner (Appeals) before the Tribunal, for keeping the matter alive, he held that assessee was required to deduct TDS on service tax deposited on behalf of agent. In this connection, he raised the demand under section 201(1) amounting to ` 4,65,21,907, alleging short deduction of tax. Further, he also levied interest amounting to ` 1,36,40,926 under section 201(1A). Being aggrieved of the order passed by the Assessing Officer under section 201(1) / 201(1A), assessee preferred appeal before the learned Commissioner (Appeals). 4. Learned Commissioner (Appeals), noticing the fact that in ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 circulars no. 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 for Government for collection of service tax. Therefore it has been decided that tax deduction at source (TDS) under sections 194-I of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of the learned Commissioner (Appeals). 7. The next issue raised in ground no.(ii) is challenging the decision of the learned Commissioner (Appeals) in deleting the demand raised for short deduction of tax under section 194C in respect of payment made towards out sourcing expenses. 8. Brief facts are, the Assessing Officer noticing that the assessee has deducted tax on payment made towards out sourcing expenses such as processing charges, call centre operation and business service charges by applying the provisions of section 194C instead of section 194J called upon the assessee to explain why demand should not be raised under section 201(1) / 201(1A). In reply, it was submitted by the assessee, as the services rendered are in the nature of contract and not fee for technical service or professional services it has deducted tax u/s 194C. The assessee also relied upon the order of the learned Commissioner (Appeals) in its own case for earlier assessment year. The Assessing Officer, however, stating that the decision of the learned Commissioner (Appeals) is contested before the Tribunal held that the assessee was required to deduct TDS under section 194J and not 194C. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 Writer Information Management Services and found that very basic services were contracted and rendered by the said party involving no special technical skill or professional qualification. On the basis of the rival arguments and perusal of the various records as placed before us we find that the work assigned to the service provider was not a technical or professional work which required special skills but simple, basic and repetitive nature of work and we are inclined to opine that the order of CIT(A) is correct and deserved to be upheld.In view of the above f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t work involved is in nature of contract and does not involve any professional and technical service. Therefore, provisions of section 194C are applicable. In this context, the assessee also relied upon the orders of the learned Commissioner (Appeals) in its own case for earlier assessment years. The Assessing Officer, however, observing that the decision of the learned Commissioner (Appeals) is contested before the Tribunal, held that the assessee was required to deduct tax at source under provisions of section 194J. Accordingly, alleging short deduction of tax, he raised demand under section 201(1) / 201(1A). Being aggrieved of such decision of the Assessing Officer, assessee challenged the same before the learned Commissioner (Appeals). 14. The learned Commissioner (Appeals), following his own decision for preceding assessment years, deleted the demand. 15. We have considered the submissions of the parties and perused the material available on record. As agreed by both the parties, this issue has been decided by the Tribunal in assessee's own case referred to above. Therefore, respectfully following the observation of the Tribunal while deciding the case of the assessee as re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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