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TMI Blog2018 (5) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... B.R.BASKARAN, AM AND SHRI RAVISH SOOD, JM For The Revenue : Shri Samuel Darse, D.R. For The Assessee : Shri Rajan Vora And Shri Nikhil Tiwari, A.Rs ORDER PER RAVISH SOOD, JUDICIAL MEMBER: The present appeal filed by the revenue is directed against the order passed by the CIT(A)-11, Mumbai, dated 27.01.2016, which in itself arises from the order passed by the A.O under Sec. 143(3) of the Income tax Act, 1961(for short Act‟), dated 06.03.2015 for A.Y 2012-13. The revenue had raised before us the following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the payment made to the parties/ contractors were subject to deduction of tax u/s 194C instead of section 194J as held by the AO, ignoring the clear terminology and scope of work of the contracts entered into by the assessee with the parties/contractors. 2. The appellant prays that the order of the Ld. CIT(A) on the above ground be set aside and that of the Assessing Of f icer restored. 3. The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 2. Briefly s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1%, respectively. The aforementioned expenses were accounted and grouped by the assessee as Survey Expenses in its Profit and loss account for the year under consideration. The assessee had during the year incurred an amount of ₹ 17,50,36,140/- towards such survey expenses. 5. During the course of the assessment proceedings, the A.O observed that the assessee had deducted tax at source on the aforesaid survey expenses of ₹ 17,50,36,140/- under Sec. 194C of the Act. The A.O holding a conviction that as the payments made by the assessee were in context of technical services, therefore, it was liable to deduct tax at source under Sec.194J and not under Sec. 194C of the Act. The explanation of the assessee that the work carried out by the vendors could not be characterised as technical services and thus did not fall within the sweep of Sec.194J, however did not find favour with the A.O. The A.O being of the view that the assessee ought to have deducted tax at source under Sec.194J of the Act disallowed proportionate amount of ₹ 15,75,32,526/- under Sec. 40(a)(ia) of the Act. 6. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haracter as that technical services, relied on the following orders of the coordinate benches of the Tribunal: ( i) ACIT Vs. Pankaj Bhargava (ITA No. 86/Del/2012) (Del) ( ii) Gujarat State Electricity Corporation Ltd. Vs. ITO (2004) (3 SOT 468) (Ahd.) ( iii) ITO Vs. Man Foods (P) Ltd, (ITA No. 7150/Mum/2012) (Mum) 7. The CIT(A) after deliberating on the contentions of the assessee so raised before him in the backdrop of the order passed by the A.O, did find favour with the same. The CIT(A) observed that the A.O while concluding that the assessee ought to have deducted tax at source under Sec.194J and not under Sec.194C, had as a matter of fact relied mainly on the agreement and not on the actual work involved. It was observed by the CIT(A) that though the terminology used in the agreement such as technical audit of distribution transformer‟ though at the first blush would give a feeling that the same involved some complex technical services, but however, the same as a matter of fact actually referred to taking photographs of transformers. It was observed by the CIT(A) that the nature of work carried out by the vendors involved door-to-door collection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o technical services were involved in the work done by the vendors by deploying semi-skilled labourers, therefore, the assessee had rightly deducted tax at source under Sec. 194C and the provisions of Sec. 194J were not attracted. The ld. A.R further averred that even otherwise the provisions of Sec. 40(a)(ia) could not have been invoked in respect of short deduction of tax at source. In support of his aforesaid contention the ld. A.R relied on the judgment of the Hon‟ble High Court of Calcutta in the case of CIT Vs. M/s S.K. Tekrimal 361 ITR 432 (Cal). 9. We have perused the facts of the case and find that TCS had entered into an agreement with the assessee company for creation of Geographical Information system in the State of Maharashtra and Gujarat. As observed by the CIT(A), the execution of the project involved both technical and nontechnical work. Though the technical work was performed by the assessee through its employees who were technical personnel, but however, the nontechnical and non-skilled work involving the collection of data etc. was outsourced by the assessee to various vendors in the relevant locations for operational convenience. The nature of such non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved by the CIT(A) the nature of the nontechnical and supporting work carried out by the vendors i.e. (i) field survey of collection of names of major roads/base map features; (ii) collection of names/attributes of assets data from ledgers available with utility companies; and (iii) collection of consumer data through contact door-todoor survey etc. did not require any technical skill. We are of the considered view that for carrying out the aforesaid work by the unskilled and semiskilled labourers, no technical skill or industrial science would be involved. We have given a thoughtful consideration to the facts before us and are of a strong conviction that the work executed by the vendors could safely be brought within the sweep of carrying out any work through supply of labour as contemplated in Sec. 194C of the Act. We are persuaded to be in agreement with the view taken by the CIT(A) that as the payments made to the vendors for the work done by them by deploying semi-skilled personnel, did not involve any technical or professional knowledge on their part, the same could not be brought within the sweep of Sec. 194J and had rightly been subjected to deduction of tax at source by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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