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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 ..... he 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 stated, the facts of the case are that the assessee company which is engaged in the business of Information Technology/Information Technology enabled services had filed its return of income for A.Y. 2012-13 on 29.09.2012 admitting total income of Rs. 5,59,38,540/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. The case of the assessee was subsequently taken up for scrutiny assessment under Sec.143(2). 3. The facts involved in the case lies in a narrow compass. The assessee company is engaged in the business of Information Technology/Information Technology enabled services. The Ministry of Power, Government of India under XI Five year plan had initiated Restructured Accelerated Power Development and Reforms Programme (for short „R-APDRP‟) with an overall programme objective to provide an IT backbone and strengthening of the Electricity Distribution System across the Country, which enabled utilities in reduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Sec.194J of the Act disallowed proportionate amount of Rs. 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 submitted before the CIT(A) that the work carried out by the vendors did not fall within the ambit of technical services defined under Sec.194J, and was rather squarely covered by category of works contract defined under Sec. 194C of the Act. It was submitted by the assessee that the provisions of Sec. 194C of the Act stated that the contract should be for "carrying out any work" or "carrying out any work through supply of labour". It was submitted by the assessee that as the activities performed by the third party vendors did not involve any technical or professional knowledge, and rather they had deployed only semi skilled resources with ITI or Standard X/XII educational qualification, therefore, it was incorrect on the part of the A.O to conclude that the payments made to the said vendors were in context of technical services rendered by them. The assessee further submitted before the CIT(A) that as a matter of fact the A.O had relied only on the terms of the contract between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of consumer data and painting of asset number on the electrical polls. The CIT(A) further observed that the assessee had engaged vendors with manpower who were not technically qualified. The CIT(A) after consulting the documents which were placed on record by the assessee before him, viz. invoices, nature of work done, pictorial representation with items of work involved in the contract etc., was persuaded to subscribe to the claim of the assessee that the vendors had not rendered any technical services which would have made it obligatory on its part to have deducted tax at source under Sec. 194J of the Act. The CIT(A) on the basis of his aforesaid deliberations concluded that the work carried out by the vendors did not fall within the ambit of technical services contemplated under Sec. 194J, and rather was clearly in the nature of contract work provided in Sec. 194C of the Act. Besides, the appellate authority was also convinced that as the activities carried out by the vendors did not require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-technical and supporting work that was outsourced by the assessee to the various vendors, involved the field survey for collection of names of major roads/base map features; collection of names/attributes of assets data from ledger available with utility companies‟; collection of consumer data through contact survey by door-to-door survey etc. We have perused the scope of work carried out by the vendors, as can be gathered from the relevant extracts of the „agreement‟ between the assessee and the vendors reproduced in the body of the assessment order. The nature of such work which was provided by the vendors included DGPS Survey for GCP collection; field survey and mapping; indexing etc. We are persuaded to be in agreement with the observations of the CIT(A) that though the terminology used in the agreement such as "Technical audit of Distribution Transformer" would at the first blush give an impression that the same involved rendering of certain complex technical ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the assessee under Sec. 194C. We thus being of the view that the assessee had correctly deducted tax at source on the payment made to the vendors, therefore, no disallowance under Sec.40(a)(ia) as regards the same was liable to be made in the hands of the assessee. We thus finding no infirmity in the order of the CIT(A), uphold the same in context of the issue under consideration. Before parting, we may herein observe that the revenue had assailed before us the order of the CIT(A) only to the extent he had observed that the payments made to the vendors were to be subjected to deduction of tax at source under Sec.194C and not under Sec. 194J of Act. Resultantly, as the observations of the CIT(A) in context of the other reasons on which the disallowance under Sec. 40(a)(ia) made by the A.O had been struck down by him had not been assailed before us by the revenue, therefore, we refrain from adverting to the same. The Ground of appeal No. 1 raised by the revenue is dismissed in term ..... X X X X Extracts X X X X X X X X Extracts X X X X
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