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TMI Blog2019 (3) TMI 1356X X X X Extracts X X X X X X X X Extracts X X X X ..... tc., illumination and communication work. The assessee was getting a physical output, a tangible structure and not merely the services of its qualified, professional engineers/staff from the sub-contractor. The said activities were undertaken with the help of men and machines which were beyond the scope of technical services. The said contract between the assessee and the sub-contractor satisfied the provisions of Section 194C of the Act and did not attract the provisions of Section 194J of the Act. The Tribunal had, thus, rightly concluded that the case of the assessee fell under Section 194C of the Act and not under Section 194J of the Act. Tribunal had noticed that the sub-contractor had already offered the payments received from the assessee to tax and, thus, there was no justification in creating additional demand on account of short deduction of tax. Since, there was no short deduction of tax at source under Section 201(1) of the Act, therefore, there would be no liability of any interest under Section 201(1A) of the Act upon the assessee. - decided against revenue - ITA-162-2018 (O&M) - - - Dated:- 22-1-2019 - MR AJAY KUMAR MITTAL AND MRS MANJARI NEHRU KAUL, JJ. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d provided services within the ambit of 'Professional and Technical Services' as envisaged under Section 194J read with Explanation 2 to Section 9(1)(vii) of the Act. Accordingly, a show cause notice was issued to the assessee to explain as to why the tax at source was deducted under Section 194C instead of Section 194J of the Act on the payments made to the subcontractor. In response thereto, the assessee submitted its reply by pleading that the scope of work given to the sub-contractor was construction work for grounding including straightening, cutting, unloading in the site, transporting to pre-assembly/erection site, alignment, welding, text and inspection, illumination and communication work etc. and that none of the vendors were professionals and covered within the definition of Section 194J read with Explanation 2 to Section 9(1)(vii) of the Act. The issue was examined by the Assessing Officer, who opined that the assessee was to deduct tax at source from the payments made to the sub-contractor under Section 194J of the Act. The Assessing Officer vide order dated 11.3.2013 (Annexure A-1) passed under Sections 201(1) and 201(1A) of the Act demanded tax and interest a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer. 5. As per Section 194C of the Act, any person responsible for paying any sum to any resident for carrying out any work, in pursuance to a contract between the contractor and a specified person shall deduct and deposit TDS at the specified rates and sum. As per Clause (iv)(e) of Explanation to Section 194C, 'work' shall include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer. 6. The contention of the revenue was that the amount which was paid to the sub-contractor M/s IOT Engineering Project Ltd. was for professional and technical services within the ambit of provisions of Section 194J of the Act read with Explanation 2 to Section 9(1)(vii) of the Act for which tax was to be deducted at the rate of 10% of the payments made. 7. It would, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head Salaries . 9. Explanation 2 to section 9(1)(vii) provides that for the purpose of clause (vii), 'fees for technical services' means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head 'salaries'. 10. The aforesaid provision defines 'fee for technical services'. However, it contains an exclusion part which is not termed 'fees for technical services'. The question whether the payment would come within the exclusion part of Explanation 2 or not would have to be established by the person who claims the exclusion which would depend upon the nature of the work performed. 11. Having analysed the legal provisions, we proceed to examine the factual matrix herei ..... 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