While upholding the findings of the findings of the Commissioner of Income Tax (Appeals), the Mumbai bench of ITAT held that the payments made by Standard Chartered Bank to Bloomberg, Reuter and CRISIL would amount to Fee for Technical Services for which TDS is deductible under Section 194J of the Income Tax Act.
The appellant-Bank, in the instant case, received services such as online information and database, management services, intellectual property services, business auxilliary services etc., from Reuter India Pvt. Ltd. and Bloomberg Data Services Pvt. Ltd. It also received services from CRISIL Ltd. who provides rating, research, risk and policy advisory company, that they would provide high end research, that services provided by them are copyright protected, that they had provided services solely for the assessee’s internal business. The bank made payments t these companies under the head subscription charges and deducted tax at source under section 194C of the Act.
The Assessing Officer found the bank as assessee-in-default since the above payment would amount to Fee for Technical Services.
On first appeal, the first appellate authority held that the assessee had paid subscription charges to three parties for license to use their data base,that the payment for subscription charges were in the nature of royalty.
However, the bench noted that the assessee cannot be treated as defaulter since it was a case of short deduction of tax and not a matter of non-deduction of tax at source. Secondly, the AO has also taken a notice of filing of returns by the recipients of the amounts in question.
Following the Apex Court judgment of Hindustan Coca Cola Beverages Pvt, the bench held that there was no justification to hold the assessee an assessee-in –default.
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