The Bombay High Court recently upheld an Income Tax Appellate Tribunal’s (ITAT) order that the Annual Maintenance Contracts are subject to TDS under Section 194C of the Income Tax Act.
During the course of assessment, the Assessing Officer noted that the assessee, Mumbai Metropolitan Regional Development Authority (MMRDA) had made payment towards Annual Maintenance Contracts (AMCs) and for Air Conditioners and Lifts on which TDS was deducted under section 194C of the Act. According to the Officer, the same ought to have been deducted under section 194J. proceedings were initiated against the assessee for the default. He also held that the assessee liable to pay interest under section 201(1A) of the Act
On appeal, the ITAT held that the assessee had made payments only in respect of maintenance contracts which relate to minor repairs, replacement of some spare parts, greasing of machinery etc. These services do not require any technical expertise, and therefore, could not be categorized as “technical services” as contemplated under section 194J of the Income Tax Act, 1961.
Aggrieved by the order, the Revenue approached the High Court.
While upholding the Tribunal order, Justice S C Dharmadhikari and Justice B.P.Colabawalla held that “section 194J of the I.T.Act, 1961, deals with fees for professional or technical services. In contrast, section 194C of the I.T.Act, 1961 deals with payments to contractors. In the facts and circumstances of the present case, the assessee had correctly deducted TDS under the provisions of section 194C of the I.T.Act, 1961 and not as per the provisions of section 194J thereof. This being the case, we find that even the additional question of law [question (d)] as reproduced above (for the A.Y. 2008-09 and 2009-10) does not give rise to any substantial question of law which would require us to admit the present appeals.”
Subscribe Taxscan Premium to view the Judgment
