The Raipur bench of the Income Tax Appellate Tribunal (ITAT) has held that the payment made to the processing agency for the computer assisted work cannot be considered as “professional service” for the purpose of the 194J of the Income Tax Act, 1961.
The assessee,CG Professional Exam Board is a self-governing body under the State of Chhattisgarh and conducts examination for recruitment of employees was subjected to a TDS survey u/s.133A(2A) of the Income Tax Act on 10.10.2017. During the course of survey proceedings, the department found that the assessee had failed to deduct tax at source on payments made under a confidential head to a processing agency in accordance with section 194J of the Act. Accordingly, addition was made under the Income Tax Act.
The Assessing Officer was of the opinion that the assessee had wrongly deducted tax at source on the payments made to the processing agency under section 194C of the Act, as against that which ought to have been made under section 194J.
ITAT Judicial Member, Shri Ravish Sood accepted the contention of the assessee that as rendering of the aforesaid services would not require any professional skill or expertise, much the less any professional degree on the part of the service provider, therefore, the same clearly takes the same beyond the scope and gamut of the definition/meaning of the term “professional services” as envisaged in Section 194J of the Act.
Holding in favour of the assessee, the ITAT held that “I have even otherwise approached the issue in hand independent of the aforesaid technical intricacies, and is of the considered view that as the very nature of the services rendered by the processing agency, i.e., tabulation, checking and preparation of marksheets and other computer assisted work would not require any specific professional skill or expertise, therefore, it is difficult to comprehend as to how it would find a place within the meaning of “professional services” as envisaged in the “Explanation (a)” of Section 194J of the Act.”
“In case, if a view to the contrary is taken, then all the services rendered by any agency by deploying computers/internet services, irrespective of the fact that the same would not require any professional skill or expertise would have to be categorized as “professional services”. Considering my aforesaid observations, wherein neither I am able to concur with the view taken by the lower authorities that the services rendered by the processing agency requires any professional expertise or skill, much the less those specified in “Explanation (a)” of Section 194J, AND also is unable to persuade myself to conclude that the services in question could be brought within the meaning of “technical consultancy” [as forms part of the definition of “professional services” in Explanation (a) of Section 194J], therefore, the same in my considered view could not have been brought within the meaning of Section 194J of the Act. On the basis of my aforesaid observations I set-aside the order of the CIT(Appeals) to the extent he had concluded that the assessee was liable to deduct tax at source on the payments made to the processing agency u/s.194J of the Act,” the ITAT observed.
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