HIGH COURT OF JUDICATURE AT HYDERABAD
FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH
PRESENT THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR
I.T.T.A. NO.399 OF 2014
DATED:09.7.2014 Between:
Commissioner of Income Tax (TDS) I.T. Towers, A.C. Guards Hyderabad … Appellant And M/s. Central Power Distribution Corporation of A.P. Limited Mint Compound Hyderabad … Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR
I.T.T.A. NO.399 OF 2014
JUDGMENT: (per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta)
This appeal is sought to be preferred and admitted against the judgment and order of the learned Tribunal dt.13.12.2013, in I.T.A. No.1798/Hyd/2012, on the following suggested question of law:
“In the facts and circumstances of the case, whether the Tribunal (ITAT) is correct in law in holding that Transmission Charges paid by the respondent assessee to A.P. TRANSCO, TDS [Tax Deduction at Source] liable to be deducted under Section 194C of the Income Tax Act 1961, when the respondent – assessee is liable to deduct TDS in terms of Section 194J(1)(c) read with Explanation 2 below Section 9(1)(vi) of the Income Tax Act, 1961?
From the question formulated as above, it is clear that the issue is whether in this case provisions of Section 194J of the Income Tax Act, 1961 (for short, ‘the Act’) are applicable or not.
We set out sub-section (1) of Section 194J of the Act) hereunder:
“Fees for professional or technical services.
194J. (1). Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of –
(a) fees for professional services, or
(b) fees for technical services, or (ba) any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company, or
(c) royalty, or
(d) any sum referred to in clause (va) of section 28, shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax on income comprised therein:
… Explanation.- For the purposes of this section.-
(a) “professional services” means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified” by the Board for the purposes of section 44AA or of this section;
(b) “fees for technical services” shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;
(ba) “royalty” shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;
(c) where any sum referred to in sub-section (1) is credited to any account, whether called “suspense account” or by any other name, in the books of account of the person liable to pay such sum, such crediting shall be deemed to be credit of such sum to the account of the payee and the provisions of this section shall apply accordingly.”
According to us, in order to attract Section 194J of the Act, the factual finding must be that a person who is responsible for paying to a resident any sum by way of fees for professional services, or fees for technical services, or any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under Section 192 of the Act, to a Director of a Company, or royalty or any sum referred to in clause (va) of section 28 of the Act, shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income tax on income comprised therein.
The Department has stated specifically that it is a case of payment of royalty.
The learned Tribunal on fact found as follows:
“From the assessee’s agreement with AP TRANSCO, it is noticed that the services rendered by the payees not only included the services in connection with transmission of the power but also several other distinct services such as maintenance of metering system, noting down meter reading, sealing and resealing of meters etc.”
Royalty, in our view, is paid on account of any technical know- how which is not purely and readily available in the market. If the Tribunal has reached fact-finding that Section 194J of the Act is not attracted on a given fact and Section 194C of the Act fits, we cannot reappreciate in the absence of allegation of absurdity about the order of the learned Tribunal. Thus, we find no merit in this appeal.
The appeal is accordingly dismissed. There will be no order as to costs.
K.J. SENGUPTA, CJ SANJAY KUMAR, J 09.7.2014 bnr