H.P. State Co-operating Bank Ltd. vs. DCIT-TDS

Parties Involved

Facts Summary

The appeal by H.P. State Co-operating Bank Ltd. for the Assessment Year 2017-18 arises from an order of the Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 14.11.2022 confirming a demand raised by the Assessing Officer (AO) on 30.10.2018. The AO held the assessee to be assessee-in-default with respect to certain payments and raised a demand for higher TDS of 10% under section 194J, which was confirmed by the CIT(A). The assessee appealed against this decision. The assessee had paid connectivity charges to service providers for Rs.230.55 Lacs and deducted TDS @2%. The AO opined that a higher TDS of 10% was required under section 194J since the payment was in the nature of fees for technical services. The CIT(A) confirmed the demand of Rs.21.15 Lacs against the assessee. A similar demand was raised for AY 2018-19, which was adjudicated in the assessee’s favor by the CIT(A) on 17.03.2023. The CIT(A) followed decisions of the High Courts of Madras and Delhi, holding that the payments would be covered under section 194C and not under section 194J since no human element was involved in rendering these services.…

Legal Issues

• 1. Whether the payments made by the assessee to service providers are covered under section 194C or 194J of the Act?

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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