Bajaj Allianz Life Insurance Company Ltd., Pune V. ITO, Pune

ITA 116/PUN/2013

• Counselvise Citation: 11624514 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 11-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NOS.116 & 117/PN/2013 (ASSESSMENT YEARS : 2007-08 & 2008-09) BAJAJ ALLIANZ LIFE INSURANCE COMPANY LIMITED, GE PLAZA, AIRPORT ROAD, YERWADA, PUNE 411 006 PAN : AADCA1701E . APPELLANT VS. INCOME TAX OFFICER (TDS-I), PUNE 411 037. . RESPONDENT ITA NOS.153 & 154/PN/2013 (ASSESSMENT YEARS : 2007-08 & 2008-09) DY. COMMISSIONER OF INCOME TAX, (TDS-I), PUNE. . APPELLANT VS. BAJAJ ALLIANZ LIFE INSURANCE COMPANY LIMITED, GE PLAZA, AIRPORT ROAD, YERWADA, PUNE 411 006 PAN : AADCA1701E . RESPONDENT ASSESSEE BY : MR. RAJENDRA AGIWAL DEPARTMENT BY : MR. P. L. PATHADE DATE OF HEARING : 05-03-2014 DATE OF PRONOUNCEMENT : 21-03-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED TWO SET OF CROSS-APPEALS PREFERRED BY THE ASSESSEE AND THE REVENUE, PERTAINING TO THE ASSESSMENT YEARS 200 7-08 AND 2008-09, WERE HEARD TOGETHER AND ARE BEING DISPOSED-OFF BY WAY OF A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. ITA NOS.116 & 117/PN/2013 ITA NOS.153 & 154/PN/2013 2. IN ALL THE APPEALS, THE PERTINENT DISPUTE RELATE S TO DEDUCTION OF TAX AT SOURCE IN RESPECT OF CERTAIN PAYMENTS MADE BY THE A SSESSEE. THERE IS NO DISPUTE THAT THE ASSESSEE WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE BUT THE ONLY DIFFERENCE BETWEEN THE ASSESSEE AND THE REVENUE IS WITH RESPECT TO PARTICULAR SECTION IN CHAPTER XVII OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) UNDER WHICH TAX WAS REQUIRED TO BE DEDUCTED AT SOURCE. I N THIS BACKGROUND, WE MAY NOW TAKE-UP FOR DETERMINATION THE VARIOUS GROUNDS O F APPEAL RAISED IN THE RESPECTIVE APPEALS. 3. FIRST, WE MAY TAKE-UP APPEAL OF THE ASSESSEE IN ITA NO.116/PN/2013 FOR ASSESSMENT YEAR 2007-08, WHICH IS DIRECTED AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DATED 29.10.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 28.03.2011 PAS SED BY THE ASSESSING OFFICER U/S 201(1)/201(1A) OF THE ACT. 4. IN THIS APPEAL, THE FIRST ISSUE RELATES TO THE P AYMENTS MADE BY THE ASSESSEE TO M/S TBWA ANTHEM PVT. LTD. (I.E. TBWA) F OR PRODUCTION OF BAJAJ ALLIANZ SUPER AGENT ADVERTISEMENT FILM IN 11 LANGU AGES. THE SAID PAYMENTS WERE SUBJECTED TO TAX DEDUCTION BY THE ASSESSEE @ 1 % IN TERMS OF SECTION 194C OF THE ACT. AS PER THE ASSESSEE, THE SAID PAY MENTS WERE IN THE NATURE OF CARRYING OUT WORK OF ADVERTISING BY PRODUCTION O F PROGRAMMES FOR BROADCASTING OR TELECASTING. THE STAND OF THE ASSE SSEE WAS THAT THE SAID PAYMENT WAS MADE TO THE RECIPIENT TOWARDS THE COST OF MASTER PRODUCTION OF CERTAIN ADVERTISEMENT FILMS OF THE ASSESSEE WHICH W ERE BROADCAST/TELECAST ON ELECTRONIC MEDIA. AS PER THE ASSESSEE, EXPLANATION - III TO SECTION 194C OF THE ACT SPECIFICALLY INCLUDED ADVERTISING AND PRODUC TION OF PROGRAMMES FOR BROADCASTING OR TELECASTING WITHIN THE DEFINITION O F THE EXPRESSION WORK. HENCE, THE SAID PAYMENTS WERE SUBJECTED TO DEDUCTIO N OF TAX AT SOURCE IN TERMS OF SECTION 194C OF THE ACT. THE STAND OF THE ASSESSING OFFICER AS WELL AS CIT(A) IS TO THE EFFECT THAT THE NATURE OF WORK CARRIED OUT BY TBWA INVOLVED ITA NOS.116 & 117/PN/2013 ITA NOS.153 & 154/PN/2013 RENDERING OF TECHNICAL, MANAGERIAL OR PROFESSIONAL SERVICES AND THEREFORE THE TAX WAS REQUIRED TO BE DEDUCTED IN TERMS OF SECTION 194J OF THE ACT @ 5%. 5. BEFORE US ALSO, THE RIVAL STANDS HAVE BEEN REITE RATED. AS PER THE APPELLANT, EXPLANATION- III TO SECTION 194C OF THE ACT SPECIFICALLY INCLUDES ADVERTISING WITHIN THE DEFINITION OF WORK AND T HEREFORE SECTION 194C OF THE ACT WAS RIGHTLY APPLIED BY THE ASSESSEE IN ORDER TO DEDUCT TAX AT SOURCE ON THE PAYMENTS MADE TO TBWA ANTHEM. THE LEARNED COUNSEL ALSO REFERRED TO THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CA SE OF CIT VS. PRASAR BHARTI (BROADCASTING CORPN. OF INDIA), (2007) 292 ITR 580 (DEL.) FOR THE PROPOSITION THAT PAYMENTS MADE TO THE TELEVISION PROGRAMME PROD UCERS ARE SUBJECTED TO DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT AND NOT U/S 194J OF THE ACT, AS IS BEING CONTENDED BY THE REVENUE. IN THIS CONNECT ION, RELIANCE HAS ALSO BEEN PLACED ON THE CBDT CIRCULAR NO.714 DATED 03.08 .1995 WHEREIN IT HAS BEEN CLARIFIED THAT ENTIRE PAYMENTS MADE FOR ADVER TISING INCLUDING PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING AND TELECASTING TO BE USED IN ADVERTISING SHALL BE LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT. 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE HAS REITERATED THE STAND OF THE ASSESSING OFFICER BY PO INTING OUT THAT THE RECIPIENT IS A PRODUCTION HOUSE WHICH HAS PRODUCED AN ADVERTI SEMENT FILM FOR THE ASSESSEE, WHICH INVOLVED RENDERING OF PROFESSIONAL SERVICES AND THEREFORE SECTION 194J OF THE ACT HAS BEEN RIGHTLY APPLIED BY THE ASSESSING OFFICER. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. FACTUALLY SPEAKING, IN TERMS OF THE INVOICE RAISED BY THE REC IPIENT TBWA ANTHEM, A COPY OF WHICH HAS BEEN PLACED AT PAGE 16 OF THE PAPER BO OK, ASSESSEE HAS MADE THE PAYMENT TOWARDS COST OF MASTER PRODUCTION OF AD VERTISING FILMS IN 11 LANGUAGES. CLEARLY, ASSESSEE HAS INCURRED THE EXPE NDITURE FOR PRODUCTION OF FILMS, WHICH HAVE BEEN USED BY IT FOR THE PURPOSES OF ADVERTISING. IT HAS BEEN ITA NOS.116 & 117/PN/2013 ITA NOS.153 & 154/PN/2013 CLARIFIED BY THE CBDT IN ITS CIRCULAR NO.714 (SUPRA ) THAT PAYMENTS MADE FOR ADVERTISEMENT, INCLUDING PRODUCTION OF PROGRAMMES F OR SUCH BROADCASTING AND TELECASTING TO BE USED IN SUCH ADVERTISEMENT, ARE L IABLE FOR DEDUCTION OF TAX AT SOURCE IN TERMS OF SECTION 194C OF THE ACT. THE AF ORESAID CLARIFICATION OF THE CBDT, WHICH IS IN LINE WITH EXPLANATION III TO SECT ION 194C OF THE ACT, CLEARLY SUPPORTS THE STAND OF THE ASSESSEE REGARDING THE AP PLICABILITY OF SECTION 194C OF THE ACT TO THE IMPUGNED PAYMENTS. MOREOVER, IT IS ALSO CLEAR FROM A PERUSAL OF THE SAID CIRCULAR THAT IT HAS BEEN ISSUED BY CBD T TO CLEAR THE REPORTED CONFUSION ABOUT THE APPLICABILITY OF SECTION 194C O R SECTION 194J OF THE ACT IN SUCH SITUATIONS. THE CBDT, HAVING REGARD TO THE SC OPE AND MEANING OF THE TERM ADVERTISEMENT USED IN SECTION 194C(1) OF THE ACT HAS OPINED THAT THE IMPUGNED NATURE OF PAYMENTS WOULD ATTRACT DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT AND NOT UNDER SECTION 194J OF THE A CT, AS SOUGHT TO BE MADE OUT BY THE REVENUE BEFORE US. THE PLEA OF THE REVE NUE IS THAT THE RECIPIENT IS A FILM PRODUCTION HOUSE, AND HAS, THUS RENDERED PRO FESSIONAL SERVICES FOR PRODUCING THE ADVERTISING FIRMS; THUS SECTION 194J OF THE ACT IS ATTRACTED. THE SAID PLEA IS QUITE MISPLACED BECAUSE THE PAYMENTS A RE NOT MADE TO ANY PROFESSIONAL ARTISTS BUT TO AN ADVERTISING AGENCY/P RODUCTION HOUSE, WHICH HAS PRODUCED THE ADVERTISING FILMS FOR THE ASSESSEE. T HEREFORE, CONSIDERING THE AFORESAID DISCUSSION, IN OUR VIEW, THE ASSESSEE IS JUSTIFIED IN ASSERTING THAT THE IMPUGNED PAYMENTS ARE LIABLE FOR DEDUCTION OF TAX A T SOURCE U/S 194C OF THE ACT AS AGAINST SECTION 194J OF THE ACT CONTEMPLATED BY THE REVENUE. HENCE, ON THIS GROUND ASSESSEE SUCCEEDS. 8. THE SECOND GROUND IN THIS APPEAL IS WITH REGARD TO THE DEDUCTION OF TAX AT SOURCE ON PAYMENTS OF RS.1,06,79,133/- MADE TO M /S VALUEFIRST MESSAGING PRIVATE LIMITED (IN SHORT M/S VALUEFIRST) FOR SMS SERVICES. IN BRIEF, THE FACTS ARE THAT ASSESSEE PAID THE IMPUGNED SUM TO THE RECI PIENT M/S VALUEFIRST FOR USING ITS SERVICES. M/S VALUEFIRST PROVIDED THE AS SESSEE WITH SMS SERVICES TO UPDATE ITS POLICY-HOLDERS REGARDING POLICY RENEWAL DATES, PREMIUM PAYMENT ITA NOS.116 & 117/PN/2013 ITA NOS.153 & 154/PN/2013 DUE DATES, ACKNOWLEDGEMENT OF PREMIUM PAYMENT RECEI VED, ETC. AND CERTAIN OTHER RELEVANT UPDATES. FOR THE AFORESAID PURPOSE, ASSESSEE UTILIZED A COMPUTER PORTAL PROVIDED BY M/S VALUEFIRST WHICH WA S USED TO SEND SMS UPDATES TO THE CUSTOMERS AND THIS EXERCISE WAS UNDE RTAKEN WITHOUT ANY INTERFACE, ADVICE OR SUPPORT OF ANY PERSONNEL FROM M/S VALUEFIRST. THE ASSESSEE STATED THE SAID PAYMENTS ARE SUBJECTED TO DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT WHEREAS THE STAND OF THE ASSESS ING OFFICER WAS THAT THE SERVICES RENDERED BY M/S VALUEFIRST WERE IN THE NAT URE OF TECHNICAL AND PROFESSIONAL SERVICES AND ACCORDINGLY, SUCH PAYMENT S SHOULD BE SUBJECTED TO DEDUCTION OF TAX AT SOURCE U/S 194J OF THE ACT. AS PER THE REVENUE, THE INVOLVEMENT OF HUMAN ELEMENT IN THE SERVICES PROVID ED BY M/S VALUEFIRST WERE ALSO PRESENT AND THE SAME COULD NOT BE RULED OUT. THE CIT(A) HAS FURTHER OBSERVED THAT THE AGREEMENT WITH M/S VALUEFIRST ALS O CONTAINED CLAUSES WHEREBY THE SAID CONCERN WAS TO IMPART TRAINING TO THE PERSONNEL OF THE ASSESSEE FOR UNDERSTANDING AND RUNNING THE SMS SERV ICES AND ALSO PROVIDE PROFESSIONAL SUPPORT AND THEREFORE ACCORDING TO HIM IT WAS A CASE OF RENDERING OF PROFESSIONAL SERVICES WHICH FELL WITHIN THE PU RVIEW OF SECTION 194J OF THE ACT. ACCORDINGLY, THE ASSESSEE IS IN FURTHER APPEA L BEFORE US. 9. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE SERVICES OF UPDATING ITS POLICY-HOLDERS COULD HAVE BEEN UNDERTAKEN BY THE ASSESSEE BY SENDING SMSS ITSELF BUT GOING BY THE QU ANTUM OF SMSS REQUIRED TO BE SENT EVERY-DAY, THE SAID SERVICE WAS OUTSOURC ED TO M/S VALUEFIRST. THEREFORE, THE ONLY WORK THAT WAS DONE BY M/S VALUE FIRST WAS TO ACT AS SENDER OF THE SMSS SENT BY THE ASSESSEE TO ITS ULTIMATE CU STOMERS AND M/S VALUEFIRST CARRIED THE MESSAGES THROUGH ITS MOBILITY PLATFORM. THE LEARNED COUNSEL VEHEMENTLY POINTED OUT THAT M/S VALUEFIRST WAS NEIT HER THE ORIGINATOR OF THE SMS AND NOR DOES IT COMPILE OR DRAFT THE CONTENTS O F THE MESSAGES, WHICH WAS BEING ENTIRELY DONE BY THE ASSESSEE. THEREFORE, TH ERE IS NO TECHNICAL, MANAGERIAL OR PROFESSIONAL SKILLS PROVIDED BY M/S V ALUEFIRST SO AS TO REQUIRE ITA NOS.116 & 117/PN/2013 ITA NOS.153 & 154/PN/2013 DEDUCTION OF TAX AT SOURCE IN TERMS OF SECTION 194J OF THE ACT. ACCORDING TO THE ASSESSEE, IT WAS IN THE NATURE OF SERVICE CONTR ACT AND THE TAX HAS DEDUCTED ACCORDINGLY IN TERMS OF SECTION 194C OF TH E ACT. 10. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REP RESENTATIVE HAS REITERATED THE POINTS RAISED BY THE ASSESSING OFFIC ER/CIT(A) IN ORDER TO SUPPORT THE CASE OF THE REVENUE, WHICH WE HAVE ALREADY NOTE D ABOVE, AND ARE NOT BEING REPEATED FOR THE SAKE OF BREVITY. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. FACTUALLY SPEAKING, IN THE PRESENT CASE, IT IS QUITE EVIDENT THAT M/S VALUEFIRST IS MERELY ASSISTING THE ASSESSEE FOR SENDING SMS MESSAGES TO ITS CUSTOMERS. IN-FACT, EVEN THE PREAMBLE OF THE AGREEMENT WITH M/S VALUEFI RST, A COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK AT PAGES 20 TO 34, DE SCRIBES M/S VALUEFIRST AS A COMPANY ENGAGED IN PROVIDING MOBILE MESSAGING SOL UTIONS TO CARRY DATA OVER MOBILE NETWORK USING ITS MOBILITY PLATFORM. T HE CONTENT OF THE SMS MESSAGES SENT TO THE CUSTOMERS ARE DEVELOPED BY THE ASSESSEE ITSELF AND M/S VALUEFIRST MERELY ASSISTS IN SENDING OF SUCH MESSAG ES. TO EFFECTUATE THE DELIVERY OF SUCH MESSAGES, M/S VALUEFIRST PROVIDES ITS MOBILITY PLATFORM. IN OUR CONSIDERED OPINION, THERE IS NO TECHNICAL OR PROFES SIONAL SERVICES WHICH CAN BE SAID TO HAVE BEEN OFFERED BY M/S VALUEFIRST IN TERM S OF THE PRESENT ARRANGEMENT. THE EMPHASIS OF THE CIT(A) ON TRAININ G PROVIDED BY M/S VALUEFIRST TO THE EMPLOYEES OF THE ASSESSEE TO JUST IFY THAT THE SERVICES INVOLVED ARE IN THE NATURE OF PROFESSIONAL SERVICE, IS QUITE A MISNOMER. IN-FACT, THE RELEVANT CLAUSE OF THE AGREEMENT ONLY PROVIDES THAT M/S VALUEFIRST SHALL TRAIN FOUR PEOPLE OF THE ASSESSEE COMPANY IN ORDER TO UND ERSTAND AND RUN THE SMS SERVICES AND APPARENTLY SUCH TRAINING APPEARS TO BE SO ELEMENTARY THAT THE SAME IS TO BE PROVIDED OVER A CHAT SESSION ON AN IN STANT MESSENGER, OVER PHONE OR IN PERSON. SIMILARLY, THE OTHER PLEA BASE D ON CLAUSE 14 OF THE AGREEMENT TO SAY THAT M/S VALUEFIRST WAS PROVIDING PROFESSIONAL SERVICES IS ITA NOS.116 & 117/PN/2013 ITA NOS.153 & 154/PN/2013 ALSO WRONG. AS PER THE SAID CLAUSE, M/S VALUEFIRST HAS CATEGORIZED ITS MAINTENANCE SERVICES INTO THE CATEGORIES, NAMELY, S TANDARD SUPPORT AND PROFESSIONAL SUPPORT. THE TWO SERVICES ARE CATEGOR IZED ON THE BASIS OF RESPONSE TIME TAKEN BY M/S VALUEFIRST TO RESPOND TO THE MAINTENANCE DEMANDS BY THE ASSESSEE. THE PROFESSIONAL SUPPORT CATEGORY ENTAILED A SHORTER RESPONSE TIME FROM M/S VALUEFIRST AS COMPAR ED TO THE OTHER CATEGORY OF SERVICE. IT APPEARS THAT ASSESSEE OPTED FOR THE PROFESSIONAL SUPPORT CATEGORY OF SERVICE FROM M/S VALUEFIRST. IT ONLY M EANS THAT THE CATEGORIZATION OF SERVICES BETWEEN STANDARD SUPPORT AND PROFESSION AL SUPPORT REFLECTS ON THE RESPONSE TIME NEEDED BY M/S VALUEFIRST TO RESPOND T O THE MAINTENANCE PROBLEMS AND IT IS NO REFLECTION ON THE NATURE OF S ERVICES WHICH IN THE PRESENT CASE EVIDENTLY DOES NOT INVOLVE PROVIDING OF ANY TE CHNICAL, MANAGERIAL OR PROFESSIONAL SERVICES SO AS TO FALL WITHIN THE MEAN ING OF SECTION 194J. THEREFORE, IN OUR VIEW, ASSESSEE MADE NO MISTAKE IN DEDUCTING THE TAX AT SOURCE IN TERMS OF SECTION 194C OF THE ACT. THUS, ON THIS ASPECT ALSO ASSESSEE SUCCEEDS. 12. THE THIRD AND LAST GROUND IN THIS APPEAL RELATE S TO THE PAYMENTS MADE BY THE ASSESSEE OF RS.2,89,94,243/- ON ACCOUNT OF F ACILITIES MANAGEMENT CHARGES. THE RELEVANT FACTS IN THIS REGARD ARE THA T ASSESSEE, BEING A LARGE ORGANIZATION, OUTSOURCED CERTAIN ROUTINE ADMINISTRA TIVE FUNCTIONS SUCH AS ASSETS MANAGEMENT, VENDOR MANAGEMENT, ETC. TO A SER VICE PROVIDER. THE IMPUGNED AMOUNT REFLECTED PAYMENTS TO SUCH SERVICE PROVIDERS FOR THE SERVICES PROVIDED BY THEM. ASSESSEE SUBJECTED SUCH PAYMENTS TO DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT WHEREAS AS PER THE REVENUE, TAX WAS REQUIRED TO BE DEDUCTED U/S 194J OF THE ACT, AS IT AMOUNTED TO PROFESSIONAL SERVICES. 13. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE FACILITIES MANAGEMENT SERVICE PROVIDER WAS NOT RUNN ING ANY MANAGERIAL, ITA NOS.116 & 117/PN/2013 ITA NOS.153 & 154/PN/2013 TECHNICAL OR PROFESSIONAL SERVICES SO AS TO FALL WI THIN THE PURVIEW OF SECTION 194J OF THE ACT. THE LEARNED COUNSEL HAS REFERRED TO THE WRITTEN SUBMISSIONS MADE BEFORE THE CIT(A), WHICH HAS BEEN REPRODUCED I N THE IMPUGNED ORDER, TO SHOW THE NATURE OF SERVICES OBTAINED FROM THE FACIL ITIES MANAGEMENT SERVICE PROVIDER. IN TERMS THEREOF IT IS SEEN THAT THE SER VICES HAVE BEEN RENDERED IN RELATION TO ASSET MANAGEMENT SERVICES; DESKTOP MANA GEMENT SERVICES; VENDOR MANAGEMENT; VIRUS MANAGEMENT; AND, NETWORK M ANAGEMENT, ETC. . THE EMPHASIS OF THE REVENUE IS THAT THE SAID AMOUNT S ARE PAID FOR COMPLEX SERVICES OF ASSET MANAGEMENT, DESKTOP MANAGEMENT, V IRUS MANAGEMENT ETC. WHICH REQUIRES LARGE SCALE HUMAN ELEMENT QUALIFIED IN THE RESPECTIVE FIELDS AND THEREFORE IT INVOLVES RENDERING OF PROFESSIONAL SERVICES COVERED BY SECTION 194J OF THE ACT AND NOT SECTION 194C OF THE ACT, AS CONTENDED BY THE ASSESSEE. 14. WE HAVE PERUSED THE NATURE OF SERVICES RENDERED BY THE SAID SERVICE PROVIDER IN THE CONTEXT OF THE OBJECTION RAISED BY THE REVENUE. UNDER THE ASSET MANAGEMENT SERVICES, IT INTER-ALIA, INVOLVES OBTAINING INITIAL DATABASE FOR RESPECTIVE BRANCHES OF ASSESSEE, MAINTENANCE OF UPT O DATE ASSET DATABASE AND UPDATING THE SAME. SIMILARLY, IN DESKTOP MANAG EMENT SERVICES, THE SERVICES INVOLVED CO-ORDINATION WITH VENDORS FOR IN STALLATION OF NEW DESKTOPS AND LAPTOPS, CONDUCTING FIRST LEVEL DIAGNOSIS IN TH E CASE OF ANY HARDWARE FAILURE AND ENSURING THAT NO UNAUTHORIZED SOFTWARE IS LOADED ON THE DESKTOPS. SIMILARLY, VENDOR MANAGEMENT SERVICES, INCLUDED LOG GING CALL WITH VENDORS AFTER FIRST LEVEL OF ANALYSIS OF THE INCIDENT, MAIN TAIN VENDOR DATABASE, FOLLOW UP WITH THE SUPPLIER, TRACKING OF INVENTORY ITEMS SENT FOR REPAIRS AND FOLLOW UP REPLACEMENTS, ETC. IN VIRUS AND NETWORK MANAGEMENT , THE SERVICES INTER-ALIA INCLUDE COORDINATING WITH THE ASSESSEES IT DEPARTM ENT FOR PROBLEM RESOLUTION, ENSURING LOCAL CONNECTIVITY FROM DESKTOP TO SWITCH, CHECKING FOR CABLE CONNECTION AND CONNECTIVITY FROM SWITCH AND ROUTER, ETC.. ITA NOS.116 & 117/PN/2013 ITA NOS.153 & 154/PN/2013 15. IT IS QUITE EVIDENT FROM ALL THE AFORESAID SERV ICES THAT THERE IS HARDLY ANY LEVEL OF EXPERTISE REQUIRED TO RENDER SUCH SERVICES ; AND, RATHER THEY ARE IN THE NATURE OF ROUTINE ADMINISTRATIVE ASSISTANCES REQUIR ED FOR DAY-TO-DAY OPERATIONS. IN-FACT, THE DESKTOP MANAGEMENT SERVIC ES ENVISAGED UNDER THE AGREEMENT ONLY APPEAR TO BE FOR EFFECTING COORDINAT ION WITH THE VENDORS FOR INSTALLATION OR FOLLOW UP WITH THE VENDORS IN CASE OF HARDWARE FAILURE, ETC.. THEREFORE, THE SERVICES PROVIDER BY ITSELF DOES NOT ENVISAGE PROVIDING OF ANY TECHNICAL OR PROFESSIONAL SERVICES AND IS MERELY PR OVIDING ADMINISTRATIVE SUPPORT FUNCTIONS. IN OUR CONSIDERED OPINION, THE AFORESAID SERVICES FALL WITHIN THE SCOPE OF WORK, AS UNDERSTOOD FOR THE PURPOSE OF SECTION 194C OF THE ACT AND THE ASSESSEE MADE NO MISTAKE IN DEDUCTING TAX A T SOURCE IN TERMS OF SECTION 194C OF THE ACT. THUS, ON THIS GROUND ALSO ASSESSEE SUCCEEDS. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.116/PN/2013 FOR ASSESSMENT YEAR 2007-08 IS ALLOWED. 17. NOW, WE MAY TAKE-UP THE CROSS-APPEAL OF THE REV ENUE FOR ASSESSMENT YEAR 2007-08 WHEREIN THE GRIEVANCE IS WITH REGARD T O ACTION OF THE CIT(A) IN HOLDING THAT THE PROVISIONS OF SECTION 194-I OF THE ACT ARE NOT APPLICABLE IN RESPECT OF PAYMENTS MADE FOR DIESEL GENERATOR (D.G. ) SET HIRE CHARGES. 18. IN BRIEF, THE RELEVANT FACTS ARE AS FOLLOWS. A SSESSEE HAD INCURRED D.G. SET EXPENSES FOR ITS VARIOUS OFFICES ACROSS INDIA, WHICH REPRESENTED COMPOSITE PAYMENT FOR EXPENSES ON ACCOUNT OF DIESEL, RUNNING AND MAINTENANCE OF D.G. SETS, PROVISION OF LABOUR FOR OPERATING THE D.G. SE TS AND REPAIRS/REPLACEMENT IN CASE OF DAMAGE TO THE D.G. SETS. ASSESSEE CONTENDE D THAT THE CONTRACTOR WAS PROVIDING COMPOSITE SERVICES AND THE ELEMENT OF HIRE CHARGES WAS MERELY INCIDENTAL; AND, ACCORDINGLY IT WAS CANVASSED THAT SUCH PAYMENTS WERE LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT. THE STAND OF THE ASSESSING OFFICER WAS THAT THE PAYMENTS WERE FOR HIRING OF D. G. SETS WHICH WAS LIABLE FOR ITA NOS.116 & 117/PN/2013 ITA NOS.153 & 154/PN/2013 DEDUCTION OF TAX AT SOURCE U/S 194-I OF THE ACT AND NOT U/S 194C OF THE ACT. THE STAND OF THE REVENUE IS THAT SECTION 194-I OF T HE ACT PRESCRIBES FOR DEDUCTION OF TAX AT SOURCE ON ALL RENT PAYMENTS MAD E FOR HIRING OF MACHINERY OR PLANT OR EQUIPMENT. SINCE IN THE PRESENT CASE, THE SUM AND SUBSTANCE OF THE AGREEMENT WAS HIRING OF D.G. SETS, AS PER THE R EVENUE, TAX WAS LIABLE TO BE DEDUCTED U/S 194-I OF THE ACT AND NOT U/S 194C O F THE ACT, AS DONE BY THE ASSESSEE. 19. BEFORE THE CIT(A), ASSESSEE ACCEPTED THE POSITI ON THAT SECTION 194-I OF THE ACT WAS ATTRACTED IN RELATION TO PAYMENTS IN TH E NATURE OF RENT FOR USE OF D.G. SETS, AND SUCH PAYMENTS AMOUNTED TO RS.70,19,0 46/- OUT OF TOTAL PAYMENT OF RS.1,66,82,034/-. ASSESSEE ALSO SUBMITT ED THAT IN RESPECT OF PAYMENTS OF RS.6,38,670/-, INCOME-TAX WAS DULY PAID BY THE RECIPIENTS AND ACCORDINGLY CIT(A) HELD THAT DEMAND U/S 201(1) OF T HE ACT COULD NOT BE RAISED AGAIN TO THE ABOVE EXTENT FOLLOWING THE JUDGEMENT O F THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD. VS. CIT (2007) 293 ITR 226 (SC) BUT DIRECTED THE ASSESSING OFFICER TO CHARGE INTEREST U/S 201(1A) OF THE ACT. WITH REGARD TO THE BALANCE AMO UNT, THE CIT(A) NOTICED THAT PAYMENT HAS BEEN MADE FOR COMPOSITE CONTRACT F OR THE SERVICES OF D.G. SET AS THE RECIPIENTS WERE LIABLE TO PROVIDE THE SP ARE PARTS, DIESEL AS WELL AS THE REQUISITE MANPOWER TO RUN THE D.G. SETS, AND AC CORDINGLY HE HELD THAT SUCH PAYMENTS ATTRACTED DEDUCTION OF TAX AT SOURCE U/S 1 94C OF THE ACT. THE RELEVANT DISCUSSION IN THE ORDER OF THE CIT(A) CONT AINED IN PARA 7 IS AS UNDER :- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS REPLY OF THE APPELLANT. FROM THE BRAKE-UP OF PAYMENT OF RS.1,66, 82,034/-, IT IS SEEN THAT PAYMENT OF RS.70,19,046/- HAS BEEN MADE AS A RENT F OR DG SET. THIS POSITION HAS BEEN ACCEPTED BY THE APPELLANT TOO IN ITS SUBMI SSIONS. HOWEVER, THE APPELLANT HAS SUBMITTED THAT IT HAS GOT CONFIRMATIO NS FROM THE PAYEES IN RESPECT OF PAYMENT OF RS.6,38,670/- ON WHICH INCOME -TAX HAS BEEN DULY PAID BY THE RECIPIENTS. THIS BEING SO, DEFAULT CAN BE SA ID TO RS.63,80,376/- ONLY, AS IN VIEW OF HON'BLE SUPREME COURT'S ORDER IN THE CAS E OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD. VS. CIT (2007)(293 ITR 226)(SC) . DEMAND U/S. 201(1) CANNOT BE INVOKED IN CASE THE RECIPIENT HAS MADE PA YMENT OF TAX. THEREFORE, AS SUBMITTED BY THE APPELLANT COMPANY ITSELF, THERE IS NO DEFAULT IN RESPECT OF RS.6,38,670/-ON ACCOUNT OF SHORT DEDUCTION OF TDS. THE ASSESSING OFFICER IS ITA NOS.116 & 117/PN/2013 ITA NOS.153 & 154/PN/2013 ACCORDINGLY DIRECTED TO MODIFY THE DEMAND AFTER VER IFICATION OF THE APPELLANT'S CLAIM THAT RECIPIENT HAD MADE PAYMENT OF TAX IN RES PECT OF RS.6,38,670/-. HOWEVER, INTEREST U/S. 201(1A) WILL BE CHARGEABLE I N THIS REGARD. AS REGARDS, THE BALANCE AMOUNT, IT IS SEEN THAT THE PAYMENT HAS BEEN MADE FOR COMPOSITE CONTRACT FOR THE SERVICES OF DG SET AS THE RECIPIEN TS WERE LIABLE TO PROVIDE THE SPARE PARTS, DIESEL AS WELL AS REQUISITE MAN POWER TO RUN THE DG SETS. THEREFORE, THE WHOLE ARRANGEMENT IS IN THE NATURE O F CONTRACT FOR WHICH PROVISIONS OF SEC. 194C ARE APPLICABLE. THEREFORE, IT IS HELD THAT THERE IS DEFAULT IN RESPECT OF RS.63,80,376/- ONLY PERTAININ G TO THIS GROUND FOR WHICH THE ASSESSING OFFICER IS DIRECTED TO MODIFY THE DEMAND. ACCORDINGLY, GROUND NO. 2 IS PARTLY ALLOWED. 20. AGAINST THE AFORESAID, REVENUE IS IN APPEAL BEF ORE US. BEFORE US THE DISPUTE RAISED BY THE REVENUE IS ONLY IN RESPECT OF COMPOSITE D.G. SET HIRE CHARGES WHEREIN THE CIT(A) HELD THAT SUCH PAYMENTS ARE COVERED U/S 194C AND NOT U/S 194-I OF THE ACT. THE REASON ADVANCED BY THE CIT(A) IS THAT SUCH PAYMENTS ARE IN TERMS OF A COMPOSITE CONTRACT FOR S UPPLY OF THE D.G. SETS AND ALLIED SERVICES WHICH INVOLVED PROVIDING OF DIESEL, SPARE PARTS, REQUISITE MANPOWER, ETC.. ON THIS BASIS, THE CIT(A) HAS INFE RRED THAT THE SAID CONTRACT/ARRANGEMENT WAS FOR CARRYING OUT OF WORK WITHIN THE MEANING OF SECTION 194C OF THE ACT AND IS NOT A MERE RENTAL AR RANGEMENT AS ENVISAGED U/S 194-I OF THE ACT. WE FIND NO REASON TO INTERFE RE WITH THE AFORESAID CONCLUSION OF THE CIT(A) AS NO MATERIAL HAS BEEN BR OUGHT BY THE REVENUE TO CONTROVERT THE FINDINGS OF THE CIT(A). THE ORDER O F THE CIT(A) ON THIS ASPECT IS HEREBY AFFIRMED. THUS, REVENUE FAILS IN ITS APPEAL . 21. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 153/PN/2013 FOR ASSESSMENT YEAR 2007-08 IS DISMISSED. 22. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE ISSUES RAISED IN THE CROSS-APPEALS OF THE ASSESSEE AND THE REVENUE RESPE CTIVELY FOR ASSESSMENT YEAR 2008-09 ARE COVERED BY OUR DECISION IN APPEAL OF THE ASSESSEE AND CROSS-APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 200 7-08 RESPECTIVELY AS RENDERED IN ABOVE PARAGRAPHS. ACCORDINGLY, THE SAM E SHALL APPLY MUTATIS- ITA NOS.116 & 117/PN/2013 ITA NOS.153 & 154/PN/2013 MUTANDIS IN THE APPEALS OF THE ASSESSEE AND CROSS-APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2008-09 ALSO. 23. RESULTANTLY, WHEREAS THE APPEALS OF THE ASSESSE E ARE ALLOWED, THOSE OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST MARCH, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 21 ST MARCH, 2014 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE