DCIT (TDS) 3(2), MUMBAI V. RELIANCE LIFE INSURANCE CO. LTD, MUMBAI

ITA 6544/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2857 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 20-06-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 29-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEELIMA NADKARNI
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI SMC BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, ITA. NO. 6544/MUM/2014 (ASSESSMENT YEAR:2012-13) DEPUTY COMMISSIONER OF INCOME TAX (TDS)-3(2), MUMBAI 400 002 APPELLANT VS. M/S. RELIANCE LIFE INSURANCE CO. LTD. 9 TH & 10 TH FLOOR, R TECH PARK, NILON COMPOUND, NEAR HUB MALL, GOREGAON (E), MUMBAI RESPONDENT PAN: AADCA1410E /BY APPELLANT : MRS. NEELIMA NADKARNI, D.R. /BY RESPONDENT : MR. JITENDRA SANGHAVI, A.R. /DATE OF HEARING : 20.06.2016 /DATE OF PRONOUNCEMENT : 22.06.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-14, MUMBAI, DA TED 01.08.2014 FOR A.Y. 2012-13 ON FOLLOWING GROUND: ITA NO.6544/MUM/14 A.Y. 12-13 [DCIT VS. RELIANCE LI FE INSURANCE CO. LTD.] PAGE 2 I) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE SHORT DEDUCTION IN RESPECT OF PAYMENTS MADE TOWARDS OUTSOURCING EXPENSES WITHOUT APPRECIATING THE FACT THAT THE NATURE OF SERVICES RECEIVED BY THE ASSESSEE REQUIRE S CERTAIN PARAMETERS OF TECHNICAL/MANAGERIAL SKILL OF HIGHLY QUALIFIED SPECIALIZED COMPETENCY AND FALLS WITHIN THE PURVIEW OF SECTION 194J AND NOT U/S 194C OF THE I.T. ACT. 2. ASSESSING OFFICER HELD THAT ASSESSEE IN DEFAULT U/S.201 BY HOLDING THAT ASSESSEE HAD SHORT DEDUCTED TDS OF RS.36,67,712/- IN RESPECT OF PAYMENTS MADE TOWARDS OUTSOURCING EXPENSES OF RS.48,56,92,082/- SUCH AS P ROCESSING CHARGES OF RS.39,12,75,033/- AND BUSINESS SERVICES OF RS.9,44,17,049/-. 2.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE AND HAVING CONSIDERED THE SAME, CIT(A) GRANTED RELI EF TO ASSESSEE, WHEREIN CIT(A) OBSERVED THAT SIMILAR ISSU E AROSE IN A.Y. 2008-09, 2009-10 AND 2010-11. FOLLOWING THE S AME REASONING, CIT(A) GRANTED RELIEF TO THE ASSESSEE ON BOTH ACCOUNTS I.E. ON THE POINT OF ORDER U/S.201(1) AND 201(1A) OF THE ACT. 2.2 LD. AUTHORIZED REPRESENTATIVE POINTED OUT THAT SIMILAR ISSUE AROSE IN ASSESSEES OWN CASE FOR A.Y. 2008-09 , 2009-10 AND 2010-11 IN ITA NOS.3009, 3010 & 3011/M/2013, WH EREIN SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSE E BY OBSERVING AS UNDER: ITA NO.6544/MUM/14 A.Y. 12-13 [DCIT VS. RELIANCE LI FE INSURANCE CO. LTD.] PAGE 3 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. FROM THE ORDERS OF AUTHORITIES BE LOW, RIVAL SUBMISSIONS AND RECORDS BEFORE US, WE FIND THAT THE ASSESSEE ENGAGED IN THE LIFE INSURANCE BUSINESS NEE DS VARIOUS TYPES OF SERVICES SUCH AS STORAGE OF DATA, SCANNING AND SORTING OF DOCUMENTS, PROCESSING CHARGES, CALL CENTRE OPERATIONS AND BUSINESS SERVICES BESIDES OTHER BASI C WORKS CONNECTED AND INCIDENTAL THEREWITH WHICH WERE OUTSO URCED BY THE ASSESSEE TO OUTSIDE AGENCIES ON CONTRACTUAL BASIS. THE VARIOUS SERVICES OUTSOURCED WERE CASH & BANK RECONCILIATION, COMMISSION QUERY HANDLING, CASH CHE QUE COLLECTION CHARGES, COMMISSION PROCESSING AND DOCUM ENT DESPATCH, DATA PROCESSING, POLICY DESPATCH, DOCUMEN T SCANNING , PRINTING ,EMAILS OF DOCUMENTS, INFRA SUP PORT AND OUTSOURCING STAFFING, POLICY SERVING PROCESS, CALL INBOUND AND OUTBOUND , TELE-CALLING FOR ANSWERING CUSTOMER QUERIES ABOUT PRODUCT , FOLLOW AND MAINTAINING DEALERS NETW ORK ETC. AS IS CLEAR FROM THE SAID OUTSOURCED SERVICES, THES E ARE A SORT OF CLERICAL AND BASIC ADMINISTRATIVE WORK. THE ASSESSEE MADE THE PAYMENT FOR THESE SERVICES AFTER DEDUCTING TDS UNDER THE PROVISIONS OF SECTION 194C OF THE ACT BEL IEVING THESE ARE BASIC TYPE OF SERVICES INVOLVING NO TECHN ICAL OR PROFESSIONAL QUALIFICATION WHEREAS THE AO CAME TO T HE CONCLUSION THAT THESE ARE TECHNICAL SERVICES AND WE RE REQUIRED TO BE SUBJECTED TO TDS UNDER THE PROVISION S OF SECTION194J OF THE ACT AND FINALLY TREATED THE ASSE SSEE IN DEFAULT UNDER THE PROVISIONS OF SECTION 201(1) OF T HE ACT AND RAISED THE DEMAND ACCORDINGLY. THE LD CIT(A) AFTER HAVING EXAMINED AND PERUSED AGREEMENTS WITH THE SERVICE PROVIDERS AND AFTER GOING INTO THE VARIOUS SERVICES PROVIDED REACHED A CONCLUSION THAT THE OUTSOURCED SERVICES D O NOT REQUIRE ANY KIND OF TECHNICAL AND PROFESSIONAL EXPE RTISE AND ARE JUST SIMPLE AND REPETITIVE NATURE OF WORK SUCH AS DOCUMENT STORAGE, DOCUMENTS DELIVERY AND COLLECTION SERVICES AND DOCUMENTS MANAGEMENT SERVICES. THE LD CIT(A) EXAMINED THE CONTRACT WITH WRITER INFORMATION MANAG EMENT SERVICES AND FOUND THAT VERY BASIC SERVICES WERE CO NTRACTED AND RENDERED BY THE SAID PARTY INVOLVING NO SPECIAL TECHNICAL SKILL OR PROFESSIONAL QUALIFICATION. ON T HE BASIS OF THE RIVAL ARGUMENTS AND PERUSAL OF THE VARIOUS RECO RDS AS PLACED BEFORE US WE FIND THAT THE WORK ASSIGNED TO THE ITA NO.6544/MUM/14 A.Y. 12-13 [DCIT VS. RELIANCE LI FE INSURANCE CO. LTD.] PAGE 4 SERVICE PROVIDER WAS NOT A TECHNICAL OR PROFESSIONA L WORK WHICH REQUIRED SPECIAL SKILLS BUT SIMPLE, BASIC AND REPETITIVE NATURE OF WORK AND WE ARE INCLINED TO OPINE THAT TH E ORDER OF CIT(A) IS CORRECT AND DESERVED TO BE UPHELD. IN VIE W OF THE ABOVE FACTS, WE DISMISS THE GROUND NO 1 RAISED BY T HE REVENUE BY UPHOLDING THE ORDER OF FAA ON THIS POINT . 2.3 NOTHING CONTRARY WAS BROUGHT TO MY NOTICE. FACT S BEING SIMILAR, SO FOLLOWING SAME REASONING, I AM NOT INCL INED THE INTERFERE WITH THE FINDING OF CIT(A) WHO HAS DECIDE D THE ISSUE IN FAVOUR OF ASSESSEE. THIS ISSUE IS FORTIFIED BY THE DECISION OF ITAT IN EARLIER YEAR AS DISCUSSED ABOVE. SO, I UPH OLD THE SAME. 3. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS THE 22 ND DAY OF JUNE, 2016. SD/- (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER MUMBAI: DATED 22/06/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. %&%'( ) / CONCERNED CIT 4. )- / CIT (A) 5.-./00'(, '( , %& / DR, ITAT, MUMBAI 6./4567 / GUARD FILE. BY ORDER / , / % , '( , %&