The Commissioner Of Income Tax, Tds-2, Mumbai v. M/S. Reliance Life Insurance Co Ltd

R.M. AMBERKAR (Private Secretary) IN THE HIGH COURT OF JUDICATURE AT BOMBAYO.O.C.J.INCOME TAX APPEAL NO. 1065 OF 2017 The Commissioner of Income Tax, TDS-2, Mumbai ..Appellant Versus M/s. Reliance Life Insurance Co Ltd ..Respondent ................... Mr. P.C. Chhotaray for the Appellant Mr. P.C. Chhotaray for the Appellant Mr. B.G. Yewale i/by M/s. Rajesh Shah & Co for the RespondentMr. B.G. Yewale i/by M/s. Rajesh Shah & Co for the Respondent ................... CORAM : AKIL KURESHI & S.J. KATHAWALLA, JJ. DATE : JUNE 18, 2019. P.C.: 1.Revenue is in the appeal against the judgment of theIncome Tax Appellate Tribunal, Mumbai ("the Tribunal" forshort) dated 19.8.2016 raising following questions for our consideration:- "(i) Whether on the facts and in the circumstances of the case andin law, the Tribunal was justified in holding that tax wasdeductible from payment of net insurance commission to theagents, after excluding the service tax component from thegross commission, instead of holding that tax was deductiblefrom the gross insurance commission including the service taxcomponent?in law, the Tribunal was justified in holding that tax wasdeductible from payment of net insurance commission to theagents, after excluding the service tax component from thegross commission, instead of holding that tax was deductiblefrom the gross insurance commission including the service taxcomponent? (ii) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that tax wasdeductible from payment of outsourcing expenses such asprocessing charges, call centre operations and businessservices etc. under Section 194C instead of Section 194J ofthe Income Tax Act, 1961 without appreciating that the natureof services received by the assessee requires certainparameters of technical / managerial skill of highly specializedcompetency and falls within the purview of Section 194J of theAct and not 194C of the Act?" (iii) Whether on the facts and in the circumstances of the case andin law, the Tribunal was justified in holding that tax wasdeductible from payment of data storage charges underSection 194C instead of Section 194J of the Act withoutappreciating that the nature of services received by theassessee requires certain parameters of technical /managerial skill of highly specialized competency and fallswithin the purview of Section 194J of the Act and not 194C ofthe Act?" in law, the Tribunal was justified in holding that tax wasdeductible from payment of data storage charges underSection 194C instead of Section 194J of the Act withoutappreciating that the nature of services received by theassessee requires certain parameters of technical /managerial skill of highly specialized competency and fallswithin the purview of Section 194J of the Act and not 194C ofthe Act?" 2.Learned counsel for the parties pointed out that theseissues came up for consideration in Income Tax Appeal No.604 of 2017 and connected appeals concerning this veryassessee. The Court considered the issues in followingmanner:- "2. Question Nos.a to c relate to the requirement of deduction oftax at source by the respondent whether the same was correctlydeducted. Each question relates to a different payment and we shalltherefore examine each question separately. 3.Respondent–assessee is an Insurance Company.Question Nos. a and b pertain to a deduction of tax at source on thepayment of outsourcing expenses. The assessee had deducted taxunder Section 194C of the Act. The revenue argues that the sameought to have been under Section 194J of the Act since paymentswere for managerial and technical services. "2. Question Nos.a to c relate to the requirement of deduction oftax at source by the respondent whether the same was correctlydeducted. Each question relates to a different payment and we shalltherefore examine each question separately. 3.Respondent–assessee is an Insurance Company.Question Nos. a and b pertain to a deduction of tax at source on thepayment of outsourcing expenses. The assessee had deducted taxunder Section 194C of the Act. The revenue argues that the sameought to have been under Section 194J of the Act since paymentswere for managerial and technical services. 4.The CIT (Appeals) and the Tribunal examined the nature ofexpenditure and came to the conclusion that the assessee had hiredthe services for various works such as storage of data, scanning ofdocuments, processing charges, call centre operations etc. Lookingto the nature of services outsourced, it was held that the same werebasically clerical services of repetitive nature of work and paymentswere therefore, neither for managerial nor for technical services.Having perused the documents on record and looking to the natureof services described, we do not find that the Tribunal has committedany error. The work outsourced was in the nature of clerical work. Noquestion of law arises. 5.In so far as question No.c is concerned, the same pertains tothe charges of the event management paid by the assessee. In thiscontext, the CIT (Appeals) and the Tribunal noted that the assesseehad arranged conference at Agra. The payments were essentially fordomestic ticketing, reimbursing hotel expenses, tour leaders’expenses. Such services were essentially in the nature of travelagent who had arranged the ticket booking and hotel facilities. TheTribunal therefore held that payments were not for any technicalservices availed by the assessee. No question of law arises." 3.In the result, the appeal is dismissed. [ S.J. KATHAWALLA, J. ] [ AKIL KURESHI, J ]