Chhaya Prakashani Limited Vs DCIT (ITAT Kolkata)
Disallowance u/s 40(a)(ia) Deleted: ITAT Kolkata Holds TDS @2% u/s 194C Correct for DTP/Composing Work — Not Technical Service u/s 194J
Assessee, Chhaya Prakashani Ltd., appealed against NFAC’s order confirming disallowance u/s 40(a)(ia) for alleged short deduction of TDS on payments for composing & DTP work. AO, based on survey findings, held that TDS ought to have been deducted @10% u/s 194J treating the work as “technical services”. Assessee had deducted TDS @2% u/s 194C on contractual printing/DTP work & argued that the issue already stood concluded in its favour in its own case for earlier years in proceedings u/s 201.
Assessee relied on the coordinate bench order in ITA Nos. 579–583/Kol/2025 dated 04.11.2025, where Tribunal held that composing & DTP services are not “technical services” within the meaning of Explanation to section 194J. Tribunal had examined the agreement dated 16.09.2011 with Publishing Services Pvt. Ltd. and concluded that it was a pure contract for printing/composing work governed by section 194C. Therefore, TDS @2% was correctly applied.
In the present assessment u/s 143(3), Tribunal noted that the foundation of the AO’s 40(a)(ia) disallowance was the very allegation of short deduction, which now stood nullified by the earlier binding order under section 201. Since Assessee had already deducted TDS @2% as required u/s 194C, there was no failure to deduct or short-deduction; hence, invocation of section 40(a)(ia) did not survive.
Tribunal therefore deleted the entire disallowance sustained by CIT(A)/NFAC & allowed Assessee’s appeal in full.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
