Case Law Details

Case Name : EMC Vs. ITO (ITAT Mumbai)
Appeal Number : ITA No. 2269 TO 2272/M/2007
Date of Judgement/Order : 20/01/2010
Related Assessment Year :

RELEVANT PARAGRAPH

4. We have perused the records and considered the rival contentions carefully. The dispute is regarding rate of deduction of tax at source in respect of job work assigned by the assessee to others as an event manager. There is no dispute that the assessee had not deducted tax at source. The dispute is only whether the case of the assessee will be covered under section 194C(1) which relates to payment made by the assessee to a contractor or under section 194C(2) which relates to payments made to a sub-contractor. In respect of art work and photography the AO had treated the payment made by the assessee to the parties under section 194J which relates to payment for professional and technical services. There are different rates of tax prescribed under section 194C(1), 194C(2) and 194J. The case of the assessee is that it is covered under the provisions of section 194(2) as it had sub-contracted the work to other parties. The case of department is that the assessee as an event manager was providing services as a professional or as a manager to the clients and therefore the assessee is not a contractor of the clients. Whether the assessee had sub-contracted the work will depend upon its own position as to whether it had taken work on contract from the clients or as a professional. The real position in this regard could be ascertained only after examination of the contractual agreement of the assessee with the clients as well as the agreements of the assesseee with the other parties to whom the assessee had awarded the job work. But the AO has given a clear finding that the assessee had not given these agreements nor any such agreements had been produced before CIT(A) or even at the stage of Tribunal. Under these circumstances the status of the assessee can be decided only on the basis of treatment given to the assessee by the clients. There is no dispute that the clients have treated the assessee as a professional and had deducted the tax under section 194J in relation to the payment made to the assessee. Thus in our view the decision of authorities below to treat the assessee as professional and not as a contractor of the clients is reasonable on the facts of the case and has to uphold. This being the position, the job awarded by the assessee to other parties in performance of duty as event manager has to be treated as a contractor and not a sub-contractor and provisions of section 194C(1) had therefore been rightly applied by the AO.

4.1 The only other dispute is whether in respect of art work and photography the parties to whom payments had been made by the assessee should be treated as a professional or as a contractor. The department has treated the art work and photography work as a professional. The professional service has been defined in clause (a) to the Explanation to section 194J which had been reproduced in para 3 earlier. None of the services mentioned in clause (a) is relevant to the services of the assessee and only other services which have been notified by the Board and not appearing in the clause are the profession of authorised representative and the profession of film artist. Again the profession of authorised representative is not applicable to the case of the assessee and the phrase “film artist* has been defined in the notification itself to mean any person engaged in his professional capacity in the production of cinematography film whether produced by him or any other person, actor, cameraman etc. The photography and the art work in case of the assessee has not been done in relation to production of any cinematography. Therefore the art work and photography as has been rightly point out by the Learned AR will not come within the purview of professional services. Since the assessee had assigned the job of art work and photography to others the claim of the assessee that job often had been given on contract basis has to be accepted. Therefore the case of art work and photography will also be covered under the provision of section 194C(1). In other words all the payments made by the assessee will be covered under the provisions of section 194C(1). The order of CIT(A) is modified to that extent.

NF

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