Case Law Details
Commissioner of Income Tax Vs SBI Life Insurance Company Ltd. (Bombay High Court)
Therefore the obligation to deduct is on the person who is paying and the deduction to be made at the time of making such payment. Factually and admittedly no amount has been paid to the agents by respondent as a reimbursement of expenses incurred by agent in the foreign travel. Respondent had made arrangement for foreign travel for all the agents and paid expenses directly to those service providers. Therefore as no amount was paid to the agents by respondent, obligation to deduct income tax thereon at source also would not arise.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
Respondent is engaged in the business of underwriting life insurance policies. Respondent business comprises of individual life and group business. A survey under Section 133A of the Income Tax Act, 1961 (for short, the Act) was conducted in the case of respondents on 20/11/2009. A show cause notice for default under Section 201(1) of the Act was issued on 10/3/2010. It is stated by appellant that during the course of survey, Assessing Officer noticed that while making payment of insurance commission to its agents, the assessee deducted TDS on the net amount of insurance commission after excluding the service tax component. Assessing Officer opined that TDS was required to be deducted on the gross insurance commission including the service tax component as required under Section 194D of the Act.
2. Assessing Officer also noticed that respondent had made payments on account of usage/hiring of hardware/software etc and the expenses were treated as contractual expenses and TDS was deducted under Section 194C of the Act. Since the payments were made to various vendors like payment to server management services and call support services etc., which were highly specialized work requiring involvement of highly qualified and technical manpower for carrying out these activities, Assessing Officer has felt that these activities for which payments were made by respondents are of technical nature and therefore liable to TDS under Section 194J of the Act.
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