Chhaya Prakashani Ltd. Vs ITO (TDS) (ITAT Kolkata)
Summary: The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) in Chhaya Prakashani Ltd. vs ITO (TDS) dealt with multiple appeals concerning the applicable TDS provision for payments made towards composing and DTP work. The dispute arose when the Assessing Officer (AO) held that the payments made to M/s Publishing Services Pvt. Ltd., amounting to ₹39,42,543 for composing services, were in the nature of technical services under Section 194J of the Income Tax Act and not contractual payments under Section 194C. The assessee, a publishing company engaged in printing educational books, had deducted TDS at 2% under Section 194C, treating the payments as contractual. The AO, however, considered them as technical services, thereby applying a 10% TDS rate under Section 194J and raised a demand of ₹5,61,419, including interest under Section 201(1A). The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO’s order, rejecting the assessee’s claim. On further appeal, the ITAT examined the nature of services provided and the agreement dated 16.09.2011 between the assessee and the publishing agency. It noted that the composing and DTP activities were carried out based on manuscripts supplied by the assessee and were routine publishing-related services rather than technical or professional in nature. Referring to the statutory definition of “technical services” under Section 194J, the Tribunal held that such printing-related work does not qualify as technical service. Accordingly, the ITAT concluded that the assessee had rightly deducted TDS under Section 194C at 2%. The Tribunal set aside the CIT(A)’s order, directed deletion of the TDS demand, and extended the same ruling to other assessment years under appeal, thereby allowing all appeals filed by the assessee.
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