Case Law Details
Service charges are being billed on ‘per teacher’ or ‘per student’ basis and periodicity of the time of billing is also varying from service to service. And thus, it is seen that it is not a lump sum payment by the assessee to M/s. K12 Techno Services Pvt. Ltd. for all the services being rendered under the agreement but it is a payment on the basis of each of the services and per person. The TDS is to be made on the payment made and the TDS rates are fixed on the basis of nature of the services or contract and not on the basis of the number of recipients of the payment. When the intention of both the parties is clear that the payments shall be made for each of the service independently, then, the services are clearly ascertainable and divisible. The TDS rates for each of the services would therefore vary.
Services rendered by M/s K12 Techno Services Pvt. Ltd. are distinguishable from each other and though the recipient of all the payments is a single party, the nature of the services are discernible and different. If the contention of the Revenue was to be accepted, then why should the TDS be deducted u/s 194J and not u/s 194C for all the payments treating the entire agreement as a work contract?. When the basket of services is filled with different and distinguishable services, we are of the opinion that the assessee was correct in adopting different rates of TDS for different types of payments.
Relevant Extract of the Judgment
This is assessee’s appeal for the A.Y 2012-13. In this appeal, the assessee is aggrieved by the order of the CIT (A) in holding that the agreement between the assessee and M/s. K12 Techno Services Pvt. Ltd is a composite agreement and therefore assessee is required to deduct tax at source u/s 194J of the Act from all the payments made towards various services rendered by M/s K12 Techno Services Pvt. Ltd.
2. Brief facts of the case are that the assessee is a society engaged in the business of running educational institutions in the name and style of M/s Sri Gowtham Academy of General & Technical Education. To verify the compliance of the TDS provisions of the I.T. Act by the assessee, a survey operation u/s 133A was conducted on 19.10.2011. On verification of the details furnished by the assessee, it was noticed that the assessee has made TDS u/s 194C of the Act on some payments and u/s 194J of the Act on some other payments made to M/s K12 Techno Services Pvt. Ltd. The assessee was therefore directed to furnish the copy of the agreement and details of the services rendered by M/s. K12 Techno Services Pvt. Ltd. The assessee furnished the same.
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