M/s. Coimbatore Integrated Waste Vs. DCIT (ITAT Mumbai)
The FAA held that the scope of the work given to the sub-contractors involved construction work, welding, erection, alignment, transportation of equipment and materials with the help of machines which did not fall within the scope of technical services as defined in Explanation 2 to section 9(1)(vii). He also held that merely because technical personnel were employed in the execution of the contract it did not follow that the contract was one for technical services. The Appellate Tribunal confirmed the findings of the FAA. Dismissing the appeal filed by the department, the Hon’ble High Court held as under:
“…..the contract entered into between the assessee and each of the contractors did not involve supply of professional or technical services at least within the meaning of section 194J of the Income-tax Act, 1961. Therefore, the considerations paid under the contracts were not for professional or technical services rendered by the contractors to the assessee and section 194J was not applicable. The technical personnel were deployed not for and on behalf of the customer, but for and on behalf of the contractor itself with a view to ensuring that the contractor supplied the equipment in accordance with the contractual specifications. The nature of human intervention was reflected in the terms and conditions of the agreement itself.”
