Page 53 - Corporate_Professional_Today

your QuerieS

Income Tax

(Contributed by CA V.K.Subramani)

TDS on annual maintenance contract of However, if the payer has deducted tax under

hospital equipments section 194C and it is being litigated in the
appellate forum you can make use of the
We are marketing hospital equipments CBDT Circular No.7, dated 8-8-1995 in which
after importing the same from western it has been stated that normal maintenance
countries. We allow payment of the cost contract including supply of spares are covered
of equipments by hospitals and doctors in by section 194C. Where the technical services
instalments. During that time, we provide are rendered, the provisions of section 194J
free maintenance service including replacement shall apply.
of parts. After the total payment of the Also, your payer could quote the decision
cost of machine by hospitals/doctors we of Dy. CIT (TDS) v. Asian Heart Institute&
enter into an agreement called as annual Research Centre (P) Ltd. [2017] 82 taxmann.
maintenance contract (AMC) which is com 250 (Mum. - Trib.).
similar to our responsibility discharged
during the payment tenure. Is the payment Book profit under section 115JB and
received under AMC liable for tax deduction
under section 194C or section 194J of the disallowance under section 14A
Income-tax Act, 1961? Our company’s scrutiny assessment for

rom your query it is obvious that the assessment year 2015-16 was completed by
Fdifferential rate of tax deduction applicable adopting income computed under the normal
under sections 194C and 194J might cause provisions as the tax thereon was higher
some discomfort in the event of lower than the tax on book profit computed under
deduction of tax at source. Section 194C per section 115JB. The Assessing Officer has
se is a contract, whereas section 194J entails made a disallowance under section 14A,
rendering of technical services. In rendering though no exempt income was admitted
professional/technical service, specialization in the return. There is lesser allowance of
achieved through a scheme of learning is depreciation in an earlier assessment year
involved besides its application. To avoid and when rectified the carry over effect in
the controversy of whether it is a contract or the assessment year 2015-16 would result
provision of technical services, it is always in adoption of book profit under section
better to deduct tax at source at a higher rate 115JB instead of regular income. Is it
in order to avoid any disallowance or penal advisable to file an appeal against the
consequences. As the payee, you may have assessment or file a rectification petition
lesser flow of funds because of higher rate under section 154?
of tax deduction but otherwise there would rom your query I understand that you
be no tax consequence for you. Fhave unabsorbed depreciation which is
not effected in your income-tax statements.

160 January 20 To January 26, 2018 u Taxmann’s Corporate Professionals Today u Vol. 41 u 54