Payment for surrogacy charges which to be paid to surrogate mothers is not liable to TDS u/s 194J: ITAT

Case details: Kiran Infertility Central (P.) Ltd. V. ITO - [2021] 129 taxmann.com 7 (Hyderabad - Trib.)

Judiciary and Counsel Details

• • S.S. Godara, Judicial Member and Laxmi Prasad Sahu, Accountant Member.
  • Smt. S. Sandhya and S. Rama Rao, AR for the Appellant.
  • Rohit Mujumdar, DR for the Respondent.

Facts of the Case

Assessee-Company was running an infertility clinic. It paid certain sum as surrogacy charges without deducting TDS thereon. Assessing Officer (AO) concluded that said payments were in nature of Fees for Technical Services under Section 194J as well as contractual payment under Section 194C requiring mandatory TDS deduction. CIT(A) upheld the order passed by AO.

Assessee contended that it was neither a party to the corresponding agreement executed between the genetic parents and surrogate mother(s) nor has it availed any technical services from either of them so as to deduct TDS.

ITAT held

On appeal, Hyderabad ITAT held that there was no technical service element involved in all this surrogacy process involving the recipient or the surrogate mothers attracting the clinching statutory expression(s) of managerial, professional, and technical services under section 194J read with section 9(1)(vii) Explanation. Thus, the action of the lower authorities invoking Section 194J was liable to be reversed.

Case Review

• • Sumati Dayal v. CIT [1995] 80 Taxman 89/214 ITR 801 (SC) (para 26) followed.
  • CIT v. Durga Prasad More [1971] 82 ITR 540 (SC) (para 26) followed.

List of Cases Referred to

• • Hindustan Coco Cola Beverages (P.) Ltd. v. CIT [2007] 163 Taxman 355/293 ITR 226 (SC) (para 15)
  • GE India Technology Centre (P.) Ltd. v. CIT [2010] 7 taxmann.com 18/193 Taxman 234/327 ITR 456 (SC) (para 15)
  • Baby Manji Yamada v. Union of India [Writ Petition (Civil) No. 369 of 2008, dated 29-9-2008] (para 21)
  • Sumati Dayal v. CIT [1995] 80 Taxman 89/214 ITR 801 (SC) (para 24)
  • CIT v. Durga Prasad More [1971] 82 ITR 540 (SC) (para 24)
  • CIT v. Faizan Shoes (P.) Ltd. [2014] 48 taxmann.com 48/226 Taxman 115/367 ITR 155 (Mad.) (para 26)
  • Ahmedabad Electricity Co. Ltd. v. CIT [1993] 66 Taxman 27/199 ITR 351 (Bom.) (para 27).