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

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  • Last Updated on 13 August, 2021

Deduction of tax at source

Case details: Kiran Infertility Central (P.) Ltd. V. ITO - [2021] 129 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

List of Cases Referred to

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