Sum Paid to Contract Teachers can’t be Treated as ‘Fee for Professional Services’, No Sec. 194J TDS

Case Details: Dist. Intermediate Educational Office v. ITO (TDS) - [2023] 150 taxmann.com 439 (Hyderabad-Trib.)

Judiciary and Counsel Details

• • Rama Kanta Panda, Accountant Member & K. Narasimha Chary, Judicial Member
  • Darshan Jakharia, AR for the Appellant.
  • Kumar Aditya, DR for the Respondent.

Facts of the Case

Assessee was an authority appointed by and working under the directions of the State Government. Its primary function was to disburse the Honorarium/Remuneration to the teachers with whom the colleges agreed to perform the teaching work entrusted by the college committee following the curriculum of the intermediate syllabus.

During the assessment proceedings, the Assessing Officer (AO) held that the payments to teachers fall within the ambit of ‘fee for professional services’ as per section 194J. Accordingly, the AO made additions and treated the assessee as ‘assessee-in-default’ for non-deduction of tax on payment to contracted teachers under section 194J.

The matter reached the Hyderabad Tribunal.

ITAT Held

The Tribunal held that for section 194J, “professional services” shall mean services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as notified by the Board.

Notification No. 88/2008 dated 28/01/2008 issued by CBDT notified the services rendered by the following persons in relation to the sports activities as “Professional Services”:

a. Sports Persons,

b. Umpires and Referees,

c. Coaches and Trainers,

d. Team Physicians and Physiotherapists,

e. Event Managers,

f. Commentators,

g. Anchors and

h. Sports Columnists.

The words ‘fee for professional services means’ left no scope for interpretation, and the categories mentioned therein as on the date are exhaustive by the explanation itself or by the notification of CBDT. Such an exhaustive definition excludes the payments to contract teachers in intermediate colleges.

Either in the explanation to section 194J or in the notification issued, the contract teachers referred to as teaching professionals by AO are not covered. Thus, payments made to contract teachers did not answer the ‘fee for professional services’ description to levy TDS under section 194J.