In the case of CIT vs Reliance Life Insurance Co. Ltd., the Bombay High Court has held that TDS is not payable on outsourcing expenses which are clerical in nature.

Revenue’s Arguments:

The Revenue argued that the assessee had deducted tax under Section 194C of the act which was related to payments made to contractor or sub-contractor, whereas same ought to have been done under Section 194J of the act since payment were for managerial and technical services.

Tribunal’s Holding:

The Tribunal held that assessee had outsourced services such as storage of data, scanning of documents, processing charges, call center operations etc. which were clerical services. Said services were repetitive in nature of work and hence, were not managerial or technical. Therefore, TDS would not be payable on such clerical services under Section 194J.

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