Short Overview: Where assessee had hired the services for various works such as storage of data, scanning of documents, processing charges, call center operations, etc. and the same were basically clerical services of repetitive nature of work therefore, work outsourced was in the nature of clerical work and was rightly deducted under section 194C.

Assessee was an insurance company and made payment of outsourcing expenses. It had deducted tax under section 194C. Revenue alleged that the same ought to have been under section 194J since payments were for managerial and technical services.

It is held that CIT(A) and Tribunal examined the nature of expenditure and came to conclusion that assessee had hired the services for various works such as storage of data, scanning of documents, processing charges, call center operations, etc. It was held that the same were basically clerical services of repetitive nature of work and payments were, therefore, neither for managerial nor for technical services. The work outsourced was in the nature of clerical work and was rightly deducted under section 194C.

Decision: In assessee’s favour