TMI Blog2008 (10) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... ax deduction at source - Consequently, both the questions are answered against the Revenue and in favour of the assessees. - ITA No. 1120, 1121, 1129, 1135, 1154, 1155, 1159, 1171 and 1177 of 2007 and 697, 698 and 1020 of 2008 - - - Dated:- 31-10-2008 - BADAR DURREZ AHMED and RAJIV SHAKDHER JJ. I. T. A. Nos. 1120, 1121, 1129, 1135, 1154, 1155, 1159, 1171 and 1177 of 2007 with 697, 698 and 1020 of 2008. Mrs. Premlata Bansal for the appellants in I. T. A. Nos. 1120, 1121, 1129, 1135, 1154,1155,1159,1171 of 2007 and 697, 698, 1020 of 2008. Ms. Rashmi Chopra for the appellant in I. T. A. No. 1177 of 2007. Mr. Tarun Sharma for the respondents in I. T. A. Nos. 1154 and 1177 of 2007. Mr. Kanan Kapur for the respondents in I. T. A. Nos. 1120, 1121, 1129, 1154, 1155, 1159, 1171 of 2007. None for the respondents in I. T. A. No. 697, 698 and 1020 of 2008. JUDGMENT The judgment of the court was delivered by 1. BADAR DURREZ AHMED J. -In all these appeals under section 260A of the Income-tax Act, 1961 (hereinafter referred to as "the said Act"), the following substantial questions of law have been framed : (a) Whether the payments made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Example 1: Assume that subscriber A of Airtel intends to call subscriber X of MTNL within New Delhi. Subscriber A's call which originates within the circle of Airtel would have to be handed over (through interconnection) to MTNL's network so as to reach the subscriber X. In such a case, while Airtel would recover the normal call charges from its subscriber A it would have to pay a part of it to MTNL for its interconnect usage charges. Example 2: Assume that subscriber A of IDEA in Maharashtra wants to make a call to subscriber B of Airtel at New Delhi. The call would originate within the IDEA network in Maharashtra and would have to be inter-connected with BSNL (being the national long distance service provider) which would carry the call to the Airtel Delhi network and after interconnection would be transferred to the subscriber B of Airtel, Delhi. In such a case, following the principle of the interconnect seeker paying the charges to the interconnect provider, Airtel-Delhi would raise an invoice for interconnect charges on BSNL which, in turn, would raise an invoice on IDEA (Maharashtra) for the national long distance interconnect charges. IDEA (Maharashtra) would recover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the payments made by the respondents to MTNL/other companies in respect of interconnect/port/access charges were not covered within the expression "fees for technical services" as used in section 194J of the said Act. They submitted that their case was dearly covered by the decision of the Madras High Court in the case of Skycell Communications Ltd. v. Deputy CIT [2001] 251 ITR 53, wherein the payment made by a subscriber to the provider of cellular mobile facility was held not to amount to fees for technical services within the meaning of section 194J read with section 9(1)(vii), Explanation 2 of the said Act. It was contended that the mere collection of a fee for use of a standard facility provided to all those willing to pay for it does not amount to the fee having been received for "technical services". It was also contended that unless and until, there is an element of human interface, the facility of interconnection/port access cannot be regarded as a technical service. Reliance were also placed on an earlier decision of this court in the case of. J. K. ( Bombay ) Ltd. v. CBDT [1979] 118 ITR 312, which has considered the expression "technical servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Tribunal in holding that the payments made to MTNL/other companies in respect of the interconnect/port access charges were outside the purview of section 194J of the said Act, was not correct in law. She contended that the Tribunal, having followed the decision of the Madras High Court in the case of Skycell Communications Ltd. [2001] 251 ITR 53, had erred in law inasmuch as that decision was clearly distinguishable. 10. Section 194J which relates to "fees for professional or technical services", so much as is relevant, reads as under : "194J. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of- (a) fees for professional services, or (b) fees for technical services, … shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to five per cent. of such sum as income -tax on income comprised therein : … Erplanation.-For the purposes of this section,- (a) 'professional services' means services rendered by a person in the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd. [2001] 251 ITR 53 (Mad), a learned single judge of the Madras High Court noted that installation and operation of sophisticated equipment with a view to earn income by allowing customers to avail of the benefit of the user of such equipment does not result in the provision of technical service to the customer for a fee. It was also held that technical service referred to in Explanation 2 to section 9(1) (vii) contemplated the rendering of a "service" to the payer of the fee and that mere collection of a "fee" for use of a standard facility provided to all those willing to pay for it did not amount to the fee having been received for technical services. We find ourselves to be in agreement with the views expressed by the learned single judge of the Madras High Court in Skycell Communications Ltd. [2001] 251 ITR 53. However, we still have to deal with the submissions made by the learned counsel for the appellants/Revenue that the payments that were considered in the case of Skycell Communications Ltd. [2001] 251 ITR 53 (Mad) were those made by a subscriber to the cellular mobile telephone facility provider and not by one cellular network provider to another. For this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of consultants. "Consultant" itself has been defined, inter alia "as a person who gives professional advice or services in a specialized field". It is obvious that the word "consultant" is a derivative of the word "consult" which entails deliberations, consideration, conferring with someone, conferring about or upon a matter. Consult has also been defined in the said Dictionary as "ask advice for, seek counsel or a professional opinion from ; refer to (a source of information); seek permission or approval from for a proposed action". It is obvious that the service of consultancy also necessarily entails human intervention. The consultant, who provides the consultancy service, has to be a human being. A machine cannot be regarded as a consultant. 19. From the above discussion, it is apparent that both the words "managerial" and "consultancy" involve a human element. And, both, managerial service and consultancy service, are provided by humans. Consequently, applying the rule of noscitur a sociis, the word "technical" as appearing in Explanation 2 to section 9(1) (vii) would also have to be construed as involving a human element. But, the facility provided by MTNL/other com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odfrey Phillips India Ltd. [2005] 4 RC 186; [2005] 2 SCC 515 observed that they did not read the said decision as excluding the application of the principle of noscitur a sociis to the case before them inasmuch as it had been amply demonstrated that the word "luxury" in entry 62 was doubtful and had been defined and construed in different senses. The Supreme Court further observed as under (page 220 of 4 RC) : "81. We are aware that the maxim of noscitur a sociis may be a treacherous one unless the 'societas' to which the 'socii' belong, are known. The risk may be present when there is no other factor except contiguity to suggest the 'societas'. But where there is, as here, a term of wide denotation which is not free from ambiguity, the addition of the words such as 'including' is sufficiently indicative of the societas. As we have said, the word 'includes' in the present context indicates a commonality or shared features or attributes of the including word with the included." 22. In the appeals before us it is obvious that the meaning of the expression "technical services" by itself, is far from clear. It is also clear that the word "technical" has been used in the "societ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Supreme Court employed the doctrine of noscitur a sociis and held that the word "minerals" took colour from the words "mineral oil" which preceded it and the word "ores" which succeeded it. A somewhat similar situation has arisen in the present appeals where the word "technical" is preceded by the word .managerial. and succeeded by the word "consultancy". Therefore, the word "technical" has to take colour from the word "managerial" and "consultancy" and the three words taken together are intended to apply to those services which involve a human element. This concludes our discussion on the applicability of the principle of noscitur a sociis. 26. Before concluding we would also like to point out that the interconnect/port access facility is only a facility to use the gateway and the network of MTNL/other companies. MTNL or other companies do not provide any assistance or aid or help to the respondents/assessees in managing, operating, setting up their infrastructure and networks. No doubt, the facility of interconnection and port access provided by MTNL/other companies is "technical" in the sense that it involves sophisticated technology. The facility may even be construed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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