TMI Blog2009 (12) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the stock exchanges trade (purchase and sale) on behalf of their clients. As a part of infrastructure provided to the members a trading system, known as on screen trading is provided by stock exchanges. Such trading facilities are established by stock exchanges to enable trading anywhere in the territory of India. Such trading systems are centralized to enable trading in various stock exchanges. Each stock exchange is connected to the member s work stations through appropriate communication network using a Very Small Aperture Terminal (VSAT) Network. Members will be connected to the Central Trading System through the hub of the VSAT network. Department of Telecommunications (DoT) has to issue a license for the installation and operation of private Closed User Group (CUG) VSAT network. All capital and revenue investments toward VSATs and central infrastructure will be met by concerned Stock Exchange. To allow the members the benefit of such of VSAT network, the stock exchanges charges fees from its members. (ii)Other charges and their nature are as follows: Other charges Rs. 6,80,398 SEBI Expenses 1,71,909 BSE St. Exchange-CDSL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted tax at source on such payment, the aforesaid sum claimed as deduction was disallowed by the Assessing Officer. According to the Assessing Officer, trading in stock exchange is carried on through computer terminals, which are connected to NSE and BSE and various stock brokers, who are members of various stock exchanges. VSAT activity enables the brokers over the length and breadth of the country to get connected with each other and do trading. VSAT and leaseline are provided by the stock exchanges and they charge fees for doing so. Thus, it was not a case of providing a simple service for a fee. It was a payment of a fees of a technical services rendered. The assessee had relied on the decision of Hon ble Madras High Court in the case of Skycell Communications Ltd. v. Dy. CIT [2001] 251 ITR 53 1; wherein it was held that payment of fee for use of a standard facility provided to all those willing to pay for it does not amount to the fee having been paid for technical services. The Assessing Officer distinguished the aforesaid decision by holding that the data provided through VSAT is not something which is not available to general public but is only available to members of stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other decisions cited by the appellant also support the appellant s view. Therefore I hold that the provisions of section 194J are not attracted on VSAT and lease line charges at Rs. 32,37,471. As a legal corollary of this finding, I also hold that no disallowance is to be made on this amount under section 40(a)( ia). In this way, the appellant gets relief on this limited point." 5. Learned CIT(A) followed the aforesaid decision and held that the provisions of section 194J are not attracted to all the above charges because those charges are not for providing any technical services but use to infrastructure facilities and, therefore, no disallowance can be made under section 40(a)( ia) of the Act. Aggrieved by the order of learned CIT(A), the revenue has preferred the present appeal before the Tribunal. 6. Before us, learned Departmental Representative reiterated the stand of the revenue as reflected in the order of the Assessing Officer. 7. We have heard the rival submissions. The relevant provisions of law may be referred to for the purpose of clarity. "194-J Fees for professional or technical services. (1) Any person, not being an individual or a Hindu undivided family, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r/mobile phone subscriber to the operator of the cellular/mobile phone facility. The following were its observations : "Thus while stating that "technical service" would include managerial and consultancy service, the Legislature has not set out with precision as to what would constitute "technical" service to render it "technical-service". The meaning of the word "technical" as given in the New Oxford Dictionary is adjective 1. of or relating to a particular subject, art or craft or its techniques: technical terms (especially of a book or article) requiring special knowledge to be understood : a technical report. 2. of involving, or concerned with applied and industrial sciences: an important technical achievement. 3. resulting from mechanical failure : a technical fault. 4. according to a strict application or interpretation of the law or the rules: the arrest was a technical violation of the treaty. Having regard to the fact that the term is required to be understood in the context in which it is used, "fee for technical services" could only be meant to cover such things technical as are capable of being provided by way of service for a fee. The popular meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not contract to receive a technical service. What he does agree to is to pay for the use of the airtime for which he pays a charge. The fact that the telephone service provider has installed sophisticated technical equipment in the exchange to ensure connectivity to its subscriber, does not on that score, make it provision of a technical service to the subscriber. The subscriber is not concerned with the complexity of the equipment installed in the exchange, or the location of the base station. All that he wants is the facility of using the telephone when he wishes to, and being able to get connected to the person at the number to which he desires to be connected. What applies to cellular mobile telephone is also applicable in fixed telephone service. Neither service can be regarded as "technical service" for the purpose of section 194J of the Act.............. . . . At the time the Income-tax Act was enacted in the year 1961, as also at the time when Explanation 2 to section 9(1)(vii) was introduced by the Finance (No. 2) Act, with effect from April 1, 1977, the products of technology had not been in such wide use as they are today. Any construction of the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services to any of its members. We are of the view that this ratio of Hon ble Madras High Court will apply to the facts of the present case. The Assessing Officer in coming to the conclusion that the payment was for fee for technical services has relied on the fact that the screen based trading is sophisticated method of trading. This by itself will not be sufficient to holding technical services being rendered. The Assessing Officer has also held that services are not available to the public at large but only to registered members, again this by itself will not make the services in question as technical services. Another reason given by the Assessing Officer is that speed at which transactions were completed and the ease with which transactions are done in screen based trading. This again is not relevant criteria for holding that the services rendered were technical services. Fact that the data provided on screen will provide better data for carrying out transaction will not again be sufficient to hold that technical services are being rendered. All the above features present in screen based trading saves time. This is the result of improved techno-logy. That does not mean that st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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