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TMI Blog2014 (11) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee on 9.10.2009 in order to verify the compliance of the TDS provisions by the assessee. During the course of survey, it was found that the assessee has deducted tax at source from the payments made to M/s. Records and Data Warehousing Pvt. Ltd. under S.194C of the Act. After verification of the details furnished by the assessee in this regard, the Assessing Officer was of the opinion that the payment made by the assessee to M/s. Records and Data Warehousing Pvt. Ltd. is covered by the provisions of S.194J and there was thus short deduction of tax at source by the assessee from the payments made to M/s. Records and Data Warehousing Pvt. Ltd. He therefore, issued a notice requiring the assessee company to show cause as to why it should not be treated as an assessee in default under S.201(1) for such short deduction of tax at source. In reply, the following explanation was offered by the assessee- They have entered into an agreement with service provider for collection, filing and maintenance of filled in Post Paid subscriber enrollment forms and Airtel Prepaid enrolment forms and to submit the form's based on retrieval request of Airtel form time to time. Service provider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned CIT(A). During the course of appeal proceedings, detailed submission was made by the assessee company in support of its case that there was no obligation on its part to deduct tax at source from the payment made to M/s. Records and Data Warehousing Pvt. Ltd. under S.194J. The said submission, as summarized by the learned CIT(A) in his impugned order dated 15.7.2013 for assessment year 2006-07, was as under- "a) The activity of collection filing and retrieval of forms does not involve any service of technical, managerial and consultancy in nature. b) The professional or technical nature of service as enumerated in the provisions of 194J is not involved so as to attract the TDS under the said section. There is no managerial, technical consultancy service is involved. c) The contractor has paid tax on the income earned by him i.e., from the payments received from appellant company. We enclose herewith PAN of contractor to show that distributor is a regular assessee and therefore the tax was paid by him. d) A certificate obtained from Chartered Accountant confirming the fact that contractor has fully paid taxes on their overall income including payments received from appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of short deduction of tax at source. He accordingly held that the assessee company could not be treated as assessee in default under S.201(1) for short deduction of tax at source form the payments made to M/s. Records and Data Warehousing Pvt. Ltd., as the payee had already paid tax due on its income for all the five years under consideration. He however, held that the assessee was still liable to pay interest under S.201(1A) from the date when the tax was deductible till the date when tax was actually paid by the deductee/payee. Accordingly, the Assessing Officer was directed by the learned CIT(A) to recompute the interest payable by the assessee under S.201(1A) for all the five years under consideration. 6. The learned counsel for the assessee at the outset, took us through the relevant Master Service Agreement placed in the paper book and pointed out the scope and structure of services provided by M/s. Records and Data Warehousing Pvt. Ltd. to the assessee company as stipulated in clause (2) of the Said Agreement. He also invited our attention to the Appendix B of the said agreement placed at pages 30 and 31 of the paper-book specifying the activities to be undertaken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee in the present case, did not receive any technology or technical information/technical know-how from the services rendered by M/s. Records and Data Warehousing Pvt. Ltd. and it is thus, not a case of rendering of technical services by the said service provider, as envisaged under S.194J of the Act. 8. The Learned Departmental Representative, on the other hand, submitted that the payment in question made by the assessee company to the service provider, M/s. Records and Data Warehousing Pvt. Ltd. cannot be treated as payment made for carrying out any work in pursuance of a contract, as envisaged in S.194C. He pointed out that the expression 'work' for the purposes of S.194C is defined in Explanation 'iv' below Section 194C and the said close ended definition does not cover the services contracted and availed by the assessee from M/s. Records and Data Warehousing Pvt. Ltd. He took us through the Master Services Agreement entered into by the assessee company with M/s. Records and Data Warehousing Pvt. Ltd. and pointed out that the scope of services rendered was inclusive of digitalization and maintenance of data as well as retrieval of such data as and when required by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... related discipline, as may be necessary to perform the services with high standard of quality. 10. The activities to be undertaken by the service provider to provide the services to the assessee company as per the Master Services Agreement are identified and enumerated in Appendix Bas under- Sl. No. Activities Time Frame Measure 1. Pick up of APEF/SEF Form from Hyderabad prepaid Distributors/ARC points Same day No forms should be pending at Distributors' point 2. All packets to be delivered at R&D warehouse Within 24 Hors Zero delays; MIS on the same Pick up vis-a-vis delivered (Further accepted and rejected) 3. Audit of all the APEF/SEF forms at Service provider' zonal offices (As per Airtel check list) Within 24 Hrs. 100% compliance to extant Airtel APEF/SEF documentation policy 4. Initial/Mandatory data entry of all the APEF/SEF forms in the system Within 24 Hrs 100% data entry within 24 hours of forms from the receipt of the forms (including corrections, if any) Daily MIS to be submitted to Airtel 5. Comprehensive data entry of customer details pertaining to all the 'accepted APEF/SEF' as per the extant data entry specifications/guidelines Within 72hours (a) 100% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... away applied in the present case to decide the issue in dispute. 12. In the case of CIT V/s. Bharti Cellular Limited (319 ITR 139)(Del), Hon'ble Delhi High Court had an occasion to interpret and explain the expression 'fee for technical services' as appearing in S.194J. In this context, it was noted by the Hon'ble Delhi High Court that the said expression appearing in S.194J has the same meaning as given in Explanation (2) to S.9(1)(vii), which means any consideration for rendering of any 'managerial, technical or consultancy services'. Taking note that the word 'technical' is preceded by the word 'managerial' and succeeded by the word 'consultancy, Hon'ble Delhi High Court held that the rule of noscitur a sociis is clearly applicable and this would mean that the word 'technical' would take colour from the words 'managerial' and 'consultancy' in between which it is sandwiched. Elaborating further, Hon'ble Delhi High Court observed that it is obvious that the expression 'manager' and consequently 'managerial service' has a definite human element attached to it and similarly, the services 'consultancy' also necessarily intends human intervention. It was held by the Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X
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