TMI Blog2014 (11) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ] the 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’ - 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 - the expression ‘fee for technical services’, as appearing in S.194J, they found that the question of human intervention was never raised even upto the level of the Tribunal – thus, the order is remitted back to the AO for fresh adjudication – Decided in favour of assessee. - ITA No.956/Hyd/13 ITA No.957/Hyd/13 ITA No.1287/Hyd/13 ITA No.1288/Hyd/13 ITA No.1289/Hyd/13 - - - Dated:- 29-10-2014 - Shri P. M. Jagtap And Shri Saktijit Dey,JJ. For the Appellant : Shri Anil Bhalla For the Respondent : Shri B.Ram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S U/s. 194I does not apply. Service provider represented hat it has necessary infrastructure, Manpower and experience in the providing world cross record management services. And that it has claimed that the agreement is to carry out certain work and therefore the payment is towards contract for work, falling U/s. 194C. Thus, the assessee has vehemently objected for treating the nature as rent or technical fee. 3. The explanation of the assessee was not found acceptable by the Assessing Officer. According to him, as per the Master Agreement, the contractor was providing professional services having expertise in record and data management. He also noted that the amount paid by the assessee to M/s. Records and Data Warehousing Pvt. Ltd. was also subject to levy of service tax. He therefore held that the payments made by the assessee were in the nature of fee for technical/professional services falling under S.194J and the assessee was liable to deduct tax at a higher rate as applicable to the payments covered under S.194J. Accordingly, the assessee company was treated by the Assessing Officer as an assessee in default under S.201(1) for short deduction of tax at source on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P)Ltd. 2007 TIOL-144 SCIT, wherein it has been held as under; No demand visualized under Sec.201(1) of the Income Tax should be enforced after the tax deductor has satisfied that officer in charge of TDS that the taxes due have been paid by the deductee assessee. However, this will not alter the liability to charge interest under Sec.201(1A) of the AC till the date of payment of taxes by the deductee assessee or the liability for penalty under Sec.271C of the Income Tax Act. 5. After considering the submissions made by the assessee and the material available on record, the learned CIT(A) held that the Master Service Agreement dated 8.9.2009 entered into between the assessee and the M/s. Records and Data Warehousing Pvt. Ltd. was sufficient to show that it is not just a works contract, but the service provider was required to have experience, expertise and ability and skills to provide the services contracted for. He noted that as per clause 2.2.6 of the said agreement, the service provider was to devise effective administrative processes for the mandatory compliance and delivery of customer agreement forms submitted by the subscribers to the assessee company from time t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard are sufficient to show that only routine services were rendered by the service provider, which did not involve any expertise, much less any technical expertise. He also pointed out that the manpower required for rendering the services was of graduate level, which again goes to show that the services rendered were clerical in nature, without requirement of any technical or professional expertise. He submitted that the Assessing Officer and the learned CIT(A) have heavily relied on clause 3.11 of the agreement to hold that experience and expertise on the part of the service provider was required to render the services to the assessee company. He contended that the details of activities under taken by the service provider as enumerated in Appendix B to the agreement, however, clearly shows that no services in the nature of technical or professional were required to rendered by the service provider. 7. The learned counsel for the assessee also invited our attention to the sample copy of the invoice raised by M/s. Records and Data Warehousing Pvt. Ltd. on the assessee (copy placed at page No.51 of the paper-book) to show that the description of services given therein as well as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loying graduates, who were assigned the work after necessary training. He submitted that the services provided by M/s. Records and Data Warehousing Pvt. Ltd. to the assessee company are also classified by the Service Tax Authorities as business support services , which clearly goes to show that it was not a case of works contract covered by S.194C, but the services rendered were in the nature of technical services covered by S.194J. He invited our attention to the eight types of activities undertaken by the service provider for the assessee company as enumerated in Appendix B to the Master Services Agreement and contended that it was not possible to undertake these activities without the technical expertise. He contended that the services in the present case thus were rendered by the service provider to the assessee company by employing skilled manpower and by using Information Technology and the same, therefore, were in the nature of technical services covered by S.194J. 9. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that the amount in question was paid by the assessee company to M/s. Records and Data Warehousi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the extant data entry specifications/guidelines Within 72hours (a) 100% accurate data entry (including corrections, if any) (b) Quality/Audit team to have control. MIS to be submitted on audit. (Customer Details or otherwise ) by Airtel 6. After completing scanning, all the forms to be field at central warehouse (HYD) Within 24 hours of scanning 100% compliance- (a) MIS on Scanned APEF/SEFs vis- -vis the APEF/SEFs stored at Warehouse (b) ZERO mismatches between scanned and filed forms 7. Retrieval of forms as Telecom Enforcement Resource Monitoring(TERM) Cell requirement Within 72 Hrs. 100% compliance. MIS submission to Airtel 8. Inserting of Value Added Services (VAS) forms as and when received Within 48 hrs. 100% compliance and MIS submission It is also stipulated in Appendix B that minimum qualification of manpower required to render the services would be graduates with reading and writing capacity of English and Telugu and typing skills of 60 words per minute. 11. The question that arises now for our consideration is whether the pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ager 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'ble Delhi High Court that the expression technical services thus necessarily involves human element or what is now a days fashionably called human interface . In the case of Bharti Cellular Ltd (supra) before the Hon'ble Delhi High Court, the facility provided by MTNL and other companies to the assessee for interconnection/port access was one which was provided technically by the machines and since it did not involve any human interface, the Hon'ble Delhi High Court held that the same could not be regarded as technical services as contemplated under S.194J of the Act. 13. It is worthwhile to note that the decision of the Hon ble Delhi High Court in the case of Bharti Cellular Ltd (supra) was challenged by the Revenue before the Hon'ble Supreme Court, and although the Hon'ble Supreme Court in the judgment reported in 330 ITR 239, substantially agreed in principle with the meaning assigned by the Hon'ble Delhi High Court to the expression fee for technica ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
