Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Asstt. Commissioner of Income-Tax Circle-12 (4) , Bangalore Versus M/s Torry Harris Business Solutions (P) Ltd.

2015 (7) TMI 109 - ITAT BANGALORE

TDS on payment made for Internet services i.e. leased line benefits/broadband services - Whether are not in the nature of technical services and do not attract the provisions of sec.194J - Held that:- The issue is covered in favour of the assessee by the decision of this Tribunal in the assessee's own case for assessment year 2009-10 to which both of us are signatories.

The interconnect/port access facility is only a facility to use the gateway and the network of MTNL/other companies. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l service', the individual meanings of the words 'technical' and 'service' have to be shed. And, only the meaning of the whole expression 'technical services' has to be seen. Moreover, the expression 'technical service' is not to be construed in the abstract and general sense but in the narrower sense as circumscribed by the expressions 'managerial service' and 'consultancy service' as appearing in Expln. 2 to s. 9(1)(vii) of the said Act. Considered in this light, the expression 'technical serv .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee by the decision of the jurisdictional High Court in the case of Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] it is held whatever is excluded from the export turnover should also be excluded from the total turnover for the purpose of computing deduction u/s.10A of the Act. - Decided against revenue. - ITA No. 1300/Bang/2014 - Dated:- 17-4-2015 - P. Madhavi Devi, JM And Abraham P. George, AM,JJ. For the Petitioner : Mrs Sahanzeb Akhtar, CIT-DR For the Respondent : Shri R Srinivasan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

m the export turnover as well as from the total turnover for the purpose of computation of deduction u/s 10A of the Act for the assessment year 2007-08. 2. Brief facts of the case are that the assessee-company which is in the business of development of computer software, had filed its return of income for the assessment year 2007-08 on 31/10/2007 declaring a total income of ₹ 69,32,820/- after claiming deduction of ₹ 19,60,93,025/- u/s 10A of the Act. During the assessment proceeding .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e assessee preferred an appeal before the CIT(A) who deleted the addition by following the judgment of the Hon'ble Delhi High Court in the case of CIT vs. Estel Communications Pvt. Ltd. (217 CTR 102) wherein it was held that when there was a simple purchase of Internet Band-width it cannot be held that the payment was for technical services. Against the relief given by the CIT(A), the revenue is in appeal before us by raising grounds 1 & 2 on this issue. 5. The learned Departmental Repre .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ell Communications Ltd. vs. DCIT (251 ITR 53). 6. Having regard to the rival contentions and the material on record, we find that the issue is covered in favour of the assessee by the decision of this Tribunal in the assessee's own case for assessment year 2009-10 to which both of us are signatories. The relevant portion of the Tribunal order is reproduced hereunder: 21. We have perused the orders and heard the rival contentions. Claim of the assessee was denied by the AO for want of deducti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

smission by Satellite Cable, optic fiber or any other similar technology. However, we find that Hon'ble Delhi High Court in the case of M/s Arathi Cellular Ltd., (supra) had held under at paras-10 to 21 of its judgment; 10. Sec. 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 an HUF, who is responsible for paying to a resident any sum by way of- (a) fees for profession .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of s. 44AA or of this section; (b) 'fees for technical services' shall have the same meaning as in Expln. 2 to cl. (vii) of sub-s. (1) of s. 9; ............... 11. It is apparent that in respect of fees for technical services tax is to be deducted at sour .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head 'Salaries'." The aforesaid Explanation makes it clear that 'fees for technical services' means any consideration (including any lump sum consideration) for the rendering of any 'managerial, technical or consultancy services' but does not include considerati .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sion 'consideration for the rendering of any managerial, technical or consultancy services'. It is only if the payments made by the respondents/ assessees to MTNL/other companies in respect of interconnect/port access charges fall within the ambit of this expression that the said payments could be regarded as fees for technical services as contemplated under s. 194J of the said Act. 12. In Skycell (supra), a learned Single Judge of the Madras High Court noted that installation and operat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

unt 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 (supra). However, we still have to deal with the submissions made by the learned counsel for the appellant/Revenue that the payments that were considered in the case of Skycell (supra) were those made by a subscriber to the cellular mobile telephone facility provider and not by one cellular network provider to an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r consultancy services'. The word 'technical' is preceded by the word 'managerial' and succeeded by the word 'consultancy'. Since the expression 'technical services' is in doubt and is unclear, the rule of noscitur a sociis is clearly applicable. The said rule is explained in Maxwell on The Interpretation of Statutes (Twelfth Edition) in the following words: "Where two or more words which are susceptible of analogous meaning are coupled together, noscitur .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

;of pertaining to, or characteristic of a manager, esp. a professional manager of or within an organization, business, establishment, etc." The word 'manager' has been defined, inter alia, as : "a person whose office it is to manage an organization, business establishment, or public institution, or part of one; a person with the primarily executive or supervisory function within an organization etc.; a person controlling the activities of a person or team in sports, entertainme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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); se .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ntly, applying the Rule of noscitur a sociis, the word 'technical' as appearing in Expln. 2 to s. 9(1)(vii) would also have to be construed as involving a human element. But, the facility provided by MTNL/other companies for interconnection/port access is one which is provided automatically by machines. It is independently provided by the use of technology and that too, sophisticated technology, but that does not mean that MTNL/other companies which provide such facilities are rendering .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

annot be regarded as 'technical services' as contemplated under s. 194J of the said Act. 16. Since we have applied the rule of noscitur a sociis, it would be necessary to indicate that this rule or principle has been applied and accepted by the Supreme Court whenever the meaning of a word, which falls within a group of words, is unclear and the intention of the legislature is doubtful. In Godfrey Phillips India Ltd. & Anr. vs. State of U.P. & Ors. (2005) 194 CTR (SC) 257 : (2005) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

analogous to that of the less general words such as 'entertainment', 'amusements', 'gambling' and 'betting', which were clubbed with it. The Supreme Court, employing the said principle of noscitur a sociis, noted that this principle of interpretation had received the approval of the Supreme Court in an earlier decision in Rainbow Steels Ltd. vs. CST (1981) 2 SCC 141. The Supreme Court also noted that earlier, indiscriminate application of this rule was doubted in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ifferent senses. The Supreme Court further observed as under : "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 indicativ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the rule would clearly apply and, therefore, the expression 'technical services' would have to take colour from the expressions 'managerial services' and 'consultancy services'. 18. To conclude the discussion on the application of the rule of noscitur a sociis, we think that a reference to the Supreme Court decision in the case of Stonecraft Enterprises vs. CIT (1999) 153 CTR (SC) 86 : (1999) 3 SCC 343 would be apposite. In that case the Supreme Court was required to inte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eral in the general sense, it was not a mineral for the purposes of s. 80HHC and, therefore, the deduction provided for therein was available to the assessee who was in the business of exporting granite. The Supreme Court noted the arguments of the learned counsel for the assessee based upon the doctrine of noscitur a sociis that the word 'minerals' in s. 80HHC should be read in the context of the words 'ores' which it was associated with and must draw colour therefrom. It was su .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tracted from the earth. Consequently, the Supreme Court held that all minerals extracted from the earth, granite included, must, therefore, be held to be covered by the provisions of sub-s. (2)(b) of s. 80HHC, and the exporter thereof was, therefore, disentitled to the benefit of that section. 19. From this decision, it is apparent that the Supreme Court employed the doctrine of noscitur a sociis and held that the word 'minerals' took colour from the words 'mineral oil' which pre .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sion on the applicability of the principle of noscitur a sociis. 20. 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

;technical service' is not to be construed in the abstract and general sense but in the narrower sense as circumscribed by the expressions 'managerial service' and 'consultancy service' as appearing in Expln. 2 to s. 9(1)(vii) of the said Act. Considered in this light, the expression 'technical service' would have reference to only technical service rendered by a human. It would not include any service provided by machines or robots. 21. Thus, it is clear, whether we .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version