TMI Blog2015 (11) TMI 1451X X X X Extracts X X X X X X X X Extracts X X X X ..... td (supra) before the 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 Delhi High Court held that the same could not be regarded as 'technical services' as contemplated under S.194J of the Act. It is worthwhile to note that the decision of the Delhi High Court in the case of Bharti Cellular Ltd (supra) was challenged by the Revenue before the Supreme Court, and although the Supreme Court in the judgment reported in [2010 (8) TMI 332 - Supreme Court of India ], substantially agreed in principle with the meaning assigned by the Delhi High Court to 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. The Supreme Court also felt that some expert evidence was required to be brought on record to show how a human intervention takes place during the course of rendering of the services. The matter, therefore, was restored by the Supreme Apex Court to the file of the Assessing Officer with a direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nical personnel were utilized as in the case maintenance of mobile towers, tax @ 10% u/s 194J was deducted and in other cases tax u/s 194C @ 2% was deducted. The argument advanced was that these services were not technical in nature and don't require technical knowledge. The assessee also filed a written submission dated 16/12/2013 arguing that since Section 194C speaks of supply of labour for carrying out any work pursuant to a contract, the applicable rate of payment would be only 2%. However, the Assessing Officer observed that work is different from services and Sec 194C and 194 J operate on different parameters. Definition of technical services in section 9 states as under:- For the purposes of this clause, 'lees for technical services means any consideration (including any turn sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other 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 above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied activities under the contract, the same gets squarely covered under the provisions of the section 194C of the Act. Further, the term 'work' has a wide import which includes not only 'works contract' but also any work which can be carried out by either a contractor under a contract or through supply of labour to carry out work under a contract. The ld. Authorised representative for assessee wish to submit that in the subject orders passed by the Assessing Officer under section 201(1)/(1A) of the Act for FY 2012-13 and 2013-14 (till September, 2014), it has been held that payment made for supply of manpower would qualify as Fee for Technical Services and hence, tax was deductible at the rate of 10% under section 194J of the Act. In this regard, the ld. Authorised representative for assessee submitted that the payment made to the suppliers of manpower would not be liable for deduction of tax at source under Section 194J of the Act is as follows: Relevant extract of section 194J of the Act is as follows: (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) .... , or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss as per the Shorter Oxford Dictionary and Websters' New World Dictionary. As you would appreciate, none of the above functions is performed by the executives at the assessee's stores. Their job being restricted to only attending to the subscribers/ customers of the Assessee in a manner already specified to them. Having regard to the above definition, the Assessee respectfully submits that no directive or regulative or control or superintendence or administrative functions are performed by these executives. In fact the direction, control, regulation, administrative and superintendence functions are performed by the management of the Assessee in respect of the activities of these executives. Considering the nature of work carried out by the service provider, provisions of Section 194J of the Act would not be applicable in the present case. Accordingly, the Assessee respectfully submits that the payments made towards supply of manpower is in the nature of 'supply of labour for carrying out work' as envisaged under Section 194C of the Act and tax has been appropriately deducted under Section 194C Of the Act. Further, the explanation to Section 191 of the Act provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treats any non-deduction /short deduction on the part of a person enjoined to deduct tax was an infraction of law and equates such failure with an assessee in default. The issue in question was only to adjudicate if the services provided for payments made for supply of personnel would be technical service u/s.194J or mere contract u/s.194C. The Assessing Officer was duty bound to examine the nature of services provided and to decide on the applicability of relevant section. In this case u/s.194J or 194C, the judgment relied upon by the assessee in this context is not relevant to the issue before the Assessing Officer, hence the Commissioner of Income Tax (Appeals) dismissed this ground. 7.1 In the next ground, the ld. Departmental Representative submitted that the assessee contents that the Assessing officer has erred in holding the manpower charges are subject to deduction of tax u/s.194J has technical services whereas the actual or contractual in nature and tax is to be deducted only u/s.194C. In the case of CIT vs. Bharti Cellular in 220 CTR 258 (Del), the Delhi High Court, wherein held that 15. From the above discussion, it is apparent that both the words 'manageria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Business Solutions 7,06,96,268/- 2,15,58,974/- Customer support services such as telecalling for bill payments, telecalling for new activation. It can be seen, the payment can be made for three kinds of service. They are (1) Support services such as filed activations, vendor payment queries, entering receipts into SAP, field verifications etc. (2) Customer support services such as tele-calling for bill payments, tele-calling for new activations. (3) House keeping services. On perusal of the same shows that the support services at I and II above would necessarily require technical expertise and managerial expertise because they would involve identification of the customers to whom such services have to be rendered. The activation of any new service/ marketing and selling of the services would also essentially required in depth analysis and knowledge of the services provided and activates of the company. It was an admitted fact that the services provided by the assessee are highly technical in nature and support of services cannot be carried out by a person without requisite knowledge. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by VECL. In all other cases, VECL may request for withdrawal of a deputee subject to payment of one month's service fee to Service Provider. In case of relieving a Deputee, VECL shall conduct all the formalities required to be done at their end and inform Service Provider duly of the same. No pending formalities shall be entertained at a later date by Service Provider. e. Safety and Health VECL will not assign work of a hazardous nature (health/safety) without prior intimation to service provider and without provision of adequate personal protection gear. f. Service Provider will devise suitable selection procedures and ensure that personnel's services offered have the approval of VECL. g. Service Provider will ensure that the deputees' salaries / reimbursements are processed and reached to the deputees latest by last working day of the month irrespective of thepayments from VECl. h. Service Provider will review deputee performance periodically with the concerned Executive of the VECL i. Service Provider personnel will communicate with the deputees / concerned Executive ofVECL periodically to address any problems and implement s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agree to maintain the confidentiality of the confidential information for a further period of three years from the date of such termination. The service provider agrees that any of assessee's technical or business information that service provider's employees or agents acquire while on assessee's premises or through access to assessee's computer system or databases while on or off assessee's premises, shall be deemed confidential information. All information provided by the assessee to service provider shall at all times, remain the sole and exclusive property of assessee. Upon termination /expiry of this agreement, confidential information shall be returned to assessee or destroyed in accordance with the instructions of assessee and evidence of such destruction provided to assessee to its reasonable satisfaction the assessee may at its sole option, witness the destruction. The transactions financial or otherwise and / or correspondence entered into by and between assessee and the service provider and submit such reports to assessee periodically as specified by the assessee. In the assessment year under consideration, the assessee availed/ made payments as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax (Appeals) that the payments made towards housekeeping services shall be subject to tax u/s.194C and he also held that the assessee should deduct tax u/s.194J for technical services for the services provided 1) Support services such as filed activations, vendor payment queries, entering receipts into SAP, field verification etc. and 2) Customer support services such 'as tele- calling for bill payments, tele- calling for new activation . 9. In our opinion, the findings of the Commissioner of Income Tax (Appeals) is to be confirmed as the activities undertaken by the service provider for the assessee company discussed as per the agreement, it is not possible to undertake such activities without technical expertise, skilled manpower and by using up to date technology of the service provider. Contrary to this, the ld. Authorised Representative for assessee relied on the various judicial precedents. However, a careful reading of these judgments shows that the facts involved in the said cases were entirely different from the facts involved in this case. Therefore, it cannot be applied in the present case to decide the issue. In the case of CIT vs. Bharti Cellular Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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