TMI Blog2016 (6) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided by humans, that applying the rule of noscitur a sociis, the word “technical” in Explanation 2 to section 9(1)(vii) would also have to be construed as involving a human element. In that matter the AO was of the opinion that interconnect/port access charges were liable for tax deduction at source in view of the provisions of section 194J of the Act and that these charges were in the nature of fee for technical services. Provisions of section 194J of the Act would be applicable only if any managerial, technical or consultancy services are provided to an assessee and that mere use of technology would not make any service managerial/technical or consultancy service. In the case under consideration use of technology is there, but, it does not mean that it was not a contract. The assessee had rightly deducted TDS as per the provisions of section 194C of the Act. We do not find any legal or factual infirmity in the order of the FAA. So, confirming her order, we decide effective ground of appeal against the AO. - I. T. A. 5951 & 52/Mum/2014 - - - Dated:- 22-6-2016 - Sh. Rajendra, Accountant Member And Pawan Singh, Judicial Member For the Revenue : Shri K. Ravi Ramachandra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for opening bank accounts it was taking help of its sister concerns and others, that the service-providers would mobilise technical manpower for opening the bank accounts, that they would prepare biometric and demographic particulars of the customers and put the same in bank network, that the services of capturing photos and finger-prints by web camera and scanner required highly technical skill and specified soft ware, that the procedure could not be performed by non technical person, that payment for such services would attract section 194 of the Act. He further held that the assessee had not deducted TDS on ₹ 26. 98 crores, that the deducteee had submitted nil deduction certificate (u/. 197 of the Act, dt. 17. 6. 2010), that the certificate was issued for Nil-deduction for payment/credit under contract for an amount of ₹ 18 crores, that the assessee had not deducted tax for ₹ 26. 98 crores. Finally, he held that the assessee was in default u/s. 201/201A of the Act. The tax payable u/s. 194J of the Act, along - with the interest u/s. 201(1A), was calculated at ₹ 22. 74 lakhs (short fall u/s. 201(1) ₹ 64, 582/- and interest u/s. 201(1A) ₹ 22. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act was applicable. As stated earlier none appeared on behalf of the assessee. 6. We have perused the material before us. We find that the AO was of the opinion that TDS was to be made as per the provisions of section 194J of the Act and not as per the provisions of section 194C, that one of the service provider i. e. sister concern had supplied nil-taxdeduction certificate to the assessee, that the FAA held that service availed by the assessee were in the nature of a contract and that there was no acquisition of technical knowhow by the assessee. 6. 1. We find that in the case of Delhi Transco Ltd. (380 ITR 398), the Hon ble Delhi High Court has defined the word technical services while dealing with the section 194 J of the Act, in the following manner: Section 194J of the Income-tax Act, 1961, provides for deduction of tax at source from fees for technical services. Technical services consist of services of technical nature when special skills or knowledge relating to technical field are required for their provision, managerial services are rendered for performing management functions and consultancy services relate to provision of advice by someone having special qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L was not a technical service. It was held that the assessee was not liable to be saddled with higher liability of tax deduction at source. Upholding the order of the Tribunal , the Hon ble Court held as under: that PGCIL was operating and maintaining its own system using the services of engineers and qualified technicians. PGCIL was in that process not providing technical services to others, including the assessee. A comparison could be made with the system of distribution of some other commodity like water. It might require the operation and maintenance of water pumping station and the maintenance of a network of pipes. However, what was conveyed through the pipes and the equipment to the ultimate consumer was water. The equipment and pipes have no doubt to be maintained by technical staff but that did not mean that a person to whom the water was distributed through using the pipes and equipment was availing of any technical service as such. Although the wheeling charges may be fixed by the Commission, that by itself was not a determinative factor. Once it was accepted that all that PGCIL did was to transmit the electricity to the assessee through the network without any hu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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