TMI Blog2017 (1) TMI 1584X X X X Extracts X X X X X X X X Extracts X X X X ..... 260-A of Income Tax Act, 1961 (hereinafter referred to as the Act, 1961 ) have arisen from judgments and orders of Income Tax Appellate Tribunal (hereinafter referred to as the Tribunal ) in respect to different Assessment Years (hereinafter referred to as A.Y. ) though raise common substantial questions of law. Details of appeal numbers, date of order of Tribunal and A.Y. are as under:- Sr. No. Income Tax Appeal Numbers Date of Order Assessment Year ITA Numbers (Before Tribunal) 1. 86 of 2015 27.02.2015 2008-09 1/LKW/2013 2. 147 of 2015 16.06.2015 2009-10 136/LKW/2013 3. 3. 149 of 2015 16.06.2015 2008-09 135/LKW/2013 2. The substantial questions of law as formulated by appellants are differently worded but as agreed by learned counsel for parties, there are three substantial questions of law; (i) Whether payment of fee for transmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CL ) and power supply charges were payable to UPPCL. 8. UPPTCL is a transmission licensee by UPERC and Assessee is a distribution licensee. Both are companies registered under the provisions of Companies Act, 1956 (hereinafter referred to as Act, 1956 ) and are government companies. Service provided by UPPTCL involved use of sophisticated technology and also involve human interface in use of that technology and can be termed as Technical Service . As per Electricity Regulatory Act, 2003 (hereinafter referred to as Act, 2003 ), transmission licensee is a Service Provider and transmission service provider i.e. UPPTCL formulated an agreement from Assessee-Company for resuming technical charges for Technical Service rendered. A.A. observed that it observed that payment made to UPPTCL is not a payment of purchase/supply of power but payment of technical charge for rendering Technical Service on monthly basis. It consequently held that Assessee was liable to deduct tax at source on charges paid for transmission to UPPTCL and since it has failed to do so, amount of ₹ 1,65,32,88,040/- is disallowed under Section 40(a)(ia) of Act, 1961. Assessment order was passed making a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial amendments, (i) by insertion of Clause (BA) by Finance Act, 2012 w.e.f. 01.07.2012 and; (ii) insertion of Clause (C) by Taxation Laws Amendment Act, 2006 w.e.f. 13.07.2006. There is some other minor amendments which are not substantial. Section 194J reads as under:- 194J. (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) fees for professional services, or (b) fees for technical services, or (ba) any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company; or (c) royalty, or (d) any sum referred to in clause (va) of section 28, shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax on income comprised therein : Provided that no deduction shall be made under this section-- (A) from any sums as aforesaid credited or paid before the 1st day of July, 1995; or (B) where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion shall apply accordingly. 14. Explanation (b) of Section 194J explains what is fees for technical services . For the said purpose, it says that fees for technical services shall have the same meaning as contained in Section 9(1)(vii) Explanation (2) of Act, 1961. This Explanation (2) of Section 9(1)(vii) reads as under:- Explanation (2) - For the purpose of this clause, fees for technical services means any consideration (including any lump 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'. 15. A reading of aforesaid provision shows that fee is nothing but consideration for payment of amount rendered to anyone including any lump sum amount for specific services i.e. Managerial, Technical or Consultancy . Technical Services , therefore, as per Explanation (2) is not confined to any performance or function involving technology only bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision, A.A. held that service made available by Stock Exchange may come within the term Technical Service . Rejecting this approach, Court said that Technical Services like Managerial and Consultancy service would denote seeking of services to cater to special needs of consumer/user as may be felt necessary and making of same available by service provider. It is the above feature that would distinguish/identify a service provided from a facility offered. While former is special and exclusive to seeker of service, latter, even if termed as a service, is available to all and would therefore stand out in distinction to former. Service provided by Stock Exchange for which transaction charges are paid fails to satisfy aforesaid test of specialized, exclusive and individual requirement of user or consumer who may approach service provider for such assistance/service. It is only service of above kind that, according to us, should come within ambit of expression Technical Services appearing in Explanation 2 of Section 9(1)(vii) of Act. In absence of above distinguishing feature, service, though rendered, would be mere in the nature of a facility offered or available which would n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een considered nor the said authority has looked into the fact that mere involvement of technology will not bring something within the ambit of Technical Services as defined in Explanation (2) of Section 9(1)(vii) for the reason that here, under Act, 1961, term Technical Services has been defined in a different manner i.e. alongwith terms Managerial and Consultancy Services . Managerial or consultancy Services by itself may not include any technology still would be covered by definition of fee for technical services in the Act. Therefore, term Technical Services is not dependent solely on the fact that use of technology is involve or not. Moreover, term technical has to be read applying principle of noscitur a sociis in the term Managerial and Consultancy . That takes away normal and common meaning of Technical Services as is known in common parlance and make it totally different. Detailed aspect in this regard we have already discussed and therefore, we are not able to be persuaded to agree with opinion rendered by Authority for Advance Ruling (Income Tax) vide opinion dated 27.08.2012. 23. Be that as it may, we have no hesitation in holding that in transmission ..... X X X X Extracts X X X X X X X X Extracts X X X X
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