AI Drafter 
TaxTMI 
TaxTMI 
2009 (12) TMI 498
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....as on screen trading is provided by stock exchanges. Such trading facilities are established by stock exchanges to enable trading anywhere in the territory of India. Such trading systems are centralized to enable trading in various stock exchanges. Each stock exchange is connected to the member's work stations through appropriate communication network using a Very Small Aperture Terminal (VSAT) Network. Members will be connected to the Central Trading System through the hub of the VSAT network. Department of Telecommunications (DoT) has to issue a license for the installation and operation of private Closed User Group (CUG) VSAT network. All capital and revenue investments toward VSATs and central infrastructure will be met by concerned Stock Exchange. To allow the members the benefit of such of VSAT network, the stock exchanges charges fees from its members. (ii) Other charges and their nature are as follows: Other charges Rs. 6,80,398 SEBI Expenses 1,71,909 BSE St. Exchange-CDSL 3,55,000 Arbitration expenses 2,200 BSE expenses A/c. 6,21,163 VSAT Charges-Hughes 19,500 VSAT Recoveries-Hughes (811,500) ODIN charges A/c. (2,000....
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....tock brokers, who are members of various stock exchanges. VSAT activity enables the brokers over the length and breadth of the country to get connected with each other and do trading. VSAT and leaseline are provided by the stock exchanges and they charge fees for doing so. Thus, it was not a case of providing a simple service for a fee. It was a payment of a fees of a technical services rendered. The assessee had relied on the decision of Hon'ble Madras High Court in the case of Skycell Communications Ltd. v. Dy. CIT [2001] 251 ITR 53 1; wherein it was held that payment of fee for use of a standard facility provided to all those willing to pay for it does not amount to the fee having been paid for technical services. The Assessing Officer distinguished the aforesaid decision by holding that the data provided through VSAT is not something which is not available to general public but is only available to members of stock exchange. According to the Assessing Officer, the facility provided by the stock exchange in the form of information was a technical information and not commercial information. According to the Assessing Officer, these services were specialized in nature. For all the....
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....nce is to be made on this amount under section 40(a)( ia). In this way, the appellant gets relief on this limited point." 5. Learned CIT(A) followed the aforesaid decision and held that the provisions of section 194J are not attracted to all the above charges because those charges are not for providing any technical services but use to infrastructure facilities and, therefore, no disallowance can be made under section 40(a)( ia) of the Act. Aggrieved by the order of learned CIT(A), the revenue has preferred the present appeal before the Tribunal. 6. Before us, learned Departmental Representative reiterated the stand of the revenue as reflected in the order of the Assessing Officer. 7. We have heard the rival submissions. The relevant provisions of law may be referred to for the purpose of clarity. "194-J Fees for professional or technical services.-(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, shall, at the time of credit of such sum to the account of the payee or at the time of payment the....
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....l and consultancy service, the Legislature has not set out with precision as to what would constitute "technical" service to render it "technical-service". The meaning of the word "technical" as given in the New Oxford Dictionary is adjective 1. of or relating to a particular subject, art or craft or its techniques: technical terms (especially of a book or article) requiring special knowledge to be understood : a technical report. 2. of involving, or concerned with applied and industrial sciences: an important technical achievement. 3. resulting from mechanical failure : a technical fault. 4. according to a strict application or interpretation of the law or the rules: the arrest was a technical violation of the treaty. Having regard to the fact that the term is required to be understood in the context in which it is used, "fee for technical services" could only be meant to cover such things technical as are capable of being provided by way of service for a fee. The popular meaning associated with "technical" is "involving or concerning applied and industrial science". In the modern day world, almost every facet of one's li....
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....a charge. The fact that the telephone service provider has installed sophisticated technical equipment in the exchange to ensure connectivity to its subscriber, does not on that score, make it provision of a technical service to the subscriber. The subscriber is not concerned with the complexity of the equipment installed in the exchange, or the location of the base station. All that he wants is the facility of using the telephone when he wishes to, and being able to get connected to the person at the number to which he desires to be connected. What applies to cellular mobile telephone is also applicable in fixed telephone service. Neither service can be regarded as "technical service" for the purpose of section 194J of the Act.............. . . . At the time the Income-tax Act was enacted in the year 1961, as also at the time when Explanation 2 to section 9(1)(vii) was introduced by the Finance (No. 2) Act, with effect from April 1, 1977, the products of technology had not been in such wide use as they are today. Any construction of the provisions of the Act must be in the background of the realities of day-to-day life in which the products of technology play an important....