TaxTMI 
TaxTMI 
2010 (2) TMI 910
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....e of VSAT charges and transaction charges are as follows:- VSAT Charges:- Members of the stock exchanges trade (purchase and sell) on behalf of their clients. As a part of infrastructure provided to the members a trading system, known 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 centralised to enable trading in various stock exchanges. Each stock exchange is connected to the member's workstations 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. Transaction charges:- Charges levied by the Stock Exchanges on its members bas....
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.... was a technical information and not commercial information. According to the Assessing Officer, these services were specialised in nature. For all the above reasons, the Assessing Officer disallowed the claim of the assessee for deduction. 5. On appeal by the assessee, learned CIT(A) followed the order of learned CIT(A)-XV, Mumbai in the case of Kotak Securities Ltd. v. Addl. CIT [2008] 25 SOT 440 for assessment year 2005-06 wherein on the issue of deductibility of tax at source on transaction charges the Tribunal held that it was not a payment for any technical services rendered. Learned CIT(A) followed the aforesaid decision and held that the provisions of section 194 are not attracted to transaction and VSAT 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 consi....
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....ontract of employment then the payment of remuneration for such services are outside the purview of fees for technical services. 8. The Hon'ble Madras High Court in the case of Skycell Communications Ltd. (supra) had an occasion to examine the definition of 'fee for technical services' in the context of payment of fees by a cellular/Mobile phone subscriber to the operator of the cellular/mobile phone facility. The following were its observations:- "Thus, while stating that "technical service" would include managerial 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 appli....
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....llows:- "Installation and operation of sophisticated equipments with a view to earn income by allowing customers to avail of the benefit of the user of such equipment does not result in the provision of technical service to the customer for a fee. When a person decides to subscribe to a cellular telephone service in order to have the facility of being able to communicate with others, he does not contract to receive a technical service. What he does agree to is to pay for the use of the airtime for which he pays 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....