TaxTMI 
TaxTMI 
2014 (6) TMI 542
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....ns of Income Tax Act, while making a mention of Explanation 2 to section 9(1)(vii) of I.T.Act, regarding term 'technical service' by using the word 'human' in violation of principle of interpretation of statutes? ii) Whether on the facts and circumstances of the case, the learned ITAT was right in law in holding that the payments made by the assessee in form of transmission/wheeling and SLDC charges were not liable for deduction of tax at source under section 194J of the Income Tax Act? iii) Whether on the facts and circumstances of the case, the learned ITAT was justified in law in holding that the respondent is not liable to pay interest under section 201(1-A) of the I.T.Act, 1961 because there was no tax liability on the income of the deductee? 3. Briefly, the facts necessary for adjudication of the controversy involved as narrated in ITA No.652 of 2010 may be noticed. The respondent Dakshin Haryana Bijli Vitran Nigam Limited is a company under the Companies Act, 1956. It is engaged in the distribution of power in the State of Haryana. It purchases power from the generation company M/s Haryana Power Generation Corporation Limited, Panchkula (HPGCL) and is selling it to the co....
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....30 ITR 239 and decision of this Court in ITA No.940 of 2008 decided on 11.7.2011, CIT-I (TDS) vs. Chief Manager, State Bank of India, the matter requires to be remanded to the Assessing Officer to examine afresh as to whether there was any human intervention requiring examination of technical data and therefore, the services rendered would fall under section 194J of the Act to be "technical services". It was also pointed out that in view of the decision of the Apex Court in Bharti Cellular Limited's case (supra), the Central Board of Direct Taxes had issued Instruction No.5/2011 [F.No.225/61/2011-IT(A-II)] dated 30.3.2011 to the following effect:- "The Hon'ble Supreme Court has made the following observations in an order dated 12.8.2010 in the case of CIT vs. Bharti Cellular Limited (2010) 193 Taxman 97 (SC): 'We are directing CBDT to issue directions to all its officers, that in such cases, the department need not proceed only by the contracts placed before the officers. With the emergence of our country as one of the BRIC countries and with the technological advancement matters such as present one will keep on recurring and hence time has come when department should examine tech....
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.... in respect of such tax if such resident - i) has furnished his return of income under section 139, ii)has taken into account such sum for computing income in such return of income; and iii)has paid the tax due on the income declared by him in such return of income and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed. xx xx xx xx xx xx xx Proviso to Section 201(1A) Provided that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso to sub section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident." 6. Learned counsel for the respondent further argued that there was no human intervention and, therefore, the provisions of section 194J(1) of the Act were not attracted. It was also urged that there was no income element and, therefore, no deduction of tax was....
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.... the Act. This submission is not accepted by the Department. We leave it there because this submission has not been examined by the Tribunal. 9. In short, the above aspects need reconsideration by the Assessing Officer. We make it clear that the assessee(s) is not at fault in these cases for the simple reason that the question of human intervention was never raised by the Department before the CIT. It was not raised even before the Tribunal; it is not raised even in these civil appeals. However, keeping in mind the larger interest and the ramification of the issues, which is likely to recur, particularly, in matters of contracts between Indian Companies and Multinational Corporations, we are of the view that the cases herein are required to be remitted to the Assessing Officer (TDS). 10. Accordingly, we are directing the Assessing Officer (TDS) in each of these cases to examine a technical expert from the side of the Department and to decide the matter within a period of four months. Such expert(s) will be examined (including cross-examined) within a period of four weeks from the date of receipt of the order of this Court. Liberty is also given to Respondent No.1 to examine its e....