TaxTMI 
TaxTMI 
2015 (7) TMI 109
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....in the business of development of computer software, had filed its return of income for the assessment year 2007-08 on 31/10/2007 declaring a total income of Rs. 69,32,820/- after claiming deduction of Rs. 19,60,93,025/- u/s 10A of the Act. During the assessment proceedings u/s 143(3) read with sec.144C of the Act, the AO observed that the assessee had claimed to have paid lease-line expenses of Rs. 36,11,140/- and debited the same under the head 'communication expenses' but did not deduct TDS in respect of the aforesaid expenditure. The AO was of the opinion that the services rendered were technical services and therefore TDS provisions are applicable. He, therefore, disallowed the sum of Rs. 36,11,140/- u/s 40(a)(ia) of the Act. 4. Aggrieved, the assessee preferred an appeal before the CIT(A) who deleted the addition by following the judgment of the Hon'ble Delhi High Court in the case of CIT vs. Estel Communications Pvt. Ltd. (217 CTR 102) wherein it was held that when there was a simple purchase of Internet Band-width it cannot be held that the payment was for technical services. Against the relief given by the CIT(A), the revenue is in appeal before us by raisin....
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....-tax on income comprised therein : ............... Explanation : For the purposes of this section,- (a) 'professional services' means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of s. 44AA or of this section; (b) 'fees for technical services' shall have the same meaning as in Expln. 2 to cl. (vii) of sub-s. (1) of s. 9; ............... 11. It is apparent that in respect of fees for technical services tax is to be deducted at source at 5 per cent (as it then was). It is also clear that the expression 'fees for technical services' has the same meaning as in Expln. 2 to cl. (vii) of sub-s. (1) of s. 9. The said Expln. 2 reads as under : "Explanation 2 : For the purposes 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 o....
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....riber to the cellular mobile telephone facility provider and not by one cellular network provider to another. For this purpose, we must examine the appeals at hand de hors the decision of the Madras High Court in Skycell (supra). 13. We have already pointed out that the expression 'fees for technical services' as appearing in s. 194J of the said Act has the same meaning as given to the expression in Expln. 2 to s. 9(1)(vii) of the said Act. In the said Explanation the expression 'fees for technical services' means any consideration for rendering of any 'managerial, technical or consultancy services'. The word 'technical' is preceded by the word 'managerial' and succeeded by the word 'consultancy'. Since the expression 'technical services' is in doubt and is unclear, the rule of noscitur a sociis is clearly applicable. The said rule is explained in Maxwell on The Interpretation of Statutes (Twelfth Edition) in the following words: "Where two or more words which are susceptible of analogous meaning are coupled together, noscitur a sociis, they are understood to be used in their cognate sense. They take, as it were, thei....
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....quently, applying the Rule of noscitur a sociis, the word 'technical' as appearing in Expln. 2 to s. 9(1)(vii) would also have to be construed as involving a human element. But, the facility provided by MTNL/other companies for interconnection/port access is one which is provided automatically by machines. It is independently provided by the use of technology and that too, sophisticated technology, but that does not mean that MTNL/other companies which provide such facilities are rendering any technical services as contemplated in Expln. 2 to s. 9(1)(vii) of the said Act. This is so because the expression 'technical services' takes colour from the expressions 'managerial services' and 'consultancy services' which necessarily involve a human element or, what is now a days fashionably called, human interface. In the facts of the present appeals, the services rendered qua interconnection/port access do not involve any human interface and, therefore, the same cannot be regarded as 'technical services' as contemplated under s. 194J of the said Act. 16. Since we have applied the rule of noscitur a sociis, it would be necessary to indicate that t....
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....ty or shared features or attributes of the including word with the included." 17. In the appeals before us it is obvious that the meaning of the expression 'technical services' by itself, is far from clear. It is also clear that the word 'technical' has been used in the 'society' of the words 'managerial' and 'consultancy'. In such a situation, the rule would clearly apply and, therefore, the expression 'technical services' would have to take colour from the expressions 'managerial services' and 'consultancy services'. 18. To conclude the discussion on the application of the rule of noscitur a sociis, we think that a reference to the Supreme Court decision in the case of Stonecraft Enterprises vs. CIT (1999) 153 CTR (SC) 86 : (1999) 3 SCC 343 would be apposite. In that case the Supreme Court was required to interpret the provisions of s. 80HHC(2)(b) of the said Act relating to asst. yrs. 1985-86, 1987-88 and 1988-89. In the said sub-s. (2)(b) of s. 80HHC, it was provided that the section did not apply to the following goods or merchandise, namely : (i) mineral oil; and (ii) minerals and ores. The questio....
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....gateway and the network of MTNL/other companies. MTNL or other companies do not provide any assistance or aid or help to the respondents/assessees in managing, operating, setting up their infrastructure and networks. No doubt, the facility of interconnection and port access provided by MTNL/other companies is 'technical' in the sense that it involves sophisticated technology. The facility may even be construed as a 'service' in the broader sense such as a 'communication service'. But, when we are required to interpret the expression 'technical service', the individual meanings of the words 'technical' and 'service' have to be shed. And, only the meaning of the whole expression 'technical services' has to be seen. Moreover, the expression 'technical service' is not to be construed in the abstract and general sense but in the narrower sense as circumscribed by the expressions 'managerial service' and 'consultancy service' as appearing in Expln. 2 to s. 9(1)(vii) of the said Act. Considered in this light, the expression 'technical service' would have reference to only technical service rendered by ....