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TMI Blog2015 (7) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 a human. It would not include any service provided by machines or robots. The interconnect charges/ port access charges cannot be regarded as fees for technical services - Decided against revenue. Exclusion of reimbursement of certain expenses both from the export turnover as well as from the total turnover for the purpose of computation of deduction u/s 10A - Held that:- This issue also is covered in favour of the assessee by the decision of the jurisdictional High Court in the case of Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] it is held whatever is excluded from the export turnover should also be excluded from the total tur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the same issue had arisen in the assessee's own case for the assessment year 2009-10 and 'C' bench of this Tribunal, to which both of us i.e. Judicial Member and the Accountant Member are signatories, had decided the issue in favour of the assessee by following the decisions of the Hon'ble Delhi High Court (cited supra) as well as the Hon'ble Bombay High Court in the case of Skycell Communications Ltd. vs. DCIT (251 ITR 53). 6. Having regard to the rival contentions and the material on record, we find that the issue is covered in favour of the assessee by the decision of this Tribunal in the assessee's own case for assessment year 2009-10 to which both of us are signatories. The relevant portion of the Tribunal order is reproduced hereunder: 21. We have perused the orders and heard the rival contentions. Claim of the assessee was denied by the AO for want of deduction of tax at source. Payments made by the assessee were undisputedly for purchasing inter-net band width. DRP had relied on the definition of 'royalty' given in Explanation-2to section (9)(1)(vi) of the Act and held that royalty included payments effected for use of any proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be income of the recipient chargeable under the head 'Salaries'. The aforesaid Explanation makes it clear that 'fees for technical services' means any consideration (including any lump sum consideration) for the rendering of any 'managerial, technical or consultancy services' but does not include consideration for any construction, assembly, mining or like project in the country by the recipients or consideration which would be income of the recipients chargeable under the head 'salaries'. The said definition is in two parts. The first part is 'means and includes' type of definition and the second part is 'does not include' definition. In the present appeals we are not concerned with the second part. The entire focus is attracted to the first part and that too, to the expression 'consideration for the rendering of any managerial, technical or consultancy services'. It is only if the payments made by the respondents/ assessees to MTNL/other companies in respect of interconnect/port access charges fall within the ambit of this expression that the said payments could be regarded as fees for technical services as contemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 'technical' would take colour from the words 'managerial' and 'consultancy', between which it is sandwiched. The word 'managerial' has been defined in the Shorter Oxford English Dictionary, Fifth Edition as : of pertaining to, or characteristic of a manager, esp. a professional manager of or within an organization, business, establishment, etc. The word 'manager' has been defined, inter alia, as : a person whose office it is to manage an organization, business establishment, or public institution, or part of one; a person with the primarily executive or supervisory function within an organization etc.; a person controlling the activities of a person or team in sports, entertainment, etc. It is, therefore, clear that a managerial service would be one which pertains to or has the characteristic of a manager. It is obvious that the expression 'manager' and consequently 'managerial service' has a definite human element attached to it. To put it bluntly, a machine cannot be a manager. 14. Similarly, the word 'consultancy' has been defined in the said Dictionary as 'the work or position of a consulta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the intention of the legislature is doubtful. In Godfrey Phillips India Ltd. Anr. vs. State of U.P. Ors. (2005) 194 CTR (SC) 257 : (2005) 2 SCC 515, a Constitution Bench of the Supreme Court was considering the meaning of the word 'Luxuries' as appearing in Entry 62 of the List II of the VIIth Schedule to the Constitution which empowers the State legislature to make laws with respect to 'taxes on luxuries including taxes on entertainment, amusement, betting and gambling'. The Supreme Court was of the view that the general meaning of 'luxury' had been explained or clarified and must be understood in a sense analogous to that of the less general words such as 'entertainment', 'amusements', 'gambling' and 'betting', which were clubbed with it. The Supreme Court, employing the said principle of noscitur a sociis, noted that this principle of interpretation had received the approval of the Supreme Court in an earlier decision in Rainbow Steels Ltd. vs. CST (1981) 2 SCC 141. The Supreme Court also noted that earlier, indiscriminate application of this rule was doubted in the case of The State of Bombay vs. The Hospital Mazdoor S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court was that while granite was a mineral in the general sense, it was not a mineral for the purposes of s. 80HHC and, therefore, the deduction provided for therein was available to the assessee who was in the business of exporting granite. The Supreme Court noted the arguments of the learned counsel for the assessee based upon the doctrine of noscitur a sociis that the word 'minerals' in s. 80HHC should be read in the context of the words 'ores' which it was associated with and must draw colour therefrom. It was submitted that the word 'minerals' must be read as referring only to such minerals as are extracted from ores and not others. While the Supreme Court agreed that the doctrine of noscitur a sociis was applicable, it held that the word 'minerals', in sub-s. (2)(b) of s. 80HHC must be read in the context of both 'mineral oil' and 'ores' and not just 'ores'. The Supreme Court held that these three words taken together are intended to encompass all that may be extracted from the earth. Consequently, the Supreme Court held that all minerals extracted from the earth, granite included, must, therefore, be held to be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) or not, the result is the same. The interconnect charges/ port access charges cannot be regarded as fees for technical services. Consequently, both the questions are answered against the Revenue and in favour of the assessees. Their Lordships had followed the decision of the Hon'ble Mumbai High Court in the case of Sky cell (supra), though for different reasons. Assessee here had produced bills to show that payments effected thereof for purchasing inter-net band width. We are therefore, of the opinion that assessee was not bound to deduct tax at source u/s 194J of the Act on the payments effected to the service providers. Vis- -vis application of Sec.194C, the AO was not able to show that the service provided were based on any specific contract entered by the assessee with the service providers. We are therefore, of the opinion that disallowance u/s 40(ia) of the Act was not warranted. Such a disallowance stands deleted. Ground no.13 of the assessee is allowed. Respectfully following the same, we do not see any reason to interfere with the order of the CIT(A). Ground No.2 is accordingly rejected. 7. As regards ground Nos.3 and 4 on the second issue are concerne ..... 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