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TMI Blog2011 (12) TMI 546X X X X Extracts X X X X X X X X Extracts X X X X ..... ge can be upgraded without the presence of human beings by way of handing over drawings and designs or a technical service can be rendered by robot (machines) without intervention of human element, the classification of the services rendered by the assessee as technical service is not free from doubt. In such circumstances, the assessee cannot be saddled with higher liability for tax deducted at source as it is only expected to deduct tax on the basis of commonly understood meaning of the provision. We may also look at the issue from the point of view of the recipient. The transmission of electricity for the assessee has been undertaken in the normal course of its business and the income is to be classified as business income. This may lead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired to deduct the tax at source @ 5% of the payment u/s 194J as it was providing technical services by transmitting the electricity. Therefore, an order was passed u/s 201(1) and 201(1A) of the Act raising the total demand of ₹ 3,19,87,617/-. The ld. CIT(Appeals) partly allowed the appeal of the assessee by making following observations:- "17. Now the major question which is to be decided is whether transportation of energy (goods) should be subject to TDS u/s 194C (2% TDS on payment) or u/s 194J (5% TDS on payment). Since there are not many case laws of HCs/SC on such issue, and in the absence of sufficient legal precedent on the subject, I am unable to reject the view taken by the ld. Assessing Officer and agree to the demand ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at best be said to be transportation of goods covered u/s 194C of the Act. A reference is made to the decision of Hon'ble Delhi High Court in the case of CIT Vs. Bharti Cellular Ltd., (2008) 220 CTR (Del) 258. In paragraph no. 15 of the judgment, it is mentioned that the words "managerial" and "consultancy" involve a human element and both these services are provided by human beings. Such element should also be involved in the word "technical" by applying the rule of noscitur a sociis. The services are provided by the telecom companies for interconnection automatically by machines. That does not mean that these companies are providing technical services. For ready reference, this paragraph is reproduced below:- "15. From the above discus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en placed in the paper book between page nos. 144 to 173. In paragraph no. 9.6, it has been mentioned that technical services are said to be rendered when technology or technical knowledge of a person is made available to others. Rendering of services by allowing use of technical system is a different matter. For the sake of ready reference, this paragraph is reproduced below:- "9.6 An analysis of above cases lays down the proposition that s. 194J would have application only when the technology or technical knowledge of a person is made available to others and not where by using technical systems, services are rendered to others. Rendering of services by allowing use of technical system is different than charging fees for rendering techni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es are covered u/s 194C. 2.4 In view of the aforesaid, it was argued that the demand raised may be deleted by not treating the assessee as an assessee in default. 3. In reply, the ld. CIT, DR relied upon paragraph no. 5.1 of the assessment order. In this paragraph, he has distinguished the facts of the case of Bharti Cellular Ltd., decided by Hon'ble Delhi High Court in 175 Taxman 573; and Skycell Communications Ltd. Vs. DCIT, (2001) 251 ITR 53 (Mad). 4. We have considered the facts of the case and submissions made before us. In the case of Bharti Cellular Ltd. (supra), the Hon'ble Court by applying the rule of noscitur a sociis, has come to a conclusion that involvement of human element is essential for rendering any service as "technic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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