9911796707
TMI Blog2016 (6) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commercial banks/Scheduled banks to open their Branches. The company would provide the banking services through its network of agents, through whom the customers could do Banking business by use of device called "Point of Transaction Machine(POT)". The transactions of the beneficiary/customers are settled at the end of the day by connecting the POT to the Bank Server and the transactions of the beneficiary gets reflected in the beneficiary's bank account. On verification of the P&L account the AO found that the assessee had incurred major expenditure under the heads enrollment charges, AMC charges, POT usage charges and rent for POT machines. He called for details in that regard and observed that the assessee had considered the enrollm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c particulars of the customers and put the same in bank network, that the services of capturing photos and finger-prints by web camera and scanner required highly technical skill and specified soft ware, that the procedure could not be performed by non technical person, that payment for such services would attract section 194 of the Act. He further held that the assessee had not deducted TDS on Rs. 26. 98 crores, that the deducteee had submitted nil deduction certificate (u/. 197 of the Act, dt. 17. 6. 2010), that the certificate was issued for Nil-deduction for payment/credit under contract for an amount of Rs. 18 crores, that the assessee had not deducted tax for Rs. 26. 98 crores. Finally, he held that the assessee was in default u/s. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssional services, that the services rendered by the service providers were also not in the nature of managerial, technical or consultancy services, that mere use of technology would not make it technical services, that provision of section 194J were not applicable to the payments made to the parties, that in order to cover u/s. 194J it was necessary that there must either be acquisition or use of technical knowhow which was provided by a human element, that there was no acquisition of technical expertise/knowhow by the assessee, that the even the AO was not sure about the fact that whether the service provided was professional services or technical services, that the parties were contractors executing contracts for projects undertaken, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision of advice by someone having special qualification that allow him to do so. What constitutes technical services cannot be understood in a rigid formulaic manner. It will vary from industry to industry. There will have to be a specific line of enquiry for determining what in a particular industry would constitute rendering of a technical service. " Facts of the case were that the assessee had entered into a bulk power transmission agreement on 21. 07. 2004, with the Power Grid Corporation India Ltd. (PGCIL). In one of the preamble clauses of the agreement, it was recorded that the assessee was desirous of receiving energy through power grid transmission system on mutually agreed terms and conditions. Under clause 8 of the agreement, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid by the assessee were fees for technical services liable for tax deduction at source under section 194J . The Tribunal agreed with the assessee that what had been availed of by it from PGCIL was not a technical service. It was held that the assessee was not liable to be saddled with higher liability of tax deduction at source. Upholding the order of the Tribunal , the Hon'ble Court held as under: ......that PGCIL was operating and maintaining its own system using the services of engineers and qualified technicians. PGCIL was in that process not providing technical services to others, including the assessee. A comparison could be made with the system of distribution of some other commodity like water. It might require the operation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would mean that the word "technical" would take colour from the words "managerial" and "consultancy", between which it is sandwiched, that Both the words "managerial" and "consultancy" involve a human element, that both, managerial service and consultancy service, are provided by humans, that applying the rule of noscitur a sociis, the word "technical" in Explanation 2 to section 9(1)(vii) would also have to be construed as involving a human element. In that matter the AO was of the opinion that interconnect/port access charges were liable for tax deduction at source in view of the provisions of section 194J of the Act and that these charges were in the nature of fee for technical services. If both the judgments are considered objectively, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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