M/s Bharti Airtel Limited, Hyderabad V. Dy.CIT, Circle-14(1), Hyderabad

ITA 957/HYD/2013

• Counselvise Citation: 95722514 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 07-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B RAMA KRISHNA
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.956/HYD/13 : ASSESSMENT YEAR 2008 - 09 ITA NO.957/HYD/13 : ASSESSMENT YEAR 2010 - 11 ITA NO.1287/HYD/13 : ASSESSMENT YEAR 2006 - 07 ITA NO.1288/HYD/13 : ASSESSMENT YEAR 2007 - 08 ITA NO.1289/HYD/13 : ASSESSMENT YEAR 2009 - 10 M/S. BHARATI AIRTEL LIMITED, HYDERABAD (PAN AAACB 2894 G) V/S. DY. COMMISSIONER OF INCOME - TAX, CIRCLE 14(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIL BHALLA RESPONDENT BY : SHRI B.RAMAKRISHNA, DR DATE OF HEARING 20 . 1 0.2014 DATE OF PRONOUNCEMENT 29.10.2014 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER : THESE FIVE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST FIVE SEPARATE ORDERS PASSED BY THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) II, HYDERABAD FOR ASSESSMENT YEARS 200 6 - 0 7 TO 2010 - 11, WHEREBY SHE UPHELD THE DECISION OF THE ASSESSING OFFICER IN TR E ATING THE AMOUNTS PAID BY THE ASSESSEE TO M/S. RECORDS AND D ATA WA R EHOUSING PVT. LTD. A S COVERED BY THE PROVISIONS OF S.194J OF THE ACT AND CONSEQUENTLY UPH ELD THE LEVY OF INTEREST UNDER S.201(1A) OF THE ACT. I TA NO. 956/H YD/20 13 & FOUR OTHERS M/S. BHARATI AIRTEL LIMITED, HYDERABAD 2 2. THE ASSESSEE IN THE PRE S EN T CA S E IS A COMPANY WHICH IS ENGAGED IN TH E BU S IN E SS OF RENDERING VARIOUS T E LECOMMUNICATION SER V I C ES INCLUDING LANDLINE AND INTERNET SERVI C ES IN THE ST ATE OF ANDHRA PRADESH. SURVEY UNDER S.133A WAS CARRIED OUT IN THE BU S IN E SS PREM ISES OF THE ASSESSEE ON 9.10.2009 IN ORDER TO VERIFY THE CO M PL I ANCE OF THE TDS PROVISION S BY TH E ASSESSEE . DU R IN G TH E CO URS E OF SURVEY, I T W AS FOUND THAT THE ASSESSEE HAS DEDUCTED TAX AT SOU R CE FROM TH E PAYM E N T S MADE TO M/S. RECORDS AND DATA WAREHOUSING P VT. LTD. UNDER S.194C OF THE ACT. AFTER VERI F ICATION OF THE DETAILS FURNISHED BY THE ASSESSEE IN THIS RE G ARD, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE PAYMENT MADE BY THE ASSESSEE TO M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. IS COVERED BY THE P ROVISION S OF S.194J AND THERE WAS THUS SHORT DEDUCTION OF TAX AT SOU R CE BY TH E ASSESSEE F R OM TH E PAYM E N T S MADE TO M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. HE TH E R E FORE, ISSUED A NOTICE REQUIRING THE ASSESSEE COMPANY TO SHOW CAU S E AS TO WHY IT SHOUL D NO T B E TREATED AS AN ASSESSEE IN DEFAULT UNDER S.201(1) FOR SUCH SHORT DEDUCTION OF TAX AT SOU R CE. IN REPLY, THE FOLLOWING EXPLANATION WAS OFFERED BY THE ASSESSEE - T HEY HAVE ENTERED INTO AN AGREEMENT WITH SER V I C E PROVIDER FOR COLLECTION, FILING AND M AINTENANCE OF FILLED IN POST PAID SUBSCRIBER ENROLLMENT FO R MS AND AIRTEL PREPAID ENROLMENT FORMS AND TO SUBMIT THE FORMS BASED ON RETRIEVAL REQUEST OF AIRTEL FORM TIM E TO TIME. SERVICE PROVIDER IS ENGAGED INTER ALIA, IN TH E BU S IN ES S OF RECORD MANAGEMEN T AND RELATED SERVI C ES TO CORPORATE CLI E NTS IN C LU D IN G BUT NOT LIMITED TO TELECOM OPERATORS. I TA NO. 956/H YD/20 13 & FOUR OTHERS M/S. BHARATI AIRTEL LIMITED, HYDERABAD 3 S E RVICE PROVIDER SHOULD EMPLOYEE ADEQUATELY AND FULLY SERVICE TRAINED SERVICE STAFF. HENCE, THERE IS NO STAFF OF BHARTI AIRTEL WERE INVOLVED. WE ARE NOT PAYING ANY RENT TO THE BUILDING DIRECTLY OR IN DI R EC TLY. HENCE, DEDUC T ION OF TDS U/S. 194I DOES NO T AP P LY. SERVI C E PROVIDER REPRESENTED HAT IT HAS NECESSARY INFRASTRUCTURE, MANPOWER AND EXPERIEN C E IN THE PROVIDING WORLD CROSS RECORD MANAGEMENT S E RVICES. AND THAT IT HAS CLAIMED THAT THE AGREEMENT IS TO CARRY OUT CERTAIN WORK AND THEREFORE THE PAYM E NT IS TOWARDS CONTRACT FOR WO R K, FALLING U/S. 194C. THU S , THE ASSESSEE HAS VEHEMENTLY OBJECTED FOR TREATING THE NATURE AS RENT OR TECHNICAL FEE. 3. THE EXPLANATION OF THE ASSESSEE WAS NO T FOUND ACCEPTABLE BY THE ASSESSING OFFICER. ACCOR D ING TO HIM, AS PER THE MASTER AGREEM E NT, THE CONTRA C TOR WAS PROVIDING PROFESSIONAL SER V I C ES HAVING EXPERTISE IN RECORD AND D A TA MANAGEMENT. HE ALSO NO T ED THAT THE AMOUNT PAID BY THE ASSESS EE TO M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. WAS ALSO SUBJECT TO LEVY OF SER V ICE TAX. HE TH E R E FORE HELD THAT THE PAYM E N T S MADE BY TH E ASSESSEE W E RE IN T HE NATURE OF FEE FOR TECHNICAL /PROFESSIONAL SERVICES FALLING UNDER S .194J AND THE ASSESSEE WAS LIA BLE TO DEDUCT TAX AT A HI G H E R RATE AS APPLICABLE TO THE PAYMENTS COVERED UNDER S.194J. ACCOR DI NGLY, THE ASSESSEE COMPA N Y WAS TREATED BY THE ASSESSING OFFICER AS AN ASSESSEE IN DEFAULT UNDER S.201(1) FOR SHO R T DEDUCTION OF TAX AT SOU R CE ON THE PAYMENTS MADE TOWARDS PROFESSIONAL SERVICES COVERED UNDER S.194J, AND IN T ER E ST UNDER S.201(1A) WAS ALSO L E VI E D BY HIM FOR ALL THE FIVE YE A RS UNDER CONSIDERATION AS UNDER - I TA NO. 956/H YD/20 13 & FOUR OTHERS M/S. BHARATI AIRTEL LIMITED, HYDERABAD 4 ASSESSMENT YEAR GROSS PAYMENT AMOUN T DEDUCTED AMOUNT DEDUCTIBLE DIFFERENCE INTEREST U/S. 201 - (1A) UPTO 31.3.2011 TOTAL 2006 - 07 4814674 107257 251567 144310 95324 239634 2007 - 08 10768101 241639 562633 320994 172390 493385 2008 - 09 10253013 232039 997732 765693 323317 1089010 2009 - 10 17208191 389909 1772444 1382535 400740 1783275 2010 - 11 28583221 588697 2858322 2269625 372823 2642448 4 . AGAIN S T THE ORDERS PASSED BY THE ASSESSING OFFICER UNDER S.201(1)/ S.201(1A) TR E ATING IT AS AN ASSESSEE IN DEFAULT, THE ASSESSEE COMPANY FIL E D ITS APPEAL FOR ALL THE FIVE YEARS UNDER CONSIDERATION BEFORE THE LEARNED CIT(A). DURIN G TH E COU R SE OF APPEAL PROCEEDINGS, DETAILED SUBMISSION WAS MADE BY TH E ASSESSEE COMPANY IN SUPPORT OF I T S CA S E THAT THERE WAS NO OBLIGATION ON ITS PART TO DEDU C T TAX AT SOU R CE F R O M TH E PAYMENT MADE TO M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. UNDER S.194J. THE SAID SUBMISSION, AS SUMMARIZED BY THE LEARNED CIT(A) IN HIS IMPUGN E D ORDER DATED 15.7.2013 FOR ASSESSMENT YEAR 2006 - 07, WAS AS UNDER - A) THE ACTIVITY OF COLL ECT ION FILING AND RETRIEVAL OF FORMS DOES NO T INV OLVE ANY S E RVIC E OF TECHNICAL, MANAGERIAL AND CONSU LT ANCY IN NATURE. B) THE PRO F ESSIONAL OR TECHNICAL NATURE OF SERVICE AS ENUMERATED IN TH E P R OVISION S OF 194 J IS NO T INVOL V ED SO AS TO ATTRACT THE TDS UNDER THE SAID SECTION. THERE IS NO MANAGERIAL, TECHNICAL CONS U LTANCY S ERVICE IS INVOL V ED. C) THE CONTRACTOR HAS PAID TAX ON THE IN C OM E EARNED BY HIM I.E., FROM THE PAYM E N T S RECEIVED FROM APPELLANT I TA NO. 956/H YD/20 13 & FOUR OTHERS M/S. BHARATI AIRTEL LIMITED, HYDERABAD 5 COMPANY. WE ENCLOSE HEREWITH PAN OF CONTRACTOR TO SHOW THAT DISTRIBUTOR IS A REGULAR ASSESSEE AND THEREF ORE THE TAX WAS PAID BY HIM. D) A CERTIFICATE OB T AIN E D FROM CHARTERED ACCOUNTANT CONFIRMING THE FACT THAT CONTRACTOR HAS FULLY PAID TAXES ON THEIR OVERALL INCOME INCLU D IN G PAYM E N T S RECEIV E D FROM APPELLANT COMPANY AND FI L ED INCOM E TAX RETURNS IS SUBMI T TED. E) REFERENCE IS INVITED TO THE DECISION OF SUPREME COURT IN HINDUSTAN COCA COLA B E VERAGE (P)LTD. 2007 TIOL - 144 SCIT, WHEREIN IT HAS BEEN HELD AS UNDER; NO DEMAND VISUALIZED UNDER SEC.201(1) OF THE INCOM E TA X SHOULD BE ENFORCED AFTER THE TAX DEDUCTOR HAS SATISFIED THAT OFF IC ER IN CHARGE OF TDS T HAT THE TAXES DUE HAVE B E EN PAID BY THE DEDUCTEE ASSESSEE. HOW E VER, THIS WILL NO T ALTER THE LIABILITY TO CHARGE INTEREST UNDER SEC.201(1A) OF THE AC TILL THE DATE OF PAYM E N T O F TAXES BY THE DEDU C TEE A SSESSEE O R THE LIABILITY FOR PENALTY UNDER SEC.271C OF THE INCOME TAX ACT. 5. A F TER CONSIDERING THE SUBMI S SION S MADE BY TH E ASSESSEE AND THE M A TERIAL AVAILABLE ON RECORD, THE LEARNED CIT(A) HELD THAT THE MASTER SERVICE AG R E EMENT DATED 8.9.20 09 ENTERED INTO BETWEEN THE ASSESSEE AND THE M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. WAS SUFFICIENT TO SHOW THAT IT IS NOT JUST A WORKS CONTRACT, BUT THE SERVI C E PRO V IDER WAS REQUIRED TO HAVE EXPERIENCE, E X PERTISE AND ABILITY AND SKILLS TO PROVIDE TH E S ERVICES CONTRACTED FOR. HE N O T ED THAT AS P E R CLAUSE 2.2.6 OF THE SAID AGREEMENT, THE S ERVICE PROVIDER I TA NO. 956/H YD/20 13 & FOUR OTHERS M/S. BHARATI AIRTEL LIMITED, HYDERABAD 6 WAS TO DEVISE EFFECTIVE ADMINISTRATIVE PROCESSES FOR THE MANDATORY COMPLIANCE AND DELIVERY OF CUSTOMER AGREEMENT FORMS SUBMI T TED BY THE SUBSCRIBERS TO THE ASSESSEE COMPANY FROM TIME TO TIME. HE ALSO NO T ED THAT THE S E RVI C E PROVIDER WAS ALSO TO MONITOR BOTH THE FREQUENCY AND THE NATURE OF THE S ERVICE PROBLEM S AND TO TAKE ACTION TO IMPLEMENT CHANGES TO RE D UCE AND/OR TO ELIMINAT E RECURRING PROBLEMS. HE TH E R E FORE, R E JECTED THE CONTENTION OF TH E ASSESSEE THAT THE PAYMENT MADE TO M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. WAS COVERED BY S.194C TREATING THE SAME UNTENABLE AND UPHELD THE DECISION OF THE ASSESSING OFFICER THAT THE S E RV I C ES RENDERED BY M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. TO THE ASSESSEE COMPANY WERE IN THE NATURE OF TECHNICAL SERVI C ES AS COVERED BY THE P R OVIS I ON S OF S.194J OF THE AC T. HE HO WE VER ACCEPTED THE ALTERNAT I V E PL E A O F TH E ASSESSEE BY RELYING ON THE D EC ISION OF THE HON'BLE SUPREME COURT I N TH E CA S E OF HINDU S TAN COC A C OLA B EVERAGES PVT. LTD. V/S. CIT(293 ITR 226 ) THAT THE PAYEE HAVING PAID THE TAX ON ITS INCOME RECEIVED F R OM THE ASSESSEE DURING ALL THE FIVE YEARS UNDER CONSIDERATION, THE SAME COULD NOT BE RECOVERED AGAIN FROM THE ASSESSEE, EVEN THOUGH THERE WAS DEFAULT COMMIT T ED BY THE ASSESSEE IN TERMS OF SHO R T DEDUCTION OF TAX AT SOUR CE. HE ACCORDINGLY HELD THAT THE ASSESSEE COMPANY COULD NOT BE TR E ATED AS ASSESSEE IN DEFAULT UNDER S.201(1) FOR SHO R T DEDUCTION OF TAX AT SOURCE FORM THE PAYMENTS MADE TO M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. , AS THE PAYEE HAD ALREADY PAID TAX DUE ON ITS INCOME FOR ALL THE FIVE YE A RS UNDER CONSIDERATION. HE HOWEVER, HELD THAT THE ASSESSEE WAS STILL LIABLE TO PAY INTEREST UNDER S.201(1A) FROM THE DATE WHEN THE TAX WAS DEDU C TIBLE TILL TH E DATE WHEN TAX WAS ACTUALLY PAID BY THE DEDUCTEE/PAYEE. ACCOR D INGLY, THE ASSESSING OFFICER WAS DIRE C TED BY THE LEARNED CIT(A) TO RECOMPUTE THE IN T ER E ST PAYABLE BY THE ASSESSEE UNDER S.201(1A) FOR ALL THE FIVE Y E ARS UN D ER CONSIDERATION. I TA NO. 956/H YD/20 13 & FOUR OTHERS M/S. BHARATI AIRTEL LIMITED, HYDERABAD 7 6 . THE L EARNED COUN S EL FOR THE ASSESSEE AT THE OUTSET, TOOK US THROUGH THE REL E VANT M ASTER SERVICE AGREEMENT PLACED IN THE PAPER BOOK AND POINTED OUT THE SCOPE AND STRUCTURE OF SERVICES PROVIDE D BY M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. TO THE ASSESSEE COMPANY AS STIPULATED IN CL A US E (2 ) OF THE SAID AGREEM E NT. HE ALSO INVITED OUR ATTENTION TO THE APPENDIX B OF THE SAID AGREEMENT PLACED AT PAGES 30 AND 31 OF THE PAPER - BOOK SPECIFYING THE A CTIVITIES TO BE UNDERTAKEN BY THE SERVICE PROVIDER. HE CONTENDED THAT TH E SCOPE O F SERVICES RENDERED BY THE SERVICE PROVIDER AND TH E A CTIVITIES UN D ERTAKEN IN THIS RE G ARD ARE SUFFICIENT TO SHOW THAT ONLY ROUTINE SERVICES WERE RENDERED BY THE SERVICE PROVI DER, WHICH DID NOT INVOLVE ANY EXP ER TISE, MUCH LESS ANY TECHNICAL EXPERTISE. HE A L SO POINTED OUT THAT THE MANPOWER REQUI R ED FOR RENDERING THE SERVICES W A S OF GRADUATE LEVEL, WHICH AGAIN GOES TO SHOW THAT THE SERVICES RENDERED WERE CLERICAL IN NATURE, WITH OUT REQUIREMENT OF ANY TECHNICAL OR P R OFESSIONAL E X P E RTISE. HE SUBMITTED THA T THE ASSESSING OFFICER AND T HE LEARNED CIT(A) HAVE HEAVILY RELIED ON CLAUSE 3.11 OF THE AGREEMENT TO HOLD THAT EXPERIENCE AND EXPERTISE ON THE PART OF THE SERVICE PROVIDER WAS REQUIRED TO RENDER TH E SERVIC E S TO THE ASSESSEE COMPANY. HE CONTENDED THAT THE DETAILS O F ACTIVITIES UNDER TAKEN BY TH E SERVICE PROVIDER AS ENUMERATED IN APPENDIX B TO THE AGRE E MENT, HOWEVER, CLEARLY SHOWS THAT NO SERVICES IN THE NATURE OF TECHNICA L OR PROFESSIONAL WERE REQUIRED TO RENDERED BY THE SERVICE PROVIDER. 7 . T H E LEARNED COUN S EL FOR THE ASSESSEE ALSO INVITED OU R ATTENTION TO THE SAMPLE COPY O F THE INVOICE RAISED BY M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. ON TH E ASSESSEE (COPY PLA CED AT PAGE NO.51 OF THE PAPER - BOOK ) TO SHOW THAT THE DESCRIPTION OF SERVI C ES GIVEN THEREIN AS WELL AS THE RATES CHARGED FOR SERVICES CLEARLY SHOW THAT ALTHOUGH IT WAS A CASE OF RENDERING OF SERVICES ON WHICH SERVICE TAX WAS LEVIABLE, THE NATURE OF SUCH SE RVI C ES WAS I TA NO. 956/H YD/20 13 & FOUR OTHERS M/S. BHARATI AIRTEL LIMITED, HYDERABAD 8 CER T AINLY NOT TECHNICAL. HE ALSO POINTED OUT THAT EVEN FOR THE PU R PO S ES OF SERVICE TAX, THE SERVICES RENDERED BY TH E SE R VICE PROVIDER WERE CLASSIFIED AS BUSINESS SUPPORT S E RVICES AND STORAGE AND WAREHOUSING SERVI C ES, WHICH CANNOT B E REGARDED AS TECHNICAL SERVIC E S. RELYING ON TH E DECISION OF THE HON'BLE DELHI HIGH COURT IN TH E CASE OF CIT V/S BHARATI CELLULAR LIMITED ( 319 ITR 139 ) (AT PAGE 1 50) , HE CONTENDED THAT THE WAREHOUSING SERVICES CANNO T B E CONSTRUED AS IN THE NATURE OF TECHNI C AL SERVICE. HE ALSO RELIED ON ANO T H E R DECISION OF THE DELHI HIGH COURT IN TH E C A SE OF CIT V/S. HINDUSTAN LEVER LTD.( 29 TAXMANN.COM.313 ) , WHEREIN IT WAS HELD THAT WAREHOUSING CHAR G ES ARE IN THE NATURE OF WORKS CONT RACT COV ERED UNDER S.194C OF THE ACT. HE ALSO CITED OTHER JUDICIAL PRONOUNCEMENTS TO EXPLAIN WHAT EXACTLY IS THE NATURE OF S E RVIC E S THAT ARE CON S I D ERED AS TECHNICAL SERVICES. HE CONTENDED THAT THE ASSESSEE IN THE PRESENT CA S E, DID NO T RECEIVE ANY TECHNOLOGY OR TECHNICAL INFORMATION/TECHNICAL KNOW - HO W FROM THE SERVICE S RENDERED BY M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. AND IT IS THUS, NOT A CA S E OF RENDERING OF TECHNICAL SERVI C ES BY THE SAID SERVICE PROVIDER , AS ENVISAGED UNDER S.194J OF THE ACT. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE , ON THE OTHER HAND, SUBMITTED THAT THE PAYMENT IN QUESTION MADE BY THE ASSESSEE COMPANY TO THE S ERVICE PROVIDER, M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. CANNOT B E TRE A T E D AS PAYMENT MADE FOR CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT, AS ENVISAGED IN S.194C. HE POINTED OUT THAT THE E XPRESSION WORK FOR THE PU R PO S ES OF S.194C IS DEFINED IN EXPLANATION IV BELOW S ECTION 194C AND TH E SAID CL OSE E ND ED DEFINITION DOE S NO T COVER THE SERVICES CONTRACTED AND AVAILED BY TH E ASSESSEE FROM M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. HE TOOK US THROUGH THE MASTER SERVICE S AGR E EMENT ENTERED INTO BY THE ASSESSEE COMPANY WITH M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. AND PO INTED OUT TH A T THE I TA NO. 956/H YD/20 13 & FOUR OTHERS M/S. BHARATI AIRTEL LIMITED, HYDERABAD 9 SCOPE O F SERVICES RENDERED WAS INCLUSIVE OF DIGITALIZATION AND MAINTENANCE OF DATA AS WELL AS RETRIEVAL OF SUCH DATA AS AND WHEN REQUI R ED BY TH E ASSESSEE COMPANY. HE ALSO POINTED OUT THAT THESE SERVICES MAINLY INVOLVING DATA MANAGEMEN T W E RE RENDERED BY TH E SERVICE PROVIDER BY EM P LOYING GRADUATES, WHO WERE ASSIGNED THE WORK AFTER NECESSARY TRAINING. HE SUBMITTED THAT THE SERVICES PROVIDED BY M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. TO THE ASSESSEE COMPANY A RE ALSO CLASSIFIED BY THE SERVICE TAX A UTHORIT IES AS BU S IN E SS SUPPORT SERVIC E S, WHICH CLEARLY GOES TO SHOW THAT IT WAS NO T A CA S E O F WORKS CONTRACT COVERED BY S.194C, BUT THE S E RVICES REND E RED WERE IN THE NATURE OF TECHNICAL SERVICES COVERED BY S.194J. HE INVITED O U R ATTENTION TO THE EIGHT TYPES OF ACTIVITIES UN D ERTAKEN BY THE SERVICE PROVIDER FOR THE ASSESSEE COMPANY AS ENUMERATED IN APPENDIX B TO THE MA STER SERVIC E S AGR E EMENT AND CONTENDED THAT IT WAS NO T POSSIBLE TO UNDERTAKE THESE ACTIVITIES WITHOUT THE TECHNICAL EXPERTISE. HE CONTENDED THAT THE SE RVICES IN THE PR E SEN T CA S E THUS W E RE RENDERED BY TH E SERVICE PROVIDER T O THE ASSESSEE C OMPANY BY EMPL O YING SKILLED MANPOWER AND BY USING INFORMATION TECHNOLOG Y AND THE SAM E , THEREFORE, WERE IN THE NATURE OF TECHNICAL SERVICES COVERED BY S.194J. 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE AMOUNT IN QUESTION WAS PAID BY THE ASSESSE E COMPANY TO M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. FOR THE SERVICES RENDERED IN PURSUANCE OF A MASTER SERVICE S A G RE E MENT EXECUTED ON 8 TH SEPTEMB E R, 2009. A COPY O F THE SAID AGREEMENT IS PL A CED ON RECORD BEFORE US AT PAGE NOS.1 TO 38 OF TH E PAPER B OOK AND PERUSAL OF THE SAME SHOWS THAT IT IS CL EA RLY M E NTION E D IN TH E RECITAL THAT THE SER V ICES PROVIDER M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. HAS NECESSARY IN F RASTRUC T U R E, MANPOWER AND EXPERIENCE IN PROVIDING WORLD CLASS RECORD MANAGEMENT SERVICE S AND IT HAS BASE I TA NO. 956/H YD/20 13 & FOUR OTHERS M/S. BHARATI AIRTEL LIMITED, HYDERABAD 10 FINANCIAL CAPABILITI E S TO PERFORM THE RECORD MANAGEMENT AND REL A TED SERVICES. CLAUSE NO.2.2.2 OF THE SAID AGREEMENT STIPULATED THAT THE SERVICE PROVIDER SHALL ENSURE PROPER PRESERVATION OF THE DO C UM E NT, BY USING GOOD PRACTICES OF MATERIAL HANDLING AND RESOURCES SUCH AS HEAVY DUTY RACKS, CARTONS, BOX FILES, PL A STIC ENVELOPES OF STANDARD QUALITY FOR E A CH DOCUMENTS SET. CLAUSE 3.11 OF THE AGREEMENT FURTHER REITERATES THAT THE SERVICE PROVIDER HAS EXPERIENCE, EXPERTISE, ABILITY AND SKILLS IN THE FIELDS MORE PARTICULARLY DESCRIBED IN APPENDIX A & APPENDIX B OR ANY SUCH OTHER FIELD AND REL A TED DISCIPLINE, AS MAY BE NECESSARY TO PERFORM THE SERVI C ES WITH HIGH STANDARD OF QUALITY. 10. THE ACTIVITIES TO BE UNDERTAKEN BY THE SERVICE PROVIDER TO PR OVIDE THE SERVICES TO THE ASSESSEE COMPANY AS PER THE MASTER SERVICES AGREEMENT ARE IDENTIFIED AND ENUMERATED IN APPENDIX BAS UNDER - SL. NO. ACTIVITIES TIME FRAME MEASURE 1. PICK UP OF APEF / SEF FORM FROM HYDERABAD PREPAID DISTRIBU T ORS/ARC POINTS SAME DAY NO FORMS SHOULD BE PENDING AT DISTRIBUTOR S POINT 2. ALL PACKETS TO B E DELIVERED AT R&D WAREHOUSE WITHIN 24 HORS ZERO DELAYS; MIS ON THE SAME PICK UP VIS - A - VIS DELIVERED ( F URTHER ACCEPTED AND REJECTED) 3. AU D IT OF ALL THE APEF/SEF FORMS AT SERVICE PROVIDER ZONAL OFFICES ( AS PER AIRTEL CHECK LIST) WITHIN 24 HRS. 100% CO M PLI A NCE TO EXTANT A IRTEL APEF/SEF DOCUMENTATION POLICY 4. INITI A L/MAN DA TORY DATA ENTRY OF ALL THE APEF/SEF FORMS IN THE SY S TEM WITHIN 24 HR S 100% DATA ENTRY WITHIN 24 HOU R S OF FORMS F R OM THE RECEIPT OF THE FORMS (IN C LU D IN G CORREC T IONS, IF ANY) DAILY MIS TO BE SUBMITTED TO AIRTEL 5. COMPREH E NSIVE DATA ENTRY OF CUSTOM E R DETAILS PERTAINING TO ALL TH E ACCEPTED APEF/SEF AS PER THE EXTANT D AT A ENT RY SPECIFICATIONS/GUIDELINES WITHIN 72 HOURS (A) 100% ACCURATE DATA ENTRY (INCLUDING CORR E C T IONS, IF ANY) (B) QUALITY/AUDIT TEAM TO HAVE CONTROL. MIS TO BE SUB M I T TED ON AUDIT. I TA NO. 956/H YD/20 13 & FOUR OTHERS M/S. BHARATI AIRTEL LIMITED, HYDERABAD 11 ( CUSTOM E R DETAILS OR OTHERWISE ) BY AIRTEL 6. AFTER COMPLETING SCANNING, ALL THE FORMS TO BE FIELD AT CENTRAL WAREHOUSE (HYD) WITHIN 24 HOU R S O F SCANNING 100% COMPLIANCE - (A) MIS ON SCANNED APEF/SEFS VIS - - VIS THE APEF/SEFS STORED AT WAREHOUSE (B) ZERO MISMATCHES BETWEEN SCANNED AND FILED FORMS 7 . RETRIEVAL OF FORMS AS TELECOM ENFORCEMENT RESOURCE MONITORING(TERM ) CELL REQUIREMENT WITHIN 72 HRS. 100% COMPLIANCE. MIS SUBMISSION TO AIRTEL 8. INS E RTING OF VALUE ADDED S E RVI C ES (VAS) FORMS AS AND WHEN RECEIVED WITHIN 48 HRS. 100% COMPLIANCE AND MIS SUBMISSION IT IS ALSO STIPULATED IN APPENDIX B THAT MINIMUM QUALIFICATION OF MANPOWER REQUI R ED TO RENDER THE S E R V I C ES WOULD BE GRADUATES WITH READING AND WRITING CAPACITY OF ENGLISH AND TELUGU AND TYPING SKILLS OF 60 WORDS PER MINUTE. 11. THE QUESTIO N THAT ARI S ES NOW FOR OUR CON S I DE RATION IS WH E TH E R THE PAYM E N T MADE BY TH E ASSESSEE COMPANY TO M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. FOR THE S E R V ICES RENDERED IN PURSUANCE OF TH E MASTER S E RVIC E S AGRE E MENT IS IN THE NATURE OF PAYMENT TO CON T R A CTOR A S ENVISAGED IN S.194C OR FEE FOR TECHNICAL SERVI C ES AS COVERED BY S.194J, AND THE SAME HAS TO B E DECIDED KEEPING IN VIEW THE RELEVANT TERMS OF TH E MASTER S E RVI C ES AGREEMENT AND TH E ACTIVITEIS UNDERTAKEN BY THE SERVICE PROVIDER TO PROVIDE THE CONTR A CTED SE R V ICES TO THE ASSESSEE COMPANY, AS NARRATED/DISCUSSED BY US IN THE FOREGOING P ORTION OF THIS ORDER. ALTHOUGH THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS POIN TE D OUT THAT T HE SERVICES RENDERED BY THE M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. TO TH E ASSESSEE COMPANY HAVE BEEN CLASSIFIED BY THE S E RVICE TAX AUTHORITIES MAINLY AS BUSIN E SS SUPPORT SERVICES, THE SAME IN OUR OPINION, IS NOT VERY RELEVANT TO I TA NO. 956/H YD/20 13 & FOUR OTHERS M/S. BHARATI AIRTEL LIMITED, HYDERABAD 12 CON C LU S IVELY DECIDE THE ISSUE BEFORE US. THE LEARNED COUN S EL FOR THE ASSESSEE HAS ALSO CITED V A RIOUS JUDICIAL PRONOUN C EMENTS IN SUPPORT OF THE ASSESSEES CA S ES THAT THE SERVI C ES RENDERED BY M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. ARE NO T IN THE NATURE OF TECHNICAL SERVICES. A CAREFUL R E ADING OF THE SAID JU D I C IAL PRONOU NC EMENTS, HO W EVER, SHO WS THAT THE FACTS INVOLVED IN THE CITED CA S ES WERE MATERIALLY D IFFE R ENT FROM THE FACTS INVOL V ED IN THE C A SE OF THE ASSESSEE AND THE RATIO OF THE SAID DECISIONS, THEREFORE, CANNOT BE STRAIGHT AWAY APPLIED IN THE PR E S E N T CASE TO DECIDE THE ISSUE IN DISPUTE. 12. IN THE CASE OF CIT V/S. BHARTI CELLULAR LIMITED (319 ITR 139)(DEL), HONBLE DELHI HIGH COURT HAD AN OCCASION TO INTERPRET AND EXPLAIN THE EXPRESSION FEE FOR TECHNICAL SERVICES AS APPEARING IN S.194J. I N THIS CONTEXT, IT WAS NO T ED BY THE HON'BLE DELHI HIGH COURT THAT THE SAID EXPRESSION APPEARING IN S.194J HAS THE SAME MEANING AS GIVEN IN EXPLANATION (2) TO S.9(1)(VII), WHICH MEANS ANY CON S ID E RATION FOR RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSU L TANCY S E RVI C ES. TAKING NOTE THAT THE WORD TECHNICAL IS PRECEDED BY THE WORD MANAGERIAL AND SUCCEEDED BY THE WORD CONSU L TANCY, HON'BLE DELHI HIGH COURT HELD THAT THE RULE OF NOSCITUR A SOCIIS IS CLEARLY APPLICABLE AND THIS WOULD M E AN THAT THE WORD TECHNICAL WOULD TAKE COLOUR FROM THE WORD S MANAGERIA L AND CONSULTANCY IN BETWEEN WHICH I T IS SANDWICHED. ELABORATING FURTHER, HON'BLE DELHI HIGH COURT OBSERVED T H A T IT IS OBVIOUS THAT THE E XPRESSION MANAGER AND CONSEQUENTLY MANAGERIAL SERVICE HAS A DEFINITE HUMAN ELEMENT ATTACHED TO IT AN D SIMILARLY, THE S E RVI C ES CONS U LTANCY ALSO NECESSARILY INTENDS HUMAN INTERVENTION. IT WAS HELD BY THE HON'BLE DELHI HIGH COURT THAT THE EXPRESSION TECHNICAL S E RVIC E S THUS NECESSARILY INVOL V ES HUMAN ELEMENT OR WHAT IS NOW A DAYS FASHIONABLY CALLED HUMAN INTERFACE. IN TH E CA S E OF BHARTI CELLULAR LTD (SUPRA) BEFORE THE HON'BLE DELHI HIGH C OU R T, THE FACILITY I TA NO. 956/H YD/20 13 & FOUR OTHERS M/S. BHARATI AIRTEL LIMITED, HYDERABAD 13 PROVIDED BY MTNL AND OTHER COMPANIES TO THE ASSESSEE FOR INTERCONNECTION/PO R T ACCESS WAS ON E WHICH WAS PROVIDED TECHNICALLY BY THE MACHINES AN D SIN C E IT DID NO T INVOLVE ANY HUMAN INTERFACE, THE HON'BLE D ELHI HIGH C OU R T HELD THAT THE SAME COULD NO T B E REGARDED AS TECHN I CAL S E RVI C ES AS CONTEMPLATED UNDER S.194J OF THE ACT. 13. IT IS WORTHWHILE TO NOTE THAT THE DECISION OF TH E HONBLE DELHI HIG H COU R T IN TH E CASE OF BHARTI CELLULAR L T D (SUPRA) WAS CHALL E NGED BY THE REVENUE BEFORE THE HON'BLE SUPREME COURT, AND ALTHOUGH THE HON'BLE SUPREME COURT IN THE JU D GMENT REPORTED IN 330 I T R 239, SUBSTANTIALLY A GREED IN PRINCIPLE WITH TH E M E ANING ASSIGNED BY THE HON'BLE DELHI HIGH COURT TO THE EXPRESSION FEE FOR TECHNICAL SERVI C ES, AS APPEARING IN S.194J, THEY FOUND THAT THE QUESTION OF HUMAN IN T ERVENTION WAS NEVER RAISED EVEN UPTO THE LEV E L OF THE TRIBUNAL. HONBLE APEX COU R T ALSO FELT THA T SOME EXP E RT EVIDENCE WAS REQUIRED TO BE BROUGHT ON RECORD TO SHOW HOW A HUMAN INTERVENTION TAKE S PL A CE DURING THE COU R SE OF RENDERIN G O F THE S E RVI C ES. THE MA T TER, TH E R E FORE, WAS RESTORED BY THE HON'BLE APEX COU R T TO THE FILE O F THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE SAME AFRESH, AFTER E XAMININ G A TECHNICAL EXPERT. 14. KEEPIN G IN VIEW THE DECISION OF THE HON'BLE SUPREME COURT IN TH E CASE OF BHARTI CELLULAR LTD. (SUPRA) , WE ARE O F TH E VI E W THAT THE ISSUE INVOLVED IN THE PRESENT CASE SHOULD A LSO BE APP R O P R I ATELY R ESTORED TO THE FIL E O F THE ASSESSING OFFICER, FOR DECIDING THE SAME AFRESH, AFTER EXAMININ G TH E I S SUE O F INVOL V EMENT OF HUMAN ELEMENT OR HUMAN INTERFACE IN THE S E RVI C ES RENDERED BY M/S. RECORDS AND DATA WAREHOUSING PVT. LTD. TO THE ASSESSEE COMPANY, SO AS TO ASCERTAIN WHETHER THE SAID SER V ICES CAN BE REGARDED AS TECHNICAL SERVI C ES AS CON T EMPL A TED UNDER S.194J. WE ACCOR D I N GLY SET ASIDE THE IMPU G N E D ORDERS OF THE LEARNED CIT(A) I TA NO. 956/H YD/20 13 & FOUR OTHERS M/S. BHARATI AIRTEL LIMITED, HYDERABAD 14 AND R E STORE THE MAT T ER TO THE FILE OF TH E ASSESSING O FFICER WITH A DIRECTION TO DECIDE THE SAME AFRESH IN THE LIGHT OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V/S. BH A RTI CELLULAR LTD. (SUPRA) , IN A C COR D ANCE WITH LA W AND AFTER GIVING SUFFICIENT OPPORTUNITY O F H E ARING TO THE ASSESSEE. 15. IN TH E RESULT, ALL THE FIVE APPEALS O F THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. \ ORDER PRONOUNCED IN THE COURT ON 29 TH OC TOBER, 2014 SD/ - SD/ - ( SAKTIJIT DEY ) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/ - 2 9 TH OCTOBER, 2014 COPY FORWARDED TO: 1. M/S. BHARATI AIRTEL LIMITED, CIRCLE OFFICE, 1 - 8 - 437,438 364 & 445, SPLENDID TOWER, OPP. BEGUMPET POLICE STATION, HUDA ROAD, BGUMPET, HYDERABAD 2 . DY. COMMISSIONER OF INCOME - TAX CIRCLE 14(1), HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) I I , HYDERABAD COMMISSIONER OF INCOME - TAX I, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S