IGate Global Solutions Ltd.,, Pune v. Deputy Commissioner of Income-tax ,,

ITA 1636/PUN/2014 | 2011-2012
Pronouncement Date: 29-04-2015 | Result: Allowed

Appeal Details

RSA Number 163624514 RSA 2014
Assessee PAN AABCP6219N
Bench Pune
Appeal Number ITA 1636/PUN/2014
Duration Of Justice 8 month(s) 1 day(s)
Appellant IGate Global Solutions Ltd.,, Pune
Respondent Deputy Commissioner of Income-tax ,,
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2015
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 29-04-2015
Assessment Year 2011-2012
Appeal Filed On 28-08-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE M S . SUSHMA CHOWLA JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO S . 1 636 & 1637 /PN/201 4 ASSESSMENT YEAR S : 20 11 - 12 & 20 1 2 - 1 3 IGATE GLOBAL SOLUTIONS LTD. (IN THE MATTER OF ER STWHILE IGATE COMPUTER SYSTEMS LTD. SINCE AMALGAMATED ) LEVEL I II V & VI TOWER 3 CYBERCITY MAGARPATTA CITY HADAPSAR PUNE 411013 . APPELLANT PAN: AABCP6219N VS. THE DY. COMMISSIONER OF INCOME - TAX(TDS) - 2 . RESPONDENT PUNE. A PPELLAN T BY : SHRI C.H. NANIWADEKAR RESPONDENT BY : SHRI RAJESH DAMOR DATE OF HEARING : 2 7 - 0 4 - 201 5 DATE OF PRONOUNCEMENT : 29 - 0 4 - 201 5 ORDER ORDER PER SUSHMA CHOWLA J.M : BOTH THE APPEALS FILED BY THE ASSESSEE ARE AGAINST THE S EPARATE ORDER S OF CIT(A) - V PUNE DATED 06 .0 8 .201 4 REL ATING TO ASSESSMENT YEARS 20 11 - 12 AND 2 0 12 - 1 3 PASSED UNDER SECTION 201(1)/201(1A) OF THE INCOME TAX ACT 1961 . 2. BOTH THE APPEALS RELATING TO SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD 2. BOTH THE APPEALS RELATING TO SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND AR E BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. THE FACTS IN BOTH THE YEARS UNDER APPEAL ARE IDENTICAL. HOWEVER WE MAKE A REFERENCE TO THE FACTS IN ITA NO.1 636 /PN/201 4 TO ADJUDICATE THE ISSUE. 3. THE ASSESSEE HAS RAISED SIMI LAR GROUNDS OF APPEAL IN BOTH THE YEARS AND THE GROUNDS OF APPEAL IN ASSESSMENT YEAR 20 11 - 12 READ AS UNDER: - I N THE FACT AND THE CIRCUMSTANCES OF CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) - V PUNE ERRED: ITA NO S. 1 636 & 1637 /PN/201 4 IGATE GLOBAL SOLUTIONS LTD 2 1. IN RESPECT OF DATALINK CHA RGES PAID BY T HE APPELLANT: A) IN CONFIRMING THAT DATALINK CHARGES OF RS.3 75 36 820 ARE LIABLE TO TDS U/S 194J . B) IN CONCLUDING THAT HUMAN INTERVENTION IS REQUIRED FOR PROVIDING THE DATALINK SERVICES AND HENCE THE DATA LINK CHARGES ARE SUBJECT TO TDS U/S 194 J . C) WITHOUT PREJUDICE TO ABOVE IN NOT APPRECIATING THAT THE RECIPIENTS OF THE DATALINK CHARGES ARE COMPANIES WHO WOULD HAVE FILED THEIR TAX RETURNS AND INCLUDED THE AMOUNTS IN THEIR TAXABLE INCOME AND HENCE AT THE MOST THE APPELLANT CAN BE LIABLE TO PAY I NTEREST U/S 201 ( 1A ). 2. THE APPELLANT CRAVES LEAVE TO ADD MODIFY OR WITHDRAW ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING . 4 . THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS IN RELATION TO DEDUCTIBILITY OF TAX UNDER SECTION 194J OF THE ACT ON DA TA LINK CHARGES PAID BY THE ASSESSEE. 5. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE FROM THE DATA LINK CHARGES PAID TO VARIOUS TELECOM SERVICE PROVIDERS UNDER SECTION 194J OF THE ACT. SINCE THE ASSESSEE HAD NOT DEDUCTED THE TAX AT SOURCE OUT OF THE SAID DATA LINK CHARGES PAID BY IT THE ASSESSEE WAS SHOW CAUSED AS TO WHY THE DEMAND SHOULD NOT BE RAISED UNDER SECTION 201(1) OF SHOW CAUSED AS TO WHY THE DEMAND SHOULD NOT BE RAISED UNDER SECTION 201(1) OF THE ACT AND INTEREST SHOULD NOT BE CHARGED UNDER SECTION 201(1A) OF THE ACT . REFER ENCE WAS ALSO MADE TO THE EARLIER ORDERS PASSED UNDER SECTION 201(1) AND 201(1A) OF THE ACT RELATING TO FINANCIAL YEARS 2006 - 07 TO 2008 - 09 . IN REPLY THE ASSESSEE DENIED ITS LIABILITY OF DEDUCTING TAX AT SOURCE ON THE DATA LINK CHARGES. HOWEVER THE ASSE SSING OFFICER HELD THAT THE DATA LINK CHARGES PAID BY THE ASSESSEE WAS THE FEES PAID FOR TECHNICAL SERVICES RENDERED BY THE SERVICE PROVIDERS ON WHICH THE ASSESSEE SHOULD HAVE DEDUCTED TAX AT SOURCE UNDER SECTION 194J OF THE ACT. IN VIEW OF THE ASSESSEE NOT HAVING DISCHARGED HIS LIABILITY OF DEDUCTION OF TAX AT SOURCE THE ASSESSING OFFICER RAISED DEMAND UNDER SECTION 201(1) OF THE ACT AT RS. 99 17 920/ - AND CHARGED INTEREST UNDER SECTION 201(1A) OF THE ACT AT RS. 35 70 450/ - . 6. THE CIT(A) PLACED RELIANCE ON THE APPELLATE ORDER PASSED FOR ASSESSMENT YEAR 2007 - 08 IN WHICH SIMILAR ISSUE WAS DECIDED. FURTHER RELIANCE WAS PLACED ITA NO S. 1 636 & 1637 /PN/201 4 IGATE GLOBAL SOLUTIONS LTD 3 ON THE RATIO LAID DOWN BY THE PUNE BENCH OF THE TRIBUNAL IN SCIGEN BIOPHARMA PVT. LTD. IN ITA NO.1298/PN/2012 FOR ASSESSMENT YEAR 2007 - 08 ORDER DATED 30.09.2013 WHEREIN IT WAS HELD THAT THE INTEREST CHARGEABLE UNDER SECTION 201(1A) OF THE ACT IS TO BE CALCULATED FROM THE DATE OF PAYMENT / CREDIT TILL THE DATE OF COMPLETION OF THE ASSESSMENT IN THE CASE OF DEDUCTEE. ACCORDINGLY T HE ASSESSING OFFICER WAS DIRECTED TO MODIFY THE DEMAND UNDER SECTION 201(1) OF THE ACT AND THE INTEREST CHARGEABLE UNDER SECTION 201(1A) OF THE ACT. 7. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 8. ON THE PERUSAL OF RECORD WE FIND THAT SIMIL AR ISSUE OF DEDUCTIBILITY OF TAX OUT OF DATA LINK CHARGES AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 1301 TO 1303 & 1616/PN/2013 RELATING TO ASSESSMENT YEARS 2007 - 08 TO 2010 - 11 AND VIDE ORDER DATED 30.12.2014 IT WAS HELD AS UNDER: - 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS ENGAGED IN SOFTWARE DEVELOPMENT SOFTWARE EXPORT AND ALLIED ACTIVITIES. TDS SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED ON THE PREMISES OF THE ASSESSEE ON 13.01.2009. TH E CONDUCTED ON THE PREMISES OF THE ASSESSEE ON 13.01.2009. TH E ASSESSEE WAS FOUND TO HAVE MADE PAYMENTS AGAINST DATA LINK CHARGES TO VARIOUS TELECOM SERVICE PROVIDERS. THE ACIT - TDS WAS OF THE VIEW THAT THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE OUT OF SUCH DATA LINK CHARGES PAID TO VARIOUS TELECOM SERVICE PROV IDERS BEING PROFESSIONAL SERVICES PROVIDED BY THE SAID SERVICE PROVIDERS IN VIEW OF SECTION 194J OF THE ACT. THE EXPLANATION OF THE ASSESSEE IN THIS REGARD WAS THAT THE SAID PAYMENTS FOR DATA LINK CHARGES WERE PAID FOR USING STANDARD FACILITIES PROVIDED BY THE SERVICE PROVIDERS BY USING TECHNICAL GADGETS WHICH WERE MADE AVAILABLE UNIVERSALLY TO THE OTHERS BY WAY OF THE DATA LINK SATELLITE LINE WHICH WAS ESTABLISHED FROM ONE SERVICE PROVIDER TO BE CARRIED OVER TO THE OTHER SERVICE PROVIDER. IN ORDER TO PROVIDE EFFICIENT AND FLAWLESS SERVICES TO THE SUBSCRIBERS THE EXISTING SERVICE PROVIDERS PROVIDE INTER - CONNECTION OF THEIR NETWORKS THROUGH EQUIPMENT OF THEIR NETWORKS TO THE EQUIPMENTS OF OTHER SERVICE PROVIDERS. THE CONNECTION IS USED FOR THE TRANSMIS SION OF DATA FROM ONE SERVICE PROVIDER TO THE DESIGNATED CLIENT SERVER AND THERE WAS NO HUMAN INTERVENTION FOR THE TRANSMISSION OF THE DATA. 16. ON THE PERUSAL OF THE RECORD IT TRANSPIRES THAT FACILITIES WERE PROVIDED BY TWO ENTITIES I.E. THE ASSESSEE AND THE SERVICE PROVIDERS WHO WERE LINKED TO EACH OTHER THROUGH THE DATA LINK AND FOR FACILITATING THE ARRANGEMENT ONE SERVICE PROVIDER USED THE NETWORK ELEMENT OF OTHER SERVICE PROVIDER TO PROVIDE SERVICES TO THE ULTIMATE CUSTOMERS. THE ISSUE WHICH ARI SES IN THE PRESENT APPEAL IS WHETHER SUCH PROVIDING OF SERVICES IS COVERED UNDER SECTION 194J OF THE ACT BEING TECHNICAL OR PROFESSIONAL SERVICES PROVIDED BY THE SERVICE PROVIDER. ITA NO S. 1 636 & 1637 /PN/201 4 IGATE GLOBAL SOLUTIONS LTD 4 17. FEES FOR TECHNICAL SERVICES HAS BEEN DEFINED IN EXPLANATION (B) TO SECT ION 194J OF THE ACT TO HAVE SAME MEANING AS IN EXPLANATION TO SECTION 9(1)(VII) OF THE ACT WHICH READS AS UNDER: - 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 OTHER PERSONNEL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION ASSEMBLY MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF TH E RECIPIENT CHARGEABLE UNDER THE HEAD SALARIES. 18. UNDER THE PROVISIONS OF SECTION 194J OF THE ACT WHERE THE ASSESSEE MAKES ANY PAYMENT AGAINST FEES FOR TECHNICAL SERVICES THEN IS LIABLE TO DEDUCT TAX AT SOURCE AT THE SPECIFIED RATES AT THE TIME OF CREDIT OF THE PAYMENT OR AT THE TIME OF ACTUAL PAYMENT WHICHEVER IS EARLIER. FEE FOR TECHNICAL SERVICES IS DEFINED UNDER THE ACT AS CONSIDERATION PAID FOR RENDERING ANY MANAGERIAL TECHNICAL OR CONSULTANCY SERVICES BUT DOES NOT INCLUDE CONSIDERATION PAID FOR ANY CONSTRUCTION ASSEMBLY MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT. FURTHER THE CONSIDERATION WHICH IN TURN WOULD BECOME THE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD SALARIES IS ALSO NOT TO BE INCLUDED AS FEES FOR TECHNICAL SERVICES. IN OTHER WORDS THE TECHNICAL SERVICES INVOLVE RENDERING OF ANY MANAGERIAL TECHNICAL OR CONSULTANCY SERVICES. IN ORDER TO PROVIDE MANAGERIAL TECHNICAL AND CONSULTANCY SERVICES THE ELEMENT OF HUMAN INVOLVEMENT IS NECESSARY. IN THE FACTS OF P RESENT CASE BEFORE US WHERE THERE IS PROVISION FOR DATA LINK AND INTER - CONNECTION FACILITIES THE USER UTILIZES THE TECHNICAL EQUIPMENTS FOR INTER - CONNECTION PURPOSES ONLY THROUGH TECHNICAL EQUIPMENT OR GADGETS USED IN THE TRANSMISSION PROCESS BUT THE SA ME DOES NOT PART TAKE THE NATURE OF SERVICES OF MANAGERIAL TECHNICAL OR CONSULTANCY NATURE. MERELY BECAUSE CERTAIN TECHNICAL EQUIPMENTS OR CONSULTANCY NATURE. MERELY BECAUSE CERTAIN TECHNICAL EQUIPMENTS OR GADGETS ARE MADE AVAILABLE FOR TRANSMISSION OF DATA LINK DOES NOT ESTABLISH THE CASE OF THE REVENUE THAT SUCH SERV ICES ARE TECHNICAL SERVICES PROVIDED BY THE SERVICE PROVIDER TO THE ASSESSEE WHICH ARE COVERED UNDER THE PROVISIONS OF SECTION 194J OF THE ACT. 19. ANOTHER ASPECT TO BE NOTED IN THE CASE IS THAT WHERE SUCH TECHNICAL EQUIPMENTS / GADGETS REQUIRE MAINTEN ANCE THEN TECHNICAL SUPPORT STAFF IS USED FOR CORRECTING THE SYSTEM BUT THAT ITSELF DOES NOT ESTABLISH THAT THE SERVICES PROVIDED BY THE MAINTENANCE CREW ARE IN THE NATURE OF TECHNICAL SERVICES WHICH ARE NOT IN THE NATURE OF MANAGERIAL TECHNICAL OR CONSU LTANCY SERVICES NOR IS IT FOR THE USE OF OR RIGHT TO USE IN INDUSTRIAL COMMERCIAL OR SCIENTIFIC EQUIPMENTS. 20. THE HONBLE MADRAS HIGH COURT IN SKYCELL COMMUNICATIONS LTD. VS. DCIT REPORTED IN (2001) 251 ITR 53 (MAD) HAD HELD THAT FOR THE PURPOSE OF SEC TION 194J TO BECOME APPLICABLE IT IS NECESSARY THAT THE PAYEE RECEIVES SERVICES. IF THE PAYEE USES ONLY TECHNICAL GADGETS WHICH ARE MADE AVAILABLE TO OTHERS ALSO FOR FEES THE SAME DOES NOT MAKE THE PAYMENT SUBJECT TO TAX DEDUCTION AT SOURCE UNDER SEC TION 194J OF THE ACT. 21. THE BANGALORE BENCH OF THE TRIBUNAL IN INFOSYS TECHNOLOGIES LTD. VS. DCIT (SUPRA) ON CONSIDERATION OF THE PAYMENT MADE TOWARDS BANDWIDTH CHARGES TO THE SERVICE PROVIDERS HAD HELD THAT SUCH PAYMENTS WERE NOT IN THE NATURE OF MANAG ERIAL CONSULTANCY OR TECHNICAL SERVICES NOR WAS IT FOR THE USE OF OR RIGHT TO USE INDUSTRIAL COMMERCIAL OR SCIENTIFIC EQUIPMENTS. IT WAS FURTHER HELD BY THE BENCH THAT THE SERVICE PROVIDERS WERE ONLY TO ENSURE THAT SUFFICIENT BANDWIDTH WAS AVAILABLE ON AN ONGOING BASIS TO THE ULTIMATE USERS TO UPLINK AND DOWNLINK THE SIGNALS. THE RELEVANT FINDINGS OF THE TRIBUNAL WERE AS UNDER: - ITA NO S. 1 636 & 1637 /PN/201 4 IGATE GLOBAL SOLUTIONS LTD 5 THE CIT(A)'S REASONING THAT THE ONLY WAY OUT IS TO GET A NO - DEDUCTION CERTIFICATE FROM THE AO (TDS) IS LACKED MERIT IN SUBST ANCE AND THIS REASONING OF THE CIT(A) IS TO BE OUT RIGHTLY REJECTED. SOFTWARE DEVELOPED BY COMPANIES IN INDIA IS EXPORTED EITHER IN PHYSICAL MODE (I.E. THROUGH FLOPPY DISKS) OR THROUGH WIRELESS COMMUNICATION USING SATELLITE LINKS. WHEN AN INDIAN COMPANY EX PORTS SOFTWARE TO COMPANIES OUTSIDE INDIA USING SATELLITE COMMUNICATION FACILITIES THE DIGITAL SIGNALS ARE CONVERTED INTO ANALOG SIGNALS THROUGH EARTH STATIONS AND ARE TRANSMITTED TO ONE OF THE GEO - STATIONERY SATELLITES USING THE REQUIRED BANDWIDTH PROVID ED BY VIDESH SANCHAR NIGAM LTD. OR SOFTWARE TECHNOLOGY PARKS OF INDIA. THE SIGNALS THAT HAVE BEEN BEAMED TO THE SATELLITE WILL BE DOWNLINKED TO THE EARTH STATION IN THE US AND SENT TO THE CLIENT LOCATIONS USING THE BANDWIDTH AND DOWNLINKING FACILITY PROVID ED BY INTERNATIONAL SERVICE PROVIDERS SUCH AS AT & T MCI TELECOMMUNICATIONS ETC. THE ASSESSEE SHARES THE BANDWIDTH PROVIDED BY THE INTERNATIONAL SERVICE PROVIDERS. BANDWIDTH IN NORMAL PARLANCE REFERS TO THE AMOUNT OF TRAFFIC THAT COULD BE CARRIED ON THE I NTERNET. GREATER THE BANDWIDTH GREATER WOULD BE THE ABILITY TO TRANSMIT DATA AND OTHER COMMUNICATION. THE PAYMENTS MADE TO SERVICE PROVIDERS SUCH AS AT & T OR MCI TELECOMMUNICATIONS ARE FOR THE USE OF BANDWIDTH PROVIDED FOR DOWNLINKING SIGNALS IN THE US. THE PAYMENTS MADE ARE NOT IN THE NATURE OF MANAGERIAL CONSULTANCY OR TECHNICAL SERVICES NOR IS IT FOR THE USE OF OR RIGHT TO USE INDUSTRIAL COMMERCIAL OR SCIENTIFIC EQUIPMENT. THE SERVICE PROVIDERS SUCH AS MCI TELECOMMUNICATIONS OR AT & T ONLY ENSURE TH AT THE SUFFICIENT BANDWIDTH IS AVAILABLE ON AN ONGOING BASIS TO THE ULTIMATE USERS TO UPLINK AND DOWNLINK THE SIGNALS. NO DISALLOWANCE UNDER S. 40(A)(I) WAS CALLED FOR. 22. FURTHER THE DELHI BENCH OF THE TRIBUNAL IN GLOBAL ONE INDIA P. LTD. 22. FURTHER THE DELHI BENCH OF THE TRIBUNAL IN GLOBAL ONE INDIA P. LTD. VS. ACIT ( SUPRA) WHILE DECIDING THE ISSUE OF PAYMENTS MADE TOWARDS FACILITIES PROVIDED BY THE SERVICE PROVIDER FOR TRANSMISSION OF DATA AND WHETHER TAX WAS TO BE DEDUCTED AT SOURCE UNDER SECTION 194I OF THE ACT HELD AS UNDER: - WE FIRST TAKE UP CORPORATE TAX ISSUES WHICH IS GROUND NO. 5 FOR THE ASSESSMENT YEAR 2007 - 08. THE ASSESSEE IS A LICENSED INTERNET PROVIDER. DURING THE YEAR IT PROCURED DOMESTIC HALF CIRCUIT FACILITY TO ITS CUSTOMERS FROM TELECOM SERVICE PROVIDERS LIKE BSNL MTNL AND INTERNATIONAL HALF CIRCUI T FACILITY FROM RAG ATLANTIC AT FRANCE. THESE ARE STANDARD FACILITIES PROVIDED FOR TRANSMISSION OF DATA BY THOSE ORGANISATIONS. THE ISSUE IS WHETHER TAX SHOULD BE DEDUCTED AT SOURCE UNDER SECTION 194 - I FROM PAYMENTS MADE FOR USE OF SUCH STANDARD FACILITIE S. THE HON'BLE DELHI HIGH COURT IN THE CASE OF ASIA SATELLITE TELECOMMUNICATIONS CO. LTD. V. DIT [2011] 332 ITR 340 (DELHI) AND THE HON'BLE MADRAS HIGH COURT IN THE CASE OF SKY CELL COMMUNICATIONS LTD. V. DEPUTY CIT [2001] 251 ITR 53 (MAD) HAVE ADJUDICATED THE ISSUE IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE SAME WE HOLD THAT PAYMENTS MADE TOWARDS USE OF STANDARD FACILITY WHEN THE LESSEE IS NOT HAVING ANY DOMAIN OR CONTROL OR POSSESSORY RIGHTS OVER SUCH FACILITY CANNOT BE CATEGORISED AS USE OF ASSETS FOR THE PURPOSE OF THE ACT. 23. THE ASSESSING OFFICER HAD PLACED RELIANCE ON THE RATIO LAID DOWN BY THE CALCUTTA BENCH OF THE TRIBUNAL IN HUTCHISON TELECOM EAST LTD. VS. ACIT (SUPRA) WHEREIN IT WAS HELD THAT INTERCONNECTIVITY CHARGES PAID TO BSN L WERE IN THE NATURE OF PAYMENT FOR TECHNICAL SERVICES AND NOT PAYMENT MADE AGAINST WORK AND SAME WERE SUBJECT TO PROVISIONS OF SECTION 194J OF THE ACT. HOWEVER THE HONBLE DELHI HIGH COURT IN CIT VS. BHARTI CELLULAR LTD. (SUPRA) HAS OVERRULED THE RATIO LAID DOWN BY THE ITA NO S. 1 636 & 1637 /PN/201 4 IGATE GLOBAL SOLUTIONS LTD 6 CALCUTTA BENCH OF THE TRIBUNAL IN HUTCHISON TELECOM EAST LTD. VS. ACIT (SUPRA) BY HOLDING THAT THE WORD TECHNICAL HAD TO TAKE COLOUR FROM THE WORDS MANAGERIAL AND CONSULTANCY. IT WAS FURTHER HELD BY THE HONBLE HIGH COURT THAT MANAGERIAL SERVICES HAD DEFINITE HUMAN ELEMENT ATTACHED TO AND SIMILAR SERVICES OF CONSULTANCY ALSO NECESSARY ENTAILED HUMAN INTERVENTION AND CONSEQUENTLY THE WORD TECHNICAL AS APPEARING IN EXPLANATION (2) UNDER SECTION 9(1)(VII) OF THE ACT HAS TO BE CONSTRUED INVOL VING HUMAN ELEMENT. THE FACILITIES WHICH WERE PROVIDED BY MTNL AND OTHER COMPANIES FOR INTER - CONNECTION / PORT ACCESS WHICH WAS PROVIDED AUTOMATICALLY BY THE MACHINES AND HENCE THE MTNL AND OTHER COMPANIES WHICH PROVIDES SAID FACILITIES WERE NOT RENDERING ANY TECHNICAL SERVICES AND THE PAYMENTS MADE TO SUCH SERVICE PROVIDERS WERE NOT LIABLE FOR TAX DEDUCTION AT SOURCE UNDER SECTION 194J OF THE ACT. 24. THE HONBLE SUPREME COURT IN CIT VS. BHARTI CELLULAR LTD. (SUPRA) OBSERVED THAT QUESTION OF HUMAN INTE RVENTION WAS NEVER RAISED BY THE DEPARTMENT EITHER BEFORE THE CIT(A) OR BEFORE THE TRIBUNAL AND WAS NOT RAISED EVEN IN THE PRESENT APPEALS. HOWEVER KEEPING IN MIND THE HIGHER INTEREST AND RAMIFICATIONS OF THE ISSUE THE MATTER WAS REMITTED BACK TO THE AS SESSING OFFICER TO EXAMINE TECHNICAL EXPERT AND DECIDE THE SAME AFRESH. FURTHER IT WAS HELD BY THE HONBLE SUPREME COURT THAT THE DEPARTMENT WAS NOT ENTITLED TO LEVY INTEREST UNDER SECTION 201(1A) OF THE ACT OR IMPOSE PENALTY FOR NON - DEDUCTION OF TDS ON THE FACTS AND CIRCUMSTANCES OF THE CASE FOR THE REASONS THAT THERE WAS NO LOSS OF REVENUE AS TAXES HAD BEEN PAID BY THE RECIPIENT AND ALSO BECAUSE THE MOOT QUESTION INVOLVED IN THE CASE WAS YET TO BE DECIDED. 25. NOW COMING TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE THE ASSESSEE HAD FURNISHED THE EXPLANATION BEFORE THE ASSESSING OFFICER AND ALSO FILED WRITTEN SUBMISSIONS BEFORE THE CIT(A) VIDE LETTER DATED 01.04.2013 ALONG WITH FLOW CHART / DIAGRAM OF HOW THE DATA LINKS WORKS 01.04.2013 ALONG WITH FLOW CHART / DIAGRAM OF HOW THE DATA LINKS WORKS WHICH IS PLACED AT PA GES 24 TO 26 OF THE PAPER BOOK. THE ASSESSEE ALSO PLACED ON RECORD THE SAMPLE COPIES OF PURCHASE ORDERS AT PAGES 27 ONWARDS UNDER WHICH IT WAS EXPLAINED THAT THE PERUSAL OF THE BILLS WOULD REFLECT THE BASIS OF CHARGES RATES ETC. WHICH WERE FIXED / AGRE ED UPON AND FINALLY BILLED BY THE DATA LINK PROVIDERS AND IT WAS VEHEMENTLY STATED THAT THE SAME DOES IN NO WAY INDICATE INVOLVEMENT OR OTHERWISE OF HUMAN INTERVENTION IN THE DATA LINK PROCESS. IN VIEW THEREOF IN THE ABSENCE OF ANY HUMAN INTERVENTION BET WEEN THE ASSESSEE AND THE SERVICES PROVIDED BY THE DATA LINK PROVIDER IT CANNOT BE SAID THAT THE PAYMENT MADE BY THE ASSESSEE WAS FOR TECHNICAL SERVICES. MERELY BECAUSE FOR MAINTENANCE PURPOSE CERTAIN HUMAN INTERVENTION WAS PROVIDED CANNOT LEAD TO THE S URMISE THAT THE DATA LINK CHARGES PAID TO VARIOUS TELECOM SERVICE PROVIDERS WERE IN THE NATURE OF TECHNICAL SERVICES GOVERNED BY THE PROVISIONS OF SECTION 194J OF THE ACT. THE DATA LINK CHARGES WERE PAID FOR UTILIZING THE STANDARD FACILITIES WHICH WERE P ROVIDED BY THE INDIVIDUAL SERVICE PROVIDERS BY WAY OF USE OF TECHNICAL GADGETS WHICH WERE MADE AVAILABLE VIDE DATA LINK SATELLITE LINK LINE ESTABLISHED FROM ONE SERVICE PROVIDER TO BE CARRIED OVER TO THE OTHER SERVICE PROVIDER DOES NOT INVOLVE TECHNICAL S ERVICES AS THERE WAS ONLY INTERCONNECTION OF THE NETWORKS TO THE EQUIPMENTS OF OTHER SERVICE PROVIDERS. IN THE ABSENCE OF ANY HUMAN INTERVENTION FOR TRANSMITTING THE DATA THROUGH SUCH DATA LINK SATELLITE LINK LINE THE PAYMENTS MADE FOR UTILIZING SUCH SER VICES WAS NOT IN THE NATURE OF TECHNICAL SERVICES GOVERNED BY SECTION 194J OF THE ACT. ACCORDINGLY WE REVERSE THE FINDING OF CIT(A) IN THIS REGARD AND HOLD THAT DATA LINK CHARGES OF RS.8 32 46 468/ - WERE NOT LIABLE FOR TAX DEDUCTION AT SOURCE UNDER THE P ROVISIONS OF SECTION 194J OF THE ACT. IN VIEW THEREOF THE GROUNDS OF APPEAL NO.1 (A) AND (B) ARE ALLOWED. SINCE THERE WAS NO REQUIREMENT TO DEDUCT TAX AT SOURCE UNDER SECTION 194J OF THE ACT THERE ITA NO S. 1 636 & 1637 /PN/201 4 IGATE GLOBAL SOLUTIONS LTD 7 WAS NO LIABILITY UPON THE ASSESSEE AND THERE WAS NO FAI LURE ON PART OF ASSESSEE FOR NON - DEDUCTION OF TAX AT SOURCE AND CONSEQUENTLY THE ASSESSEE WAS NOT LIABLE TO PAY INTEREST UNDER SECTION 201(1A) OF THE ACT. THE GROUND OF APPEAL NO.1(C) RAISED BY THE ASSESSEE IS ALLOWED. 9. SINCE T HE I SSUE BEING IDENTICA L TO THE ISSUE BEFORE THE TRIBUNAL I.E. WITH REGARD TO THE DEDUCTION OF TAX AT SOURCE ON DATA LINK CHARGES PAID BY THE ASSESSEE UNDER THE PROVISIONS OF SECTION 194J OF THE ACT WE HOLD THAT THERE WAS NO REQUIREMENT TO DEDUCT TAX AT SOURCE UNDER SECTION 194 J OF THE ACT. CONSEQUENTLY THE DEMAND RAISED UNDER SECTION 201(1) OF THE ACT IS DELETED. SINCE THERE WAS NO LIABILITY UPON THE ASSESSEE TO DEDUCT TAX AT SOURCE UNDER THE PROVISIONS OF SECTION 194J OF THE ACT THERE WAS NO FAILURE ON THE PART OF ASSESSEE FOR NON - DEDUCTION OF TAX AT SOURCE AND CONSEQUENTLY THE ASSESSEE IS NOT LIABLE TO CHARGING OF INTEREST UNDER SECTION 201(1A) OF THE ACT AND THE SAME IS ALSO D ELETED . 1 0 . THE FACTS AND ISSUE IN ITA NO. 1 637 /PN/2014 ARE IDENTICAL TO THE FACTS AND ISSUE IN ITA NO. 1 636 /PN/201 4 AND OUR DECISION IN ITA NO. 1 636 /PN/201 4 SHALL APPLY MUTATIS MUTANDIS TO ITA NO.1 637 /PN/201 4 . 11 . IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED . ORDER P RONOUNCED ON THIS 29 TH DAY OF APRIL 201 5 . SD/ - SD/ - ( R.K. PANDA ) ( SUSHMA CHOWLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED: 29 TH APRIL 201 5 . GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A) - V PUNE ; 4) THE CIT - V PUNE ; 5) THE DR A BENCH I.T.A.T. PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T. PUNE