Brief: The Court, by referring the case back to the assessing officer, appears to have accepted the contention that only services rendered by humans can be regarded as a technical service. The ruling has particular significance for the technology sector where similar interpretation issues on tax ability of technical services are common. Further as held by the Court, in such cases technical evidence would be required for establishing that there was no human intervention involved in the process.
Citation: CIT, Delhi Vs. Bharti Cellular Ltd. (Civil appeal No. 6691 of 2010)
Court: Supreme Court
Facts
- · Bharti Cellular Ltd. (taxpayer) is a cellular service provider.
- · The taxpayer has entered into an interconnect agreement with BSNL / MTNL which allowed it to access the network of BSNL / MTNL (other cellular service providers) and vice versa. The agreement also referred to sharing of revenue between the parties.
- · The taxpayer pays interconnect / access / port charges to BSNL / MTNL under the agreement.
Issues before the Supreme Court
· Whether the charges were in the nature of fees for technical services and whether tax was required to be deducted by the taxpayer under section 194J of the Income-tax Act, 1961 (Act).
