ORDER

Civil Appeal Nos.6696/2010, 6697/2010, 6698/2010 and 6699/2010 arising out of S.L.P. (C) Nos.13027/2009, 13029/2009, 13030/2009 and 20909/2009 are taken on Board along with these cases.

2. Delay condoned.

3. Leave granted.

4. In this batch of cases, the key issue which arises for determination is, whether manual intervention is involved in the technical operations by which a cellular service provider, like M/s. Bharti Cellular Limited, is given the facility by BSNL/MTNL for interconnection?

Facts in the lead case of Bharti Cellular Limited

5. Respondent No.1 is a cellular service provider. It has Interconnect Agreement with BSNL/MTNL. Under such agreement, Respondent No.1 pays interconnect/access/port charges to BSNL/MTNL. Bharti Cellular, BSNL, MTNL, Hutchison are all service providers. All are governed by National Standards of CCS No.7 issued by Telecom Engineering Centre. Under the National Standards M/s. Bharti Cellular Limited is required to connect its network with the network of BSNL (the service provider) and similar concomitant agreement is provided for under which BSNL is required to interconnect its network with M/s. Bharti Cellular Limited.

6. The question basically involved in the lead case is:

whether TDS was deductible by M/s. Bharti Cellular Limited when it paid interconnect charges/access/port charges to BSNL? For that purpose, we are required to examine the meaning of the words “fees for technical services” under Section 194J read with clause (b) of the Explanation to Section 194J of the Income Tax Act, 1961, [`Act’, for short] which, inter alia, states that “fees for technical services” shall have the same meaning as contained in Explanation 2 to clause (vii) of Section 9(1) of the Act. Right from 1979 various judgments of the High Courts and Tribunals have taken the view that the words “technical services” have got to be read in the narrower sense by applying the rule of Noscitur a sociis, particularly, because the words “technical services” in Section 9(1)(vii) read with Explanation 2 comes in between the words “managerial and consultancy services”.

7. The problem which arises in these cases is that there is no expert evidence from the side of the Department to show how human intervention takes place, particularly, during the process when calls take place, let us say, from Delhi to Nainital and vice versa. If, let us say, BSNL has no network in Nainital whereas it has a network in Delhi, the Interconnect Agreement enables M/s. Bharti Cellular Limited to access the network of BSNL in Nainital and the same situation can arise vice versa in a given case. During the traffic of such calls whether there is any manual intervention, is one of the points which requires expert evidence. Similarly, on what basis is the “capacity” of each service provider fixed when Interconnect Agreements are arrived at? For example, we are informed that each service provider is allotted a certain “capacity”. On what basis such “capacity” is allotted and what happens if a situation arises where a service provider’s “allotted capacity” gets exhausted and it wants, on an urgent basis, “additional capacity”? Whether at that stage, any human intervention is involved is required to be examined, which again needs a technical data. We are only highlighting these facts to emphasise that these types of matters cannot be decided without any technical assistance available on record.

8. There is one more aspect that requires to be gone into. It is the contention of Respondent No.1 herein that Interconnect Agreement between, let us say, M/s. Bharti Cellular Limited and BSNL in these cases is based on obligations and counter obligations, which is called a “revenue sharing contract”. According to Respondent No.1, Section 194J of the Act is not attracted in the case of “revenue sharing contract”. According to Respondent No.1, in such contracts there is only sharing of revenue and, therefore, payments by revenue sharing cannot constitute “fee