DCIT CORPORATE CIRCLE 1(2), CHENNAI vs. COSMIC GLOBAL LTD., CHENNAI

आदेश/ O R D E R

PER S. JAYARAMAN, ACCOUNTANT MEMBER:

With regard to the disallowance on employees contribution towards PF & ESI, since the Ld. CIT(A) has followed the decision of the Jurisdictional High Court, supra, we do not find any reason to interfere with her order and hence, the corresponding grounds of appeal of the Revenue are dismissed.

4.1 With regard to the disallowance on translation charges to non-resident translators u/s. 40(a)(ia), the relevant portion of the order of this tribunal from dated 25.11.2016, supra, is extracted as under:

“6.0 We have heard the rival submissions and perusal of the material placed before us. The Ld.AR relied on the decision of assessee’s own case for the AY 2009-10 on similar facts and held as under: “We have heard the submissions made by the representatives of both the sides and have perused the orders of the authorities below. The Assessing Officer has made disallowance of Rs.2. 63 Crores under Sect/on 40(a)(i) on account of non- deduction of tax at source on the payments made to non-resident translators. The authorities below have held translation services to be technical in nature. On the other hand, the contention of the assessee is that the payment for translation services to non- residents does not fall within the ambit of “fees for technical, managerial or consultancy services’. Let us first understand the scope of the term “technical services’ The expression “technical services” has not been defined anywhere in the Act. However, “fees for technical services” has been defined in Explanation 2 to Section 9(’l)(vii) of the Act, which reads as under:“Explanation (2) — for the purposes of this clause, “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 the recipient chargeable under the head “Salaries” The dictionary meaning of the word “technical” as given in Oxford English Dictionary is “(1) relating to a particular subject, art, or craft, or its techniques requiring special knowledge to be understood; (2) involving or concerned with applied and industrial sciences relating to the operation of machines; (3) according to a strict application or interpretation of the law or rules’ The Chambers English Dictionary explains the term “technical” as — “(1) relating to practical skill or applied science, especially those sciences useful to industry; (2) relating to a particular subject or requiring know/edge of particular subject to be understood; (3) according to a strict interpretation of the law or rules; (4) belonging or relating to or showing a quality of technique’ In the present case, the assessee is getting the translation of the text from one language to another. The only requirement for translation from one language to other is, the proficiency of the translators in both the languages, / e. the language from which the text is to be translated, to the language in which It is to be translated. The translator is not contributing anything more to the text which is to be translated. He is not supposed to explain or elaborate the meaning of the text. Apart from the knowledge of the language, the translator Is not expected to have the knowledge of applied science or the craft or the techniques in respect of the text which is to be translated. A bare perusal of Explanation 2 to Section 9(1)(vii), which explains “fees for technical service” and the dictionary meaning of the word “technical” makes it unambiguously dear that translation services rendered by the assessee are not technical services. Therefore, the payment made by the assessee to the non-resident translators would not fail within the scope of “fees for technical, manager/al or consultancy service” as detailed in Explanation 2. In our considered view, the CIT(Appeals) has travelled beyond the definition of “fees for technical service” to bring the translation services within the compass of the term “fees for technical services’ In our considered opinion, the payments made by the assessee to non-residents on account of translation services do not attract the provisions of Section .194J. The disallowance made under Section 40(a)(ia) is thus deleted. This ground of appeal of the assessee is allowed.”

:-5-: Respectfully, following the decision of the coordinate Bench of this tribunal, since the facts in the case are identical to the facts of the AY 2009- 10, we hold that the services rendered by the assessee are not technical services as per explanation of Sec.9(i)(vii) of Income Tax Act and the assessee is not required to deduct the tax at source and accordingly, we confirm the order of the Ld.CIT(A). The Revenue’s ground of appeal on this issue is dismissed.

7. In the result, the appeal is dismissed.”

Since the facts in this case are identical to the facts of the above assessment year , following the decision of the coordinate bench, supra, we hold that the services rendered by the assessee are not technical services as per Explanation of section 9(1)(vii) and the assessee is not required to deduct the tax at source and accordingly, we confirm the order of the Ld. CIT(A). The corresponding grounds of appeal of the Revenue on this issue are dismissed.

Order pronounced in the Open Court on 12th June, 2018 at Chennai.