9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (4) TMI 811 - AT - Income TaxTDS u/s 194J - Treatment of Roaming charges paid to various telecom operators to be in the nature of Fees for technical services and liable to Tax Deduction at source ( TDS ) - assessee in default u/s 201(1) - Held that - If any person delivers any services through his skills, or experience, or make available any such services either through aid of any machines, equipment or any kind of technology, then rendering of such services can be reckoned as technical services . There should be a constant human endeavor or involvement of the human interface during the process of rendering of technical services. On the contrary, if any technology or machine developed by human is put to operation automatically, wherein it operates without much human interface or human intervention, then usage of such technology or machine cannot per se be held as rendering of technical services by human skills. It is obvious that in such a situation some human involvement could be there but it is not a constant endeavour of the human in the process. Here in this case, post Bharati Cellular Ltd., 2010 (8) TMI 332 - Supreme Court of India , whereby, AO was required to examine the technical experts cannot be held to be conclusive at this stage qua the concept of human involvement in the process of roaming, because in such cross examinations, as incorporated by the AO in the impugned order, there is inherent contradiction and if we go by the latest principle laid down by the Hon ble Supreme Court in the case of Kotak Securities Ltd (2016 (3) TMI 1026 - SUPREME COURT ), then the whole test of constant human intervention and human interface fails in the case of roaming charges. However, we are not entering into the semantics of the controversy whether human involvement / intervention is there qua the payment of roaming charges. We are keeping this issue open and our observations made above are not final conclusion on this matter, because in the case of Vodafone Essar Mobile Services Ltd., which order has been quoted by the AO extensively has not stood scrutiny or concluded by any appellate authorities or any court, especially in light of any rebuttal which may come from the side of assessee. Thus, we are refraining from deciding the first issue before us. Whether assessee can be treated as assessee-in-default under section 201(1) - Held that - we find that Ld. CIT(A) without perusing the finding of the AO as noted in the order, has recorded a wrong finding of fact that assessee has not filed any declaration of the deductees and the details of their income in their return of income, wherein, the said payments have been incorporated. From the perusal of the assessment order, especially, in the second last page, as noted above the AO himself has held that, the assessee could not be treated as assessee-in-default in terms of section 201(1) in wake of assessee having furnished declaration from the payee in this regard. Once there is a categorical finding by the AO, then without any contrary material on record to rebut his finding or notice by the CIT(A), such a finding of the CIT(A) is wholly erroneous, which cannot be sustained. Thus, we hold that when the AO himself has held that assessee is not in default in terms of section 201(1) in wake of evidences filed before him, then without any defect or any material to rebut, there cannot be any deviation from the order of the AO and accordingly, observation and finding of the CIT(A) with regard to section 201(1) is set aside and is hereby reversed. - Decided in favour of assessee Liability of interest under section 201(1A) - Held that - If deductees have themselves incurred huge losses and have shown these losses in their return of income on which no income-tax is payable then, there is no occasion to pay tax by the deductees and hence, in such a situation, neither the assessee can be held to be assessee-in- default for nor non-deduction of the tax for amount paid by the deductees would entail levy of interest under section 201(1A). However, this fact as stated by the assessee needs verification from the end of the AO, whether the deductees have incurred losses during the year and whether they were not required to pay any taxes on such payments. If contention of the assessee as raised before the CIT(A) is found to be correct then no interest under section 201(1A) should be charged and accordingly relief should be given.
Issues Involved:
1. Treatment of Roaming Charges as Fees for Technical Services and TDS applicability under Section 194J. 2. Treating the Appellant as 'assessee in default' under Section 201(1). 3. Levy of Interest under Section 201(1A). Detailed Analysis: 1. Treatment of Roaming Charges as Fees for Technical Services and TDS applicability under Section 194J The assessee, a CDMA service provider, entered into a "Roaming Agreement" with another telecom operator to provide GSM services in areas where it lacked a GSM license. The primary contention was that roaming charges paid to other operators should not be treated as fees for technical services (FTS) under Section 194J because the process is automated and does not involve human intervention. The assessee argued that the roaming facility is a standard telecom infrastructure facility provided by the visiting network and does not involve rendering technical services requiring TDS under Section 194J. The AO, however, referred to the Supreme Court's decision in the case of Bharati Cellular Ltd., which required examining whether human intervention is involved in the process. The AO concluded that human intervention is required in maintaining and rectifying technical snags, thus classifying the payments as FTS under Section 194J. 2. Treating the Appellant as 'assessee in default' under Section 201(1) The AO accepted the assessee's alternative argument that it should not be treated as 'assessee in default' under Section 201(1) because the payee companies were assessed to tax and had provided declarations and PAN details. This was in line with the Supreme Court's decision in Hindustan Coca Cola Beverage Pvt Ltd. vs CIT, which held that if the recipient has paid the taxes, the payer cannot be treated as an assessee in default. The CIT(A) erroneously observed that the assessee had not furnished declarations from the deductees, contradicting the AO's findings. The Tribunal found this observation incorrect, noting the AO had acknowledged the declarations and PAN details provided by the assessee, thus reversing the CIT(A)'s finding and ruling in favor of the assessee on this issue. 3. Levy of Interest under Section 201(1A) The AO imposed interest under Section 201(1A) for non-deduction of TDS, despite not treating the assessee as in default under Section 201(1). The CIT(A) dismissed the assessee's plea that no interest should be levied because the deductees had incurred losses and were not liable to pay tax, due to lack of documentary evidence. The Tribunal directed the AO to verify the assessee's claim that the deductees had incurred losses and were not required to pay any taxes. If verified, no interest under Section 201(1A) should be charged, thereby providing partial relief to the assessee. Conclusion The Tribunal ruled that: - Roaming charges paid by the assessee do not constitute fees for technical services requiring TDS under Section 194J. - The assessee is not an 'assessee in default' under Section 201(1) due to the declarations provided by the payees. - The interest under Section 201(1A) should be reconsidered upon verification of the deductees' tax liabilities. The appeals were partly allowed for statistical purposes, with directions for verification by the AO regarding the deductees' tax liabilities.
|
