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2017 (8) TMI 294 - HC - Income TaxTDS U/S 194J - payment for providing SMS services as well as technical support services - non deduction of tds - nature of services - Held that - As observed by the Tribunal that M/s. Valuefirst Messaging Pvt. Ltd. is merely assisting the assessee in sending SMS messages to its customers. The preamble of the agreement between the assessee and M/s. Valuefirst Messaging Pvt. Ltd. itself describes that M/s. Valuefirst Messaging Pvt. Ltd. is a company engaged in providing mobile messaging solutions to carry data over mobile network using its mobility platform. There is no technical or professional services, which can be said to have been offered by M/s. Valuefirst Messaging Pvt. Ltd. The judgment in a case of Director of Income Tax (International Taxation) V/s. A.P. Moller Maersk A/S reported in (2017 (2) TMI 993 - SUPREME COURT) and another judgment of the Apex Court in a case of Commissioner of Income Tax Vs. Kotak Securities Ltd. (2016 (3) TMI 1026 - SUPREME COURT) has considered that such a service and charges paid, as not fees for technical services and no liability of direct tax of such liability arises. - Decided in favour of assessee.
Issues:
Interpretation of Section 194J for payments made for SMS services and technical support. Analysis: The judgment pertains to Assessment Years 2007-08 and 2008-09 and involves the interpretation of Section 194J regarding payments made to a company for SMS services and technical support. The appellant argued that the Tribunal erred in not applying Section 194J to the payments made to the company for providing SMS services and technical support, as per the service agreement. The appellant contended that the company was responsible for training a technical team and ensuring the SMS service's functionality and service level agreement. However, the Tribunal found that the company was only assisting the assessee in sending SMS messages without providing technical or professional services. The Tribunal referenced judgments by the Apex Court in similar cases, where services like these were not considered fees for technical services, leading to no direct tax liability. Based on this, the Court concluded that no substantial question of law arose, and the appeals were dismissed without costs.
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