2018 (2) TMI 744 - AT - Income Tax

TDS u/s. 194C and 194J on broad band charges - payment made to HCL Infinet and HCL Comnet - Held that - The grounds of appeal as raised in this appeal by the assessee are squarely covered 2017 (8) TMI 714 - ITAT MUMBAI no TDS is required to be made on payments made towards internet and communication charges. - Decided in favour of assessee.

Summary

Issues:
1. Non-deduction of TDS on payments made towards internet and communication charges.
2. Interpretation of sections 194C and 194J of the Income Tax Act.
3. Applicability of the decision in the case of CIT Vs. Kotak Securities Ltd.

Detailed Analysis:
1. The appeal was against the Commissioner of Income Tax (Appeals) order for the assessment year 2011-12. The appellant contended that no TDS was required on payments for internet and communication charges. The Assessing Officer (AO) objected to the non-deduction of TDS under sections 194C and 194J of the Act. The AO added the interest amount to the total income of the assessee for non-deduction of TDS. The CIT-A partly allowed the claim, confirming TDS on certain payments to specific entities. The ITAT Kolkata referred to a similar case in ITAT Mumbai where it was held that TDS is not required on internet and communication charges. The ITAT Kolkata relied on the Supreme Court judgment in the case of CIT Vs. Kotak Securities Ltd to support this decision.

2. The AO raised objections to the non-deduction of TDS under sections 194C and 194J of the Income Tax Act on payments made for broadband usage charges. The appellant argued that these payments were for standard facilities and did not involve any contract for work or technical services. The AO imposed interest for non-deduction of TDS and treated the assessee as in default. The CIT-A partially allowed the claim, stating that no TDS was required on certain charges. The ITAT Kolkata referred to a similar case in ITAT Mumbai and held that TDS is not applicable to internet and communication charges based on the Supreme Court judgment in the case of CIT Vs. Kotak Securities Ltd.

3. The ITAT Kolkata analyzed the decision in the case of CIT Vs. Kotak Securities Ltd, where the Supreme Court held that certain services provided by the Stock Exchange did not qualify as technical services for TDS purposes. The ITAT Kolkata applied this interpretation to the present case, concluding that no TDS was required on payments made towards internet and communication charges. The ITAT Kolkata set aside the CIT-A's order and allowed the appeal of the assessee based on the settled position of law established by the Supreme Court judgment.