2019 (9) TMI 1205 - HC - Income Tax

TDS u/s 194J - HELD THAT - Tribunal has followed the decision of the Calcutta Bench of the Tribunal in the case of Vodafone Essar Mobile Services Ltd. 2015 (9) TMI 1358 - ITAT KOLKATA . We note that it is the assessee s contention that in providing roaming service, no technical services are given as there is absence of any human intervention in providing it. On the other hand, the Revenue has placed reliance upon the evidence of the technical expert in the case of Vodafone Essar Mobile Services Ltd. (supra) to canvass the view that even in the present facts that the technical services are rendered. Thus, requiring deduction of tax u/s 194J of the Act. We asked Mr. Suresh Kumar, whether the decision of the Calcutta Bench of the Tribunal in the case of Vodafone Essar Mobile Services Ltd. (supra) has been accepted by the Revenue or any appeal has been filed by the Revenue and if so, the result thereof. Mr. Suresh Kumar, seeks time of two weeks to enable him to take appropriate instructions. Admit admit question nos. (a) and (b) for consideration as they do give rise to substantial question of law

Issues:
1. Nature of relationship between assessee and distributor for TDS under Section 194H
2. Default treatment of assessee under Section 201(1) for non-deduction of tax under Section 194H
3. Roaming charges paid by assessee to another telecom operator not being "Fees for Technical Services" under Section 194J

Analysis:

1. Nature of Relationship for TDS under Section 194H:
The High Court considered the appeal challenging the Tribunal's order on the relationship between the assessee and distributor. The Revenue contended that the relationship should be treated as Principal to Agent, making the assessee liable to deduct TDS under Section 194H of the Income Tax Act. However, the Tribunal held it to be Principal to Principal. The Court acknowledged the substantial question of law raised and indicated inclination to admit the question for consideration. The final decision on this issue was pending due to adjournment related to another question.

2. Default Treatment under Section 201(1) for Non-Deduction of Tax:
Regarding the default treatment of the assessee under Section 201(1) for non-deduction of tax under Section 194H, the Court noted that the impugned order followed a decision of the Calcutta Bench of the Tribunal in a similar case. The assessee argued that no technical services were provided in roaming services, thus not liable for TDS under Section 194J. The Revenue, however, relied on a technical expert's evidence to support the view that technical services were indeed rendered, necessitating tax deduction under Section 194J. The Court sought clarification on the Revenue's acceptance of the Calcutta Bench's decision and granted time for the appellant to provide relevant information.

3. Roaming Charges and "Fees for Technical Services" under Section 194J:
The issue of roaming charges paid by the assessee to another telecom operator not being classified as "Fees for Technical Services" under Section 194J was a key point of contention. The Court observed the conflicting views presented by the assessee and the Revenue regarding the technical nature of the services involved in roaming. The decision of the Calcutta Bench of the Tribunal in a similar case was referenced, and further clarification was sought on the acceptance or appeal status of that decision by the Revenue. The appeals were adjourned to a later date for additional information and consideration.

In conclusion, the High Court's judgment involved a detailed analysis of the three main issues raised by the Revenue and the assessee concerning the nature of the relationship for TDS, default treatment for non-deduction of tax, and the classification of roaming charges as "Fees for Technical Services." The decision-making process was ongoing, pending further information and clarification on certain aspects, with a focus on legal interpretations and precedents set by previous Tribunal decisions.

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