2020 (6) TMI 24 - AT - Income Tax

TDS u/s 194J - Interconnection usages charges (IUC) is in the nature of fees for technical services - HELD THAT - We find in the identical situation the Tribunal M/S. BHARTI AIRTEL LTD. 2019 (3) TMI 217 - ITAT AHMEDABAD has been pleased to pass orders in Revenue s appeal holding that the roaming charges paid by the appellant to other telecom companies are not covered under fees for technical services and out of the purview of TDS provision of 194J. Order is being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT - Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, we rely upon the decision of the Coordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JSW Limited 2020 (5) TMI 359 - ITAT MUMBAI .

Summary

Issues Involved:
1. Whether interconnection usage charges (IUC) are in the nature of fees for technical services.
2. Whether the assessee is liable for TDS under Section 194J of the Income Tax Act, 1961.
3. Validity of order pronouncement beyond the 90-day period due to COVID-19 pandemic.

Issue-wise Detailed Analysis:

1. Nature of Interconnection Usage Charges (IUC):
The primary issue in this appeal is whether the interconnection usage charges (IUC) are considered fees for technical services. The Tribunal examined the nature of IUC and determined that these charges do not involve human intervention. The Tribunal referenced the judgment in the case of ACIT vs. M/s. Bharti Airtel Ltd., where it was established that roaming services do not require human intervention, thus falling outside the ambit of fees for technical services. The Tribunal cited the Mysore Bench's reliance on the Karnataka High Court's decision in CIT vs. Vodafone South Ltd., which concluded that the process of roaming connectivity does not involve human intervention, and therefore, the services do not qualify as technical services under Section 194J of the Act.

2. Liability for TDS under Section 194J:
The Tribunal reviewed various judgments, including those from the Ahmedabad and Jaipur Benches, and concluded that the interconnection charges paid by the appellant to other telecom operators are not fees for technical services. Consequently, there is no liability for the assessee to deduct tax at source under Section 194J. The Tribunal upheld the Commissioner of Income Tax (Appeals)'s decision, which had deleted the demand for TDS on IUC, aligning with the precedent that such charges do not fall within the purview of Section 194J.

3. Validity of Order Pronouncement Beyond 90 Days Due to COVID-19:
The Tribunal addressed the procedural issue of pronouncing the order beyond the 90-day period due to the COVID-19 pandemic. It referenced the case of DCIT vs. JSW Ltd., where it was established that the lockdown period should be excluded when calculating the time limit for pronouncement of orders, as per Rule 34(5) of the Appellate Tribunal Rules, 1963. The Tribunal noted that the unprecedented situation caused by the pandemic justified the delay and that the period during which the lockdown was in force should be excluded from the 90-day computation. This interpretation aligns with the pragmatic approach required during extraordinary circumstances, as supported by the Hon'ble Supreme Court and Bombay High Court directives.

Conclusion:
The Tribunal found no merit in the Revenue's appeal, confirming that IUC does not constitute fees for technical services and that no TDS is required under Section 194J. Additionally, the Tribunal justified the delayed pronouncement of the order due to the COVID-19 pandemic, adhering to the guidelines provided by higher judicial authorities. Consequently, the appeal by the Revenue was dismissed.