9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (6) TMI 129 - HC - Income TaxTDS u/s 194J - Addition u/s 40(a)(ia) - whether payment of interconnect user charges as it could not be categorized as fee for technical services? - HELD THAT - Admittedly, the Karnataka High Court in Commissioner of Income Tax, TDS, Bangalore vs. Vodafone South Ltd. 2016 (8) TMI 422 - KARNATAKA HIGH COURT and various Tax Tribunals have taken the view that there is no human intervention involved in providing the interconnect services whether it be for data link or roaming. The Supreme Court in Berger Paints India Ltd. vs. Commissioner of Income Tax, 2004 (2) TMI 4 - SUPREME COURT has held that if the revenue has not challenged the correctness of the law laid down by the High Court and has accepted it in the case of one assessee, then it is not open to the revenue to challenge its correctness in the case of other assessee without just cause. Keeping in view the aforesaid mandate of law and the letter dated 21 st April, 2022, this Court is of the view that the appellant-revenue has consciously elected not to challenge the aforesaid judgment of the Karnataka High Court, which hold that no TDS is required to be deducted by the assessee on payment of interconnect user charges as it cannot be categorized as fee for technical services. Consequently, this Court is of the view that it is not open to the revenue to challenge the correctness of the finding rendered by the Karnataka High Court in Vodafone South Ltd. (supra) in the case of other assessee without just cause.
Issues:
1. Interpretation of Section 194J of the Income Tax Act regarding TDS deduction on interconnect user charges. 2. Precedence of Karnataka High Court judgment in Commissioner of Income Tax, TDS, Bangalore vs. Vodafone South Ltd. 3. Appellant's challenge to the need for TDS deduction based on Bombay High Court's consideration of a similar question. 4. Legal implications of the JDIT(OSD)(L&R) letter regarding the non-filing of SLP in the Vodafone South Ltd. case. 5. Appellant-revenue's attempt to challenge the Karnataka High Court judgment despite a conscious decision to accept it. 6. Applicability of legal principles regarding consistent stand by the Revenue on similar issues. Analysis: 1. The central issue in this case revolves around the interpretation of Section 194J of the Income Tax Act concerning the requirement for TDS deduction on interconnect user charges. The primary question raised is whether such charges can be classified as fees for technical services necessitating TDS deduction by the assessee. 2. The judgment of the Karnataka High Court in Commissioner of Income Tax, TDS, Bangalore vs. Vodafone South Ltd. plays a crucial role in this case. The Karnataka HC ruled in favor of the respondent-assessee, stating that no TDS under Section 194J was necessary on interconnect user charges. This judgment holds significance as it sets a precedent that the appellant-revenue is bound to follow. 3. Despite the Karnataka HC's decision, the appellant sought to challenge the need for TDS deduction based on the Bombay High Court's consideration of a similar question. However, the appellant's attempt was met with the revelation that the JDIT(OSD)(L&R) did not approve the filing of an SLP in the Vodafone South Ltd. case due to established precedents regarding the nature of interconnect charges. 4. The JDIT(OSD)(L&R) letter highlighted that the charges paid for interconnect services did not qualify as fees for technical services under Section 9(1) and Section 194J of the Act. This communication reinforced the decision not to challenge the Karnataka HC judgment, indicating a high-level acceptance within the appellant-revenue. 5. The respondent emphasized that the appellant's conscious decision to accept the Karnataka HC judgment binds them to maintain a consistent stance. Citing legal precedents, the respondent argued against allowing the appellant to take an opposing position after accepting the principles established by the Karnataka HC. 6. The court, considering the legal principles and the JDIT(OSD)(L&R) letter, concluded that the appellant-revenue had consciously chosen not to contest the Karnataka HC judgment. Therefore, challenging the finding in the case of other assessees without just cause would be untenable. Consequently, the court dismissed the appeal, stating that no substantial question of law arose for consideration based on the established precedents and the appellant's prior acceptance of the Karnataka HC judgment.
|
