9911796707
TMI Blog2015 (5) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... izing such services was not in the nature of technical services governed by section 194J of the Act. Accordingly,hold that DATA link charges were not liable for tax deduction at source under the provisions of section 194J of the Act. - Decided in favour of assessee. - ITA Nos.1636 & 1637/PN/2014 - - - Dated:- 29-4-2015 - Sushma Chowla, JM And R. K. Panda, AM,JJ. For the Petitioner : Shri C H Naniwadekar For the Respondent : Shri Rajesh Damor ORDER Per: Sushma Chowla,JM. Both the appeals filed by the assessee are against the separate orders of CIT(A)-V, Pune dated 06.08.2014 relating to assessment years 2011-12 and 2012-13 passed under section 201(1)/201(1A) of the Income Tax Act , 1961. 2. Both the appeals relating to same assessee on similar issue were heard together and are being disposed of by this consolidated order for the sake of convenience. The facts in both the years under appeal are identical. However, we make a reference to the facts in ITA No.1 636/PN/2014 to adjudicate the issue. 3. The assessee has raised similar grounds of appeal in both the years and the grounds of appeal in assessment year 2011-12 read as under:- In the fact and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Scigen Biopharma Pvt. Ltd., in ITA No.1298/PN/2012 for assessment year 2007-08, order dated 30.09.2013, wherein it was held that the interest chargeable under section 201(1A) of the Act is to be calculated from the date of payment / credit till the date of completion of the assessment in the case of deductee. Accordingly, the Assessing Officer was directed to modify the demand under section 201(1) of the Act and the interest chargeable under section 201(1A) of the Act. 7. The assessee is in appeal against the order of CIT(A). 8. On the perusal of record, we find that similar issue of deductibility of tax out of Data Link Charges arose before the Tribunal in assessee's own case in ITA Nos. 1301 to 1303 1616/PN/2013, relating to assessment years 2007-08 to 2010-11 and vide order dated 30.12.2014, it was held as under:- 15. We have heard the rival contentions and perused the record. The assessee was engaged in software development, software export and allied activities. TDS Survey under section 133A of the Act was conducted on the premises of the assessee on 13.01.2009. The assessee was found to have made payments against DATA link charges to various telecom service pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then, is liable to deduct tax at source at the specified rates at the time of credit of the payment or at the time of actual payment, whichever is earlier. Fee for technical services is defined under the Act as consideration paid for rendering any managerial, technical or consultancy services but does not include consideration paid for any construction, assembly, mining or like project undertaken by the recipient. Further, the consideration which in turn, would become the income of the recipient chargeable under the head 'Salaries', is also not to be included as fees for technical services. In other words, the technical services involve rendering of any managerial, technical or consultancy services. In order to provide managerial, technical and consultancy services, the element of human involvement is necessary. In the facts of present case before us where, there is provision for DATA link and inter -connection facilities, the user utilizes the technical equipments for inter-connection purposes only through technical equipment or gadgets used in the transmission process, but the same does not part take the nature of services of managerial, technical or consultancy nature. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsmitted to one of the geo-stationery satellites using the required bandwidth provided by Videsh Sanchar Nigam Ltd. or Software Technology Parks of India. The signals that have been beamed to the satellite will be downlinked to the earth station in the US and sent to the client locations using the bandwidth and downlinking facility provided by international service providers such as AT T, MCI Telecommunications etc. The assessee shares the bandwidth provided by the international service providers. Bandwidth in normal parlance refers to the amount of traffic that could be carried on the internet. Greater the bandwidth greater would be the ability to transmit data and other communication. The payments made to service providers such as AT T or MCI Telecommunications are for the use of bandwidth provided for downlinking signals in the US. The payments made are not in the nature of managerial, consultancy or technical services nor is it for the use of or right to use industrial, commercial or scientific equipment. The service providers such as MCI Telecommunications or AT T, only ensure that the sufficient bandwidth is available on an ongoing basis to the ultimate users to uplink ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring in Explanation (2) under section 9(1)(vii) of the Act has to be construed involving human element. The facilities which were provided by MTNL and other companies for inter-connection / port access which was provided automatically by the machines and hence the MTNL and other companies which provides said facilities were not rendering any technical services and the payments made to such service providers were not liable for tax deduction at source under section 194J of the Act. 24. The Hon'ble Supreme Court in CIT Vs. Bharti Cellular Ltd. (supra) observed that question of human intervention was never raised by the Department either before the CIT(A) or before the Tribunal and was not raised even in the present appeals. However, keeping in mind the higher interest and ramifications of the issue, the matter was remitted back to the Assessing Officer to examine technical expert and decide the same afresh. Further, it was held by the Hon'ble Supreme Court that the Department was not entitled to levy interest under section 201(1A) of the Act or impose penalty for non-deduction of TDS on the facts and circumstances of the case for the reasons that there was no loss of reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, there was no liability upon the assessee and there was no failure on part of assessee for non-deduction of tax at source and consequently, the assessee was not liable to pay interest under section 201(1A) of the Act. The ground of appeal No.1(c) raised by the assessee is allowed. 9. Since the issue being identical to the issue before the Tribunal i.e. with regard to the deduction of tax at source on Data Link Charges paid by the assessee under the provisions of section 194J of the Act, we hold that there was no requirement to deduct tax at source under section 194J of the Act. Consequently, the demand raised under section 201(1) of the Act is deleted. Since there was no liability upon the assessee to deduct tax at source under the provisions of section 194J of the Act, there was no failure on the part of assessee for non-deduction of tax at source and consequently, the assessee is not liable to charging of interest under section 201(1A) of the Act and the same is also deleted. 10. The facts and issue in ITA No. 1637/PN/2014 are identical to the facts and issue in ITA No. 1636/PN/2014 and our decision in ITA No. 1636/PN/2014 shall apply mutatis mutandis to ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
