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TMI Blog2016 (4) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... .,[2010 (8) TMI 332 - Supreme Court of India ], whereby, AO was required to examine the technical experts cannot be held to be conclusive at this stage qua the concept of human involvement in the process of roaming, because in such cross examinations, as incorporated by the AO in the impugned order, there is inherent contradiction and if we go by the latest principle laid down by the Hon'ble Supreme Court in the case of Kotak Securities Ltd (2016 (3) TMI 1026 - SUPREME COURT ), then the whole test of constant human intervention and human interface fails in the case of roaming charges. However, we are not entering into the semantics of the controversy whether human involvement / intervention is there qua the payment of roaming charges. We are keeping this issue open and our observations made above are not final conclusion on this matter, because in the case of Vodafone Essar Mobile Services Ltd., which order has been quoted by the AO extensively has not stood scrutiny or concluded by any appellate authorities or any court, especially in light of any rebuttal which may come from the side of assessee. Thus, we are refraining from deciding the first issue before us. Whether assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls have been filed by the assessee against impugned common order dated 17.02.2014, passed by CIT(A)-13, Mumbai, in relation to the order passed under section 201(1)/201(1A) for the assessment years 2010-11 and 2011-12. Since, in both the appeal grounds raised are common, arising out identical set of facts, therefore, they are being taken up together. In various grounds of appeal, the assessee has raised mainly following issues:- I. Treatment of Roaming charges paid to various telecom operators to be in the nature of Fees for technical services and liable to Tax Deduction at source ('TDS') under Section 194J of the Act. II. Treating the Appellant as 'assessee in default' u/s 201(1) by ld. CIT(A) ignoring the declarations obtained from the payees/deductees and accepted by the AO.. III. Levy of interest under Section 201(1A) of the Act . 2. The relevant facts qua the issues involved are that, the assessee company is CDMA service provider offering full telecommunication services to its telecom subscribers across Pan India. Prior to December, 2008, the assessee was exclusive CDMA service provider hence, there was no occasion for making any payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a payment in lieu of rendering or receiving of any services or discharge of any contractual obligation of technical service enjoyed by the Company and hence, question of applicability of TDS provisions u/s 194J does not arise. (iii) The call carriage during the roaming process is fully automated by virtue of sophisticated and technically advanced telecom equipments/machines and does not require any human intervention for rendering of technical services as defined in Explanation 2 to clause (vii) of sub- section (1) of section 9. From narration of above facts, it was thus submitted that the visiting network operator does not provide any technical service to the home network operator so as to deduct TDS for rendering of technical services within the ambit and scope of the provisions of Section 194 J of the Act. 3. In support of the above contentions that such kind of automated standard facility cannot be reckoned as rendering of technical services because it is without much human intervention, strong reliance was placed on following decisions, which has been incorporated and discussed by the AO at pages 2 to 4 of the order:- Name of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Operators at the time of receiving or providing interconnected services to each other and also how the systems works automatically. The sum and substance of the answers given by these experts were that, when the call gets connected by one operator to other, per se , it is an automatic connection, but when there are certain problems in the call-connect then certain human intervention is required, that is, if there are some technical snags in software or hardware or in the fiber optic cable etc. In the event of such technical snags and problems human effort is required to rectify the same. However, the entire systems works automatically albeit it cannot be 100% fully automated because for some faults which incur during the course of transmission it does require some corrections by human interventions. The questions and answers in detail has been incorporated in the said order extensively by the AO. Thereafter the AO drew his own conclusion that, human intervention is required in the process and therefore, it is rendering of technical services. He went a step further in holding that, each machine requires human intervention without which no machines can operate. Even Robots also requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e first appeal, the Ld. CIT(A) confirmed the order of the AO in so far as the issue, whether the payment made to the telecom operators on account of roaming charges is in the nature of 'fees for technical service' on which assessee was liable to deduct TDS under section 194J. However on the issue that assessee cannot be treated as 'assessee in default' under section 201(1) the Ld. CIT(A) made an uncorroborated and incorrect observation that the AO has held that the assessee has not furnished any declaration from the deductees or about their status of their return of income having already filed, wherein the said payments have already incorporated in their return of income and hence, the assessee remained in default for levy of tax under section 201(1). This observation, though on the face of it was erroneous. Regarding interest under section 201(1A) the assessee had taken a specific plea that deductees have incurred huge losses during the year and thus, there was no loss to the revenue on account of non- deduction of TDS, because in any case, no tax was payable by these deductees. In support, the assessee had relied upon the decision of Hon'ble Allhabad High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under:- Thus, the main issue involved here in these appeals are covered by series of decisions, and therefore, same should be followed. 9. So far as the issue, whether the assessee can be treated as 'assessee'-in-default when declarations/certificates have been obtained from the deductees and filed before the AO, he submitted that the finding and observation of the ld. CIT(A) is contradictory to the finding of the AO, because the AO in the order himself has noted and held that, assessee has furnished the declaration from various payees and also furnished the PAN details and the jurisdiction of the AO thereof. In wake of this finding and background, the AO himself has not treated the 'assessee-in- default' for the purpose of section 201(1). Thus, such a finding of the CIT(A) is completely erroneous which deserves to be reversed. Regarding levy of interest under section 201(1A) also, he submitted that, firstly , the deductees have incurred huge loss during the year under consideration and hence, there was no loss to the revenue on account of non-deduction of TDS, and secondly , finding of CIT(A) on this score is also diverse from her own observation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke and receives voice calls, send and receive data or access other services, including home-data services when travelling outside the geographical coverage area of a given operators' network (i.e. home network) by means of using the network of other operators having coverage in such geographical area (i.e. visiting network ). In order to cater to such roaming requirements of telecom subscribers moving out of their home net work to visiting network where the home network is not available, these telecom operator enter into Roaming agreements , that is, telecom operators having their network in that circle. Thus, the subscribers who are traveling beyond geographical areas switch over automatically from home network to the visiting network to avail uninterrupted telecom facility. This switch from one network to another network is automatic through Cell towers, fiber optic cables, etc. The home network operators collects the 'roaming charges' from the home subscribers and in turn make the payment or rather passes on to the visiting network telecom operator. It has been the contention of the assessee that, roaming facility is nothing but use of standard telecom infrastructu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court in the same case, since reported in [2011] 330 ITR 239, wherein the Hon'ble apex court held that, there is no expert report from the side of the Department that how the human intervention takes place during the process. Accordingly, the issue was set aside to the file of the AO to examine the technical report from the side of the Department to decide the matter. However, Hon'ble Supreme Court has not reversed or adversely noted otherwise the legal views enunciated with regard to the concept of necessity of human involvement in rendering of technical services by the Hon'ble Delhi High Court. 13. Now, in the present cases, the AO in the impugned orders has taken note of order passed under section 201(1)/201(1A) by the AO case of M/s Vodafone Essar Mobile Services Ltd., wherein there has been reference to statement of oath of certain experts/employees. From the perusal of the entire statement, we find that at the face of it, nothing conclusive finding or view can be drawn that there is constant human endeavor or involvement of human interface throughout the process. In answer to certain questions, these experts have admitted that when call is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusive or customized services rendered by Stock Exchange catering to the special case of the customer, albeit , it is making available these services everyone in general. Their Lordships have laid down the test of specialized, exclusively and individual requirements for rendering of services with general or standard facilities provided to everybody. If the services provided are exclusively catering to the individual requirement then only it can be reckoned as rendering of technical services. Here in this case, post Bharati Cellular Ltd., decision by the Supreme Court, whereby, AO was required to examine the technical experts cannot be held to be conclusive at this stage qua the concept of human involvement in the process of roaming, because in such cross examinations, as incorporated by the AO in the impugned order, there is inherent contradiction and if we go by the latest principle laid down by the Hon'ble Supreme Court in the case of Kotak Securities Ltd ( supra ), then the whole test of constant human intervention and human interface fails in the case of roaming charges. However, we are not entering into the semantics of the controversy whether human involvement / interven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deductees. Once that is so, then there is no question of levying of interest under section 201A. We find that now in view of proviso to sub-section (1) of section 201, if assessee is not deemed to be assessee in default in terms of sub-section (1) of section 201, then interest shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident. Relevant Proviso inserted under section 201(1) and 201(1A) reads as under:- 201(1) xxxxxxxxxxxxxxxxxxx Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident - (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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