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TMI Blog2016 (8) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... ices” or not, is essentially a question of fact. The Tribunal, after considering all the material produced before it, has found that roaming process between participating entities is fully automatic and does not require any human intervention. Coupled with the aspect that the Tribunal has relied upon the decision of the Delhi High Court for taking support of its view. In our view, the Tribunal is ultimately fact finding authority and has held that the roaming process between participating company cannot be termed as technical services and, therefore, no TDS was deductible. We do not find that any error has been committed by the Tribunal in reaching to the aforesaid conclusion. Apart from the above, the questions are already covered by the above referred decision of the Delhi High Court, which has been considered by the Tribunal in the impugned decision. - Decided in favour of assessee. - I.T.A.NO. 699/2015 C/W I.T.A.NOs.700/2015, 701/2015, 702/2015, 703/2015, 704/2015, 705/2015, 706/2015 - - - Dated:- 28-7-2016 - MR. JAYANT PATEL AND MR. S.N. SATYANARAYANA JJ. APPELLANTS (BY SRI K.V. ARAVIND, ADVOCATE) ORDER JAYANT PATEL J., In all these appeals, common que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 194H read with Section 194J of the Income Tax Act, 1961 ( the Act for short). 5. The Assessing Officer passed the order, whereby he held that the TDS was deductible and as TDS was not deducted, the amount as per Section 201 and 201(1A) of the Act were ordered to be recovered. 6. The assessee Company carried the matter in appeal before CIT (Appeals) and the Commissioner, CIT (Appeals) confirmed the view of the Assessing Officer and the appeals to that extent were dismissed. But other part of the allowing of the appeals was of the verification in the reduction of the liability under Section 201(1) read with Section 201(1A) of the Act and the directions were given by the Appellate Authority. But it was found in the appeal that the TDS was deductible. The matter was carried further in appeal before the Tribunal. The Tribunal recorded the reasons from paragraphs 13 to 15, which reads thus; 13. We have perused the orders and heard the rival contentions. Question before us is whether roaming charges paid by assessee to other service providers for using their services by assessee s customers could be treated as technical services falling u/s.194J of the Act. We find that si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bscriber which will be sent to Maharashtra circle and date of Rajasthan subscriber shall be stored in the Visitor Location register of Maharashtra circle. This data enables the services provider of Maharashtra to verify various aspects such as whether subscriber enjoys the ISD facilities or not etc. After completing this aspect, the subscriber who has gone to Maharashtra can access than network and make outgoing calls. This process requires various instruments such as MSC (Mobile Switching Centre), VLR (Visitors Location Register), Radio Network, Towers, BTS (Base Transmission Station), BSS(Base Sub Station) etc. Further, all incoming calls shall first go to Rajasthan service provider. The data available with Rajasthan circle shall identify that the subscriber is in Maharashtra and then call shall be diverted to the present location of the subscriber i.e. to Maharashtra. The ld ITO (TDS) has further observed that the entire process of roaming is thus highly technical and can be executed only if there is a contract between two service providers. The entire system is being operated /managed by highly skilled professionals. A small technical fault can disturb the entire system. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etwork of service provider of other circle, service provider of other circle shall be authorized by the Home Service provider as per the agreement entered into between the two service provides. If there is no roaming agreement between two operators or if the home telecom operator does not authenticate, subscriber cannot enjoy roaming facility. (8) The subscriber does not require to change the SIM card but by using the SIM card of Home Service provide he can access other network. (9) As per the agreement the other service provider raises bill on the Home Service provider and only the Home Service Provider is liable to pay the amount irrespective of payment made by subscriber. The subscriber and service provider of other circle are no way liable for any thing with each other. (10) If the subscriber does use SIM of Home Service provider he cannot access telecom operator of other circle unless he purchases new SIM card. (11) It is clear from the bills raised by telecom operator of other circles that they have changed service tax to assessee and the assessee has paid the same. This simply means that services were provided by one operator to other and not to customers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultancy services rendered by a person. The MICR facility provided by the SBI, which identified, read and cleared the cheque through its special kind of machines. Therefore, the same is fees for technical services. The service of this nature, in our opinion involves human skill as well as computerized machines. It is not automatic. In that sense it is no hiring /lasing or making available the technical equipment working on its own. But it is fully supported by services of personnel and requires human application of mind alongwith technical equipments. In the present case, the assessee used highly sophisticated machine, which was managed by the highly qualified technical staff which involves application of human mind. In view of the above finding, he held that roaming charges paid to the other telecom operator is a fee for technical services and liable to be deducted TDS U/s 194J of the Act. The ITO (TDS) rejected the assesee s request to apply the Hon ble Supreme Court decision in the case of Hindustan Coca Cola Beverages (P) Ltd. Vs. CIT (supra) as payees has not filed its return of income. Therefore, the benefit of Hon ble Supreme Court decision cannot be given. Accordingly, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the roaming happens automatically but because equipment is used to render the roaming service, because technical manpower is needed to operate and maintain the technical equipment therefore, roaming per se is rendering of technical services and therefore, the amount paid for roaming is technical fee in terms of Section 194J read with Explanation 2 to Section 9(1) (vii) of the Act. The ld AR explained the roaming service and submitted that Hexacom subscriber in Jaipur travels of Mumbai switches on his mobile device after reaching Mumbai. Where the subscriber travels by land he automatically receives a message transferring to the roaming network on visiting another telecom, circle. * Visiting network (e.g. Airtel in Mumbai) locates mobile device and identifies that it is not registered with its systems, i.e. VLR. *Visiting Network automatically contacts home network of Hexacom subscriber, i.e. HLR and gets service information about roaming device using IMSI number IMSI number is a unique subscriber identity number granted to the customer at the time of subscription. * Visiting network maintains temporary subscriber record for the said mobile device and provides an int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lvement of human element or there have been use of cerebral faculties in the provision of technical services by the recipient of fee. * This is so because the word technical comes in between the words managerial and consultancy services . Based upon the principles of nositur a sociis there has to be an element of manual intervention at the time when the service is being rendered. * Technical services should have a fact situation of imparting technical knowledge involving or concerning applied and industrial science. The ld AR further argued that finding of the ld CIT(A) are based on contract between two operators but contract has no relevancy on the nature of the service whether technical or otherwise. The ld CIT(A) partly accepted that roaming process is technical because it uses various instruments such as MSC (Mobile Switching Centre), VLR (Visitor Location Register), Radio network, towers, BTC etc, but the system is operated/managed by the Highly skilled professionals. The assessee s argument was that the roaming service is managed automatically by machines and payment for roaming charges are not fees for technical services. In case of fault in a breakdown o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices by allowing use of technical system is different from charging fees for tendering technical services. The applicability of Section 194J would come into effect only when by making payment of fee for technical services, assessee acquires certain skill /knowledge/intellect which can be further used by him for its own purpose /research. Where facility is provided by use of machine/robot or where sophisticated equipments are installed and operated with a view to earn income by allowing the customers to avail of the benefit by user of such equipment, the same does not result in the provision of technical service to the customer for a fee. Therefore, he argued that in roaming charges paid by the assessee to the other operators are not fees for technical services. The ld AR further relied on the decision in the case of iGATE Computer Systems Ltd. Vs. DCIT in ITA No.1301 to 1303 1616 /PN/2013 for A.Y.2007-08 to 2010-11 wherein the Hon ble Pune Bench of ITAT had considered whether any human intervention is required for providing the data link services and are liable to be deducted TDS U/s 194J of the Act and held that payments made for utilizing such services was not in the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... After this decision, the ld Assessing Officer examined the technical expert of the C-DOT on 29.09.2010 in respect of IUC and which were cross examined on 04.10.2010 by M/s.Bharti Cellular Limited, Delhi. The technical experts reexamined on 04.10.2010 on this issue and admitted that roaming services does not require any human intervention, it operates automatically. The ld AR also drawn our attention on independent opinion taken from Director CMAI, ExDirector (C M), BSNL, Ex-Member Telecom Commission on 24.12.2010 and admitted that whole interconnected uses process, no manual intervention is required. He further drawn our attention on page No.651 to 652 for postpaid as well as prepaid roaming charges charged between the operators from Mr.Kapoor Singh Guliani. The appellant also taken opinion from Former Chief Justice of India Mr. Kapadia on IUC post technical examination, cross examined and reexamination. Who also opined that Hon ble Supreme Court decision dated 12.08.2010 is an order not judgment as the principle of law was not res-integra. The word technical services have got to be read in narrow since as held by the various Hon ble High Courts and the Tribunal by applying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering any technical services as envisaged in Section 194J of the Act. Therefore, we reverse the order of the ld CIT (A) and assessee s appeal is allowed on this ground also. 14. Reading of the above order clearly show that fact- situation was essentially similar to the one here in the case of the assessee. Assessee was also treated as one in default for failure to deduct tax at source on roaming charges paid to other distributors. Therefore the coordinate bench of the Tribunal in the case of Bharti Hexacom Ltd (supra) would squarely apply. We also find that the said decision has been followed by Ahmedabad bench in the case of Vodafone Essar Gujarat Ltd v. ACIT (TDS) (ITA NO.386/Add/2011, dt.07.07.2015). Following these, we are of the opinion that assessee could not have been deemed as one in default for non-deduction of tax at source on roaming charges paid by it to other service providers. Ground 3 is allowed. 15. In its ground no.4, assessee is aggrieved on the levy of interest u/s.201 (1A) of the Act. This is a consequential ground. We have already held that assessee is not at default for deduction of tax on roaming charges and interest levied on the assessee on suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther, in the impugned order of the Tribunal, after considering the above referred decision of Bharti Cellular Limited, the Tribunal has further not only considered the opinion, but found that as per the said opinion the roaming process between participating entities is fully automatic and does not require any human intervention. Therefore, we do not find that the aforesaid decision in the case of Bharti Cellular Limited, would be of any help to the appellants - Revenue. 10. In the another decision of the Apex Court, in the case of Kotak Securities Limited, the matter was pertaining to the charges of the Stock Exchange and the Apex Court, ultimately, found that no TDS on such payment was deductible under Section 194J of the Act. But the learned Counsel for the appellants Revenue attempted to contend that in paragraphs 7 and 8 of the above referred decision of the Apex Court, it has been observed that if a distinguishable and identifiable service is provided, then it can be said as a technical services . Therefore, he submitted that in the present case, roaming services to be provided to a particular mobile subscriber by a mobile Company is a customize based service and theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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