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TMI Blog2017 (2) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... whereby the 'process' includes transmission by satellite, cable, optic fiber or by any other similar technology whether or not such process is not secret. Even if such a contention of the Department is to be accepted, then whether at the time of making the payment where no such amendment was brought in the statute, can assessee be accepted to deduct the TDS? Here, the maxim of lex non cogit ad impossplia, that is, the law of the possibly compelling a person to do something which is impossible, that is, when there is no provision for taxing an amount in India then how it can be expected that a tax should be deducted on such a payment. This view has-been upheld by in catena of decisions including the ITAT Mumbai Benches in the case of Channel Guide India Ltd, v. Asstt. CIT [2012 (9) TMI 95 - ITAT MUMBAI] wherein, it has been held that, assessee cannot held to be liable for deducting TDS in view of the retrospective amendment which has come at a much later date. Thus, we hold that assessee was not liable to deduct TDS by treating the payment in the nature of 'Royalty' in terms of section 194J or in terms of retrospective amendment brought from subsequent date. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to appreciate that the payment in the present case could not be said to be consideration... for... the transfer of all or any rights.., in respect of a... process. She erred in failing to draw a distinction between considerations for transfer of rights in respect of a process' on the one hand, and 'consideration for a facility/service provided by the recipient without any transfer of rights in respect of a process' on the other. 5. The learned CIT(A) erred in relying on Explanation 5 to s. 9(1)(vi) and the decision of the Madras High Court in the case of Verizon and other decisions cited by her. She failed to appreciate that these decisions and the explanation have no bearing in the facts and circumstances of the present case. She failed to appreciate that, on a proper analysis of the nature of the transaction in the present case, the said Explanation/cases were inapplicable/distinguishable. 6. The learned CIT(A) failed to appreciate that the income tax department itself had accepted that similar transactions would be covered only under s. 194C and not under s. 194J. In the circumstances, the orders under s. 201 were entirely unwarranted. 7. The learned CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore tax is to be deducted u/s 194J.Accordingly he has held the assessee to be assessee in default u/s 201(1) and has raised the tax demand of ₹ 21,01,660/- and interest u/s 201 (1A) of ₹ 7,56,597. 3. The assessee's case before the authorities below was that: i. There is no machinery identifiable for sole use by the assessee; ii. The appellant does not have any access is control over equipments; iii. No separate operator or maintenance contract is there; iv. Only standard connectivity is provided; v. Even the Income Tax Department has deducted TDS u/s 194C on payment made to assessee; vi. Further, the Revenue authorities itself have, while issuing certificate u/s 197 of the Act, treated the above payments to TTSL as contract payment liable to tax deducted at source u/s 194C of the Act. A copy of lower withholding tax certificate issued by the authorities in favour of TTSL wherein it has been mentioned that the above payments would constitute contract payments. 4. The Ld. CIT(A) held that, transmission of bulk SMS is through a process which falls within the category and ambit of definition of Royalty as provided in section 9(1)(vi) specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has deducted TDS under section 194C. Thus, he submitted that assessee has rightly deducted TDS under section 194C while making payment to Tata Tele Services Ltd. Regarding reliance placed on the decision of Madras High Court in the case of Verizon Communications Singapore (P.) Ltd (supra) he submitted that now this decision has been considered by the Hon'ble Delhi High Court in the case of DIT v. New Skies Satellite BV [2016] 382 ITR 114, wherein the said decision has been considered and has been distinguished by the Hon'ble High Court. Further, he relied upon the decision of Hon'ble Delhi High Court in Technip Singapore Pte. Ltd v. DIT [2016] 385 ITR 408, wherein the Hon'ble High Court after referring to the decision of Asia Satellite Telecommunication Co. Ltd. v. DIT [2011] 332 ITR 340 (Delhi) have held that payment to be characterized as one for the use of equipment, factually the equipment must be used if there is no use of equipment for rendering the services then, it cannot be reckoned as Royalty . Here in this case, admittedly, there is no use of equipment as held by the Assessing Officer and CIT(A). 6. On the other hand, Ld. DR strongly relied upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or use or right to use any equipment. Further, the concept of 'use' or 'right to use any equipment' alludes to the concept of 'leasing', which here in this case admittedly is not there. Much emphasis has been laid by the ld DR as well as by the CIT (A) that, it is a kind of a 'process' and, therefore, in view of Explanation 6 brought with retrospective effect by the Finance Act, 2012 whereby the 'process' includes transmission by satellite, cable, optic fiber or by any other similar technology whether or not such process is not secret. Even if such a contention of the Department is to be accepted, then whether at the time of making the payment where no such amendment was brought in the statute, can assessee be accepted to deduct the TDS? Here, the maxim of lex non cogit ad impossplia, that is, the law of the possibly compelling a person to do something which is impossible, that is, when there is no provision for taxing an amount in India then how it can be expected that a tax should be deducted on such a payment. This view has-been upheld by in catena of decisions including the ITAT Mumbai Benches in the case of Channel Guide India Ltd, v. A ..... 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