TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether payments made as national roaming charges to other cellular service providers constitute "rent" within the meaning of Explanation to section 194-I of the Income-tax Act, 1961; (ii) Whether the payments constitute "fees for technical services" attracting deduction under section 194J of the Income-tax Act, 1961; (iii) Whether tax can be recovered from the assessee (deductor) where the payees have included the receipts in their returns and have paid tax thereon.
Issue (i): Whether national roaming charges paid to other service providers are "rent" under section 194-I of the Income-tax Act, 1961.
Analysis: The Explanation to section 194-I emphasizes payment for the "use" of specified assets (including machinery, plant, equipment). The Tribunal examined the national GSM roaming agreement, the roaming call and billing methodology, statutory definitions (including Service Tax provisions), and relevant authorities. It rejected application of the rule of ejusdem generis to restrict "any other agreement or arrangement" and focused on whether the payer (assessee) or its subscribers actually "used" the equipment of the visited network. The factual and legal analysis concluded that the roaming facility is a service provided to the subscriber via infrastructure owned, operated and controlled by the visited operator, and that the assessee acted as a facilitator; the assessee itself did not use or control the visited operator's equipment.
Conclusion: Section 194-I is not attracted; national roaming charges are not "rent" within the meaning of the Explanation to section 194-I. This conclusion is in favour of the assessee.
Issue (ii): Whether national roaming charges constitute "fees for technical services" under section 194J of the Income-tax Act, 1961.
Analysis: The Tribunal found that the CIT(A)'s order contained no considered finding on section 194J despite the parties' submissions. In view of the significance of the question and the Supreme Court's directions in CIT v. Bharti Cellular regarding technical evidence and expert examination on the issue of human intervention/technical operations, the Tribunal declined to decide the applicability of section 194J on the merits and directed that the Assessing Officer take a fresh decision after affording opportunity and, if necessary, examining technical experts and evidence in accordance with law.
Conclusion: No final finding recorded on section 194J; the issue is remanded to the Assessing Officer for fresh decision in accordance with law (neutral outcome / procedural remand).
Issue (iii): Whether tax can be recovered from the assessee where payees have admitted/include the receipts and paid tax on them.
Analysis: The Tribunal applied the principle that tax should not be recovered twice where payees have included the relevant receipts in their returns and paid tax. It held that once the assessee furnished sufficient particulars (including PANs and confirmation letters from payees) to enable the Assessing Officer to verify payees' tax compliance, it was incumbent on the Assessing Officer to verify those particulars using his powers. The Tribunal directed the Assessing Officer to verify, via the assessing authorities of the payees, whether the payees have indeed included the roaming receipts in their returns and paid tax; if so, no recovery from the assessee should be made and the assessee should not be treated as an assessee in default.
Conclusion: The matter as to double recovery is resolved in favour of the assessee subject to verification; directed verification by the Assessing Officer and that no recovery be made if taxes are found paid by payees (favouring the assessee conditional on verification).
Final Conclusion: The Tribunal concluded that national roaming charges are not "rent" under section 194-I (relief to the assessee), declined to decide section 194J on merits and remitted that issue to the Assessing Officer for fresh consideration with opportunity to examine technical evidence (procedural remand), and directed verification of payees' tax payments with consequential relief to the assessee if taxes are found to have been paid by the payees. The appeals are accordingly partly allowed.
TaxTMI 
