TaxTMI 
TaxTMI 
2015 (5) TMI 471
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....the circumstances of case, and in law, the learned Commissioner of Income-tax (Appeals) -V, Pune, erred: 1. In respect of datalink charges paid by the appellant: a) In confirming that datalink charges of Rs. 3,75,36,820 are liable to TDS u/s 194J. b) In concluding that human intervention is required for providing the datalink services and hence the data link charges are subject to TDS u/s 194J. c) Without prejudice to above, in not appreciating that the recipients of the datalink charges are companies who would have filed their tax returns and included the amounts in their taxable income and hence at the most the appellant can be liable to pay interest u/s 201(1A). 2. The appellant craves leave to add, modify or withdraw any of the grounds of appeal at the time of hearing. 4. The only issue raised in the present appeal is in relation to deductibility of tax under section 194J of the Act on Data Link Charges paid by the assessee. 5. The Assessing Officer was of the view that the assessee was liable to deduct tax at source from the Data Link Charges paid to various telecom service providers under section 194J of the Act. Since the assessee had not deducted the ta....
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....e ACIT-TDS was of the view that the assessee was liable to deduct tax at source out of such DATA link charges paid to various telecom service providers being professional services provided by the said service providers, in view of section 194J of the Act. The explanation of the assessee in this regard was that the said payments for DATA link charges were paid for using standard facilities provided by the service providers by using technical gadgets, which were made available universally to the others by way of the DATA link satellite line, which was established from one service provider to be carried over to the other service provider. In order to provide efficient and flawless services to the subscribers, the existing service providers provide interconnection of their networks through equipment of their networks to the equipments of other service providers. The connection is used for the transmission of DATA from one service provider to the designated client server and there was no human intervention for the transmission of the DATA. 16. On the perusal of the record, it transpires that facilities were provided by two entities i.e. the assessee and the service providers, who wer....
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....se, certain technical equipments or gadgets are made available for transmission of DATA link does not establish the case of the Revenue that such services are technical services provided by the service provider to the assessee, which are covered under the provisions of section 194J of the Act. 19. Another aspect to be noted in the case is that where such technical equipments / gadgets require maintenance, then technical support staff is used for correcting the system but that itself does not establish that the services provided by the maintenance crew are in the nature of technical services which are not in the nature of managerial, technical or consultancy services nor is it for the use of or right to use in industrial, commercial or scientific equipments. 20. The Hon'ble Madras High Court in Skycell Communications Ltd. Vs. DCIT reported in (2001) 251 ITR 53 (Mad) had held that for the purpose of section 194J to become applicable, it is necessary that the payee receives 'services'. If the payee uses only technical gadgets, which are made available to others also for fees, the same does not make the payment subject to tax deduction at source under section 194J of ....
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....k the signals. No disallowance under s. 40(a)(i) was called for." 22. Further, the Delhi Bench of the Tribunal in Global One India P. Ltd. Vs. ACIT (supra) while deciding the issue of payments made towards facilities provided by the service provider for transmission of DATA and whether tax was to be deducted at source under section 194I of the Act held as under:- "We first take up corporate tax issues which is ground No. 5 for the assessment year 2007-08. The assessee is a licensed internet provider. During the year it procured, domestic half circuit facility to its customers from telecom service providers like BSNL, MTNL, and international half circuit facility from Rag, Atlantic at France. These are standard facilities provided for transmission of data by those organisations. The issue is whether tax should be deducted at source under section 194-I from payments made for use of such standard facilities. The Hon'ble Delhi High Court in the case of Asia Satellite Telecommunications Co. Ltd. v. DIT [2011] 332 ITR 340 (Delhi) and the Hon'ble Madras High Court in the case of Sky cell Communications Ltd. v. Deputy CIT [2001] 251 ITR 53 (Mad) have adjudicated the issue in ....
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....s had been paid by the recipient and also because the moot question involved in the case was yet to be decided. 25. Now coming to the facts and circumstances of the present case, the assessee had furnished the explanation before the Assessing Officer and also filed written submissions before the CIT(A) vide letter dated 01.04.2013 along with Flow chart / Diagram of how the DATA links works which is placed at pages 24 to 26 of the Paper Book. The assessee also placed on record the sample copies of purchase orders at pages 27 onwards under which, it was explained that the perusal of the bills would reflect the basis of charges, rates, etc. which were fixed / agreed upon and finally billed by the DATA link providers and it was vehemently stated that the same does in no way indicate involvement or otherwise of human intervention in the DATA link process. In view thereof, in the absence of any human intervention between the assessee and the services provided by the DATA link provider, it cannot be said that the payment made by the assessee was for technical services. Merely because for maintenance purpose certain human intervention was provided, cannot lead to the surmise that the DA....