TaxTMI 
TaxTMI 
TaxTMI 
2016 (8) TMI 422
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....ng that the data link charges does not require any human intervention and that the charges received or paid on account of this is not technical fees and does not fall under purview of Section 194J of the Act even when the Assessing Authority rightly treated the payment made by Vodafone South Limited to various operators as technical services falling within the ambit of the provisions of Section 194J of the Act? 3. Whether the Tribunal was correct in holding that credit card charges, discount on e-top ups and rechargeable coupons does not amount to commission under Section 194H of the Act, when the transaction is in the nature of principal and agent and recorded perverse finding? 3. Learned counsel for appellants - Revenue, at the outset, submitted that he is not pressing question No.3 and therefore, the appeals would rest only on the above referred question Nos.1 and 2. 4. The assessee, in all the appeals, is a mobile service provider Company. As per the assessee, whenever any roaming facilities is provided to the customer and subscriber, it is taking connectivity of that with another mobile service provider Company. As per the assessee, the payment made to the another mobile se....
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.... company makes payment to other mobile operators, which is called roaming charges. During the financial year 2008-09, the assessee company paid roaming charges at Rs. 92,16,60,531/-. As per ld ITO(TDS), these services are liable to be deducted TDS U/s 194J as fees for technical services. The technical service is not defined in the Act but dictionary meaning of word "technical" as per Cambridge dictionary is knowledge, machines or methods used in science and industry.' The work technical is derived from the word technique which means 'a particular or a special way of doing something. He further described how roaming services is technical services, which is reproduced as under: "If the subscriber of Rajasthan Circle goes to Maharashtra when he reaches Maharashtra, the network of Maharashtra catches signals from his mobile and identifies IMSI (International Mobile Subscriber Identity) of the Subscriber. The network of Maharashtra circle shall automatically find out from IMSI of the subscriber as to whether service provider of Maharashtra has a roaming agreement with service providers of Rajasthan circle or not. If yes, they only it shall send signals to service provider of Rajasthan....
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....ile making payments the assessee was required to deduct TDS which it had not done. The ITO (TDS) gave reasonable opportunity of being heard to the assessee vide letter dated 29.01.2009, which has been replied by the assessee vide letter dated 11.02.2009 and 12.02.2009, which has been reproduced by the Assessing Officer on page 27 to 30 of the order. The ld ITO (TDS), therefore held as under:- (1) Roaming is not possible unless an agreement is entered into between the two service providers. (2) Entire Roaming facility is based on IMSI which consists of MNC (Mobile Network Code a unique code allotted to assessee) and SIM which is also issued by the assessee. (3) Roaming services is a highly technical service which is possible with the use of equipment such as MSC, VLR, Radio Network, Tower, BTS, BSS and highly advanced technology. (4) It is a technical arrangement between the two telecom service providers to connect their equipments, network and services to enable their customers to have access of telecom network wherever they move. (5) All the necessary arrangements are being made by the Home service provider to enable its subscriber to get connected in all other circles....
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....the payment received by the assessee from the customers of the assessee and paid to other mobile company does not fall under TDS provision, is not tenable. From the above, it is clear that Home Service Provider takes technical services of other telecom service provider to facilitate the subscriber to access telephone wherever he visits and therefore it is required to deduct TDS from the payments made to obtain these services." The ld. ITO(TDS) considered the following decisions on which the assessee claimed that roaming charges is not covered U/s 194J of the Act. (i) Skycell Communication Ltd. 251 ITR 53 (Madras) (ii) Bharti Cellular Limited ITA No.1120/2007) (iii) DCIT Vs. Parasrampuria Synthetics Ltd. 20 SOT 248 (Delhi). (iv) ITO Vs. Moving Pictures Company India Ltd. 20 SOT 120 (Delhi). (v) Kotak Securities Ltd. Vs. Addl. CIT 25 SOT 440 (Mum). The above case laws referred by the assessee were found distinguishable to the ITO (TDS). He further relied on the decision in the case of Canara Bank Vs. ITO 305 ITR (AT) 189 where the Hon'ble ITAT Ahmadabad Bench has distinguished the order of the Skycell Communications Ltd and held that clearing charges paid to SBI through M....
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....is fact is not relevant and does not exempt the appellant company from the liability of TDS. Further, I find that the ld. A.O. has correctly held that the roaming facility provided by the other telecom service provider to the Home Service Provider (the appellant) to facilitate the subscribers of the appellant company, to access mobile services, wherever they visit, was a technical service. In this regard, I agree with the reasoning given, for the above finding by the ld. A.O., in para 3.5 of his order. Which is already reproduced in earlier para of this order. Further, it is observed that the ld. AR has again relied on the decision in the case of Skycell Communications Ltd., and the decision of Hon'ble Delhi High Court in assessee's own case. However, in this connection, I agree with the detailed observations of the ld.A.O given in para 3.6 of his order (on pages 33 and 34) that the facts of the above two cases are different, as compared to the facts of the present case and hence, the decisions given in those cases are not applicable in the present case. Therefore, I find no merit in the submissions of the ld AR for the reasons discussed in the order of the ld A.O. The ld CIT(A) c....
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....vention at any stage. Billing process *Usage of roaming subscriber in visited network is captured in a file called TP, i.e. transferred account procedure for GSM/CIBER, i.e., cellular inter-carrier billing exchange record for. *Tap file contains details of calls made by subscriber, viz., location, calling party, time of call and duration, etc, *TAP /CIBER files are rated as per tariffs charged by visiting network operator. *such TAP/CIBER file is transferred to home network of subscriber *i.e. to Hexacom). *Home network (i.e. Hexacom) then bills these calls to the Hexacom's subscriber and pays roaming charges based on the TAP to the visited network operator (i.e. Airtel). The roaming operator charges as per the roaming agreement with Hexacom, whereas the subscriber is billed as per the tariff subscribed. *The entire process is automatic. It is concluded that the above transaction flow that the service of providing airtime by visiting telecom circle is directly to the subscriber and not to Hexacom. The subscriber of Hexacom uses the network set up by the visiting circle and instead of amount being recovered from the roaming subscriber, the visiting circle sends the air minut....
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....nical networks basically to be able to do business. In fact DOT mandates that it should be so connected. There is no payment made for connecting the networks. Payments are made for calls which the roaming subscriber makes. If no calls are made no payment is made in spite of the fact that the networks are inter connected. He further relied on the decision in the case of CIT Vs. Bharti Cellular Ltd. 319 ITR 139 (Del) wherein it has been held by the Hon'ble Delhi High Court that roaming services not involving human interference and is not technical services as contemplated under Explanation 2 to Section 9(1)(vii) of the Act and not liable for tax deduction at source U/s 194J of the Act. This view has been earlier held by the Hon'ble Madras High Court in the case of Skycell Communications Ltd. Vs. DCIT (2001) 251 ITR 53 (Mad) order dated 23.02.2001 wherein the Hon'ble High Court has held that provisions of Cellular mobile telephone facility to subscribe is not a technical service. Deduction of tax at source need not to be made from subscriptions U/s 194J of the Act. He further relied on the decision in the case of Jaipur Vidyut Vitran Limited Vs. DCIT (2009) 123 TTJ 888 (JP Trib) where....
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....ion in the case of DCIT Vs. Parasrampuria Synthetics Ltd. 20 SOT 248 (Delhi). The revenue filed appeal against the order of Hon'ble Delhi High Court in the case of Bharti Cellular Ltd. before the Hon'ble Supreme Court. The Hon'ble Supreme Court has held as under:- " In cases requiring examination by technical experts, the Department ought not to proceed only by the contracts placed before the officers. With the emergence of our country as one of the BRIC countries and with technological advancement, the Department ought to examine technical experts so that the matters could be disposed of expeditiously. Further, this would enable the appellate forum, including the Supreme Court, to decide the legal issues based on the factual foundation. Held accordingly, remanding the matters for determination with technical assistance, that in these cases, in which a cellular provider under an agreement pays interconnect/access/port charges to BSNL/MTNL, the question whether the cellular provider has rendered technical services and has to deduct tax at source, depended on whether the charges were for technical services, and this involved determination of whether any human intervention was invol....
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.... process of providing roaming services; examination of technical experts by the ACIT TDS, New Delhi in the case of Bharti Cellular Ltd.; thereafter cross examination made by M/s.Bharti Cellular Ltd.; also opinion of Hon'ble the then Chief Justice of India Mr.S.H.Kapadia dated 03.09.2013 and also various judgments given by the ITAT Ahmadabad Bench in the case of Canara Bank on MICR and Pune Bench decision on Data Link Services. We find that for installation/setting up/repairing/servicing/maintenance capacity augmentation are require human intervention but after completing this process mere interconnection between the operators is automatic and does not require any human intervention. The term Inter Connecting User Charges (IUC) also signifies charges for connecting two entities. The Coordinate Bench also considered the Hon'ble Supreme Court decision in the case of Bharti Cellular Ltd. in the case of i- GATE Computer System Ltd. and held that Data Link transfer does not require any human intervention and charges received or paid on account of this is not fees for technical services as envisaged in Section 194J read with Section 9(1)(vii) read with Explanation-2 of the Act. In case be....
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....fore this Court. 8. We have heard Mr.K.V.Aravind, learned counsel appearing for the appellants - Revenue in all the appeals. The learned Counsel relied upon two decisions of the Apex Court for canvassing the contention that the roaming charges paid by the assessee to the other service provider can be said as 'technical services'; one was the decision of the Apex Court in the case of Commissioner of Income-tax, Delhi vs. Bharti Cellular Limited, reported at [2010] 193 Taxman 97 (SC); and the another was the decision of the Apex Court in the case of Commissioner of Income-tax-4, Mumbai vs. Kotak Securities Limited, reported at [2016] 67 taxmann.com 356 (SC) and it was submitted that if the observations made by the Apex Court in the above referred decisions are considered, the decision of the Tribunal would be unsustainable and consequently, the questions may arise for consideration before this Court in the present appeals. 9. We may record that in the decision of the Apex Court in the case of Bharti Cellular Limited (supra) the Apex Court after having found that whether human intervention is required in utilizing roaming services by one telecom mobile service provider Company from ....