TaxTMI 
TaxTMI 
2016 (8) TMI 422
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....on the facts and in the circumstances of the case, the Tribunal is right in law in holding 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 m....
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.... covered by the assessee company, through other mobile operators. To avail such services, the assessee 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 p....
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....e operator to another and not to the subscriber. Thus roaming service is a highly technical service and therefore while 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 the....
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.... (14) The provision of section 194J refers to "any sum" paid by the payer and does not distinguish between the payment made by someone on its behalf or its customer's behalf. Therefore, the plea of the assessee that 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 distinguishab....
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....parate agreement with the roaming service provider and is, therefore, liable for payment of roaming charges on its own behalf, as per the terms and conditions of the agreement. Hence, whether, later on, it charges for roaming services from its customers or not, this 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 differe....
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....etwork then forwards all incoming calls to the temporary phone number which terminates at the device of roaming, subscriber (in Mumbai) who is now using the services of the visiting network (i.e., Airtel): * The entire process above is automatic and does not involve any human intervention 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....
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....e subscriber. The network owner has to maintain for itself, its network in robust condition. The technical support of the staff is required to maintain the equipment and gazettes but it is not a service for roaming facility provided to the subscriber. There is commercial arrangement to connect the technical 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 ....
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....lectricity Distribution Co. Ltd. 25 Taxman 164, Siemens limited 30 Taxmano.com 200, ITAT Kalkata Bench Decision in the case of Right Florists Pvt. Limited ITA No.1336/Kol/2011 and ITA Delhi bench decision in the case of Delhi Transco Ltd. (ITA No.755(Del) /2011 A.Y. 2005-06. He also relied on the decision 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....
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....ition. 10. At the outset, the ld Sr.DR vehemently supported the order of the ld CIT(A). 11. We have heard the rival contentions of both the parties and perused the material available on record. After going through the order of the Assessing Officer, ld CIT(A); submissions of the assessee as well as going through the 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 B....
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....ming connectivity cannot be termed as "technical services" and, ultimately, it was found that the assessee could not be said as in default for non deduction of TDS at source on the roaming charges paid by it to the other service provider and the appeals are allowed to that extent. Under the circumstances, the present appeals before 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....