TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 587
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....see's grounds detailed submissions, and without appreciating the nature of the transactions in the present case. 2. The learned CIT (A) erred in considering the assessee to be in default on the basis that the assessee had deducted tax under s. 194C instead of s. 194J. She failed to appreciate that tax was properly deducted u/s 194C, and that s. 194J had no application whatsoever in the facts of the case. 3. The learned CIT (A) erred in invoking amendments under the Finance Act, 2012, in order to hold the assessee as being in default. She failed to appreciate that for the purpose of orders u/s 201, the law as on the statute-books at the day of payment alone has to be considered, and subsequent amendments (whether retrospective or not) can only affect the ultimate chargeability in the hands of the recipient, but cannot result in any retrospective liability u/s 201. 4. The learned CIT (A) failed to appreciate that the payments made in the present case are not in the nature of royalty or fees for technical services at all. She failed to appreciate that the payments are not covered even under the amended definition of royalty. In particular (but without prejudice to the generalit....
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....n the nature of Short Message Peer to Peer(SMPP) connectivity charges; ii.Once an agreement is entered into between the Appellant and the telecom operator, the telecom operator creates customer's account from their end and provides IP addresses, user name and password to the Appellant. The appellant then integrates such details in its Application Programming Interface(API) system for transmitting bulk messages to the telecom operator without any access or control over the SMPP connectivity facility/telecom operator's server/network which are used by the telecom operators for transmitting messages; iii. The Appellant receives the content of the message required to be sent as bulk SMSs from its client, pursuant to which the Appellant uses its own software and computer system to convert it in a form that could be transmitted to customers of various telecom operators; and iv. Once the SMS is ready for transmission, the Appellant causes its system to connect with the system of the telecom operators to send the message in bulk. 3.2 The assessee has deducted tax u/s 194C from the payment made to Tata Teleservices whereas the AO has held that payment as SMS and short code charg....
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....which shall enable the customer to send SMS for promotional message or transactional message. The payment is made for connectivity charges. There is no equipment which has been transferred or any kind of technology which can be said to have been passed on from Tata Tele Services to the assessee. There is no proprietary information or process which has been passed on to the assessee. Further, in the regular assessment order u/s 143(3), no disallowance under section 40(a)(ia) have been made. Thus, assessee cannot be treated as assessee in default as assessee has deducted TDS under the correct provisions of the law which is under section 194C. Moreover, he submitted that, the assessee is providing similar services to the Income-tax Department and the department while making the payment has deducted TDS under section 194C. Therefore, different yardstick cannot be applied qua the same payment made by the assessee to TTSL. In support, he filed the sample copy of purchase order placed by the Income-tax Department with the assessee for bulk SMS services; sample copy of invoice raised by the assessee to the Department; and copy of some TDS certificates showing that Income-tax Department has....
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.... Network which are only used by the Tata Tele Services for transmitting the messages. The assessee receives the content of the message which required to be sent as bulk SMSs from its client for which assessee used its own software and computer system to convert it in a form that could be transmitted to the customers of the various telecom operators. Once the SMS is ready for transmission, the assessee causes its system to connect with the system of the telecom operators to send the messages in bulk. Hence, the assessee has neither any access nor control over the equipments nor there is usage of any process or equipment which can be said to have been made available to the assessee. It is a kind of a standard connectivity facility which has been provided by the Telecom operator, nothing else. The agreement is more in the nature of works contract with the Telecom Operator for which the assessee has rightly deducted the TDS under section 194C. Even, the assessee from its customers, like Income-tax department for providing such services has received the payment which has been subjected" to TDS under section 194C. Thus, it cannot be held that the assessee is making any payment for use or....