TaxTMI 
TaxTMI 
2017 (8) TMI 1292
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....ng resident corporate assessee and diversified Engineering company holding TAN-MUML-03180-C, was treated as assessee-in-default u/s 201(1) read with section 201(1A) of the Income Tax Act, 1961 vide Assessing Officer [AO] order dated 21/03/2014. The assessee was subjected to a survey action on 12/01/2012 wherein certain discrepancies were noted with respect to compliance of TDS provisions against which the assessee was saddled with following demands, which are the subject matter of present appeals:- No. Description Amount (Rs.) Rate at which TDS ought to have been deducted Amount of TDS to be deducted (Rs.) TDS Made (Rs.) Short Deduction/dem and u/s 201 (Rs.) Interest demand u/s 201(1A) (Rs.) 1. Bank Guarantee Charges 8,33,59,262/- 10% 83,35,926/- Nil 83,35,926/- 25,84,137/- 2. Internet Charges 15,96,662/- 10% 1,59,662/- Nil 1,59,662/- 49,494/- 84,95,588/- Nil 84,95,588/- 26,33,631/- 3.1 Facts qua bank guarantee charges are that during assessment proceedings, it was noted that the assessee paid bank guarantee charges to certain Indian & foreign Banks. The....
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....he meaning of commission and brokerage u/s 194H. The same view is fortified by CBDT notification No. 56/2012 dated 31/12/2012 which clearly says that no TDS is required against bank guarantee commission paid to bank listed in the second Schedule to RBI Act, 1934. However, foreign bank is excluded from the scope of said circular. Therefore, at the outset, we are inclined to hold that there was no requirement to deduct TDS on bank guarantee commission of Rs. 371.25 Lacs paid by assessee to domestic bank. 3.6 However, as already stated, it is noted that the CBDT circular do not cover payment to foreign banks and further, the provisions of Section 194H apply only to payment made to residents. The lower authorities have failed to examine the issue from correct perspective by appreciating the relevant facts, statutory provisions, Treaty provisions, relationship between parties, nature of services availed / payment made etc. Since the AY involved is 2012-13 and therefore, at this stage, we are not inclined to afford another opportunity to revenue to improve upon their case. Consequently, the impugned payments, being not covered within the ambit of Section 194H, the resultant demand rai....
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....). Reliance was placed on the judgment of this Tribunal rendered in ACIT Vs Sanskar Info T.V.P. Ltd. [2008 24 SOT 87] where it was held that service fees for use of transponder and up linking facility in a satellite is covered under the provisions of Section 9(1)(vi). With these observations, impugned demand against payment so made for Rs. 15,96,662/- was raised against the assessee for non-deduction of tax u/s 194J. 4.2 Aggrieved, the assessee assailed the same without any success before Ld. CIT(A) vide impugned order dated 13/04/2015 where the assessee reiterated that the impugned payments were towards use of standard internet facility. It was further explained that reimbursement of data card expenses to employees was akin to telephone expenses only and therefore, no TDS was required against the same. The Ld. CIT(A) after appreciating the provisions of Section 194J and retrospective amendment made in the definition of 'royalty' made by Finance Act, 2012 and in particular the meaning of 'process' as per Explanation 6 to 9(1)(vi) and the judgment of Hon'ble Madras High Court rendered in Verizone Communications Singapore Pvt Ltd [ITA No. 149 of 2011 and 230 of 2012 order date 19/....
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.... contended that the data card expenses is akin to telephone expenses and mere reimbursement of data card expenses to employees, we restore the matter back to the file of AO for the purpose of verification of the said contention and decide accordingly as per law. Needless to say, any reimbursement of mere data card expenses to employees, which are primarily in the nature of telephone expenses do not fall within the meaning of 'Fees for technical services' or 'royalty'. 5.4 Regarding, internet charges, we find that the lower authorities have failed to appreciate the true nature of services being availed by the assessee. The assessee has contended that the same are payment towards usage of standard internet facility obtained from the service provider whereas the Ld. AO opines that the same are in the nature of 'Fees for Technical Services' as well as 'royalty'. The Ld. CIT(A) went a step further in noting that the said expenditure was not only 'fees for technical services' but also covered u/s 194I being in the nature of rent for usage of equipment. A perusal of the sample invoice placed in the paper book, prima facie, reveals that the said expenditure is towards 'internet services....
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....hange in respect of every transaction that is entered into. There is nothing special, exclusive or customised service that is rendered by the Stock Exchange. "Technical services" like "Managerial and Consultancy service" would denote seeking of services to cater to the special needs of the consumer/user as may be felt necessary and the making of the same available by the service provider. It is the above feature that would distinguish/identify a service provided from a facility offered. While the former is special and exclusive to the seeker of the service, the latter, even if termed as a service, is available to all and would therefore stand out in distinction to the former. The service provided by the Stock Exchange for which transaction charges are paid fails to satisfy the aforesaid test of specialized, exclusive and individual requirement of the user or consumer who may approach the service provider for such assistance/service. It is only service of the above kind that, according to us, should come within the ambit of the expression "technical services" appearing in Explanation 2 of Section 9(1)(vii) of the Act. In the absence of the above distinguishing feature, service, thou....