TaxTMI 
TaxTMI 
2017 (11) TMI 568
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....the common grounds taken by the assessee in ITA No. 3779 to 3781/Del/2013:- "The Appellant respectfully submits that: On the facts and circumstances of the case and in law, the notice issued under section 263 of the of Income Tax Act, 1961 ('Act') by the learned Commissioner of Income Tax (TDS), Chandigarh (hereinafter referred to as the 'learned CIT (TDS)') and the order passed under section 263 of the Act are illegal, bad in law and without jurisdiction. 2 On the facts and in circumstances of the of the case and in law, the learned CIT(TDS) erred in assuming the jurisdiction under section 263 of the Act since:- 2.1 the revisionary proceedings under section 263 of the Act have merely been initiated on the basis of the letter received from Assistant Commissioner of Income Tax (TDS), Chandigarh ('ACIT') and the CIT (TDS) did not arrive at any independent satisfaction for initiation of such proceedings. 2.2 by acceding to the request of the learned ACIT, the CIT(TDS) has effectively enhanced the time limitation prescribed under section 201(3) of the Act for completion of201 proceedings by a TDS officer. 2.3....
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....t any time before or at the time of hearing of the appeal. The Appellant prays that appropriate relief be granted based on the said grounds of appeal and the facts and circumstances of the case." 3. The following are the common grounds taken in ITA Nos. 716 to 718/Del/2017:- The Appellant respectfully submits that: On facts and circumstances of the case and in law, the learned Commissioner of Income (Appeals), Karnal ['learned CIT(A)'] has erred in passing the order under section 250 of Income Tax Act, 1961 ('Act'), confirming the contentions of the Income Tax Officer - Karnal ('learned TDS officer') that the Appellant is liable to deduct tax at source on 19 charges as per the provisions of the section 194J of the income tax act (' Act'). Each of the ground is referred to separately, which may kindly be considered independent of each other. Ground No.1 - The order passed by the learned TDS officer is bad in law 1.1 On the facts and circumstances of the case and in law, the learned CIT(A) has erred in upholding the order passed by the learned TDS officer, which is bad-in-law. 1.2 On the....
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....olding that characterization of a payment must be done having regard to the dominant purpose/ intention of the payment. 2.6 On the facts and in circumstances of the case and in law the learned CIT(A} has erred in not following the principles laid down in judicial precedents cited by the Appellant and also ignoring the binding Apex Court judgment in the case of CIT vs Delhi Transco Limited 68 taxmann.com 231 and CIT vs Kotak; Securities Limited 67 taxmann.com 356. 3. Ground No.3 - No TDS demand can be under section 201(1) of the Act can be recovered from the Appellant 3.1 On the facts and circumstances of the case and in law, the order of the learned CIT(A)/TDS Officer is bad in law in so far it seeks to recover tax demand under section 201 of the Act in contradiction to the settled principle that the payer cannot be held liable for payment of the tax demand in cases involving non-deduction of tax at source and only interest liability under section 201(IA) of the Act, If any, can be levied in such cases. 3.2 Without prejudice to Ground No. 3.1, on the facts and circumstances of the case and in law, the Ld. CIT(A)/TDS Officer has erred in raising d....
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....on Roaming Charges/Interconnect Charges as Technical Fee u/s 194J was omitted to be verified. Therefore, the order passed by him is erroneous and prejudicial to the interest of revenue. On examining the assessment records it was found that the facts brought to the notice of the Ld. CIT as per proposal under section 263 of the Act are correct, as the Assessing Officer while passing order u/s 201(1) r.w.s. 201(lA) have not dealt with the issue of TDS on Roaming Charges/Interconnect Charges paid by the Assessee. In view of above facts and in the interest of natural justice, before passing any order u/s. 263 an opportunity of being heard is given to the assessee, vide Ld. CIT's office letter No. 6518 dated 23.03.2012 and the case was fixed for hearing on 29.03.2012. On said date, a letter requesting to adjourn the case on any other convenient date was received. The case was fixed for hearing on 27.04.2012 and finally on 23.03.2013. The assessee submitted its reply stating therein as under:- In this regard, on behalf of and under instruction of our subject client, we wish to submit that a reply providing our detailed submission against initiation of revisionary proceedings u....
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....ngs U/S 263. The scope of such proceedings is restricted to revising an order which is erroneous and prejudicial to the interests of the Revenue. An order cannot De said to be erroneous when the AO followed one of the legally sustainable view out of ihe two views available on the point. The CIT cannot call an assessment order to be erroneous simply because he is inclined to follow the other legally sustainable view in preference to the one followed by the AO. The Hon'ble Summit Court in Malabar Industrial Co. Ltd., v. CIT [(2000) 243 ITR 83 (SC)] has held that: 'Where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income Tax Officer is unsustainable in law. Tthe same view has been reiterated by several Hon'ble High Courts including the Hon'ble Delhi High Court in CIT Vs. Ansal Properties & Ind. Pvt. Ltd., (2009) 315 ITR 225 (Del). In this case it has been noticed that: That at the time when the Commissioner issued the notice under section 263 and passed the order dated March 23, 2004, t....
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....y a telecom operate to the subscribers of the other telecom operator and hence, roaming charges do not fall within the purview of the definition of the term fee for technical service (FTS as defined under section 9(1)(vii) of the Act. Provision of roaming services by the other telecom operators involves provision of standard services resulting into transmission of calls/SMS when a roaming subscriber makes/ receives calls while he is roaming in the telecom service area of the other telecom operator for which it is entitled to receive appropriate service charges from VOL. It is imperative to note that services provided by the other telecom operators are standard automated services, which are available for any telecom operator willing to avail those services (to enable its subscribes to make/receives calls when the subscribers are roaming) in consideration for payment of appropriate charges. Reliance in this regard is placed on the decision of the Hon'ble Madras High Court in the case of Skycell Communications Vs DCIT 251 ITR 53, wherein it has been held as under: "Technical service referred in section 9(1) (vii) contemplates rendering of a "service" to ....
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....above judicial precedents, it is clear that payments made for use of standard facility provided by the service provider, even where it involves use of sophisticated equipment and trained personnel by the service provider, cannot be construed as FTS for the purpose of the Act. In the present case as well, roaming charges paid by VDL to other telecom operators represent payments made for standard facility provided by such telecom operators and hence, cannot be classified as FTS for the purpose of the Act. B. No human intervention is involved in provision of roaming services. As per section 9 of the Act, FTS has been defined to mean "any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries". In absence of specific meanings of the terms 'technical', 'managerial' and 'consultancy' in the Act,....
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...."Demand for non/short deduction of tax should not be enforced against the Payer if he satisfies the Income Tax Authority that such taxes have been paid by the Payee". Reliance in this regard is placed on the judgment in the case of the Deputy Commissioner of Income Tax (TDS) Vs Jaran Prakash Limited (supra), 2012, wherein the Hon'ble Allahabad High Court has not only held that no demand under section 201 of the Act can be raised where the recipient has paid the taxes, but has also held that the deductor cannot be treated as an assessee in default till it is found that the recipient has also failed to pay such tax directly. CIT Vs Bharti Cellular Limited & other 330 ITR 239 (Supreme Court). The Hon'ble Supreme Court held that in case where taxes have been paid no demand can be raised under section 201(1) of the Act. Vodafone Essar Limited Mumbai Vs DCIT (TDS) 113 ITJ 385 (Mumbai Tribunal): The Mumbai Tribunal, relying upon the decision of the Supreme Court in case of Hindustan Coca Cola Beverage Pvt. Ltd., (supra) held that the recovery could not once again be made from the tax deductor where the payee included the income on which tax was alleged to have be....
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....d the Assessing Officer to examine the extent of human involvement for applicability of provision of Section 194J of the Ad and the-Assessing Officer after following the directions of Hon'ble Supreme Court examined this aspect and established that human intervention is required to provide fault free services of interconnection. This human intervention is of highly qualified and trained technical professional having expertise and experience in that particular area of relevant technology. In these circumstance, these interconnection charges/roaming charges fall under the ambit of section 194J of the Income tax Act, 1961. 4. In view of the above discussion, Ld. CITI found that the orders passed under section 201(1) read with section 201 (1A) of the Act for the financial year 2006-07 to 2008-09 relevant to the assessment year 2007-08 to 2009-10, are erroneous and also prejudicial to the interest of revenue. Hence the same are set aside with the direction to Assessing Officer to examine the default of the assessee to the extent of not deducting tax at source on oaming/Interconnect Charges paid during these years and chargeability of interest 'under section 201(1) read w....
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....as FTS for the purposes of the Act; No human intervention, which is sine qua non for a service to qualify as technical service, is involved in provision roaming services and therefore, roaming charges cannot be construed as Fee for Technical Services for the purposes of the Act; The reports of the technical experts clearly establish the fact that roaming payments made to other telecom operators for allowing use of their network to assessee's subscribers are in the nature of provision of a standard facility, which does not involve any human intervention at all and hence, such payments cannot be classified as FTS liable for deduction of tax at source under Section 194J of the Act; no demand u/s. 201/201(1A) of the Act can be raised where taxes so deductible but not deducted by the payer are directly paid by the recipient and such an action would result in double recovery of the demand. In support of his arguments, he draw our attention towards the page no. 27 to 32 of the Paper Book which is copy of the order u/s. 201(1) & 201(1A) of the I.T. Act, 1961 dated 29.3.2011 passed by the ITO (TDS), Karnal and relied upon the order of the AO and stated that Section 194J of the Act is not ap....
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.... basis of the said reply, the AO has passed the order by relying upon the Hon'ble High Court and ITAT decision. Despite that the Ld. Commissioner of Income Tax has wrongly invoked Section 263 of the Act, which is not sustainable in the eyes of law and therefore, the same should be quashed. 9. On the contrary, Ld. DR relied upon the order of the Ld. CIT. In support of his contention he filed a copy of the submissions of Revenue on provisions of Income Tax Act and position of law on the issue of Section 263. 10. We have carefully considered the rival submissions and perused the relevant records available with us, especially the impugned order passed by the Ld. CIT u/s. 263 of the Act alongwith Paper Book filed by the Assessee as well as the Written Submissions filed by the Revenue before us. After perusing the aforesaid order of the Ld. CIT, we are of the considered opinion that the order of the Ld. CIT is wrong in assuming the jurisdiction under section 263 of the Act because the revisionary proceedings under section 263 of the Act have merely been initiated on the basis of the letter received from Assistant Commissioner of Income Tax (TDS), Chandigarh and the Ld. CIT (TDS) di....
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....ovision of 263 of the I.T. Act and directed to AO to examine the default of the assessee to the extent of not deducting tax at source on roaming / interconnect charges paid during these years and chargeability of interest under section 201(1) read with section 201(1A) of the I.T. Act, 1961 by examining the issues on the lines as directed by Hon'ble Supreme Court in the case of M/s Bharti Cellular Ltd. to the AO of Gurgaon who completed the order under section 201/201(1A) of the Income Tax Act, 1961. In our considered opinion, the order of Ld. CIT is wrong and bad in law, because AO has passed the order dated 29.3.2011 judiciously after making all the enquiries / verification, which has been replied and on the basis of the said reply, the AO has passed his order dated 29.3.2011 by relying upon the Hon'ble High Court and ITAT decision. Despite that the Ld. Commissioner of Income Tax has wrongly invoked Section 263 of the Act, which is not sustainable in the eyes of law and therefore, the same deserve to be quashed. We further find that Hon'ble Supreme Court in the case of CIT vs. Green World Corporation 314 ITR 81 (SC) has held as under:- "The jurisdiction u/s. 263 can be ex....