TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 433
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....ection 191 of the Act and the judgement of Jagran Prakashan Limited Vs DCIT(TDS) (21 Taxman.com 489) (Allahabad High Court), as there is no finding by the learned TDS officer with respect to the failure of deductees to pay taxes directly, which is a jurisdictional pre-requisite. 1.3 Without prejudice to Ground No 1.2 above, on the facts and circumstances of the case and in law, the learned CIT(A) has erred in not holding the order of the learned TDS officer as bad in law in so far it seeks to recover tax demand under section 201 of the Act in contradiction to the settled principle enunciated by Allahabad High Court in the case of Jagran Prakashan Limited (supra) 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(1 A) of the Act, if any, can be levied in such cases. 2. Ground No. 2 - The Appellant is not liable to deduct tax on discount extended to its pre-paid distributors on distribution of pre-paid SIM cards/ talktime 2.1 On the facts and circumstances of the case and in law, the learned CIT (A) has erred in upholding the order of the learned TDS officer that the ....
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....the Act on roaming charges paid to other telecom operators 3.1 On the facts and circumstances of the case and in law, the learned CIT (A) has erred in upholding the order of the learned TDS officer that the Appellant was required to deduct tax under section 194J of the Act on roaming charges paid/payable by the Appellant to other telecom operators, during the subject financial year. 3.2 On the facts and circumstances of the case and in law, the learned CIT(A) has erred in not appreciating that roaming facility is a standard automated facility which cannot be construed as Fee for Technical Services ('FTS') for the purposes of the Act and hence, section 194J of the Act is not applicable. 3.3 On the facts and circumstances of the case and in law, the learned CIT(A) has erred in not appreciating the fact that no human intervention, which is sine qua non for a service to qualify as technical service, is involved in provision of roaming services and therefore, roaming charges cannot be construed as FTS for the purposes of the Act. 3.4 On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in misapplying the statement of technical expert recorde....
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.... of the case and in law, the learned TDS officer has erred in charging interest under section 201(1 A) of the Act. 5.2 Without prejudice to Ground No. 5.1, on the facts and circumstances of the case and in law, consequential interest under section 201(1 A) of the Act should be computed from the due date of payment of withholding tax by the Appellant to the date of payment of taxes by the payee/recipient of such income. All the above grounds are without prejudice to each other. The Appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at 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." 2. Ground No. 1 is general in nature and does not require any specific adjudication. Ground No. 2 is regarding applicability of section 194H in respect of discount allowed to the distributors on distribution of pre-paid SIM cards/talk time. 3. We have heard the ld. A/R as well as the ld. D/R and considered the relevant material on record. At the outset, we note that an identical issue was considered &nb....
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....which are on principal to principal basis and wherein property in the goods is transferred to the distributor'. 45. Taking into account the provisions of Section 182 of the Contract Act and the arrangement which has been entered into between the company and the distributor and taking into account the provisions of Section 194H, the Tribunal while considering the evidence on record, in our considered opinion, has misdirected itself in considering the case from an angle other than the angle which was required to be considered by the Tribunal under the Income Tax Act. The Tribunal has travelled beyond the provisions of Section 194H where the condition precedent is that the payment is to be made by the assessee and thereafter he is to make payment. In spite of our specific query to the counsel for the department, it was not pointed out that any amount was paid by the assessee company. It was only the arrangement by which the amount which was to be received was reduced and no amount was paid as commission. 46. In that view of the matter, if we look at the provisions of Section 194H and even if explanation is taken into consideration, there is no occasion of invoking provisions o....
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....or to decide who will absorb the loss. In that view of the matter, the findings arrived at by the Tribunal is erroneous. (vi) Regarding the return of goods after expiry date, it is always the understanding between the manufacturer and company that the product is not for preparation or consumed before expiry date, the consumed items cannot be allowed otherwise manufacturer will invite criminal liability. To avoid any criminal liability or any criminal act is done for taking back the goods, will not deter the relation-ship of Principal to Principal basis. (vii) Regarding supervision, it is always for the manufacturer and the company to look into the matter that his Distributor or Sub- Distributor or Retailer will not induct in mal practice. (viii) Regarding goods sold to the Distributor, it is always a matter of contract how further goods will be distributed. Restriction on sub- distributor will not change the transaction from Principal to Principal. (ix) Regarding expenses which are described by the Tribunal and one of the reason is that it is always for the assessee to allow any special allowance or expenses to promote the sale. In a competitive world to promote the sale,....
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.... record. The facts of the present appeal and as that of the appeal bearing no. 656/JP/2010 are same and, therefore, the judgment passed by the Coordinate Bench is equally applicable to the cases in hand. For ready reference, we are hereby reproducing the facts mentioned in para 3 of the order passed by the AO TDS. The same are as under :- " The assessee has relied on the decision of Hon'ble Delhi High Court in the case of Bharti Cellular Ltd. - On the basis of which the Hon'ble Apex Court has remanded the matter to the AO for fresh adjudication. Firstly, the matter is pending before the AO and thus the issue has not reached finality in that case. Secondly, the facts of this case are entirely different from the present case. The issue under consideration in the case relied by the assessee above was payment of part access / interconnect charges whereas in the present case, the issue is regarding payment of roaming charges. Further, in the above case, the Hon'ble court found that there was no involvement of human interface in providing interconnect/part access facility whereas in present case there is necessarily human interface involved in providing roaming service. There is no dou....
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....om, circle. * Visiting network (e.g. Airtel in Mumbai) locates mobile device and identifies that it is not registered with its systems, i.e. VLR. * Visiting network automatically contacts home network of Hexacom subscriber, i.e. HLR and gets service information about roaming device using IMSI number-IMSI number is a unique subscriber identity number granted to the customer at the time of subscription. * Visiting network maintains temporary subscriber record for the said mobile device and provides an internal temporary phone number from backend system to the mobile device which is not visible to human. * Home network also updates its register to indicate that the mobile is on visitor network so that information sent to that device is correctly routed. * The Hexacom's subscriber in Mumbai, who is temporarily registered as Airtel's subscriber makes calls in Mumbai and the minutes are registered in his identity for which he has to pay through Hexacom Jaipur. * Alternatively, a called from Jaipur makes a call to Hexacom's subscriber which is routed to the home network of Hexacom subscriber in Jaipur. * Home network then forwards all incoming calls to the temporary phone nu....
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....the nature of the service whether technical or otherwise. The ld CIT(A) partly accepted that roaming process is technical because it uses various instruments such as MSC (Mobile Switching Centre), VLR (Visitor Location Register), Radio network, towers, BTC etc. but the system is operated/managed by the Highly skilled professionals. The assessee's argument was that the roaming service is managed automatically by machines and payment for roaming charges are not fees for technical services. In case of fault in a breakdown of a system, the professional people are required to monitor the telecom network to be in a robust condition in order to do business for self. This monitoring does not have any connection with roaming charges paid by the subscriber. If a telecom network breaks down there is no business and thus no payment. Existence of IMSI is only a facility to communicate and does not result the roaming services provided on a standard facilities to be a technical service. The whole roaming process is automatically and there is no human interference in it. The human interference is required to maintain the robust network only to ensure break down free service to the subscriber. The ....
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....ng charges paid by the assessee to the other operators are not fees for technical services. The ld AR further relied on the decision in the case of iGATE Computer Systems Ltd. Vs. DCIT in ITA No. 1301 to 1303& 1616/PN/2013 for A.Y. 2007-08 to 2010-11 wherein the Hon'ble Pune Bench of ITAT had considered whether any human intervention is required for providing the data link services and are liable to be deducted TDS U/s 194J of the Act and held that payments made for utilizing such services was not in the nature of technical services governed by Section 194J of the Act. He further relied on the decision of ITAT Ahmadabad Bench in the case of Canara Bank Vs. ITO 305 ITR (AT) 189 wherein MICR charges paid to SBI held not to be covered U/s 194J read with Section 9(1)(vii) Explanation-2. He also relied on the decision of Hon'ble Bangalore ITAT in the case of Bangalore Electricity Supply Co. Ltd. Vs. ITO(TDS) order dated 16/3/2012 2012(20) ITR (Trib) 265 wherein payment made by State Load Dispatch Center (SLDC) is held not liable to be deducted TDS U/s 194J of the Act. The ld AR further relied on the decision of Hon'ble Mumbai ITAT in the case of Maharastra State Electricity Distribution....
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.... prepaid roaming charges charged between the operators from Mr. Kapoor Singh Guliani. The appellant also taken opinion from Former Chief Justice of India Mr. Kapadia on IUC post technical examination, cross examined and reexamination. Who also opined that Hon'ble Supreme Court decision dated 12/08/2010 is an order not judgment as the principle of law was not res-integra. The word technical services have got to be read in narrow since as held by the various Hon'ble High Courts and the Tribunal by applying principles of "nositur a sociis" particular because the word technical service in Section 9(1)(vii) read with Explanation-2 in between word managerial consultancy services. Finally he opined that such setting up/installation, repairing, servicing, maintenance are separate activities, they are back office functions and are require human intervention. But the roaming process between participating entities is fully automatic and does not require any human intervention. Accordingly, the interconnected uses charge will not attract the provisions of Section 194J read with Section 9(1)(vii) read with Explanation-2 thereto. Therefore, he prayed to delete the addition. If we examine t....
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....mand raised applying sec. 194H is quashed. Assessee's grounds are allowed." By respectfully following our own decision on similar fact, we reverse the order of the ld CIT(A) and allow the appeal of the assessee on this ground." 3.3. In the light of above, respectfully following the decision of Coordinate Bench in the matter of M/s. Bharti Hexacom Ltd. for the assessment year 2009-10, we hereby reverse the order of ld. CIT (A) and allow the appeals of the assessee relating to Ground Nos. 2, 3 & 4. Having allowed the appeals, we deem it appropriate to put caveat to the effect that in case the Hon'ble Supreme Court in the matter of Vodafone decides the issue of roaming charges against the assessee, the AO or any other Officer authorized in this behalf may move an appropriate application." Thus, the Tribunal decided the issue in favour of the assessee by holding that the fee paid for roaming charges does not fall in the ambit of fee for technical services as no human intervention is required in providing the roaming services by the mobile service provider. The revenue challenged this order of the Tribunal before the Hon'ble High Court and the Hon'ble High Court vide decis....