Relief to Tata Teleservices: TDS deduction on Payment of Interconnect User Charges cannot be categorised as FTS, rules Delhi HC [Read Order]

The Delhi High Court bench consisting of Justice Manmohan and Justice Manmeet Pritam Singh Arora held that TDS deduction on payment of interconnect user charges cannot be categorized as the fee for technical service.

The petitioner filed the appeal in raising the question of law that no TDS under Section 194J of the Income Tax Act was required to be deducted by the assessee on payment of interconnecting user charges as it could not be categorized as a fee for technical services.

The Karnataka High Court and various Tax Tribunals have taken the view that there was no human intervention involved in providing the interconnect services like data link or roaming. Karnataka High Court holds that no TDS is required to be deducted by the assessee on payment of interconnecting user charges as it cannot be categorized as a fee for technical services. In the case of Vodafone South Ltd. (supra) held that charges for roaming and data link that no human intervention was involved in the interconnect whether it was for data link or roaming, the charges paid could not be held to be like fees for technical services for section 9(1) and section 194J of the Act

It was observed that TDS is required to be deducted by the assessee on payment of interconnecting user charges as it cannot be categorized as a fee for technical services. The court finds no substantial question of law arises and the appeal filed by CIT(A) was dismissed.

Mr Zoheb Hossain appeared on behalf of the petitioner and Mr Kamal Sawhney appeared on behalf of the respondent.

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.