In a major relief to the Idea Cellular Ltd., the Delhi bench of the Income Tax appellate Tribunal (ITAT) has held that the Company is not liable to deduct TDS on payment of roaming charges as there was no human intervention.
Before the Tribunal, the company argued that there is no manual or human intervention during the process of transportation of calls between two networks and this is done automatically. He further submitted that human intervention is required only for installation of the network and installation of other necessary equipment/ infrastructure and also for maintaining, repairing and monitoring each operator or network so that they remain in a robust condition to provide faultless service to the customers. He, therefore, submitted that the purpose of payments in question cannot be categorized as for the Fee for technical services.
On behalf of the Revenue, it was argued that without human intervention, it is not possible to provide the facility and to attend the troubleshoots as and when required and without human intervention, it is not possible for the seamless transportation of the calls between two networks, as such, it cannot be said that there is no human intervention at all.
The Tribunal found that human intervention is required only for installation of the network and installation of other necessary equipment/ infrastructure and also for maintaining, repairing and monitoring each operator or network so that they remain in a robust condition to provide faultless service to the customers besides where the We have gone through the decisions relied upon by the assessee.
The bench further relied on Apex Court decision in CIT vs Bharati Cellular wherein the court remanded to the learned AO for verification of the fact whether the process of carriage of call requires manual intervention or not, by examining technical experts from the side of the department, allowing opportunity to the assesses for cross-examination. Due to exercise was done by the learned AOs by examining the experts by affording the opportunity to cross-examine the assessees.
Subsequently, various benches of the Tribunal have considered the issue based on the factual verification of the fact and all the Tribunals are unanimous in their view that there is no manual or human intervention during the process of transportation of calls between two networks and this is done automatically. It was further found that human intervention is required only for installation of the network and installation of other necessary equipment/ infrastructure and also for maintaining, repairing and monitoring each operator or network so that they remain in a robust condition to provide faultless service to the customers besides where the
The Tribunal further relied on the ITAT decision in which it was held that the payments in question shall not be recorded as payment towards fee for technical services and only such payments as are for services which are specialized, exclusive and utmost to users/consumers qualified as fee for technical services in terms of Explanation 2 to Section 9(1)(vii) so as to attract TDS u/s 194J.
“On this premise, in assessee’s own case, a coordinate bench of this Tribunal held that in the absence of any human intervention during the actual roaming process, payment would not be fee for technical services and cannot be regarded as payments to Section 194J of the Income Tax Act are applicable,” the Tribunal said while allowing the appeal.
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