The Income Tax Appellate Tribunal (ITAT), New Delhi Bench consisting of Shamim Yahya, Accountant Member and Yogesh Kumar US, Judicial Member held that no TDS can be deducted on roaming charges under Section 194J of the Income Tax Act, 1961.
The assessee company, Unitech Wireless (Tamilnadu) Private Limited is engaged in the business of providing telecommunication services. To provide telecommunication service, it sells service products such as pre-paid vouchers, Sim-cards and E-Load etc. For selling service products, the company entered into a distribution agreement with the distributors.
On upfront sale of service products discount was offered to the distributors to the extent of the difference between the MRP and the distributor’s sale price Further, the assessee has also not deducted tax on roaming charges paid to various operators on which provisions of section 194J of the Income Tax Act, 1961 are applicable.
The Karnataka High Court in the case of CIT vs. Vodafone South Ltd held that payment made by a mobile service provider to another mobile service provider for utilization of roaming mobile date and connectivity cannot be termed as technical service and therefore, no TDS was deductible u/sl94J of the Income Tax Act.
The Commissioner of Income Tax on appeal held that “the services rendered by the other operators with regard to roaming facility was the technical services for which provision of section 194J are applicable, therefore, the AO had rightly invoked section 194J of the IT Act in this regard”
The Division Bench of the Tribunal observed that “As regards non-deduction of TDS u/s 194J of the Income Tax Act, following the aforesaid precedent, we set-aside the order of the CIT(A) on this issue and hold that no TDS was to be required u/s 194J of the Income Tax Act.”
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