In the case of Vodafone Idea, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that TDS is not deductible on payment of roaming charges since the payment for interconnection is not fees on technical service under section 194j of the income tax act, 1961.
During the appellate proceedings, the appellant assessee claimed that the payments made by it for roaming facilities do not attract provisions of section 1941 of the Act since they are not like payment, for technical services. The CIT(A) held that “assessee could not have been deemed as one in default for non-deduction of tax at source on roaming charges paid by it to other service providers”
In the case of CIT, TDS. Bangalore vs Vodafone South Ltd, Hindustan Coca-Cola Beverages Pvt. Ltd and others it was held that payments made for interconnection are not fees for rendering any technical services as envisaged in section 1941 of the Act. Therefore, no tax is deductible at source under section 1941 of the Act on payment of roaming charges to the OTOs and the appellant therefore cannot be treated as an assessee in default.
The revenue submitted that for installation/setting up/repairing/servicing/maintenance/capacity augmentation etc. human intervention is required, however after this process is complete, the interconnection between the operators is automatic and at that stage, no human intervention is required. These conclusions have been arrived at after considering the Reports of the technical experts, their cross-examination etc.
A Coram comprising of Shri Vikas Awasthy, Judicial Member & Shri M Balaganesh, Accountant Member observed that in the case of i-Gate Computer Systems Ltd, it has been held that it does not require any human intervention and charges received or paid on account of this is not fees for technical services as envisaged in section 194J read with section 9(1) (vii) read with Explanation-2 of the Act.
The ITAT held that “the payments made for interconnection are not fees for rendering any technical services as envisaged in section 194J of the Act. Therefore, no tax is deductible at source u/s 1943 of the Act on payment of roaming charges to the OTOS and the assessee therefore cannot be treated as an assessee in default.” The appeals of the Revenue got dismissed.
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