Granting relief to Vodafone, the ITAT Delhi bench ruled that revisionary proceedings under section 263 of the Income Tax Act, 2017 cannot be made on the basis of a letter received from Assistant Commissioner of Income Tax (TDS).
The sole grievance of the appellants, in the instant case was that the CIT(TDS), relying on the letter from ACIT(TDS) arrived at a conclusion that roaming charges paid to other telecom operators by the assessee attracts provisions of section 194J of the Income Tax Act. Earlier, the their claim that these charges would not amount to Fee for Technical Service within the meaning of section 194J of the Act was accepted by the AO on the basis of judicial pronouncements.
The bench noted that the CIT went wrong in assuming the revisionary jurisdiction under section 263 of the Income Tax Act since the same was initiated merely on the basis of the letter received from Assistant Commissioner of Income Tax (TDS), Chandigarh.
The bench said that “the Ld. CIT (TDS) did not arrive at any independent satisfaction for initiation of such proceedings; by acceding to the request of the learned ACIT, the CIT(TDS) has effectively enhanced the time limitation prescribed under section 201(3) of the Act for completion of 201 proceedings by a TDS officer; the order passed by the learned ACIT is neither ‘erroneous’ nor ‘prejudicial’ to the interest of the revenue since the learned ACIT took one of the two permissible views after conducting a detailed enquiry in respect of applicability of withholding tax provisions on the roaming charges paid by the appellant to the other telecom operators. We further note that Ld. CIT has not appreciated the facts that the other telecom operators, to whom the roaming charges have been paid, would have offered income arising from roaming charges received from the assessee to tax and hence, no prejudice would have been caused to the revenue and hence, initiation of 263 proceedings is bad in law and void ab initio.”
Quashing the order, the bench added that “In our considered opinion, the order of Ld. CIT is wrong and bad in law, because AO has passed the order dated 29.3.2011 judiciously after making all the enquiries / verification, which has been replied and on the basis of the said reply, the AO has passed his order dated 29.3.2011 by relying upon the Hon’ble High Court and ITAT decision.”
Subscribe Taxscan Premium to view the Judgment
