TATA Communications has taken the matter of a Rs. 228.49 crore Tax Deduction at Source (TDS) on Interconnection Usage Charges (IUC) payment order issued by the Income Tax Department to the Income Tax Appellate Tribunal (ITAT). In a filing made on the evening of Friday, September 8, 2023, the company stated that it has filed appeals with the Commissioner of Income-Tax (Appeals) in Mumbai regarding this issue.
These appeals relate to TDS orders that allege insufficient tax deduction at source by the company for the assessment years ranging from 2013-14 to 2018-19. However, the CIT(A) issued a ruling unfavourable to the company on September 7. Consequently, the company opted to file these appeals promptly on the following day.
Apart from TATA, Reliance Jio also received the letters from the department. Back when the department issued the letters, the department requested an explanation from Tata Communications.
Interconnection Usage Charges (IUC) are payments that telecommunications service providers exchange in exchange for using each other’s networks to send voice calls and text messages to or receive them from their respective subscribers.
To maintain a fair competition and stop anti-competitive practices in the telecommunications sector, IUCs are normally governed by governmental agencies or regulatory bodies.
Following this, TATA filed appeals with the CIT(A) in Mumbai. The CIT(A) has since issued an adverse ruling against TATA Communications, prompting the company to appeal the decision before the ITAT.
The company failed to deduct the TDS from IUC in relation to the interconnection fees paid by the appellant to various international telecom operators, which is why the notice was issued. Therefore, under Section 201 of the Income Tax Act,1961 the default is equivalent to the payment of interest.
Read More: Income Tax Dept seeks explanation from Reliance Jio and Tata Communications on TDS from IUC Payments
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