Vodafone Idea has no Obligation to pay TDS on Auto Roaming Charges Paid to Other Telecom Operators: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Hyderabad bench has held that Vodafone Idea Ltd, has no obligation to pay TDS on the auto roaming charges paid to other telecom operators as per the provisions of the Income Tax Act, 1961.

The appellant is a company engaged in the business of providing cellular mobile telephone services. In this case, a survey u/s.133A of the Income Tax Act, 1961 was conducted on 13.10.2009. The assessee was requested by the AO to file details of expenditure incurred and TDS deducted under the various TDS sections. Accordingly, the assessee company filed the details of expenditure incurred and TDS deducted, and on the basis of the information filed by the assessee, the AO noticed Non-deduction of TDS on Auto Roaming Charges paid to other Telecom operators.

The department contended that the assessee is making payments to other telecom operators for use of their spectrum which was allotted to them by the Govt. of India. They further argued that once allotted, the Telecom Operator becomes the exclusive owner of that spectrum for the period of allotment and therefore, in whichever circle a telecom operator does not have a spectrum license, it has to connect with other telecom operators to offer its customer services in areas where it lacks spectrum, leading to roaming charges.

A bench of Shri Laliet Kumar, Judicial Member and Shri Laxmi Prasad Sahu, Accountant Member observed that the assessee need not deduct TDS on auto roaming charges paid to other telecom operators, the AO raised demand u/s 201(1) & and interest u/s 201(1A) of the Act.

“The issue in dispute is squarely covered by various decisions as quoted supra in the written submissions filed by the assessee as well as the decisions of coordinate benches of ITAT,” the bench said.

Allowing the appeals filed by the assessee, the Tribunal observed that “Respectfully following the aforesaid decisions, we hold that there is no obligation to deduct tax at source for the assessee payer in terms of section 194C or 194J of the Act and hence the assessee cannot be treated as 'assessee in default' u/s 201(1) of the Act. Hence consequentially the interest u/s 201(1A) of the Act cannot be charged on the assessee in the instant case.”

Shri Ronak Doshi appeared for the assessee.

To Read the full text of the Order CLICK HERE

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