Vodafone Cellular Limited, Coimbatore v. DCIT, Coimbatore

ITA 2803/CHNY/2014 | 2010-2011
Pronouncement Date: 31-07-2015

Appeal Details

RSA Number 280321714 RSA 2014
Assessee PAN AAACB8614L
Bench Chennai
Appeal Number ITA 2803/CHNY/2014
Duration Of Justice 8 month(s) 19 day(s)
Appellant Vodafone Cellular Limited, Coimbatore
Respondent DCIT, Coimbatore
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Assessee
Bench Allotted D
Date Of Final Hearing 28-07-2015
Next Hearing Date 28-07-2015
Assessment Year 2010-2011
Appeal Filed On 11-11-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH CHENNAI . ! '# $ % & BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD JUDICIAL MEMBER I.T.A. NOS.2802 & 2803 /MDS/2014 ( / ASSESSMENT YEAR : 2009-10 & 2010-11) M/S VODAFONE CELLULAR LIMITED 1045-1046 AVINASH ROAD COIMBATORE 641 018. VS. THE DEPUTY COMMISSIONER OF INCOME TAX TDS CIRCLE COIMBATORE. PAN AAACB 8614 L (PETITIONER) ( $'() / RESPONDENT ) / PETITIONER BY : MR.DEEPAK CHOPRA & MS.MANASVINI BAJPAI ADVOCATE / RESPONDENT BY : MR.SUNDARA RAO JCIT D.R / DATE OF HEARING : 28.07.2015 /DATE OF PRONOUNCEMENT : 31.07.2015 * / O R D E R PER A.MOHAN ALANKAMONY ACCOUNTANT MEMBER: THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGGR IEVED BY THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) -II COIMBATORE FOR THE ASSESSMENT YEARS 2009-10 & 2010-11 IN ITA N O.85/2013-14 & ITA NOS. 2802 2803/MDS/2014 VODAPHONE CELLULAR LTD 2 IN ITA NO.86/2013-14 BOTH ORDER DATED 28.08.2014 P ASSED UNDER SECTIONS 201(1) AND 201(1A) R.W.S 250 OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN BOT H THE APPEALS; HOWEVER THE LD. A.R. HAS CONFINED HIS ARGUMENTS ONL Y WITH RESPECT TO ONE IDENTICAL GROUND RAISED IN BOTH THE APPEALS WHI CH IS REPRODUCED HEREIN BELOW FOR ADJUDICATION. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW THE LD. CIT (A) HAS ERRED IN UPHOLDING THE DECISION OF THE LEARNED TDS OFFICER THAT THE APPELLANT IS TO BE TREATED AS AN ASSESSEE IN DEFAULT FOR NON- DEDUCTION OF TAX AT SOURCE UNDER SECTION 194J OF TH E ACT ON ROAMING CHARGES PAID BY THE APPELLANT TO OTHER TELECOM OPER ATORS AND THUS HOLDING THE APPELLANT LIABLE TO PAY TAX U/S. 201(1) AND INTEREST U/S.201(1A) OF THE ACT. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROV IDING CELLULAR MOBILE SERVICES. DURING THE COURSE OF ITS BUSINESS THE ASSESSEE HAD PAID ROAMING CHARGES TO OTHER TELECOM OPERATORS AGA INST WHICH THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE IN ACCORDAN CE WITH ITA NOS. 2802 2803/MDS/2014 VODAPHONE CELLULAR LTD 3 THE PROVISIONS OF SECTION-194J OF THE ACT. AFTER AN ELABORATE DISCUSSION THE LD. ASSESSING OFFICER CAME TO A CON CLUSION THAT THE MACHINERY AND EQUIPMENTS DEPLOYED BY THE SERVICE PR OVIDER COMPANY CANNOT WORK ON ITS OWN AND THERE HAS TO BE MAN-MACHINE INTERFACE AND HUMAN INTERVENTION AT VARIOUS LEVELS AND THEREFORE THE SERVICE RENDERED BY THE SERVICE PROVIDER COMPANY AM OUNTS TO RENDERING OF TECHNICAL SERVICE AND ACCORDINGLY TH E PAYMENT MADE BY THE ASSESSEE COMPANY TO THE SERVICE PROVIDER COMPAN Y WOULD BE EXIGIBLE TO THE PROVISIONS OF SECTION 194J R.W.S 9( 1)(VIII) OF THE ACT. THE LD. CIT (A) ALSO UPHELD THE VIEW OF THE LD. ASS ESSING OFFICER. 4. AT THE OUTSET THE LD. A.R. SUBMITTED THAT THIS ISSUE IS COVERED BY THE RECENT DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S.DISHNET WIRELESS LTD. IN ITA NOS.320 T O 329/MDS/14 VIDE ORDER DATED 20.07.2015 WHERE IT WAS HELD THAT THE T AX NEED NOT BE DEDUCTED AT SOURCE IN RESPECT OF PAYMENT TOWARDS RO AMING CHARGES TO OTHER SERVICE PROVIDERS SINCE IT WOULD NOT AMOU NT TO PAYMENT OF FEES FOR TECHNICAL SERVICES AS PROVIDES U/S.194J OF THE ACT. LD. D.R VEHEMENTLY ARGUED BY REFERRING TO THE ORDER OF THE LD. ASSESSING ITA NOS. 2802 2803/MDS/2014 VODAPHONE CELLULAR LTD 4 OFFICER FROM PAGE NO.10 TO 14 WHEREIN THE STATEMENT OF SMT. VASANTHI RAMAMURTHY DIVISIONAL ENGINEER BSNL COIMB ATORE WAS EXTRACTED FROM WHICH IT COULD BE INFERRED THAT CONT INUOUS HUMAN INTERFERENCE IS REQUIRED FOR OPERATING THE FACILITY PROVIDED BY THE SERVICE PROVIDER AND HENCE THE SERVICE RENDERED BY THE SERVICE PROVIDER WOULD AMOUNT TO TECHNICAL SERVICE. THEREFO RE LD. D.R STOUTLY CONTENDED THAT THE ROAMING CHARGES PAID BY THE ASSESSEE COMPANY WOULD AMOUNT TO PAYMENT OF FEE FOR TECHNICA L SERVICES BY WHICH THE PROVISIONS OF SECTION 194J OF THE ACT WOU LD BE ATTRACTED AND THE ASSESSEE WILL BE LIABLE TO DEDUCT TAX AT SO URCE. 5. AFTER HEARING THE BOTH SIDES WE FIND THE IS SUE IN BOTH THE APPEALS TO BE IDENTICAL AND SQUARELY COVERED BY THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL CITED BY THE LD. A.R. SUPRA. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED HEREIN B ELOW FOR REFERENCE:- 25. NOW COMING TO ROAMING CHARGES THE CONTENTIO N OF THE ASSESSEE IS THAT HUMAN INTERVENTION IS NOT REQUIRED FOR PROVIDI NG ROAMING FACILITY THEREFORE IT CANNOT BE CONSIDERED TO BE A TECHNICA L SERVICE. WE HAVE GONE THROUGH THE JUDGMENT OF APEX COURT IN BHARTI CELLUL AR LIMITED (SUPRA) THE APEX COURT AFTER EXAMINING THE PROVISIONS OF SECTIO N 9(1)(VII) OF THE ACT ITA NOS. 2802 2803/MDS/2014 VODAPHONE CELLULAR LTD 5 FOUND THAT WHENEVER THERE WAS A HUMAN INTERVENTION IT HAS TO BE CONSIDERED AS TECHNICAL SERVICE. IN THE LIGHT OF T HE ABOVE JUDGMENT OF THE APEX COURT THE DEPARTMENT OBTAINED AN EXPERT OPINI ON FROM THE SUB- DIVISIONAL ENGINEER OF BSNL. THE SUB-DIVISIONAL EN GINEER CLARIFIED THAT HUMAN INTERVENTION IS REQUIRED FOR ESTABLISHING THE PHYSICAL CONNECTIVITY BETWEEN TWO OPERATORS FOR DOING NECESSARY SYSTEM CO NFIGURATIONS. AFTER NECESSARY CONFIGURATION FOR PROVIDING ROAMING SERVI CES HUMAN INTERVENTION IS NOT REQUIRED. ONCE HUMAN INTERVENTION IS NOT RE QUIRED AS FOUND BY THE APEX COURT THE SERVICE PROVIDED BY THE OTHER SERVI CE PROVIDER CANNOT BE CONSIDERED TO BE A TECHNICAL SERVICE. IT IS COMMON KNOWLEDGE THAT WHEN ONE OF THE SUBSCRIBERS IN THE ASSESSEES CIRCLE TRA VELS TO THE JURISDICTION OF ANOTHER CIRCLE THE CALL GETS CONNECTED AUTOMATICAL LY WITHOUT ANY HUMAN INTERVENTION. IT IS DUE TO CONFIGURATION OF SOFTWA RE SYSTEM IN THE RESPECTIVE SERVICE PROVIDERS PLACE. IN FACT THE SUB-DIVISIO NAL ENGINEER OF BSNL HAS EXPLAINED AS FOLLOWS IN RESPONSE TO QUESTION NO.23: - REGARDING ROAMING SERVICES AS EXPLAINED TO QUESTION NO.21. REGARDING INTERCONNECTIVITY INITIALLY HUMAN INTERVENTION IS REQUIRED FOR ESTABLISHING THE PHYSIC AL CONNECTIVITY AND ALSO FOR DOING THE REQUIRED CONFIGURATION. ONCE IT IS WORKING FINE NO INTERVE NTION IS REQUIRED. IN CASE OF ANY FAULTS HUMAN INTERVENTI ON IS REQUIRED FOR TAKING NECESSARY CORRECTIVE ACTIONS. IN VIEW OF THE ABOVE ONCE CONFIGURATION WAS MADE NO HUMAN INTERVENTION IS REQUIRED FOR CONNECTING THE ROAMING CALLS. THE SUBSCRIBER CAN MAKE AND ITA NOS. 2802 2803/MDS/2014 VODAPHONE CELLULAR LTD 6 RECEIVE CALLS ACCESS AND RECEIVE DATA AND OTHER SE RVICE WITHOUT ANY HUMAN INTERVENTION. LIKE ANY OTHER MACHINERY WHENEVER T HE SYSTEM BREAKDOWN TO SET RIGHT THE SAME HUMAN INTERVENTION IS REQUIR ED. HOWEVER FOR CONNECTING ROAMING CALL NO HUMAN INTERVENTION IS R EQUIRED EXCEPT INITIAL CONFIGURATION IN SYSTEM. THIS TRIBUNAL IS OF THE C ONSIDERED OPINION THAT HUMAN INTERVENTION IS NECESSARY FOR ROUTINE MAINTEN ANCE OF THE SYSTEM AND MACHINERY. HOWEVER NO HUMAN INTERVENTION IS REQUI RED FOR CONNECTING THE ROAMING CALLS. THEREFORE AS HELD BY THE APEX COUR T IN BHARTI CELLULAR LIMITED (SUPRA) THE ROAMING CONNECTIONS ARE PROVID ED WITHOUT ANY HUMAN INTERVENTION AND THEREFORE NO TECHNICAL SERVICE IS AVAILED BY THE ASSESSEE. THEREFORE TDS IS NOT REQUIRED TO BE MADE IN RESPEC T OF ROAMING CHARGES PAID TO THE OTHER SERVICE PROVIDERS. THEREFORE FOLLOWING THE ABOVE MENTIONED RECENT DEC ISION OF THE CO- ORDINATE CHENNAI BENCH OF THE TRIBUNAL WE HEREBY H OLD THAT IN CASE OF THE ASSESSEE THE ROAMING CHARGES PAID BY THE ASS ESSEE WILL NOT FALL UNDER THE CATEGORY OF FEES FOR TECHNICAL SERVICES AND THEREFORE THE PROVISIONS OF SECTION 194J OF THE ACT WOULD NOT BE ATTRACTED IN THE CASE OF THE ASSESSEE. FURTHER SINCE SECTIONS 201( 1) & 201(1A) OF THE ACT ARE CONSEQUENTIAL THEY WILL ALSO NOT BE AP PLICABLE TO THE CASE OF THE ASSESSEE. ITA NOS. 2802 2803/MDS/2014 VODAPHONE CELLULAR LTD 7 6. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 31 ST JULY 2015 AT CHENNAI. SD/- SD/- ( ! '# $ ) ((CHALLA NAGENDRA PRASAD) ( . ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 31 ST JULY 2015. KSSUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE