M/s. Hutchison Telecom East Ltd., Kolkata V. ACIT, Circle - 57, Kolkata, Kolkata

ITA 1101/KOL/2005

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4242 (ITAT-KOLKATA)
• Duration Of Justice: 11 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 20-10-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 09-05-2005
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Keywords: Additional evidence; Non-deduction of tax
• Section: 194C; 201(1)

Judgement Text

ITA NOS.1101,1102,1291&1292/KOL/20015 CO NOS. 142 & 143/KOL/2005 VODAFONE EAST LIMITED AYS. 2002-03 & 2003-04 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH, AM & SHRI S. S. VISWAN ETHRA RAVI, JM] I.T.A NO. 1101/KOL/2005 ASSESSMENT YEAR: 2002-03 VODAFONE EAST LIMITED VS. ASSISTANT COMMISSIONE R OF INCOME TAX, (PAN: CIRCLE-57, KOLKATA-71 ( APPELLANT ) ( RESPONDENT ) & I.T.A NO. 1291/KOL/2005 ASSESSMENT YEAR: 2002-03 ASSISTANT COMMISSIONER OF INCOME TAX, VS. VODAFONE EAST LIMITED CIRCLE-57, KOLKATA. ( APPELLANT ) ( RESPONDENT ) & C.O. NO. 142/KOL/2005 IN I.T.A NO. 1291/KOL/2005 ASSESSMENT YEAR: 2002-03 VODAFONE EAST LIMITED VS. ASSISTANT COMMISSIONE R OF INCOME TAX, (PAN: CIRCLE-57, KOLKATA-71 (CROSS OBJECTOR) (RESPONDENT) & I.T.A NO. 1102/KOL/2005 ASSESSMENT YEAR: 2003-04 VODAFONE EAST LIMITED VS. ASSISTANT COMMISSIONE R OF INCOME TAX, (PAN: CIRCLE-57, KOLKATA-71 ( APPELLANT ) ( RESPONDENT ) & I.T.A NO. 1292/KOL/2005 ASSESSMENT YEAR: 2003-04 ASSISTANT COMMISSIONER OF INCOME TAX, VS. VODAFONE EAST LIMITED CIRCLE-57, KOLKATA. ( APPELLANT ) ( RESPONDENT ) & C.O. NO. 143/KOL/2005 IN I.T.A NO. 1292/KOL/2005 ASSESSMENT YEAR: 2003-04 VODAFONE EAST LIMITED VS. ASSISTANT COMMISSIONE R OF INCOME TAX, (PAN: CIRCLE-57, KOLKATA-71 (CROSS OBJECTOR) (RESPONDENT) ITA NOS.1101,1102,1291&1292/KOL/20015 CO NOS. 142 & 143/KOL/2005 VODAFONE EAST LIMITED AYS. 2002-03 & 2003-04 2 DATE OF HEARING: 20.10.2016 DATE OF PRONOUNCEMENT: 16.11.2016 FOR THE ASSESSEE : SHRI DEEPAK CHOPRA, ADVOCATE FOR THE REVENUE : SHRI NIRAJ KUMAR, CIT ORDER PER SHRI M. BALAGANESH, AM: ALL THESE APPEALS BY ASSESSEE AND REVENUE AND CROS S OBJECTIONS BY ASSESSEE ARE ARISING OUT OF COMMON ORDER OF LD. CIT(A)-XL, KOLKA TA VIDE APPEAL NOS. 0195/04-05 AND 0196/04-05 DATED 23.03.2005. ASSESSMENTS WERE FRAMED BY ACIT, CIRCLE-57, KOLKATA U/S. 201(1)/201(1A) R.W.S. 194J OF THE INCO ME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 06.1 2.2004. 2. THE ONLY ISSUE INVOLVED IN ALL THESE APPEALS O F THE REVENUE AND APPEALS OF THE ASSESSEE INCLUDING ITS CROSS OBJECTIONS IS, AS TO WHETHER THE ASSESSEE COULD BE TREATED AS ASSESSEE IN DEFAULT IN TERMS OF SECTION 201 OF TH E ACT AND CONSEQUENTIAL INTEREST U/S 201(1A) OF THE ACT IN RESPECT OF NON-DEDUCTION OF T AX AT SOURCE FOR PAYMENTS MADE TOWARDS INTERCONNECT CHARGES (INCLUDING PORT CHARGE S, ACCESS CHARGES, ROAMING CHARGES AND PASS THROUGH CHARGES) IN THE FACTS AND CIRCUMST ANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSE SSEE IS ENGAGED IN PROVIDING CELLULAR MOBILE TELEPHONY SERVICES (CMTS) IN KOLKATA TELECOM CIRCLE AFTER RECEIPT OF APPROVAL FROM THE DEPARTMENT OF TELECOMMUNICATIONS (DOT). TH E LD AO WHILE ANALYZING THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE FOR THE FIN ANCIAL YEAR 2001-02 RELEVANT TO ASST YEAR 2002-03, OBSERVED THAT THE DEDUCTOR HAS MADE P AYMENT TO DIFFERENT TELECOM COMPANIES IN THE FORM OF ROAMING CHARGES, PASS THRO UGH CHARGES, PSTN INTERCONNECT FEES AND INTER OPERATOR CHARGES. ALL THESE CHARGE S, IN TELECOM PARLANCE, ARE KNOWN AS ACCESS CHARGES. THE ASSESSEE HAS ENTERED INTO ROAMI NG ARRANGEMENTS WITH OTHER TELECOM OPERATORS WHICH HAVE BEEN GIVEN LICENCE TO OPERATE AS TELECOM SERVICE PROVIDERS IN OTHER TERRITORIES. THE LD AO FOUND THAT THE ASSESSEE WAS MAKING PAYMENT TO VARIOUS TELECOM OPERATORS SUCH AS BSNL, STERLING CELLULAR LTD, HUTC HISON MAX TELECOM PVT LTD, FECAL ITA NOS.1101,1102,1291&1292/KOL/20015 CO NOS. 142 & 143/KOL/2005 VODAFONE EAST LIMITED AYS. 2002-03 & 2003-04 3 LTD AND SUCH PAYMENTS WERE IN RELATION TO ROAMING C HARGES, PSTN INTERCONNECT FEES, PASS THROUGH CHARGES AND INTER OPERATOR CHARGES. A CCORDING TO LD AO, THE SAID PAYMENTS FALL UNDER THE AMBIT OF FEE FOR TECHNICAL SERVICES AND ACCORDINGLY LIABLE FOR DEDUCTION OF TAX AT SOURCE IN TERMS OF SECTION 194J OF THE ACT. THE ASSESSEE EXPLAINED BY WAY OF AN EXAMPLE AS BELOW :- A CALL GENERATED FROM A HUTCH SUBSCRIBER IS FIRST E NCOUNTERED IN THE ASSESSEES BASE TRANSRECEIVER STATION AND BASE STATION CONTROLLER. FROM THESE STATIONS THE CALL TRAVELS TO MOBILE SWITCHING CENTRE AND UPTO THIS CENTRE, SUCH CALL SIGNAL HAD TRAVELLED ON A WIRELESS SYSTEM. FROM THE MOBILE SWITCH CENTRE, IT TRAVELS THROUGH ELECTRICAL MEDIUM TO THE TX SYSTEM OF HUTCH. FROM THIS STAGE, IT TRAVELS THROU GH OPTICAL FIBRE CABLES TO TX SYSTEM OF BSNL FROM WHERE IT IS ROUTED TO THE APPROPRIATE BSNL EXCHANGE. FROM THE BSNL EXCHANGE THE VOICE SIGNALS IS PASSED ON TO THE RECE IVER. FOR THE USE OF LEASED LINE BETWEEN TX SYSTEM OF HUTCH TO THE TX SYSTEM OF BSNL AND ALSO BETWEEN TX SYSTEM OF BSNL AND BSNL EXCHANGE, THE CHARGES ARE TERMED AS ANNUAL RENT AND GUARANTEE, RENTAL AND / OR LEASED LINE CHARGES AND THE SAME IS SHOWN UNDER PSTN INTERCONNECT FEES IN THE BOOKS OF THE ASSESSEE. DEPENDING UPON THE ESTIMATED NUMBER / TRAFFIC OF CALLS, HUTCH BLOCKS THE PORTS AT THE RELEVANT BSNL EXCHANGE. FOR THIS PURPOSE, BSNL CHARGES PORT CHARGES WHICH IS ALSO SHOWN UNDER TH E PSTN INTERCONNECT FEES. 3.1. THE ASSESSEE SUBMITTED THAT THE SERVICES PROV IDED BY THESE TELECOM COMPANIES WERE NOT TECHNICAL SERVICES WITHIN THE MEANING OF S ECTION 194J OF THE ACT, THAT PAYMENTS MADE TO BSNL CANNOT SUFFER TDS AS IT IS CENTRAL GOV ERNMENT COMPANY, THAT THE OTHER SERVICE OPERATORS HAD ALL PAID THEIR DUE TAXES ON T HESE RECEIPTS AND HENCE THERE WAS NO FURTHER REQUIREMENT TO DEDUCT TAX AT SOURCE. IN SU PPORT OF THESE PROPOSITIONS, IT PLACED RELIANCE ON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF SKYCELL COMMUNICATION LTD VS DCIT REPORTED IN 251 ITR 53 (M AD) ; DECISION OF BANGALORE TRIBUNAL IN THE CASE OF WIPRO LTD VS ITO REPORTED I N 85 ITD 407 (BANG-TRIB) AND THE DECISION OF LD CITA XXX, NEW DELHI VIDE HIS APPEAL NO. 138/04-05 DATED 24.12.2004 IN THE CASE OF M/S HUTCHISON TELECOM ESSAR LTD WHICH IN SHORT HELD THAT USE OF STANDARD FACILITIES WAS NOT TECHNICAL SERVICES WITHIN THE ME ANING OF SECTION 194J OF THE ACT. THESE ARGUMENTS DID NOT FIND FAVOUR WITH THE LD AO AND ACCORDINGLY HE CHARGED TAX U/S ITA NOS.1101,1102,1291&1292/KOL/20015 CO NOS. 142 & 143/KOL/2005 VODAFONE EAST LIMITED AYS. 2002-03 & 2003-04 4 201(1) OF THE ACT AMOUNTING TO RS. 1,57,07,700/- AN D INTEREST U/S 201(1A) OF THE ACT AMOUNTING TO RS. 57,33,311/- IN RELATION TO FY 2001 -02. SIMILARLY HE CHARGED TAX U/S 201(1) OF THE ACT AMOUNTING TO RS. 2,71,45,200/- AN D INTEREST U/S 201(1A) OF THE ACT AMOUNTING TO RS. 58,36,218/- IN RELATION TO FY 2002 -03. 4. BEFORE THE LD CITA, THE ASSESSEE APART FROM REI TERATING THE AFORESAID SUBMISSIONS MADE SPECIFIC SUBMISSIONS AS TO HOW THE SUBJECT MEN TIONED PAYMENTS WOULD NOT FALL UNDER THE AMBIT OF SECTION 194I AND SECTION 194C OF THE ACT BASED ON SPECIFIC QUERY RAISED BY THE LD CITA IN THAT REGARD. IT WAS SUBM ITTED THAT THE PROVISIONS OF SECTION 194I OF THE ACT CANNOT BE MADE APPLICABLE TO THE AS SESSEES CASE AS THERE WAS NO USE OF ANY LAND OR BUILDING OF THE TELECOM OPERATORS BY TH E ASSESSEE. IT WAS ALSO SUBMITTED THAT SECTION 194C OF THE ACT APPLIED TO WORK IN RELATION TO LABOUR WORK AND AS THE ASSESSEES CASE HAS NOTHING TO DO WITH ADVERTISING, BROADCASTI NG AND TELECASTING, CARRIAGE OF GOODS AND PASSENGERS AND CATERING AND HENCE SECTION 194C OF THE ACT CANNOT BE MADE APPLICABLE TO THE ASSESSEE. IT WAS SUBMITTED THAT WHEN THE ASSESSEES SUBSCRIBERS WERE ALLOWED ACCESS TO THE INFRASTRUCTURE FACILITIES OF BSNL, NO SPECIAL APPLICATION OF EFFORTS WERE REQUIRED AND HENCE THERE WAS NO INVOLVEMENT OF ANY WORK BY BSNL OR THE OTHER TELECOM OPERATORS. 4.1. WITH REGARD TO APPLICATION OF SECTION 194J OF THE ACT, IT WAS SUBMITTED THAT USE OF SOPHISTICATED TECHNOLOGY SUCH AS A MOBILE PHONE OR FLYING IN AN AIRCRAFT CANNOT BE TERMED TO BE USE OR PROVIDING TECHNICAL SERVICES WITHIN TH E MEANING OF SECTION 194J OF THE ACT. IT WAS ALSO SUBMITTED THAT USE OF STANDARD FACILITY CANNOT BE EQUATED WITH TECHNICAL SERVICES BEING PROVIDED WITHIN THE MEANING OF SECTI ON 194J OF THE ACT. THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF THE HONBLE MADRAS HIGH COURT SUPRA WHEREIN IT WAS HELD THAT THE FACT THAT THE TELEPHONE SERVICE P ROVIDER HAS INSTALLED SOPHISTICATED TECHNICAL EQUIPMENT IN THE EXCHANGE TO ENSURE CONNE CTIVITY TO ITS SUBSCRIBER DOES NOT ON THAT SCORE MAKE IT PROVISION OF TECHNICAL SERVICES TO THE SUBSCRIBER WITHIN THE MEANING OF SECTION 194J OF THE ACT. THE BANGALORE TRIBUNAL SUP RA ALSO HAD HELD THAT TECHNICAL SERVICES REFERRED TO SECTION 9(1) OF THE ACT CONTEM PLATED RENDERING OF SERVICE TO THE PAYER FOR A FEE. MERE COLLECTION OF A FEE FOR USE OF A STANDARD FACILITY PROVIDED TO ALL THOSE WILLING TO PAY FOR IT DOES NOT AMOUNT TO THE FEE HA VING BEEN RECEIVED FOR TECHNICAL ITA NOS.1101,1102,1291&1292/KOL/20015 CO NOS. 142 & 143/KOL/2005 VODAFONE EAST LIMITED AYS. 2002-03 & 2003-04 5 SERVICES. THE LD CITA DULY APPRECIATED THE CONTEN TIONS OF THE AFORESAID TWO RULINGS AND CONCLUDED THAT THE PROVISIONS OF SECTION 194J OF TH E ACT WOULD NOT APPLY TO THE ASSESSEES CASE. 4.2. THE LD CITA OBSERVED THAT IN A LAY MANS LANG UAGE, THE TELECOM OPERATORS ARE PROVIDING USE / LEASE OF THE OPTICAL FIBRE CABLES C ONNECTING THE ASSESSEES TX SYSTEM TO THE TX SYSTEM AND EXCHANGE OF BSNL(IF PAID TO BSNL) , ACCESS TO THE TX SYSTEM AND THE EXCHANGE OF THE TELECOM OPERATORS (IF PAID TO O THER OPERATORS), PROVIDING SPACE OR BLOCKING SPACE FOR THE CALL TRAFFIC OF THE ASSESSEE IN THE TELECOM OPERATORS EXCHANGE AND TRANSMITTING THE CALL / VOICE SIGNALS TO THE RECEIV ER / DESTINATION FOR WHICH CHARGES / FEES ARE LEVIED FROM THE ASSESSEE. ACCORDINGLY, HE CONC LUDED THAT THE TELECOM OPERATORS HAD PERFORMED CERTAIN WORKS SUCH AS ALLOWING CALL ACCES S, PROVIDING SPACE FOR THE CALL TRAFFIC AND TRANSMITTING THE SAID CALL / VOICE SIGNALS TO T HE RECIPIENT. HE STATED THAT IT CAN THEREFORE BE SAID WITHOUT ANY CONTROVERSY THAT THE TELECOM OPERATORS HAD WORKED FOR THE ASSESSEES BUSINESS PROVIDING ACCESSIBILITY TO ITS SYSTEM, HAD WORKED TO PROVIDE SPACE IN ITS SYSTEM AND HAD TRANSMITTED ITS GOODS / CALLS / VOICE SIGNALS TO ITS DESTINATION AND THIS WORK IS SUBSTANTIALLY ACHIEVED THROUGH AUTOMATION A ND TECHNOLOGY. HE FURTHER OBSERVED THAT IT IS COMMON KNOWLEDGE THAT WORK OR ANY WORK I S ACCOMPLISHED THROUGH THE APPLICATION OF MANUAL, MENTAL AND MECHANICAL / TECH NOLOGICAL POWER. IN THE MODERN AGE, COMPUTER TECHNOLOGY HAS PERFORMED WORK THAT COULD N OT BE PERFORMED OR ACHIEVED THROUGH MANUAL OR MECHANICAL APPLICATIONS. THE TER M ANY WORK IN SECTION 194C OF THE ACT IS NOT LIMITED TO THE END RESULT ARISING OUT OF MANUAL WORK ABOVE, BUT IS AN ALL INCLUSIVE DEFINITION COVERING ALL SORTS OF ENERGY R ELATABLE TO ANY WORK. THE TX SYSTEM AND THE EXCHANGE SYSTEM OF THE TELECOM OPERATORS AR E ALL PERFORMING WORK AND THE TELECOM OPERATORS ACTION OF RECEIVING, SORTING AND RELEASING THE CALL / VOICE SIGNALS ARE PERFORMANCE OF WORK FOR THE ASSESSEE THROUGH THE AP PLICATION OF SOPHISTICATED TECHNOLOGY AS A TOOL. ACCORDINGLY, WHEN THE TELECOM OPERATORS ALLOW ACCESS, REGULATE SPACE FOR THE TRAFFIC AND TRANSMITS THE CALL / VOICE SIGNALS TO T HEIR DESTINATION, IT CERTAINLY HAD WORKED TO GET THE RESULTS WHICH IT WAS CONTRACTED TO DISCHARG E. ACCORDINGLY, HE CONCLUDED THAT PROVISIONS OF SECTION 194C OF THE ACT WOULD BE APPL ICABLE TO ROAMING CHARGES, PASS THROUGH CHARGES AND INTER OPERATOR CHARGES. HE FU RTHER CONCLUDED THAT PSTN ITA NOS.1101,1102,1291&1292/KOL/20015 CO NOS. 142 & 143/KOL/2005 VODAFONE EAST LIMITED AYS. 2002-03 & 2003-04 6 INTERCONNECT FEES CONSIST OF TWO CHARGES I.E ANNUA L RENT AND GUARANTEE RENTAL AND / OR LEASED LINE CHARGES AND PORT CHARGES I.E REGULAT ING BOOKING / BLOCKING SPACE FOR CALL TRAFFIC. REGULATING SPACE FOR CALL TRAFFIC HAS BEE N ALREADY HELD TO BE PERFORMANCE OF WORK. ACCORDINGLY HE HELD THAT THE COMPONENT OF POR T CHARGES THEREON WOULD FALL UNDER SECTION 194C OF THE ACT. HE HELD THAT ANNUAL RENT AND GUARANTEE RENT FOR THE LEASED LINE I.E FOR OPTIC FIBRE CABLE LINKING TX SYSTEM OF THE ASSESSEE TO THE TX AND EXCHANGE SYSTEM OF BSNL APPEARS TO BE RENTAL AGREEMENT FOR T HE USE OF THE SAME AND SINCE THE CABLE IS NEITHER LAND OR BUILDING OR FITTINGS OF TH E BUILDING, HE HELD THAT THE PROVISIONS OF SECTION 194C AS WELL AS SECTION 194J OF THE ACT WOU LD NOT APPLY. 5. AGGRIEVED, BOTH THE REVENUE AS WELL AS THE ASSE SSEE ARE IN APPEAL BEFORE US. THE REVENUE HAS PREFERRED APPEAL BEFORE US ON THE GROUN D THAT THE PROVISIONS OF SECTION 194J OF THE ACT ALONE COULD BE MADE APPLICABLE IN THE IN STANT CASE AS AGAINST SECTION 194C OF THE ACT HELD BY THE LD CITA. THE ASSESSEE HAS PR EFERRED APPEAL BEFORE US ON THE GROUND THAT THE PROVISIONS OF SECTION 194C OF THE ACT CANN OT BE MADE APPLICABLE TO THE ASSESSEE IN THE INSTANT CASE AS HELD BY THE LD CITA. THE ASS ESSEE HAS ALSO PREFERRED CROSS OBJECTIONS BEFORE US THAT SINCE THE TAXES HAVE ALRE ADY BEEN PAID BY THE RECIPIENT TELECOM OPERATORS ON THE SUBJECT MENTIONED RECEIPTS, HENCE THE ASSESSEE PAYER SHOULD NOT BE TREATED AS ASSESSEE IN DEFAULT U/S 201 OF THE ACT A ND CONSEQUENTIALLY INTEREST U/S 201(1A) OF THE ACT COULD NOT BE CHARGED ON THE ASSESSEE. 6. THE LD AR ARGUED THAT THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASST YEAR 2009-10 AND 2010-11 IN ITA N O. 1864/KOL/2012 ; ITA NO. 243/KOL/2014 & ITA NO. 343/KOL/2014 DATED 15.9.2015 HAD ELABORATELY DISCUSSED THE ASPECT OF APPLICABILITY OF TDS PROVISIONS U/S 194C, 194I AND 194J OF THE ACT IN RESPECT OF THE SUBJECT MENTIONED CHARGES AND ULTIMATELY HEL D THAT THE SAID TDS PROVISIONS ARE NOT APPLICABLE TO THE SUBJECT MENTIONED PAYMENTS. HE STATED THAT THE HONBLE SUPREME COURT IN THE CASE OF CIT VS BHARTI CELLULAR LTD REP ORTED IN 330 TIR 239 (SC) HAD HELD THAT WHETHER HUMAN INTERVENTION IS REQUIRED OR NOT FOR RENDERING THE SERVICES FOR WHICH SUBJECT MENTIONED PAYMENTS WERE MADE IS TO BE EXAMI NED FROM TECHNICAL EXPERT. ACCORDINGLY THE STATEMENTS WERE RECORDED BY ACIT, C IRCLE 51(1), NEW DELHI FROM SHRI TANAY KRISHNA, TECHNICAL EXPERT , GROUP LEADER (PRO JECT PLANNING) AT C-DOT, DELHI IN ITA NOS.1101,1102,1291&1292/KOL/20015 CO NOS. 142 & 143/KOL/2005 VODAFONE EAST LIMITED AYS. 2002-03 & 2003-04 7 CONNECTION WITH THE ASSESSMENT PROCEEDINGS OF M/S V ODAFONE ESSAR MOBILE SERVICES LTD (FORMERLY KNOWN AS HUTCHISON ESSAR TELECOM LTD) FOR THE ASST YEAR 2003-04 ON 29.9.2010. HE ALSO ARGUED THAT SHRI TANAY KRISHNA WAS ALSO CROSS EXAMINED BY THE ASSESSEES REPRESENTATIVE IN THE PRESENCE OF THE LD AO ON THE SAME DAY I.E 29.9.2010. THE RELEVANT EXTRACTS OF THE EXAMINATION AND CROSS EXAMINATION OF SHRI TANAY KRISHNA HAVE BEEN DULY CONSIDERED BY THIS TRIBUNAL WHILE RE NDERING THE DECISION IN ASSESSEES OWN CASE FOR THE ASST YEARS 2009-10 AND 2010-11 SUP RA VIDE ORDER DATED 15.9.2015 AND HELD THAT THE ASSESSEE PAYER IS NOT OBLIGATED TO DE DUCT TAX AT SOURCE EITHER IN TERMS OF SECTION 194C, 194I AND 194J OF THE ACT AND HELD THA T NO HUMAN INTERVENTION IS INVOLVED FOR THESE RENDERING OF SERVICES. 7. THE LEARNED DR VEHEMENTLY ARGUED THAT NO TECHNO LOGY IN WORLD COULD SURVIVE WITHOUT HUMAN INTERVENTION. MOREOVER, WE ARE CONCER NED WITH THE YEAR 2002 FOR THE IMPUGNED ISSUES AT WHICH POINT OF TIME, TECHNOLOGY COULD NOT HAVE BEEN THAT MUCH SOPHISTICATED AS IS PRESENTLY AVAILABLE. HENCE IT WOULD NOT BE CORRECT TO SAY THAT NO HUMAN INTERVENTION WAS REQUIRED FOR RENDERING THE S UBJECT MENTIONED SERVICES AT THAT POINT OF TIME. HE ARGUED THAT THOUGH NOTHING COULD BE SEEN AND EVERYTHING IS AUTOMATED, BUT WITHOUT THE INTERVENTION OF THE HUMAN BEINGS TH E TECHNOLOGY WOULD NOT FUNCTION WITHOUT ANY DEFECTS. THE ASSESSEE PAYS ROAMING CHAR GES FOR SERVICES PROVIDED BY THE OTHER OPERATOR (VISITING OPERATOR) FOR CONNECTIVITY OF TWO MOBILE HANDSETS WHILE ROAMING. THIS IS NOT WIRELESS CONNECTIVITY. WIRELES S CONNECTION IS BETWEEN HANDSET AND CONNECTING TOWER. THEREAFTER IT IS ONLY TRANSMISSIO N LINES THROUGH WHICH THE ELECTRICAL SIGNALS TRAVEL. IT HAS TO BE SEEN THAT HOW THE VOIC E TRAVELS TO THE OTHER MOBILE NETWORK. IT IS PERTINENT TO NOTE THAT THE SOUND DOES NOT TRAVEL . IT GETS CONVERTED INTO ELECTRICAL SIGNALS AND ONLY THOSE SIGNALS TRAVEL TO THE OTHER NETWORK. HE VEHEMENTLY ARGUED THAT THE SUBJECT MENTIONED CHARGES NAMELY ROAMING CHARGES (RS. 2,95, 28,000/-) ; PSTN INTERCONNECT FEES (RS. 1,23,85,000/-) AND PASS THROUGH CHARGES ( RS. 27,22,41,000/-) WOULD FALL UNDER THE AMBIT OF TDS PROVISIONS U/S 194J OF THE ACT AS IT INVOLVES HUMAN INTERVENTION. HE FURTHER ARGUED THAT THE STATEMENTS OF SHRI TANAY KR ISHNA WERE RECORDED IN THE ASSESSMENT PROCEEDINGS OF VODAFONE ESSAR MOBILE SERVICES LTD ( FORMERLY KNOWN AS HUTCHISON ESSAR TELECOM LTD) FOR THE ASST YEAR 2003-04 ON 29.9.2010 . WE ARE NOT AWARE AS TO WHAT ITA NOS.1101,1102,1291&1292/KOL/20015 CO NOS. 142 & 143/KOL/2005 VODAFONE EAST LIMITED AYS. 2002-03 & 2003-04 8 HAPPENED ULTIMATELY IN THAT ASSESSMENT. ACCORDINGL Y, HE PLACED RELIANCE ON THE RECENT DECISION OF CO-ORDINATE BENCH OF MUMBAI TRIBUNAL IN THE CASE OF RELIANCE COMMUNICATIONS LTD VS ACIT REPORTED IN (2016) 69 TA XMANN.COM 307 (MUMBAI-TRIB.) DATED 11.4.2016 WHEREIN THE HEAD NOTES READ AS UNDER:- SECTION 194J, READ WITH SECTION 201, OF THE INCOM E-TAX ACT, 1961 - DEDUCTION OF TAX AT SOURCE - FEES FOR TECHNICAL SERVICES - ASSESSMENT Y EARS 2010-11 AND 2011-12 - ASSESSEE TELECOM OPERATOR SUBMITTED THAT SINCE PAYMENT OF RO AMING CHARGES TO OTHER TELECOM OPERATOR DID NOT REQUIRE ANY HUMAN INTERVENTION, IT COULD NOT BE REGARDED AS FEES FOR TECHNICAL SERVICES REQUIRING TDS UNDER SECTION 194J - IT WAS NOTED THAT ISSUE AS TO WHETHER ROAMING CHARGES PAID BY ASSESSEE TO OTHER TELECOM O PERATOR WAS IN NATURE OF 'FEES FOR TECHNICAL SERVICES' DID NOT REACH FINAL CONCLUSION, IN VIEW OF FACT THAT CASE OF VODAFONE ESSAR MOBILE SERVICES LTD., DATED 31-12-2010 HAD NO T BEEN CONCLUDED BY ANY APPELLATE AUTHORITY OR ANY COURT - WHETHER, THEREFORE, TRIBUN AL SHOULD BE REFRAINED FROM DECIDING ISSUE WHETHER ROAMING CHARGES PAID WERE IN NATURE O F FEES FOR TECHNICAL SERVICES AND ASSESSEE WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER SECTION 194J - HELD, YES - WHETHER, HOWEVER, SINCE ASSESSEE HAD FURNISHED DECLARATION F ROM VARIOUS PAYEES AND HAD ALSO FURNISHED PAN DETAILS AND JURISDICTION IN WHICH PAY EES WERE ASSESSED FOR TAX, ASSESSEE COULD NOT BE TREATED AS 'ASSESSEE-IN-DEFAULT' - HEL D, YES - WHETHER SINCE DEDUCTEES HAD THEMSELVES INCURRED HUGE LOSSES AND THUS, NO INCOME -TAX WAS PAYABLE, ASSESSEE COULD NOT BE HELD TO BE ASSESSEE-IN-DEFAULT NOR NON-DEDUCTION OF TAX WOULD ENTAIL LEVY OF INTEREST UNDER SECTION 201(1A) - HELD, YES [PARAS 13, 14 AND 15] [PARTLY IN FAVOUR OF ASSESSEE/MATTER REMANDED] 7.1. THE LEARNED DR FURTHER ARGUED THE PROVISIONS OF EXPLANATION 2 TO SECTION 9(1)(VII) OF THE ACT. FOR THE SAKE OF CONVENIENCE, IT IS REPRODUCED HEREUNDER: '(VII) INCOME BY WAY OF FEES FOR TECHNICAL SERVICES PAYABLE BY - EXPLANATION 2 - FOR THE PURPOSES OF THIS CLAUSE, 'FEES FOR TECHNICAL SERVIC ES' MEANS ANY CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDERATION) FOR THE RENDERING OF AN Y MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SERVICES OF TE CHNICAL OR OTHER PERSONNEL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBL Y, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOM E OF THE RECIPIENT CHARGEABLE UNDER THE HEAD 'SALARIES'.' HE ARGUED THAT THE TERM 'MANAGERIAL' OR 'CONSULTANC Y' SERVICES DEFINITELY REQUIRE HUMAN INTERVENTION. HENCE THE TERM 'TECHNICAL' WHICH IS S ANDWICHED BETWEEN THE TERM 'MANAGERIAL' AND 'CONSULTANCY' SHOULD BE GIVEN THE SAME MEANING AS HAVING HUMAN INTERVENTION. HE ALSO ARGUED THAT THESE THREE WORDS ARE NOT INTER-CONNECTED. RATHER THEY ARE INDEPENDENT. HE ARGUED THAT THIS ASPECT WAS NOT CONSIDERED BY THE DELHI HIGH COURT IN CIT V. BHARTI CELLULAR LTD. [2009] 319 ITR 139/[2008] 175 TAXMAN 573 WHICH TRAVELLED LATER TO SUPREME COURT WHILE RENDERING TH E JUDGEMENT IN BHARTI CELLULAR LTD. CASE ( SUPRA ). ITA NOS.1101,1102,1291&1292/KOL/20015 CO NOS. 142 & 143/KOL/2005 VODAFONE EAST LIMITED AYS. 2002-03 & 2003-04 9 8. IN DEFENCE, THE LD AR ARGUED THAT THE FOLLOWIN G DECISIONS WERE NOT BROUGHT TO THE NOTICE OF MUMBAI TRIBUNAL WHILE RENDERING THE JUDGE MENT RELIED UPON BY THE LD DR :- VODAFONE EAST LTD REPORTED IN 156 ITD 337 (KOLKATA TRIB) ; DISHNET WIRELESS LTD VS DCIT IN ITA NOS. 320 TO 329 /MAD/2014 DATED 20.7.2015 (CHENNAI TRIB) BHARTI HEXACOM LTD VS ITO TDS IN ITA NO. 656/JP/201 0 DATED 12.6.2015 (JAIPUR TRIB) HE ALSO PLACED RELIANCE ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT TDS BANGALORE VS VODAFONE SOUTH LTD REP ORTED IN (2016) 72 TAXMANN.COM 347 (KARNATAKA) VIDE ORDER DATED 28.7.2016 WHEREIN THE HONBLE KARNATAKA HIGH COURT AFTER CONSIDERING THE DECISIONS OF THE HONBLE APEX COURT IN THE CASE OF CIT VS BHARTI CELLULAR LTD [330 ITR 239 (SC) ] AND CIT VS KOTAK S ECURITIES LTD [(2016) 383 ITR 1 (SC) ] HAD HELD ON THE IMPUGNED ISSUE AS UNDER:- 11. IN OUR VIEW, THE CONTENTION IS NOT ONLY MISCO NCEIVED, BUT IS ON NON EXISTENT PREMISE, BECAUSE THE SUBJECT MATTER OF THE PRESENT APPEALS I S NOT ROAMING SERVICES PROVIDED BY MOBILE SERVICE PROVIDER TO ITS SUBSCRIBER OR CUSTOM ER, BUT THE SUBJECT MATTER IS UTILIZATION OF THE ROAMING FACILITY BY PAYMENT OF ROAMING CHARG ES BY ONE MOBILE SERVICE PROVIDER COMPANY TO ANOTHER MOBILE SERVICE PROVIDER COMPANY. HENCE, WE DO NOT FIND THAT THE OBSERVATIONS MADE ARE OF ANY HELP TO THE REVENUE. 12. AS SUCH, EVEN IF WE CONSIDER THE OBSERVATIONS M ADE BY THE APEX COURT IN THE CASE OF BHARTI CELLULAR LTD., SUPRA, WHETHER USE OF ROAMING SERVICE BY ONE MOBILE SERVICE PROVIDER COMPANY FROM ANOTHER MOBILE SERVICE PROVID ER COMPANY, CAN BE TERMED AS 'TECHNICAL SERVICES' OR NOT, IS ESSENTIALLY A QUEST ION OF FACT. THE TRIBUNAL, AFTER CONSIDERING ALL THE MATERIAL PRODUCED BEFORE IT, HA S FOUND THAT ROAMING PROCESS BETWEEN PARTICIPATING ENTITIES IS FULLY AUTOMATIC AND DOES NOT REQUIRE ANY HUMAN INTERVENTION. COUPLED WITH THE ASPECT THAT THE TRIBUNAL HAS RELIE D UPON THE DECISION OF THE DELHI HIGH COURT FOR TAKING SUPPORT OF ITS VIEW. 13. IN OUR VIEW, THE TRIBUNAL IS ULTIMATELY FACT FI NDING AUTHORITY AND HAS HELD THAT THE ROAMING PROCESS BETWEEN PARTICIPATING COMPANY CANNO T BE TERMED AS TECHNICAL SERVICES AND, THEREFORE, NO TDS WAS DEDUCTIBLE. WE DO NOT FI ND THAT ANY ERROR HAS BEEN COMMITTED BY THE TRIBUNAL IN REACHING TO THE AFORESAID CONCLU SION. APART FROM THE ABOVE, THE QUESTIONS ARE ALREADY COVERED BY THE ABOVE REFERRED DECISION OF THE DELHI HIGH COURT, WHICH HAS BEEN CONSIDERED BY THE TRIBUNAL IN THE IM PUGNED DECISION. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE FACTS WITH RESPECT TO VARIOUS PAYMENTS MADE BY THE ASSESSEE TO OTHER TELECOM OPERATORS REMAIN UNDISPUTED AND HENCE THE S AME ARE NOT REITERATED FOR THE SAKE OF BREVITY. THE SHORT POINT THAT ARISES FOR OUR CO NSIDERATION IS AS TO WHETHER THE SUBJECT MENTIONED PAYMENTS MADE BY THE ASSESSEE WOULD FALL WITHIN THE AMBIT OF TAX DEDUCTION ITA NOS.1101,1102,1291&1292/KOL/20015 CO NOS. 142 & 143/KOL/2005 VODAFONE EAST LIMITED AYS. 2002-03 & 2003-04 10 PROVISIONS EITHER U/S 194C OR U/S 194J OF THE ACT. WE FIND THAT THIS ISSUE HAS BEEN EXAMINED IN DETAIL BY THIS TRIBUNAL IN ITA NO. 1864 /KOL/2012 ; ITA NO. 243/KOL/2014 AND ITA NO. 343/KOL/2014 FOR THE ASST YEARS 2009-10 AND 2010-11 VIDE ORDER DATED 15.9.2015 IN ASSESSEES OWN CASE , WHEREIN IT WAS H ELD THAT :- 4.10 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT WOULD BE PERTINENT TO NOTE HERE THAT ROA MING SERVICES ARE PROVIDED BY OTHER TELECOM OPERATORS BY USING THEIR EXISTING TEL ECOM NETWORK/INFRASTRUCTURE AND NO INCREMENTAL INVESTMENT IS REQUIRED TO PUT UP ANY ADDITIONAL NETWORK/INFRASTRUCTURE FOR PROVISION OF SUCH ROAMIN G SERVICES. THE AFORESAID FACT LENDS FURTHER SUPPORT TO THE CONTENTION THAT ROAMIN G SERVICES ARE STANDARD AUTOMATED SERVICES, WHICH ARE PROVIDED BY OTHER TELECOM OPERA TORS TO SUBSCRIBERS OF VEL USING THE SAME NETWORK/INFRASTRUCTURE AS IS USED BY SUCH OPERATORS FOR PROVISION OF TELECOMMUNICATION SERVICES TO ITS OWN SUBSCRIBERS. THEREFORE, IN ESSENCE, ROAMING SERVICES ARE SIMILAR IN NATURE TO THE TELECOM SERVI CES PROVIDED BY A TELECOM OPERATOR TO ITS OWN SUBSCRIBERS AND HENCE ROAMING CHARGES WO ULD PARTAKE THE SAME CHARACTER AS THE NORMAL TELECOMMUNICATION CHARGES PAID BY A S UBSCRIBER TO ITS SERVICE PROVIDER. 4.11 WE ARE NOT IN AGREEMENT WITH THE ARGUMENTS OF THE L EARNED DR THAT THE WORD 'TECHNICAL' USED IN EXPLANATION 2 TO SECTION 9(1)(V II) OF THE ACT SHOULD TAKE THE SAME CHARACTER OF 'MANAGERIAL' OR 'CONSULTANCY' PROVIDED IN THE SAID SECTION WHEREIN HUMAN INTERVENTION IS REQUIRED AND ACCORDINGLY EVEN FOR TECHNICAL SERVICES, HUMAN INTERVENTION IS DEFINITELY REQUIRED. IN THIS REGARD , THE HON'BLE DELHI HIGH COURT IN THE CASE OF BHARTI CELLULAR LTD (SUPRA) HAD HELD TH AT SINCE THE ENTIRE PROCESS OF MAKING A CALL AND SWITCHING THE CALL FROM ONE NETWO RK TO THE OTHER IS DONE AUTOMATICALLY ON THE BASIS OF MACHINES AND DOES NOT INVOLVE ANY HUMAN INTERFACE, THE INTERCONNECT CHARGES CANNOT BE REGARDED AS FEE FOR TECHNICAL SERVICES (FTS) AND HENCE WOULD NOT FALL IN THE AMBIT OF SECTION 19 4J OF THE ACT. WE FIND THAT ON FURTHER APPEAL BY THE REVENUE TO THE HONBLE SUPREME COURT IN BHARTI CELLULAR LTD (SUPRA), THE HONBLE APEX COURT HAD STATED THAT 'RIG HT FROM 1979 VARIOUS JUDGEMENTS OF THE HIGH COURTS AND TRIBUNAL HAVE TAKEN THE VIEW THAT THE WORDS 'TECHNICAL SERVICES' HAVE GOT TO BE READ IN THE NARROWER SENSE BY APPLYING THE RULE OF NOSCITUR A SOCIIS, PARTICULARLY, BECAUSE THE WORDS 'TECHNICAL SERVICES' IN SECTION 9(1)(VII) R.W. EXPLANATION 2 COMES IN BETWEEN THE WORDS 'MANAGERIA L AND CONSULTANCY SERVICES'. WE FIND THAT THE PRINCIPLES LAID DOWN BY THE DELHI HIGH COURT HAVE BEEN ACCEPTED BY THE APEX COURT AS SUCH AND THE APEX COURT HAS MEREL Y DIRECTED THE TDS OFFICER TO CARRY OUT FACTUAL VERIFICATION TO DETERMINE THE EXT ENT OF HUMAN INVOLVEMENT. BASED ON THIS DIRECTION, THE CBDT HAD ALSO ISSUED INSTRUC TION NO. 5 OF 2011 DATED 30.3.2011 INSTRUCTING THE REVENUE AUTHORITIES TO SE EK OPINION OF TECHNICAL EXPERTS IN CASE OF COMPLEX TECHNICAL MATTERS. 4.12 AS PER THE DIRECTIONS OF THE SUPREME COURT IN THE C ASE OF BHARTI CELLULAR LTD. (SUPRA), THE TDS OFFICER HAS BEEN DIRECTED TO OBTAI N TECHNICAL EVIDENCE FROM THE EXPERTS IN THE TELECOM FIELD WITH REGARD TO THE FAC T OF EXISTENCE OF HUMAN INTERVENTION FOR THE ROAMING SERVICES AND ACCORDINGLY THE ACIT, CIRCLE 51(1), NEW DELHI HAD RECORDED STATEMENT FROM SHRI TANAY KRISHNA ON 29.9. 2010. THE LEARNED AR HAS ALSO FILED PRAYER FOR RECEIPT OF ADDITIONAL EVIDENCE IN TERMS OF RULE 29 OF ITAT RULES ON 20.7.2015 CONTAINING THE STATEMENTS RECORDED FROM S HRI TANAY KRISHNA ON 29.9.2010 ITA NOS.1101,1102,1291&1292/KOL/20015 CO NOS. 142 & 143/KOL/2005 VODAFONE EAST LIMITED AYS. 2002-03 & 2003-04 11 IN THE CASE OF VODAFONE ESSAR MOBILE SERVICES LTD & CROSS EXAMINATION BY VODAFONE ESSAR MOBILE SERVICES LTD ON 29.9.2010. THIS APPLIC ATION UNDER RULE 29 CONTAINS A PRAYER WITH REASONS THAT THESE DOCUMENTS COULD NOT BE FILED BEFORE THE LOWER AUTHORITIES AND THAT THESE DOCUMENTS ARE VERY CRUCI AL FOR THE DISPOSAL OF THE CASE UNDER APPEAL AS THE EXAMINATION OF THE TECHNICAL EX PERTS HAD TAKEN PLACE POST THE PROCEEDINGS BEFORE THE ASSESSING OFFICER AND AS PER THE DIRECTIONS OF THE HON'BLE SUPREME COURT, THESE STATEMENTS WERE RECORDED IN TH E CASE OF THE GROUP COMPANY OF THE ASSESSEE. HOWEVER, IT IS SEEN THAT THE STATEMEN T OF SHRI TANAY KRISHNA ON 29.9.2010 HAVE BEEN RELIED UPON BY THE LEARNED CIT( APPEALS) VIDE PAGE 29 OF HIS ORDER BUT THE CROSS EXAMINATION OF SHRI TANAY KRISH NA IS NOT IN RECORDS OF THE LOWER AUTHORITIES. WE FIND THAT THE STATEMENT IS VERY MUC H RELEVANT FOR THE DISPOSAL OF THESE APPEALS AND ARE HEREBY ADMITTED AS ADDITIONAL EVIDE NCE (IN RESPECT OF CROSS EXAMINATION STATEMENT OF SHRI TANAY KRISHNA ON 29.9 .2010) IN TERMS OF RULE 29 OF ITAT RULES AS THEY GO INTO THE ROOT OF THE ISSUE. 4.13 WE FIND THAT THIS ISSUE NEED NOT BE SET ASIDE TO TH E FILE OF THE LEARNED ASSESSING OFFICER FOR SEEKING FRESH TECHNICAL EVIDENCES FROM EXPERTS AS THE SAME HAD ALREADY BEEN OBTAINED IN THE CASE OF THE GROUP COMPANY OF T HE ASSESSEE AND CBDT HAD ALSO ISSUED INSTRUCTIONS IN THIS REGARD TO SEEK EVIDENCE S. ANY TECHNICAL EVIDENCE OBTAINED IN A CASE CAN BE USED IN THE CASE OF ANOTHER ASSESS EE AS LONG AS THE FACTS AND CIRCUMSTANCES INVOLVED ARE IDENTICAL. IN THE INSTAN T CASE, THE FACTS IN THE CASE OF VODAFONE ESSAR MOBILE SERVICES LTD ARE IDENTICAL WI TH THE FACTS OF THE ASSESSEE HEREIN AND ALSO IT HAPPENS TO BE THE GROUP COMPANY OF THE ASSESSEE. 4.14 SHRI TANAY KRISHNA'S STATEMENTQUESTIONS AND ANSWER S - 4, 5, 6 & 16 ARE REPRODUCED BELOW : QUESTION 4: CAN YOU ENLIGHTEN US ABOUT THE FUNCTION ING OF THE NETWORK SYSTEM OF THE CELLULAR OPERATORS AT THE TIME OF RECEIVING OR PROVIDING INTER-CONNECT SERVICES TO EACH OTHER INCLUDING INSTALLATION, INTE RCONNECTIVITY ETC FROM THE VERY BEGINNING? ANS. 4: AS REGARDS TO INTERCONNECT TO GATEWAY SWITC HES/MSC OF TWO DIFFERENT OPERATORS ARE INTERCONNECTED USING ANY TRANSPORT TE CHNOLOGY WHICH INVOLVES WIRES AS WELL AS HUMAN INTERFACE FOR SETTING UP. IT INVOLVES DIFFERENT PHASES (I) PLANNING PHASE WHERE HOW MUCH CAPACITY REQUIRED AND HOW MUCH TRAFFIC HANDLING CAPACITY IS REQUIRED ON THESE BASIS HARDWARE AND SO FTWARE IS DETERMINED. (II) SELECTION OF VENDOR - IS DONE TO DETERMINE WHO WI LL PROVIDE THESE SERVICES ALONG WITH HIS CONSULTANCY. (III) HARDWARE AND SOFTWARE IS SUPPLIED BY THE VENDOR AND IT IS CUSTOMIZED TO THE NEED OF THE NETWORK AS PER THE TEC SPECIFICATIONS. (IV) INSTALLATION AS PER VENDOR GUIDELINES - IT INVOLV ES INSTALLATION OF BOTH HARDWARE AND SOFTWARE. (V) CALL CONFIGURATION/PROVISIONING OF SYSTEM - IN TH IS THE OPERATOR HAS TO CONFIGURE AND MAKE PROVISION IN DATA BASE AS TO HOW THE CALLS WIL L FLOW. THIS HAS TO BE DON E BY A TECHNICALLY COMPETENT PERSON. (VI) TESTING - IT IS EXHAUSTIVE TESTING. THE CALLS ARE TESTED ON VARIOUS MODES (TERMINATING, LOADING ETC) ON NETWORK PORTION. ITA NOS.1101,1102,1291&1292/KOL/20015 CO NOS. 142 & 143/KOL/2005 VODAFONE EAST LIMITED AYS. 2002-03 & 2003-04 12 (A) SOFTWARE BY HARDWARE TESTING - STAND ALONE TESTIN G (B) INTERCONNECT TESTING - IT IS DONE TO TEST IF IT I S COMPATIBLE WITH OTHER HARDWARE/SOFTWARE. THIS TESTING EMPLOYS TECHNICALLY QUALIFIED PROFESSIONALS AND TESTED AS PER THE AGREED PLAN BETWEEN SERVICES PROV IDER AND VENDOR. QUESTION 5: IN YOUR EXPERT OPINION, DOES THE SYSTEM WORK AUTOMATICALLY WHEN NETWORK SYSTEM OF ONE CELLULAR OPERATOR GETS CONNEC TED WITH THE NETWORK SYSTEM OF OTHER CELLULAR OPERATOR? ANS. 5: WHEN A CALLS GET CONNECTED BY ONE OPERATOR TO OTHER, PER SE IT IS AN AUTOMATIC CONNECTION, BUT THERE CAN BE INSTANCES WH EN THERE IS A PROBLEM IN THE CALL CONNECT WHICH MAY REQUIRE RESOLUTION THROUGH HUMAN INTERVENTION. QUESTION 6: HENCE THERE IS NO 100% AUTOMATIC OPERAT ION OF THIS NETWORK. CAN YOU EXPLAIN WHAT KIND OF HUMAN INTERVENTION IS REQUIRED ? ANS. 6: YES AS I SAID EARLIER IT CAN'T BE 100% FULL Y AUTOMATED. THERE ARE SEVERAL CIRCUMSTANCES UNDER WHICH HUMAN INTERVENTION WOULD BE REQUIRED. I WOULD BRIEFLY TELL YOU ABOUT EACH OF SUCH CIRCUMSTANCES (A) THERE COULD BE A CASE WHERE THERE IS FAILURE IN P HYSICAL HARDWARE. (B) THERE COULD BE A PROBLEM DUE TO SOFTWARE BUG. (C) THERE COULD BE SNAPPING OF FIBRE OPTIC CABLES. IN (A), (B), (C) ABOVE YOU ARE REQUIRED INTERVENTIO N OF TEAMS OF TECHNICAL EXPERTS TO REMEDY THE SITUATION. QUESTION 16: PLEASE TELL US THE PLACES OR POINTS OR AREAS WHERE HUMAN INTERVENTION WITH EACH OTHER? ANS. 16: AS HAS BEEN DETAILED IN SEVERAL ANSWERS TH AT I HAVE GIVEN EARLIER, ONE CAN BROADLY SAY THAT WHEN THERE IS AN INTERCONNECTION B ETWEEN TWO SERVICE PROVIDERS, HUMAN INTERVENTION IS CONSTANTLY REQUIRED FOR MANAG EMENT OF NETWORK/SYSTEM, CAPACITY ENHANCEMENT AND MONITORING OF SYSTEM/NETWO RK. 4.15 CROSS EXAMINATION PROCEEDINGS OF SHRI TANAY KRISHNA - QUESTIONS AND ANSWERS - 3, 4, 5, 7, 11 & 12 ARE REPRODUCED BELOW: Q.3. WHAT IS THE PROCESS OF CARRIAGE OF CALLS ORIGI NATING ON NETWORK OF ONE OPERATOR AND TERMINATING ON THE NETWORK OF THE OTHER OPERATO R? THE CALL FROM ONE NETWORK TO THE OTHER NETWORK FLOW S AUTOMATICALLY, I.E. WITHOUT ANY HUMAN INTERVENTION. ONCE A CALL ORIGINATES, THE CAL L TRAVELS AUTOMATICALLY. IN ESTABLISHMENT OF A CALL, THEREIN NO HUMAN INTERVENT ION I.E., ONCE A SUBSCRIBER DIALS AND THE CALL GETS CONNECTED WITHOUT ANY FAULT, THEN THERE IS NO HUMAN INTERVENTION. INTERVENTION IS REQUIRED ONLY WHEN THE CALL IS NOT SUCCESSFUL, I.E., THE CALL FAILS DUE TO ANY REASON. Q. 4. IS ANY HUMAN INTERVENTION INVOLVED IN THE ENT IRE PROCESS OF CARRIAGE OF CALL FROM ONE OPERATOR TO ANOTHER? NO, AS STATED ABOVE, NO HUMAN INTERVENTION IS REQUI RED IN THE PROCESS OF CARRIAGE OF CALLS. HOWEVER, HUMAN INTERVENTION IS REQUIRED AT T HE INTER-CONNECT SET-UP STAGE (INCLUDING CONFIGURATION, INSTALLATION, TESTING, ET C.) AND CAPACITY ENHANCEMENT, ITA NOS.1101,1102,1291&1292/KOL/20015 CO NOS. 142 & 143/KOL/2005 VODAFONE EAST LIMITED AYS. 2002-03 & 2003-04 13 MONITORING (INCLUDING NETWORK MONITORING), MAINTENA NCE, FAULT IDENTIFICATION, REPAIR AND ENSURING QUALITY OF SERVICE AS PER INTERCONNECT . Q.5. FROM THE PERUSAL OF YOUR ANSWER TO QUESTION 4 OF YOUR STATEMENT, IT APPEARS THAT THE PHASES DESCRIBED THEREON ARE RESTRICTED TO MERELY SETTING-UP OF THE INTER- CONNECT BETWEEN THE NETWORKS OF THE TWO OPERATORS A ND NOT DURING ACTUAL CARRIAGE OF THE CALL BY ONE OPERATOR FOR THE OTHER. PLEASE C ONFIRM. YES. Q.7. FROM PERUSAL OF YOUR ANSWERS TO VARIOUS QUESTI ONS POSED TO YOU BY THE TAX DEPARTMENT, YOU HAVE MENTIONED THAT SERVICES OF A T ECHNICAL EXPERT ARE REQUIRED FOR INTER-CONNECT ARRANGEMENTS. PLEASE CONFIRM WHETHER SUCH SERVICES ARE REQUIRED FOR PROVISION OF INTER-CONNECT SERVICES, I.E., CARRIAGE OF CALLS FROM ONE NETWORK TO ANOTHER, OR ARE PRIMARILY FOR FAULT DETECTION AND R EMOVAL. PLEASE REFER TO ANSWER TO QUESTION 4 OF THIS CROSS EXAMINATION. Q.11. WHAT IS THE EXTENT OF HUMAN INVOLVEMENT IN PR OVISION OF INTERCONNECT SERVICES. I.E., CARRIAGE OF CALLS ORIGINATING ON NETWORK OF O NE OPERATOR AND TERMINATION THE NETWORK OF THE OTHER OPERATOR? WE HAVE ANSWERED IN QUESTION NO 5. Q.12. IN ANSWER TO QUESTION 21 OF YOUR STATEMENT, Y OU HAVE STATED THAT IN CELLULAR NETWORKS THE LEVEL OF HUMAN INTERVENTION IS MUCH HI GHER AND OF SOPHISTICATED TECHNICAL LEVEL. IN THIS REGARD, DO YOU AGREE THAT CELLULAR NETWORKS ARE BASED ON SOPHISTICATED TECHNOLOGY AND WORK ON AN AUTOMATED M ODE? THE HUMAN INTERVENTION AS REFERRED BY YOU FOR NETWORK OPERATIONS IS LIMITE D TO NETWORK MONITORING AND MAINTENANCE AND FAULT REPAIR, RECTIFICATION, ENHANC EMENT, CONFIGURATION, AND SET- UP? WE AGREE THAT THE TELECOM NETWORKS ARE AUTOMATED NE TWORKS AND DO NOT REQUIRE HUMAN INTERVENTION FOR CARRIAGE OF CALLS. HOWEVER, AS STATED IN QUESTION 4 OF THIS CROSS EXAMINATION, HUMAN INTERVENTION IS REQUIRED A T THE INTER-CONNECT SET-UP STAGE (INCLUDING CONFIGURATION, INSTALATION, TESTING, ETC ) AND CAPACITY ENHANCEMENT, MONITORING (INCLUDING NETWORK MONITORING), MAINTENA NCE, FAULT IDENTIFICATION, REPAIR AND ENSURING QUALITY OF SERVICE AS PER INTERCONNECT . 4.16 THE NEXT ARGUMENT OF LEARNED DR THAT ROAMING CHARGE S ARE PAID FOR BOTH INTERCONNECTIVITY AND ALSO FOR USAGE OF TRANSMISSIO N LINES AND HUMAN INTERVENTION IS VERY MUCH INVOLVED WITH REGARD TO USAGE OF TRANSMISSION LINES. WE FIND THAT THE HUMAN INVOLVEMENT IS INVOLVED ONLY WHEN SOMETHING GOES WR ONG IN THE MAINTENANCE OF TRANSMISSION LINES AND FOR CONNECTIVITY PER SE, HUM AN INTERVENTION IS NOT INVOLVED. THIS ISSUE COULD ALSO BE LOOKED INTO FROM THE ANGLE OF A PPLICABILITY OF TDS PROVISIONS ON TRANSMISSION CHARGES/WHEELING CHARGES PAID BY POWER GENERATING COMPANIES. THIS ISSUE HAD REACHED THE CORRIDORS OF VARIOUS JUDICIAL FORUMS AND NOW HAS BEEN PUT TO REST BY THE FOLLOWING DECISIONS: CIT (TDS) V. MAHARASHTRA STATE ELECTRICITY DISTRIBU TION CO. LTD [2015] 375 ITR 23/232 TAXMAN 373/58 TAXMANN.COM 339 (BOM) AURO MIRA BIOPOWER INDIA (P.) LTD. V. ITO TDS [2015] 55 TAXMANN.COM 452/68 SOT 188 (CHENNAI-TRIBUNAL) ITA NOS.1101,1102,1291&1292/KOL/20015 CO NOS. 142 & 143/KOL/2005 VODAFONE EAST LIMITED AYS. 2002-03 & 2003-04 14 DY. CIT V. DELHI TRANSCO LTD. [2014] 52 TAXMANN.COM 261 (DELHI - TRIB.) THE VARIOUS DECISIONS CITED SUPRA HAVE HELD THAT TH ERE WILL BE NO TDS ON TRANSMISSION CHARGES AND THE SAME ANALOGY WOULD APPLY WITH EQUAL FORCE IN THE CASE OF TRANSMISSION CHARGES IN TELECOM INDUSTRY. 4.17 FROM THE AFORESAID STATEMENT RECORDED FROM TECHNICA L EXPERTS PURSUANT TO THE DIRECTIONS OF THE SUPREME COURT IN BHARTI CELLULAR LTD . CASE (SUPRA) WHICH HAS BEEN HEAVILY RELIED UPON BY THE LEARNED CITA, WE FIND TH AT HUMAN INTERVENTION IS REQUIRED ONLY FOR INSTALLATION/SETTING UP/REPAIRING/SERVICIN G/MAINTENANCE/CAPACITY AUGMENTATION OF THE NETWORK. BUT AFTER COMPLETING THIS PROCESS, MERE INTERCONNECTION BETWEEN THE OPERATORS WHILE ROAMING, IS DONE AUTOMATICALLY AND DOES NOT REQUIRE ANY HUMAN INTERVENTION AND ACCORDINGLY CANNOT BE CONSTRUED AS TECHNICAL SERVICES. IT IS COMMON KNOWLEDGE THAT WHEN ONE OF THE SUBSCRIBERS IN THE A SSESSEE'S CIRCLE TRAVELS TO THE JURISDICTION OF ANOTHER CIRCLE, THE CALL GETS CONNE CTED AUTOMATICALLY WITHOUT ANY HUMAN INTERVENTION AND IT IS FOR THIS, THE ROAMING CHARGE S IS PAID BY THE ASSESSEE TO THE VISITING OPERATOR FOR PROVIDING THIS SERVICE. HENCE WE HAVE NO HESITATION TO HOLD THAT THE PROVISION OF ROAMING SERVICES DO NOT REQUIRE ANY HU MAN INTERVENTION AND ACCORDINGLY WE HOLD THAT THE PAYMENT OF ROAMING CHARGES DOES NO T FALL UNDER THE AMBIT OF TDS PROVISIONS U/S 194J OF THE ACT. 4.18 AS FAR AS THE APPLICABILITY OF PROVISIONS OF SECTIO N 194C ARE CONCERNED, WE HOLD THAT THE PROVISIONS OF SECTION 194C OF THE ACT WOUL D BECOME APPLICABLE ONLY WHERE SOME WORK (WORKS CONTRACT) IS BEING CARRIED OUT AND THER E IS SOME HUMAN INTERVENTION INVOLVED IN THE CARRIAGE OF SUCH WORK. THE TERM 'WO RK' IS DEFINED IN SECTION 194C AS FOLLOWS: 'WORK SHALL INCLUDE: (A) ADVERTISING; (B) BROADCASTING AND TELECASTING INCLUDING PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING; (C) CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TR ANSPORT OTHER THAN BY RAILWAYS; (D) CATERING; (E) MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF THE CUSTOMER BY USING MATERIAL PURCHASED FROM SU CH CUSTOMER, BUT DOES NOT INCLUDE MANUFACTURING OR SUPPLYING A PRODUCT ACCORD ING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCH ASED FROM A PERSON, OTHER THAN SUCH CUSTOMER.' WE HOLD THAT 194C IS APPLICABLE ONLY WHERE ANY SUM IS PAID FOR CARRYING OUT ANY WORK INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WOR K. THUS, 'CARRYING OUT ANY WORK' IS THE SUBSTANCE FOR MAKING THE PAYMENT RELATING TO SU CH WORK, LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT. FOR CARRYING OUT ANY WORK, MANPOWER IS SINE QUA NON AND WITHOUT MANPOWER, IT CANNOT BE SAID THAT WORK HAS B EEN CARRIED OUT. UNDER SECTION 194C EACH AND EVERY WORK/SERVICE IS NOT COVERED, HENCE T HE NATURE OF WORK DONE OR SERVICE PERFORMED IS REQUIRED TO BE SEEN. MOREOVER, THE TER M 'WORK' IS DEFINED IN SECTION 194C OF THE ACT. THE WORD 'WORK' IN SECTION 194C REFERRED T O AND COMPREHENDS ONLY THE ACTIVITIES OF WORKMAN. IT IS THE PHYSICAL FORCE WHICH HAS COMP REHENDED IN THE WORD 'WORK'. WE HAVE ALREADY HELD THAT THE PAYMENT OF ROAMING CHARG ES DOES NOT REQUIRE ANY HUMAN ITA NOS.1101,1102,1291&1292/KOL/20015 CO NOS. 142 & 143/KOL/2005 VODAFONE EAST LIMITED AYS. 2002-03 & 2003-04 15 INTERVENTION. HENCE IN THE ABSENCE OF HUMAN INTERVE NTION, THE SERVICES RENDERED IN THE CONTEXT OF THE IMPUGNED ISSUE DOES NOT FALL UNDER T HE DEFINITION OF 'WORK' AS DEFINED IN SECTION 194C AND HENCE THE PROVISIONS OF SECTION 19 4C ARE NOT APPLICABLE TO THE IMPUGNED ISSUE. 9.1. WE FIND THAT THERE IS NO DISPUTE ON THE NON-A PPLICABILITY OF PROVISIONS OF SECTION 194I OF THE ACT IN THE INSTANT CASE. WE ALSO DRAW SUPPORT OF OUR FINDING FROM THE DECISION OF DELHI TRIBUNAL IN THE CASE OF BHARTI AIRTEL LIMITED & ANR VS ITO & ANR IN ITA NOS. 3593 TO 3596/DEL/2012 AND ITA NOS. 4076 TO 4079/DEL/2012 DATED 17.3.2016 REPORTED IN (2016) 46 CCH 0304 DELTRIB , WHEREIN THEY HAVE HELD THAT THE SUBJECT MENTIONED PAYMENTS DO NOT FALL UNDER THE AMBIT OF FEE FOR TECHNICAL SERVICES OR UNDER ROYALTY U/S 194J OF THE ACT. 9.2. WE ALSO DRAW SUPPORT FROM THE RECENT DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT, TDS BANGALORE VS VODAFONE SOUTH LTD REPORTED IN (2016) 72 TAXMANN.COM 347 (KARNATAKA) VIDE ORDER DATED 28.7.2 016 , WHEREIN THE HEAD NOTES READ AS UNDER:- SECTION 194J , READ WITH SECTION 201 OF THE INCOME TAX ACT, 1961 DEDUCTION OF TAX AT SOURCE FEES FOR PROFESSIONAL OR TECHNICAL SERVICES (ROAMING CHARGES) ASESSMENT YEARS 2005-06 TO 2012-13 ASSESSEE WAS A MOBILE SERVICE PROVIDER COMPANY WHETHER PAYMENT MADE BY ASSESSEE TO ANOTH ER MOBILE SERVICE PROVIDER COMPANY FOR UTILIZATION OF ROAMING MOBILE DATA AND CONNECTIVITY COULD NOT BE TERMED AS TECHNICAL SERVICE AS ROAMING PROCE SS BETWEEN PARTICIPATING ENTITIES WAS FULLY AUTOMATIC AND DID NOT REQUIRE AN Y HUMAN INTERVENTION AND, THEREFORE, NO TDS WAS DEDUCTIBLE HELD, YES (PARAS 12 & 13 ) [IN FAVOUR OF ASSESSEE]. 9.3. RESPECTFULLY FOLLOWING THE AFORESAID DECISION S, WE HOLD THAT THERE IS NO OBLIGATION TO DEDUCT TAX AT SOURCE FOR THE ASSESSEE PAYER IN T ERMS OF SECTION 194C OR 194J OF THE ACT AND HENCE THE ASSESSEE CANNOT BE TREATED AS ASSESS EE IN DEFAULT U/S 201 OF THE ACT. HENCE CONSEQUENTIALLY THE INTEREST U/S 201(1A) OF T HE ACT CANNOT BE CHARGED ON THE ASSESSEE IN THE INSTANT CASE. SINCE WE HAVE DECID ED THE ISSUE AT THE THRESHOLD LEVEL ITSELF, THE OTHER GROUNDS RAISED BY THE ASSESSEE IN HIS CRO SS APPEAL AS WELL AS IN CROSS OBJECTIONS THAT THE PAYEE HAD CONSIDERED THESE RECEIPTS IN ITS RETURNS AND HENCE THE ASSESSEE SHOULD NOT BE TREATED AS ASSESSEE IN DEFAULT, BECOMES INF RUCTUOUS AND WE REFRAIN TO GIVE OUR FINDINGS THEREON. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE IN ITS CROSS APPEAL AS ITA NOS.1101,1102,1291&1292/KOL/20015 CO NOS. 142 & 143/KOL/2005 VODAFONE EAST LIMITED AYS. 2002-03 & 2003-04 16 WELL AS IN CROSS OBJECTIONS FOR THE ASST YEARS 2002 -03 AND 2003-04 ARE ALLOWED AND THAT OF THE REVENUE ARE DISMISSED. 9.4. THE DECISION RENDERED FOR ASST YEAR 2002-03 W OULD APPLY WITH EQUAL FORCE FOR ASST YEAR 2003-04 ALSO AS IDENTICAL FACTS ARE INVOL VED EXCEPT WITH VARIANCE IN FIGURES. 10. IN THE RESULT, THE APPEALS AND CROSS OBJECTION S OF THE ASSESSEE FOR THE ASST YEARS 2002-03 AND 2003-04 ARE ALLOWED AND APPEALS OF THE REVENUE ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 16.11.2016 . SD/- SD/- (S.S. VISWANETHRA RAVI) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 16TH NOVEMBER, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT VODAFONE EAST LTD., 11, DR. U. N. BRAHM ACHARI STREET, KOLKATA-17 2 RESPONDENT ACIT, CIRCLE-57, KOLKATA 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .