Ushodaya Enterprises Private Limited, Hyderabad V. ACIT., Circle-15(2), Hyderabad, Hyderabad

ITA 1820/HYD/2014

• Counselvise Citation: 182022514 RSA 2014
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-04-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 03-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G APARNA RAO
• Assessee Lawyers: V SIVA KUMAR
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.1820/HYD/2014 : ASSESSMENT YEAR 200 2 - 0 3 ITA NO.1821/HYD/2014 : ASSESSMENT YEAR 200 3 - 0 4 M/S. USHODAYA ENTERPRISES PRIVATE LIMITED, HYDERABAD (PAN AAACU 2690 P) V/S. ASSTT. COMMISSIONER OF INCOME - TAX CIRCLE 15(2), HYDERABAD (APPELLANT) (RESPONDENT) ITA NO.1858/HYD/2014 : ASSESSMENT YEAR 200 2 - 0 3 ITA NO.1859/HYD/2014 : ASSESSMENT YEAR 200 3 - 0 4 ASSTT. COMMISSIONER OF INCOME - TAX CIRCLE 15(2), HYDERABAD V/S. M/S. USHODAYA ENTERPRISES PRIVATE LIMITED, HYDERABAD (PAN AAACU 2690 P) (APPELLANT) (RESPONDENT) ASSESSEE BY : S HRI V.SIVAKUMAR DEPARTMENT BY : SMT. G.APARNA RAO DR DATE OF HEARING 22.4.2015 DATE OF PRONOUNCEMENT 24.4.2015 O R D E R PER BENCH : THESE FOUR APPEALS, TWO FILED BY THE ASSESSEE, BEING ITA NO. 1820 AND 1821/HYD/2014 AND TWO FIL E D BY THE R EV ENUE BEING I TA NOS.1858 AND 1859/HYD/2014 ARE CROSS APPEALS, WHICH ARE DIRECTED AGAIN S T THE COMMON ORDER OF THE LEARNED CIT(A) II, HYDERABAD DATED 4.9.2014, WHEREBY SHE DISPOSED OF THE APPEALS FIL E D BY THE ASSESSEE AGAINST T HE O R DERS PASSED BY THE ASSESSING I TA NO .1820/H YD/20 14 & THREE OTHERS M/S.USHODAYA ENTERPRISES PRIVATE LIMITED, HYDERABAD 2 OFFICER UN D ER S.201(1)/201(1A) OF THE ACT FOR THE ASSESSMENT YEARS 2002 - 03 AND 2003 - 04. 2. THE ASSESSEE IN THE PR E SEN T CA S E IS A COMPANY W H ICH IS EN G AGED IN THE BU S IN E SS OF PUBLISHING OF NEWSPAPERS, MANUFACTURING OF FOOD ITEMS, DAIRY PRO D U C TS AND ELECTRONIC MEDIA, I.E. TV CHANNEL, ETC. A SURVEY IN THE C A S E OF ASSESSEE WAS CARRIED OUT ON 3.3.2006. THE FINDINGS OF THE SURVEY AS WELL AS FURTHE R ENQUIRIES MADE BY THE ASSESSING OFFICER REVEALED THAT THERE WAS FAILU R E ON THE P A RT OF THE ASSESSEE IN DEDUCTING TAX AT SOURCE FROM CERTAIN PAYM E N T S MADE DURING THE YEARS UN D ER CON S IDERA T ION. IN CA S E OF CERTAIN PAYM E N T S, THE ASSESSEE WAS ALSO FOUND T O HAVE DEDUCTED TAX AT SOU R CE AT LOWER RATE THAN PRESCRIBED IN THE STATUTE. ACCOR D INGLY, ORDERS UN D ER S.201(1) AND 201(1A) WER E PASSED BY THE ASSESSING OFFICER FOR BOTH THE Y E ARS UN DE R CON S I DERA TION, T REATING THE ASSESSEE AS IN DEFAULT FOR NON - DEDUC T ION OR SHO R T DEDUCTION OF TAX AT SOU R CE FROM THE VARIOU S PAYM E N T S AS UN D ER - ASSESSMENT YEAR 2002 - 03 HEAD DEFAULT U/S.201(1) INTEREST U/S. 201(1A) TOTAL DISCOUNT 35228985 25364869 60593854 NEWS SERVICE AGENCY 7260934 5227872 12488806 BAND WIDTH 784308 564702 1349010 TR A NSPONDER RENT 18442348 13278491 31720839 INTERNET 109829 79077 188906 SOFTWARE 5243680 3775449 9019130 DATA CIRCUIT RENTAL 2093589 1507384 3600972 GRAND TOTAL 69163673 49797844 118961517 I TA NO .1820/H YD/20 14 & THREE OTHERS M/S.USHODAYA ENTERPRISES PRIVATE LIMITED, HYDERABAD 3 ASSESSMENT YEAR 200 3 - 0 4 HEAD DEFAULT U/S.201(1) INTEREST U/S. 201(1A) TOTAL DISCOUNT 18436709 11062026 29498736 NEWS SERVICE AGENCY 7870092 4722056 12592148 BAND WIDTH 827698 496619 1324316 TRANSPONDER RENT 1891 89 31 10691358 28510289 INTERNET 106791 64075 170866 SOFTWARE 6662009 3997206 10659214 DATA CIRCUIT RENTAL 3174612 1904767 5079380 GRAND TOTAL 54896842 32938107 87834949 3. AGAIN S T THE ORDERS PASSED BY THE ASSESSING OFFICER UN D ER S.201(1)/201(1A) FOR BOTH THE YE A RS UN D ER CON S I D ERA T ION, APP E ALS W E RE PREF E RRED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) AND AFTER CON S I D ERING THE SUBMI S SION S MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LEARNED CIT(A) HELD THAT THE ASSESSEE WAS NO T REQUIRED TO DEDUCT TAX AT SOU R CE F R OM THE PAYMENTS MADE ON ACCOUNT OF DISCOUNTS, DATA CIRCUIT RENTALS, BANDWIDTH CHARGES, INTERNE T CHARGES AND TRANSPONDER RENT. AS REGAR D S THE PAYMENTS MADE BY THE ASSESSEE ON ACCOUN T OF NEWS SERVICE AGENCIES AND SOFTWARE EXPEN S ES, THE LEARNED CIT(A) HO WE VER , HELD THAT THE ASSE SSEE WAS RE Q UIRED TO DEDUCT TAX AT SOU R CE F R OM TH E SAID PAY ME N T S AND HAVING FAILED TO DO SO, IT WAS RIGHTLY TR E ATED BY THE ASSESSING OFFICER AS ASSESSEE IN DEFAULT UNDER S.201(1). AC C OR D INGLY, THE APPEALS FIL E D BY THE ASSESSEE FOR BOTH THE YE A RS UN D ER CON S I DE RATION WERE PARTLY ALLO W E D BY THE LEARNED CIT(A), VIDE H I S COMMON APPELL A TE ORDER DATED 4.9.2014, WHICH IS IMPUGN E D BY BOTH THE RE VENUE AND THE ASSESSEE IN THE PR E S E N T APPEALS FIL E D BEFORE THE TRIBUNAL, ON THE FOLLO W IN G GROUNDS, WHICH ARE IDENTICAL IN BOTH THE YEARS UN D ER CON S I DE RATION. I TA NO .1820/H YD/20 14 & THREE OTHERS M/S.USHODAYA ENTERPRISES PRIVATE LIMITED, HYDERABAD 4 ASSESSEE APPEAL S : 1 . T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - II, HYDERABAD DATED 04 - 09 - 2014 IS ERRONEOUS, CONTRARY TO LAW AND FACTS OF THE CASE . 2 . A) COMMISSIONER INCOME TAX (APPEALS) - II GROSSLY ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER TREATING THE APPELLANT AS DEFAULTER U/S . 201(1) R.W . S . 194J FOR NON - DEDUCTION OF TDS ON PAYMENTS MADE BY THE APPELLANT TO NEWS SERVICE AGENCIES HOLDING THAT SUCH PAYMENTS ARE IN THE NATURE OF PROFESSIONAL AND TECH NICAL SERVICES AND THEREFORE ATTRACT THE PROVISIONS OF SECTION 194J OF THE ACT. B) COMMISSIONER OF INCOME TAX (APPEALS) - II, OUGHT TO HAVE SEEN THAT THE CONTRACTS ENTERED INTO BY THE APPELLANT WITH VARIOUS NEWS AGENCIES IS FOR COLLECTION OF FIRST HAND NE WS AND PROVIDING THEM TO THE APPELLANT ON ITS OWN PRESENTS SUCH NEWS INCLUDING EDITING, CAPSULING OR MANAGING IN ANY MANNER SUITABLE FOR PUBLICATION OR TELECAST ON ITS OWN EQUIPMENT. THEREFORE THE PROVISIONS OF SECTION 194J ARE NOT ATTRACTED TO SUCH PAYME NTS MADE TO THE NEWS AGENCIES SINCE NO TECHNICAL SERVICES ARE RENDERED BY THEM EXCEPT PROVIDING RAW NEWS TO THE APPELLANT. C) COMMISSIONER OF INCOME TAX (APPEALS) IN THE ALTERNATIVE, OUGHT TO HAVE SEEN THAT SINCE NEWS SERVICE AGENCIES HAVE FILED THEIR RETURN OF INCOME CONSIDERING THE SERVICE CHARGES AS THEIR INCOME AND PAID TAXES THEREON THERE IS NO LOSS TO THE RE'VENUE AND HENCE THERE IS NO JUSTIFICATION IN TREATING THE APPELLANT AS DEFAULTER U/S.201 (1) AND 201 (1A) OF THE ACT 3. A) COMMISSIONER IN COME TAX (APPEALS) - II GROSSLY ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN TREATING THE APPELLANT AS DEFAULTER U/S.201 (1) TVS.S. 194C FOR NON - DEDUCTION OF TDS ON SOFTWARE EXPENSES PAID BY THE' APPELLANT TO USHA KIRON TELEVISION, USHA KIRON MOV IES AND OTHER PARTIES HOLDING THAT THE PROVISIONS OF SEC, 194C ARE ATTRACTED TO SUCH PAYMENTS . , B) COMMISSIONER INCOME TAX (APPEALS) - II GROSSLY ERRED IN STATING THAT THE ASSESSEE COMPANY ENTERED INTO I TA NO .1820/H YD/20 14 & THREE OTHERS M/S.USHODAYA ENTERPRISES PRIVATE LIMITED, HYDERABAD 5 AGREEMENT WITH USHA KIRON TELEVISION AND USHA KIRON M OVIES FOR PRODUCTION OF TV SERIALS/PROGRAMMES TO BE TELECAST BY THE APPELLANT . C) COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE SEEN THAT IT HAD ENTERED INTO AGREEMENTS WITH USHA KIRON TELEVISION, USHA KIRON MOVIES AND OTHERS ONLY FOR TELECASTING THEIR PROGRAMMES THROUGH THE APPELLANT'S TV CHANNELS ON AN UNDERSTANDING THAT THE REVENUE GENERATED ON ADVERTISEMENTS FOR TIME SLOTS DURING TELECASTING OF THE SAID PROGRAMMES SHALL BE SHARED BETWEEN THEM AND NOT FOR PRODUCTION OF TV SERIALS/ PROGRAMMES AN D HENCE SUBJECTING TO TDS THE SHARE OF REVENUE GIVEN TO THE S AID PARTIES INVOKING THE PROVISIONS OF SECTION 194C IS NOT ALL JUSTIFIED. D) COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE PROVISIONS OF SECTION 194C ARE NOT ATTRACTED TO TH E TRANSACTION BETWEEN THE APPELLANT AND USHA KIRON TELEVISION, USHA KIRON MOVIES AND OTHERS FOR THE REASON THE SAID PARTIES DID NOT CARRY OUT ANY WORK FOR THE APPELLANT WITHIN THE MEANING OF THE PROVISIONS OF SECTION 194C OF THE ACT. E) COMMISSIONER OF INCOME TAX APPEALS (APPEALS), WITHOUT PREJUDICE TO THE ABOVE, OUGHT TO HAVE SEEN THAT SINCE USHA KIRON MOVIES AND USHA KIRON TELEVISION HAVE FILED THEIR RETURNS OF INCOME CONSIDERING THE AMOUNTS PAID BY THE APPELLANT TOWARDS SHARE OF REVEN UE FOR THEIR PROGRAMMES TELECAST BY THE APPELLANT AS THEIR INCOME AND PAID THE TAXES THEREON, THERE IS NO LOSS TO THE REVENUE AND HENCE THERE IS NO JUSTIFICATION TREATING THE APPELLANT AS DEFAULTER U/S.201 (1) AND 201 (1 A) OF THE ACT BY THE ASSESSING OFF ICER. 4. FOR ALL OF THE ABOVE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING IT IS MOST RESPECTFULLY PRAYED THAT THIS HON'BLE TRIBUNAL MAY BE PLEASED TO ALLOW THE APPEAL BY DELETING THE ADDITIONS SUSTAINED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE INTEREST OF JUSTICE REVENUES APPEAL S : 1 ) WHETHER ON THE FACTS AND CIRCUMSTANCES, THAT CIT(A).II, HYDERABAD ERRED IN LAW IN HOLDING THAT THERE WAS NO PRINCIPAL I TA NO .1820/H YD/20 14 & THREE OTHERS M/S.USHODAYA ENTERPRISES PRIVATE LIMITED, HYDERABAD 6 AGENT RELATIONSHIP BETWEEN THE ASSESSEE AND THE ADVERTISING COMPANIES. 2 ) WHETHER ON THE FACTS AND CIRCUMSTANCES, THE CIT(A).II, HYDERABAD ERRED IN COMING TO THE CONCLUSION THAT THE AMOUNT RETAINED BY THE ADVERTISING AGENCIES DID NOT PARTAKE THE CHARACTER OF 'COMMISSION' AND THE PROVISIONS OF 194H WERE THEREFORE NOT APPLICABLE. 3 ) WHETHER ON THE FACTS AND CIRCUMSTANCES, THE CIT(A).II, HYDERABAD ERRED IN HOLDING THAT DATA CIRCUIT RENTALS DID NOT CONSTITUTE TECHNICAL SERVICES, THEREBY ATTRACTING THE PROVISIONS OF SEC.194J OF THE ACT . 4 ) WHETHER ON THE FACTS AND CIRCUMSTANCES, THE CIT(A ).II, HYDERABAD ERRED IN DELETING THE ADDITIONS MADE ON ACCOUNT OF UTILIZING THE BAND WIDTH PROVIDED TO THE AS S ESSEE. 5 ) WHETHER ON THE FACTS AND CIRCUMSTANCES, THE CIT(A).II, HYDERABAD ERRED IN DELETING THE ADDITIONS MADE ON ACCOUNT OF INTERNET CHARGES. 6 ) WHE THER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE , CIT(A) . II , HYDERABAD ERRED IN LAW IN HOLDING THAT PAYMENT OF TRANSPONDER RENT WAS NEITHER ROYALTY NOR FEE FOR TECHNICAL SERVICES. 7 ) ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. LET US FIRST TAKE UP THE APPEALS OF THE ASSESSEE FOR CONSIDERATION , IN WHICH GROUNDS NO.1 AND 4 ARE GENERAL AND DO NOT REQUIRE SPECIFIC ADJUDICATION. AS REGAR DS THE ISSUE INVOLVED IN GROUNDS 2(A) AND 2(B) RELATING TO TDS LIABILITY UNDER S.194J OF THE ACT IN RESPECT OF PAYMENTS MADE TO NEWS SERVICE AGENCIES, LEARNED REPRESENTATIVES FOR BOTH THE SIDES HAVE AGREED THAT IT IS COVERED BY THE DECISION OF THE TRIBUNAL DATED 23.3.2012 IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2004 - 05 TO 2006 - 07 IN ITA NO.1699 TO 1701/HYD/2008 AND 1706 TO 170 8 /HYD/2008 . THE TRIBUNAL FOR THOSE YEARS HAS DECIDED THIS ISSUE AGAINST THE ASSESSEE VIDE PARA 40 OF ITS ORDER DATED 23.3.2012, WHICH READS AS FOLLOWS - I TA NO .1820/H YD/20 14 & THREE OTHERS M/S.USHODAYA ENTERPRISES PRIVATE LIMITED, HYDERABAD 7 40. WE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE ARE UNABLE TO APPRECIATE THAT NO PROFESSIONAL SERVICES ARE RENDERED BY THE REPORTERS IN COLLECTING THE DATA FOR PUBLI CATION OF NEWS. THE WORK CARRIED OUT BY NEWS PAPER AGENTS REQUIRES PROFESSIONAL QUALIFICATIONS AND SKILLS. THOUGH, THE DATA COLLECTED BY SUCH REPORTERS HAS TOBE REVIEWED GLOSSED UP AND MADE FIT TO BE PUBLISHED/PRESENTED. NEVERTHELESS, PROCUREMENT OF THE BASIC DATA CANNOT BE DONE WITHOUT QUALIFIED REPORTERS WHO UTILISE THEIR PROFESSIONAL SKILLS FOR COLLECTION OF THE SAME. FURTHER, THE NEWSPAPERS EMPLOY REPORTERS WHO HAVE BEEN TRAINED TO HAVE INTERROGATIVE ABILITY, PRESENCE OF MIND AND HAVE SPECIALISED IN A WAY FOR DOING THEIR WORK AND HENCE THEY ARE RENDERING WORK IN THEIR PROFESSIONAL CAPACITY. HENCE WE AGREE WITH THE CIT(A) IN DEDUCTING TDS U/S 194J AND NOT UNDER SECTION 194C AND DISMISS THE ASSESSEES APPEAL ON THIS ISSUE. THE ASSESSEES APPEAL IS DISMISSED ON THIS ISSUE. F ACTS AND CIRCUMSTANCES OF THE CASE FOR THE YEARS UNDER CONSIDERATION BEING SIMILAR TO THOSE CONSIDERED BY THE TRIBUNAL IN THE ABOVE DECISION FOR THE ASSESSMENT YEARS 2004 - 05 TO 2006 - 07, RESPECTFULLY FOLLOWING THE SAID DECISION, WE UPHOLD THE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE, AND DISMISS GROUNDS NO.2(A) AND 2(B) OF THE ASSESSEE IN THESE APPEALS. 5. AS REGARDS GROUND NO.2(C) OF THE ASSESSEES APPEALS, RELATING TO ITS ALTERNATIVE CLAIM, LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE INVOLVED THEREIN WAS ALSO RAISED BY THE ASSESSEE IN GROUND NO.3(D) OF ITS APPEALS FILED BEFORE THE LEARNED CIT(A). HE HAS SUBMITTED THAT T HE LEARNED CIT(A) HOWEVER, HAS NOT DECIDED THE SAME, AND THIS POSITION CLEARLY EVIDENT FROM THE IMPUGNED ORDER OF THE LEARNED CIT(A) IS NOT DISPUTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. WE THEREFORE, REMIT THIS ISSUE INVOLVED IN GROUND NO.2(C) OF TH E ASSESSEES APPEALS RELATING TO ITS ALTERNATIVE CLAIM, TO THE LEARNED CIT(A) FOR DECIDING THE SAME ON MERITS IN ACCORDANCE WITH LAW AFTER GIVING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. I TA NO .1820/H YD/20 14 & THREE OTHERS M/S.USHODAYA ENTERPRISES PRIVATE LIMITED, HYDERABAD 8 6. AS REGARDS THE ISSUE INVOLVED IN GROUNDS 3(A) TO 3( D ) RELATING TO TDS LIABILITY IN RESPECT OF PAYMENTS MADE ON ACCOUNT OF SOFTWARE EXPENSES, LEARNED REPRESENTATIVES FOR BOTH THE SIDES HAVE AGREED THAT I T IS COVERED BY THE DECISION OF THE TRIBUNAL DATED 23.3.2012 IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR S 2004 - 05 TO 2006 - 07 IN ITA NO.1699 TO 1701/HYD/2008 AND 1706 TO 170 8 /HYD/2008 . THE TRIBUNAL HAS DECIDED THIS ISSUE AGAINST THE ASSESSEE FOR THOSE YEARS VIDE PARA 48 ITS ORDER DATED 23.3.2012, WHICH READS AS FOLLOWS - 48. WE HEARD BOTH THE PARTIE S AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE PROFIT AND LOSS ACCOUNT IT WAS SEEN THAT IN THE ETV TELUGU DIVISION AND ETV OTHER CHANNEL DIVISION, THE ASSESSEE HAS MADE PAYMENTS TOWARDS SOFTWARE EXPENSES. THESE PAYMENTS ARE FURTHER SUBDIVIDED INTO REVENUE SHARE. OTHER PROGRAMMES AND DIRECT PURCHASES. EXPENSES TOWARDS REVENUE SHARES ARE TOWARDS THE AGREED COST FOR PRODUCTION OF TV SERIALS/PROGRAMMES. FROM THE AGREEMENTS WITH OTH ER PARTIES, IT CAN BE CONCLUDED THAT THE ASSESSEE IS ASSOCIATING ITSELF WITH THE PRODUCERS FOR GETTING THE PROGRAMMES TELECASTED ON ETV CHANNEL AND THEREBY THE ASSESSEE GETS A SOURCE FOR GENERATING ADVERTISEMENT REVENUE. HEN CE THE ASSESSEE IS MAKING PAYMENTS TO VARIOUS AGENCIES ON REVENUE SHARING BASIS FROM THE INCOME GENERATED THROUGH ADVERTISEMENTS BY WAY OF TELECASTING THE SERIALS OR PROGRAMMES PRODUCED BY THE AGENCIES. THE MODE OF PAYMENT IS NOTHING BUT A PAYMENT FOR CONTRACT OF WORK AND IS SQUARELY COVERED BY EXPLANATION III TO SECTION 194C WHICH SAYS WORK SHALL INCLUDE PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING. IN VIEW OF THE SAME, WE HOLD THAT THE NATURE OF PAYME NTS FALL WITHIN THE PURVIEW OF SECTION 194C. THEREFORE, WE UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE. FACTS AND CIRCUMSTANCES OF THE CASE FOR THE YEARS UNDER CON S I DE RATION BEING SIMILAR TO THOSE CONSIDERED BY THE TRIBUNAL IN THE ABOVE DECISION FOR THE ASSESSMENT YEARS 2004 - 05 TO 2006 - 07, RESPECTFULLY FOLLOWING THE SAID DECISION, WE UPHOLD THE IMPUGNED I TA NO .1820/H YD/20 14 & THREE OTHERS M/S.USHODAYA ENTERPRISES PRIVATE LIMITED, HYDERABAD 9 ORDER OF THE CIT(A) ON THIS ISSUE, AND DISMISS GROUNDS NO. 3 ( A ) TO 3 ( D ) OF THE ASSESSEE IN THESE APPEALS. 7. AS REGARDS GROUND NO.3(E) OF THE ASSESSEES APPEALS, RELATING TO ITS ALTERNATIVE CLAIM, LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE INVOLVED THEREIN WAS ALSO RAISED BY THE ASSESSEE IN GROUND NO.7(F) OF ITS APPEALS FILED BEFORE THE LEARNED CIT(A). HE HAS SUBMITTED THAT THE LEARNED CIT(A) HOWEVER, HAS NOT DECIDED THE SAME, AND THIS POSITION CLEARLY EVIDENT FROM THE IMPUGNED ORDER OF THE LEARNED CIT(A) IS NOT DISPUTED BY THE LEARNED DEPARTMENTA L REPRESENTATIVE. WE THEREFORE, REMIT THIS ISSUE INVOLVED IN GROUND NO.3(E) OF THE ASSESSEES APPEALS RELATING TO ITS ALTERNATIVE CLAIM, TO THE LEARNED CIT(A) FOR DECIDING THE SAME ON MERITS IN ACCORDANCE WITH LAW AFTER GIVING SUFFICIENT OPPORTUNITY OF HE ARING TO THE ASSESSEE. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES . 9. NOW TAKING UP THE APPEAL S OF THE REVENUE, AS REGARDS THE ISSUE INVOLVED IN GROUNDS 1 AND 2 RELATING TO NON DEDUCTIO N OF TAX AT SOURCE IN RESPECT OF DISCOUNTS ON ADVERTISEMENTS, LEARNED REPRESENTATIVES FOR BOTH THE SIDES HAVE AGREED THAT IT IS COVERED BY THE DECISION OF THE TRIBUNAL DATED 23.3.2012 IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2004 - 05 TO 2006 - 07 IN ITA NO .1699 TO 170 8 /HYD/2008 AND 1706 TO 1701/HYD/2008 . THE TRIBUNAL FOR THOSE YEARS HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE VIDE PARA 9 OF ITS ORDER DATED 23.3.2012, WHICH READS AS FOLLOWS - 9. WE HEARD BOTH THE PART IES. WE HAVE PERUSED THE ORDER OF THE DELHI BENCH C WHEREIN IT HAS BEEN DECIDED IN M/S TV I TA NO .1820/H YD/20 14 & THREE OTHERS M/S.USHODAYA ENTERPRISES PRIVATE LIMITED, HYDERABAD 10 TODAY NETWORK LTD. IN ITA NO.3943/DEL./2006 BY THEIR ORDER DATED 15.7.2011 THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX U/S 194H. THE T RIBUNAL FOLLOWED ANOTHER DECISION OF HONBLE TRIBUNAL DELHI H BENCH IN THE CASE OF LIVING MEDIA INDIA LTD. IN ITA NO.3807/DEL/2005 DATED 31.5.2007. THE CIT(A) FOLLOWED THE SAID DECISION IN THE CASE OF LIVING MEDIA INDIA LTD. HE ALSO NOTICED THAT THE DEPARTMENTS APPEAL AGAINST THE SAID OF THE TRIBUNAL WAS DISMISSED VIDE ORDER IN ITA NO.1264 OF 2007, A COPY OF WHICH WAS PLACED BEFORE HIM BY THE ASSESSEE. WE ALSO FIND THAT THE DEPARTMENT CONCEDED BEFORE THE TRIBUN AL AND WHEN THE MATTER REACHED UP TO THE SUPREME COURT AND THE DECISION OF THE TRIBUNAL WAS UPHELD. THEREFORE, WE ARE OF THE OPINION THAT THE ISSUE IS COVERED BY THE DECISION OF THE CO - ORDINATE BENCH IN THE CASE OF LIVING MEDIA INDIA LIMI TED IN ITA NO.3807/DEL./2005. HENCE WE CONFIRM THE ORDER OF THE CIT (A) ON THIS ISSUE AND HENCE THE DEPARTMENTAL APPEAL IS DISMISSED ON THIS ISSUE. FACTS AND CIRCUMSTANCES OF THE CASE FOR THE YEARS UNDER CONSIDERATION BEING SIMILAR TO THOSE CONSIDERED BY THE TRIBUNAL IN THE ABOVE DECISION FOR THE ASSESSMENT YEARS 2004 - 05 TO 2006 - 07, RESPECTFULLY FOLLOWING THE SAID DECISION, WE UPHOLD THE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE, AND DISMISS GROUNDS NO. 1 AND 2 OF THE REVENUE IN THESE APPEAL S. 10. AS REGARDS THE ISSUE INVOLVED IN GROUND 3 RELATING TO NON - DEDUCTION OF TAX AT SOURCE UNDER S.194J ON PAYMENT OF DATA CIRCUIT RENTALS, LEARNED REPRESENTATIVES FOR BOTH THE SIDES HAVE AGREED THAT IT IS COVERED BY THE DECISION OF THE TRIBUNAL DATED 23.3.2012 IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2004 - 05 TO 2006 - 07 IN ITA NO.1699 TO 1701/HYD/2008 AND ITA NOS.1706 TO 1708/HYD/2008 . THE TRIBUNAL FOR THOSE YEARS HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE VIDE PARA S 13 AND 14 OF ITS ORDER DATED 23.3.2012, WHICH READ AS FOLLOWS - 13. WE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE DECISION IN THE CASE OF SKYCELL COMMUNICATIONS HAS TAKEN SUPPORT OF IN TH E CASE OF CIT VS. BHARATI CELLULAR LTD. (319 ITR 0139) (DEL) WHEREIN IT HAS BEEN HELD THAT INTERCONNECT CHARGES/PORT ACCESS CHARGES CANNOT BE REGARDED AS FEES FOR TECHNICAL SERVICES. IN THIS DECISION THE MEANING OF TECHNICAL SERVIC ES WAS EXPLAINED AND IT WAS HELD I TA NO .1820/H YD/20 14 & THREE OTHERS M/S.USHODAYA ENTERPRISES PRIVATE LIMITED, HYDERABAD 11 THAT THERE HAD TO BE INVOLVEMENT OF HUMAN INTERFACE FOR A SERVICE TO BE CALLED TECHNICAL SERVICES. 14. FURTHER, THE AUTHORITY FOR ADVANCING RULING HAS HELD IN THE CASE OF INTERTEK TESTING SERV ICES INDIA P LTD. (307 ITR 418)(AAR) THAT THE OFFER OF A STANDARD FACILITY TO A NUMBER OF CUSTOMERS SUCH AS TELEPHONE/CELL PHONE USERS DOES NOT AMOUNT TO RENDERING ANY TECHNICAL SERVICE WITHIN THE MEANING OF THE DEFINITION OF TECHNICAL SERVICE. TECHNICAL OR CONSULTANCY SERVICE RENDERED SHOULD BE OF SUCH A NATURE THAT IT MAKES AVAILABLE THE TECHNICAL KNOWLEDGE, SKILLS ETC. MUST REMAIN WITH THE PERSON RECEIVING THE SERVICES EVEN AFTER THE PARTICULAR CONTRACT COME S TO AN END. IT IS ENOUGH THAT THE SERVICES OFFERED ARE THE PRODUCT OF INTENSE TECHNOLOGICAL EFFORT AND A LOT OF TECHNICAL KNOWLEDGE AND EXPERIENCE OF THE SERVICE PROVIDER HAVE GONE INTO IT. THE TECHNICAL KNOWLEDGE OR SKILLS OF THE PROVIDER SHOULD BE IMPARTED TO AND ABSORBED BY THE RECEIVER SO THAT THE RECEIVER CAN DEPLOY SIMILAR TECHNOLOGY OR TECHNIQUES IN THE FUTURE WITHOUT DEPENDING UPON THE PROVIDER. HENCE, WE CONFIRM THE ORDER OF THE CIT(A) THAT TAX IS NOT DEDUCTIBLE ON PAYMENT DATA CIRCUIT RENTALS AND DISMISS THE DEPARTMENTAL APPEAL ON THIS ISSUE. FACTS AND CIRCUMSTANCES OF THE CASE FOR THE YEARS UNDER CONSIDERATION BEING SIMILAR TO THOSE CONSIDERED BY THE TRIBUNAL IN THE ABOVE DECISION FOR THE ASSESSMENT YEAR S 2004 - 05 TO 2006 - 07, RESPECTFULLY FOLLOWING THE SAID DECISION, WE UPHOLD THE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE, AND DISMISS GROUND NO.3 OF THE REVENUE IN THESE APPEALS. 11. AS REGARDS THE ISSUE INVOLVED IN GROUND 4 RELATING TO NON - DEDUCTION OF TAX AT SOURCE ON PAYMENT OF BAND WIDTH CHARGES, LEARNED REPRESENTATIVES FOR BOTH THE SIDES HAVE AGREED THAT IT IS COVERED BY THE DECISION OF THE TRIBUNAL DATED 23.3.2012 IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2004 - 05 TO 2006 - 07 IN ITA NO.1699 TO 1701 /HYD/2008 AND 1706 TO 170 8 /HYD/2008 . THE TRIBUNAL FOR THOSE YEARS HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE VIDE PARA 17 OF ITS ORDER DATED 23.3.2012, WHICH READS AS FOLLOWS - 17. THE LEARNED COUNSEL FOR THE ASSES SEE SHRI SHIVA KUMAR RELIED ON THE DECISION OF THE TRIBUNAL I TA NO .1820/H YD/20 14 & THREE OTHERS M/S.USHODAYA ENTERPRISES PRIVATE LIMITED, HYDERABAD 12 MUMBAI BENCH IN THE CASE OF PACIFIC INTERNET (INDIA) P LTD. VS. ITO 318 ITR (AT) 0197 MUM WHEREIN IT HAS BEEN HELD THAT PAYMENT MADE FOR USING BANDWIDTH AND NETWORK OPERATION ARE NOT TECHNICAL SERVICES AND TAX NEEDED NOT BE DEDUCTED FROM SUCH PAYMENTS U/S 194J. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS NOW SETTLED THAT MERE PROVISION OF FACILITY TO USE EQUIPMENT, WHATEVER MAY BE THE SOPHISTICATION THAT WENT I NTO THE CREATION OF SUCH FACILITY, IS NOT TECHNICAL SERVICE. FOLLOWING DECISION OF THE COORDINATE BENCH IN PACIFIC INTERNET (INDIA) P LTD. VS. ITO 318 ITR (AT) 0197 MUM. WE UPHOLD THE ORDER OF THE CIT(A) THAT PAYMENTS OF BANDWIDTH ARE NOT LIABLE FOR TDS UNDER SECTION 194J AND DISMISS THE DEPARTMENTAL APPEAL ON THIS ISSUE. FACTS AND CIRCUMSTANCES OF THE CASE FOR THE YEARS UNDER CONSIDERATION BEING SIMILAR TO THOSE CONSIDERED BY THE TRIBUNAL IN THE ABOVE DECISION FOR THE ASSESSMENT YEARS 2004 - 05 TO 2006 - 07, RESPECTFULLY FOLLOWING THE SAID DECISION, WE UPHOLD THE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE, AND DISMISS GROUND NO.4 OF THE REVENUE IN THESE APPEALS. 12. AS REGARDS THE ISSUE INVOLVED IN GROUND 5 RELATING TO N ON - DEDUCTION OF TAX AT SOURCE ON PAYMENT OF INTERNET CHARGES, LEARNED REPRESENTATIVES FOR BOTH THE SIDES HAVE AGREED THAT IT IS COVERED BY THE DECISION OF THE TRIBUNAL DATED 23.3.2012 IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2004 - 05 TO 2006 - 07 IN ITA NO .1699 TO 1701/HYD/2008 AND 1706 TO 170 8 /HYD/2008 . THE TRIBUNAL FOR THOSE YEARS HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE VIDE PARA 2 1 OF ITS ORDER DATED 23.3.2012, WHICH READS AS FOLLOWS - 21. WE HEARD BOTH THE PARTIES. WE UPHOLD THE ORDER OF THE CIT(A) THAT PAYMENTS OF INTERNET CHARGES ARE NOT LIABLE FOR TDS RELYING ON THE FOLLOWING DECISIONS: 1. SKYCELL COMMUNICATIONS LTD. VS. DCIT 251 ITR 53 MAD. 2. SOFTWARE TECHNOLOGY PARK S OF INDIA VS. ITO 3 SOT 529 (BANGALORE) 3 . PACIFIC INTERNET (INDIA) PVT LTD. VS. ITO (318 ITR (AT) I TA NO .1820/H YD/20 14 & THREE OTHERS M/S.USHODAYA ENTERPRISES PRIVATE LIMITED, HYDERABAD 13 0179(MUM). . HENCE WE UPHOLD THE ORDER OF THE CIT(A) HOLDING THE PROVISIONS OF SECTION 194J ARE NOT APPLICABLE TO THE IMP UGNED PAYMENTS. FACTS AND CIRCUMSTANCES OF THE CASE FOR THE YEARS UNDER CONSIDERATION BEING SIMILAR TO THOSE CONSIDERED BY THE TRIBUNAL IN THE ABOVE DECISION FOR THE ASSESSMENT YEARS 2004 - 05 TO 2006 - 07, RESPECTFULLY FOLLOWING THE SAID DECISION, WE UPHOL D THE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE, AND DISMISS GROUND NO.5 OF THE REVENUE IN THESE APPEALS. 13. AS REGARDS THE ISSUE INVOLVED IN GROUND 6 RELATING TO NON - DEDUCTION OF TAX AT SOURCE ON PAYMENT OF TRANSPONDER RENT, LEARNED REPRESENTATIVES FO R BOTH THE SIDES HAVE AGREED THAT IT IS COVERED BY THE DECISION OF THE TRIBUNAL DATED 23.3.2012 IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2004 - 05 TO 2006 - 07 IN ITA NO.1699 TO 170 8 /HYD/2008 AND 1706 TO 1701/HYD/2008 . THE TRIBUNAL FOR THOSE YEARS HAS DECI DED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE VIDE PARA 32 OF ITS ORDER DATED 23.3.2012, WHICH READS AS FOLLOWS - 32. WE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT IN THE CASE OF ISRO SATELLITE CENTRE IN 175 TAXMAN 97 AAR, THE ASSESSEE WAS TO MAKE PAYMENT FOR TAKING ON LEASE SPACE SEGMENT CAPACITY CONSISTING OF L - 1 AND L - 5 TRANSPONDER CENTERED ON AN INMARSAT 4 TH GENERATION SATELLITE WHOSE CAPACITY IS UTILISED THROUGH DATA COMMANDS SENT FROM A GROUND STATION SET UP BY APPLICANT. THE ASSESSEE PAID A FIXED ANNUAL CHARGE REGARDLESS OF ACTUAL USE OF TRANSPONDER CAPACITY. THE AAR HELD THAT WHEN BY EARMARKING A SPACE SEGMENT CAPACIT Y OF TRANSPONDER FOR ITS USE ASSESSEE DOES NOT GET POSSESSION OR CONTROL OF EQUIPMENT OF IGL AND THE AGENCY THAT RECEIVED THE PAYMENT CHARGES PAID BY ASSESSEE CANNOT BE REGARDED AS PAYMENT FOR USE OF IGLS EQUIPMENT. THE AAR HELD THAT INCOME ARISING TO IGL OUT OF PAYMENTS RECEIVED FROM APPLICANT IS NEITHER IN NATURE OF ROYALTY UNDER ACT NOR I TA NO .1820/H YD/20 14 & THREE OTHERS M/S.USHODAYA ENTERPRISES PRIVATE LIMITED, HYDERABAD 14 IS FEE FOR TECHNICAL SERVICE. WE ARE OF THE OPINION THAT THE RATIO OF THE DECISION OF THE AAR IS EQUALLY APPL ICABLE TO THE ASSESSEES CASE. HAVING REGARD TO THE FACTS OF THE CASE, THE DECISION OF THE CIT(A) IS UPHELD. THE REVENUES APPEAL IS DISMISSED ON THIS ISSUE. FACTS AND CIRCUMSTANCES OF THE CASE FOR THE YEARS UNDER CONSIDERATION BEING SIMILAR TO THOSE CONSIDERED BY THE TRIBUNAL IN THE ABOVE DECISION FOR THE ASSESSMENT YEARS 2004 - 05 TO 2006 - 07, RESPECTFULLY FOLLOWING THE SAID DECISION, WE UPHOLD THE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE, AND DISMISS GROUND NO.6 OF THE REVENUE IN THESE APPEALS. 14. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. 15. TO SUM UP, WHILE APPEALS OF THE ASSESSEE ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPO S ES , APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 24TH APRIL, 2015 . SD/ - SD/ - ( SAKTIJIT DEY ) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/ - 24 TH APRIL, 201 5 COPY FORWARDED TO: 1. M/S. USHODAYA ENTERPRISES PRIVATE LIMITED, 6 - 3 - 570, EENADU COMPLEX, SOMAJIGUDA, HYDERABAD 500 0082. 2 . ASSTT. COMMISSIONER OF INCOME - TAX CIRCLE 15 ( 2 ), HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) II, HYDERABAD 4. COMMISSIONER OF INCOME - TAX I, HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S