Idea Cellular Ltd., Mohali V. ACIT (TDS), Chandigarh

ITA 302/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80882 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 18-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 300 TO 304/CHD/2013 ASSESSMENT YEARS : 2005-06 TO 2009-10 IDEA CELLULAR LTD V A.C.I.T. (TDS) CHANDIGARH (SUCCESSOR TO SPICE COMMUNICATION LTD) C-105, PHASE 7, I.A MOHALI AABAT 3399R (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RONAK DOSHI RESPONDENT BY: SMT. JYOTI KUM ARI DATE OF HEARING 28.8.2014 DATE OF PRONOUNCEMENT 10. 9.2014 O R D E R PER BENCH THESE APPEALS ARE DIRECTED AGAINST THE ORDERS DATED 1.12.201 AND 4.12.2012 OF THE LD CIT(A), CHANDIGARH. ITA NO. 300/CHD/2013 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS: NON DEDUCTION OF TDS U/S 194C OF THE ACT ON PAYMEN T OF ROAMING CHARGES TO THE OTHER TELECOM OPERATIONS: 1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT ADJUDICATING THE PLEA OF THE AP PELLANT THAT THE PAYMENT MADE FOR THE USE OF STANDARD FACILITY DOES NOT AMOUNTS TO FEES FOR TECHNICAL SERVICES AS DEFINED IN EXPLANATION2 TO SECTION 9(I)(VII) OF THE ACT. 2 THE APPELLANT PRAYS THAT THE PAYMENT MADE FOR USE OF STANDARD FACILITY DOES NOT AMOUNTS TO FEES FOR TECHNICAL SE RVICES AND HENCE THE APPELLANT IS NOT REQUIRED TO DEDUCT TAX ON ROAMING CHARGES PAID TO THE OTHER TELECOM OPERATORS U/S 194J OF THE ACT AND CON SEQUENTLY, IT BE HELD THAT THE APPELLANT CANNOT BE AN ASSESSEE IN D EFAULT U/S 201(1) R.W.S. 194J OF THE ACT. 2 3 AFTER HEARING BOTH THE PARTIES WE FIND THAT A TDS INSPECTION/SURVEY WAS CONDUCTED AT THE BUSINESS PRE MISES OF THE ASSESSEE ON 27.01.201. FROM THE DETAILS FURNISHED B Y THE ASSESSEE DEDUCTOR COMPANY IT WAS NOTICED THAT THE ASSESSEE W AS NOT DEDUCTING TAX AT SOURCE FROM THE PAYMENTS MADE TOWA RDS ROAMING CHARGES (NATIONAL ROAMING AND INTERNATIONAL ROAMING CHARGES) AS REQUIRED U/S 194J OF THE ACT. ACCORDINGLY A SHOW C AUSE NOTICE DATED 12.3.2010 WAS ISSUED ASKING THE ASSESSEE TO SUBMIT THE DETAILS. IN RESPONSE IT WAS MAINLY SUBMITTED THAT WHENEVER SUBS CRIBER TO A STATE OR PLACE WHERE OUR NETWORK IS NOT AVAILABLE, THE SUBSCRIBER IS PROVIDED THE FACILITY OF MAKING AND RECEIVING CALLS BY USING THE NETWORK OF OTHER TELECOM OPERATORS WITH WHICH WE HA VE ENTERED INTO AN AGREEMENT FOR THE USE OF EACH OTHERS NETWORK BY THEIR RESPECTIVE SUBSCRIBERS. THE CHARGES FOR THIS FACILITY ARE COL LECTED BY US FROM SUBSCRIBER AND PAID TO OTHER TELECOM OPERATORS, WHI CH PROVIDE THE FACILITY TO OUR SUBSCRIBER. IT IS FURTHER SUBMITTE D THAT THIS IS A STANDARD FACILITY, POPULARLY CALLED ROAMING FACILI TY, PROVIDED BY A TELECOM OPERATOR TO OTHER TELECOM OPERATORS AND VIC E VERSA. IT WAS FURTHER SUBMITTED THAT ROAMING FACILITIES DID NOT I NVOLVE HUMAN INTERVENTION AT ANY STAGE AND IS PROVIDED AUTOMATIC ALLY THROUGH SOPHISTICATED EQUIPMENT INSTALLED BY VARIOUS TELECO M OPERATORS. A TECHNICAL NOTE WAS ALSO FURNISHED. IT WAS CONTENDE D THAT ANY PAYMENT FOR USE OF STANDARD FACILITY DOES NOT AMOUN T TO FEES FOR TECHNICAL SERVICES. IN THIS REGARD RELIANCE WAS PL ACED ON THE DECISION OF HON'BLE MADRAS HIGH COURT IN CASE OF S KYCELL 3 COMMUNICATIONS LTD, 251 ITR 53. RELIANCE WAS ALSO P LACED ON FOLLOWING DECISIONS OF THE TRIBUNAL: IDEA CELLULAR LTD AND IN ESCOTEL MOBLIE COMMUNICATI ONS LTD. ITA NO. 2154, 2155 & 2156/DEL/2005 (DELHI TRIBUNAL) HUTCHISON ESSAR TELCOM LTD. ITA NO. 1052/DEL/2005. HFCL INFOTEL LTD V ITO, 99 TTJ 440 WIPRO LTD, 80 TTJ 191 (BANGALORE TRIBUNAL) CIT V ESTEL COMMUNICATIONS (P) LTD, 217 CTR 102 (DE LHI) REFERENCE WAS ALSO MADE TO THE DECISION OF HON'BLE DELHI HIGH COURT IN CASE OF CIT V ESTEL COMMUNICATIONS (P) LT D (SUPRA) WHEREIN IT WAS OBSERVED THAT MERE USE OF SOPHISTICA TED EQUIPMENTS WILL NOT MAKE A FEE FOR TECHNICAL SERVICE. ALTERNA TIVELY IT WAS CONTENDED THAT ALL THE COMPANIES FROM WHOM ROAMING SERVICES WERE OBTAINED HAVE SHOWN RECEIPTS IN THEIR ACCOUNTS AND THEREFORE ASSESSEE COULD NOT BE TREATED AT DEFAULT IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN CASE OF HINDUSTAN COCA CO LA BEVERAGE PVT LTD V CIT, 293 ITR 226. THE ASSESSING OFFICER A FTER EXAMINING THE SUBMISSIONS ACCEPTED THE ALTERNATE PLEA IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN CASE OF HINDUSTAN COCA COLA BEVERAGE PVT LTD V CIT (SUPRA) BUT OBSERVED THAT EVEN THEN ASSESSEE WAS LIABLE TO PAY INTEREST FOR SHORT DEDUCTION OF TAX FROM THE DUE DATE OF DEDUCTION OF TAX TO THE DATE OF FILING OF RETURN OF INCOME FILED BY THE DEDUCTEE. IN THIS BACKGROUND HE DETERMINED THIS AM OUNT AT RS. 13,43,317/-. 4 ON APPEAL THE SUBMISSIONS MADE BEFORE THE ASSESSI NG OFFICER WERE REITERATED. THE LD. CIT(A) AFTER EXAMINING TH E SUBMISSIONS OBSERVED THAT THIS ISSUE HAS BEEN DECIDED BY THE HO N'BLE SUPREME COURT IN CASE OF BHARTI CELLULAR LTD. 330 ITR 239. IN THE LIGHT OF 4 THESE OBSERVATIONS HE DECIDED THE ISSUE VIDE PARA 5 .2 WHICH IS AS UNDER: BY RESPECTFULLY FOLLOWING THE OBSERVATION OF HON'B LE SUPREME COURT IN THE CASE OF BHARTI CELLULAR LTD (SUPRA) THE ASSESSI NG OFFICER IS DIRECTED TO TAKE A FRESH DECISION ON THE APPLICABILITY OF SE CTION 194J TO THE PAYMENT OF NATIONAL ROAMING CHARGES IN ACCORDANCE W ITH LAW AND IN THE LIGHT OF THE ABOVE OBSERVATIONS OF HON'BLE SUPREME COURT, AFTER PROVIDING REASONABLE OPPORTUNITY TO THE APPELLANT. GROUNDS OF APPEAL TAKEN BY THE APPELLANT ARE DISPOSED OFF ACCORDINGLY . 5 BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REITE RATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND T HE LD. CIT(A). HE CONTENDED THAT HON'BLE DELHI HIGH COURT HAS CLE ARLY HELD IN CASE OF CIT V. BHARTI CELLULAR LTD. 319 ITR 139 THAT FEE FOR ROAMING CHARGES COULD NOT BE CALLED FEE FOR TECHNICAL SERVI CE. HE CONTENDED THAT THIS PROPOSITION IS STRONGLY SUPPORTED BY THE DECISION OF HON'BLE MADRAS HIGH COURT IN CASE OF SKYCELL COMMUNICATION S LTD (SSUPRA). HE FURTHER CONTENDED THAT ON AN APPEAL BY THE REVEN UE IN CASE OF CIT V. BHARTI CELLULAR LTD (SUPRA) THE HON'BLE SUPR EME COURT DIRECTED THE DEPARTMENT TO EXAMINE THE TECHNICAL EX PERTS, THIS DOES NOT MEAN THAT HON'BLE COURT HELD THAT IT IS A CASE OF TECHNICAL FEE. IN ANY CASE THE CHANDIGARH BENCH OF THE TRIBUNAL IN CASE OF HFCL INFOTEL LTD V ITO (SUPRA) HAS HELD THAT ROAMING CHA RGES CANNOT BE CONSTRUED AS TECHNICAL SERVICES. THEREFORE THIS DE CISION SHOULD BE FOLLOWED. 6 ON THE OTHER HAND, THE LD. D.R FOR THE REVENUE ST RONGLY SUPPORTED THE ORDER OF LD. CIT(A) AND SUBMITTED THA T ONCE THE ISSUE HAS BEEN DECIDED BY THE HON'BLE SUPREME COURT AND THE LD. CIT(A) HAS FOLLOWED THAT DECISION AND DIRECTED THE ASSESSI NG OFFICER TO REEXAMINE THE APPLICABILITY OF SEC 194J IN THE LIGH T OF THE 5 OBSERVATIONS MADE BY THE HON'BLE SUPREME COURT THE N SUCH ORDER CANNOT BE ASSAILED. 7 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULL Y AND DO NOT FIND ANY FORCE IN THE SUBMISSIONS OF THE LD. COUNSE L FOR THE ASSESSEE. THE DECISION OF HON'BLE DELHI HIGH COURT IN CASE OF CIT V. BHARTI CELLULAR LTD (SUPRA) WHEREIN IT WAS HELD THAT ROAMING CHARGES CANNOT BE CONSTRUED TECHNICAL SERVICES FOR THE PURPOSE OF SEC 194J, WAS CHALLENGED BY THE DEPARTMENT BEFORE T HE HON'BLE SUPREME COURT. THE HON'BLE SUPREME COURT SET ASIDE THE DECISION. THE OBSERVATIONS CONTAINED IN THE HEAD NOTE READS A S UNDER: IN CASES REQUIRING EXAMINATION BY TECHNICAL EXPERT S, THE DEPARTMENT OUGHT NOT TO PROCEED ONLY BY THE CONTRACTS PLACED B EFORE THE OFFICERS. WITH THE EMERGENCE OF OUR COUNTRY AS ONE OF THE BRI C COUNTRIES AND WITH TECHNOLOGICAL ADVANCEMENT, THE DEPARTMENT OUGHT TO EXAMINE TECHNICAL EXPERTS SO THAT THE MATTERS COULD BE DISPOSEDOF EXP EDITIOUSLY. FURTHER THIS WOULD ENABLE THE APPELLATE FORUM, INCLUDING TH E HON'BLE SUPREME COURT TO DECIDE THE LEGAL ISSUES BASED ON THE FAC TUAL FOUNDATION. HELD ACCORDINGLY, THE REMANDING THE MATTERS FOR D ETERMINATION WITH TECHNICAL ASSISTANCE, THAT IN THESE CASES IN WHICH A CELLULAR PROVIDER UNDER AN AGREEMENT PAYS INTERCONNECT/ACCESS/PORT CH ARGES TO BSNL/MTNL, THE QUESTION WHETHER THE CELLULAR PROVID ER HAS RENDERED TECHNICAL SERVICES AND HAS TO DEDUCT TAX AT SOURCE, DEPENDED ON WHETHER THE CHARGES WERE FOR TECHNICAL SERVICES, AND THIS I NVOLVED DETERMINATION OF WHETHER ANY HUMAN INTERVENTION WAS INVOLVED, WHI CH COULD NOT BE DETERMINED WITHOUT TECHNICAL ASSISTANCE. ONCE THE MATTER HAS BEEN CONSIDERED BY THE HON'BLE SUPREME COURT AND PARTICULAR ORDER HAS BEEN SET ASIDE THEN SAME C ANNOT BE FOLLOWED AND THE OBSERVATIONS OF THE HON'BLE SUPREM E COURT BECOMES A PRECEDENT WHICH HAS TO BE FOLLOWED PARTIC ULARLY BECAUSE THE ISSUE REMAINS SAME AND IT WAS ADMITTED BEFORE U S BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE IN THE APPE AL BEFORE US, ARE IDENTICAL TO THE ISSUE RAISED BY THE REVENUE BEFORE THE HON'BLE SUPREME COURT IN CASE PF CIT V. BHARTI CELLULAR LT D (SUPRA). 6 8 AS FAR AS THE DECISION OF CHANDIGARH BENCH OF THE TRIBUNAL IN CASE OF HFCL INFOTEL LTD V ITO (SUPRA) IS CONCERNED , THE SAME WAS RENDERED ON 13.12.2005 WHEREAS THE DECISION OF HON' BLE SUPREME COURT IN CASE OF CIT V. BHARTI CELLULAR LTD (SUPRA ) RENDERED ON 12.8.2010 AND THIS WAS NOT AVAILABLE TO THE TRIBUNA L. CLEARLY CHANDIGARH BENCH OF THE TRIBUNAL TOOK THE VIEW WITH OUT HAVING BENEFIT OF HON'BLE SUPREME COURT DECISION. WHEN ON A PARTICULAR ISSUE A DECISION OF HON'BLE SUPREME COURT IS AVAILA BLE THEN IN OUR OPINION, IT WOULD BE MEANINGLESS TO REFER TO THE DE CISION OF THE TRIBUNAL. THE LD. CIT(A) VERY FAIRLY FOLLOWING THE DECISION OF HON'BLE APEX COURT HAS SIMPLY ASKED THE ASSESSING O FFICER TO REEXAMINE THE APPLICABILITY OF SEC 194J IN THE LIGH T OF THE OBSERVATIONS OF THE COURT. NO FAULT CAN BE FOUND W ITH SUCH AN ORDER. ACCORDINGLY WE FIND NOTHING WRONG IN THE ORDER OF LD. CIT(A) AND CONFIRM THE SAME. ITAS NO. 301 TO 304/CHD/2003 9 FACTS AND THE ISSUES RAISED IN THESE APPEALS ARE IDENTICAL TO THE FACTS AND ISSUES RAISED IN ITA NO. 300/CHD/2013 AND FOLLOWING THE SAME WE DECIDE THESE APPEALS AGAINST THE ASSESS EE. 10 IN THE RESULT, APPEALS OF THE ASSESSEE ARE DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.9.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10.9.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 7