DCIT, New Delhi V. M/s Estel Communication P Ltd., New Delhi

ITA 5395/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3880 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 01-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Section: 195

Judgement Text

ITA NO. 5395/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 5395/DEL/2010 A.Y. : 2006-07 DCIT, CIRCLE 11(1), ROOM NO. 312, C.R. BUILDING, NEW DELHI VS. M/S E STEL COMMUNICATION P LTD., (NOW KNOWN AS KARTURI TELECOM P LTD.), B-115, SARVODAYA ENCLAVE, NEW DELHI (PAN/GIR NO. : AAACE7910N) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : NONE DEPARTMENT BY : MS. Y. KAKKAR, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 29.9.2 010 PERTAINING TO ASSESSMENT YEAR 2006-07. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCO ME TAX (APPEALS) ERRED IN DELETING THE ADDITION OF ` 1,90, 25,764/- ON ACCOUNT OF PURCHASE OF BAND WIDTH BY THE ASSESSEE. 3. IN THIS CASE THE ASSESSING OFFICER MADE THE DIS ALLOWANCE OF ` 1,90,25,764/- ON ACCOUNT OF PURCHASE OF BAND WIDTH BY HOLDING THE SAME TO BE NOT ALLOWABLE U/S 40(A) OF THE IT ACT. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF THE SAME ASSESSEE IN ITA NO. 527/2007, WHER EIN THE HONBLE ITA NO. 5395/DEL/2010 2 HIGH COURT HAS HELD THAT THE PROVISION OF SECTION 40(A) READ WITH SECTION 195 IS NOT APPLICABLE TO THE FACTS OF THE A SSESSEE CASE. ACCORDINGLY, LD. COMMISSIONER OF INCOME TAX (APPEALS ) DELETED THE ADDITION. 5. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEA L BEFORE US. 6. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE . NONE APPEARED ON BEHALF OF THE ASSESSEE. 7. WE FIND THAT THE MATTER CAN BE DISPOSED OF BY HEA RING THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RECORDS. WE NOTE THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS HELD THE ISSUE IN FAVOUR OF THE ASSESSEE BY RELYING UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE. IN THIS REGARD, LD. C OMMISSIONER OF INCOME TAX (APPEALS) HAS NOTED THE FOLLOWING PORTI ON OF THE HONBLE HIGH COURT IN THE ABOVE CITED CASE:- IN FACT, THE ASSESSEE WAS MERELY PAYING FOR AN INT EREST BANDWITH TO TELEGLOBE AND THEN SELLING IT TO ITS CUSTOMERS. THE USE OF INTERNET FACILITY MAY REQUIRED SOPHISTICA TED BUT THAT DOES INTO MEAN THAT TECHNICAL SERVICES WERE R ENDERED BY TELEGLOBE TO THE ASSESSEE. IT WAS A SIMPLE CASE OF PURCHASE OF INTERNET BANDWIDTH THE ASSESSEE FROM TELEGLOBE. UNDER THE CIRCUMSTANCES, THE TRIBUNAL CAME TO THE CONCLUSION THAT THERE WERE NO TECHNICAL SERVICES PR OVIDED ITA NO. 5395/DEL/2010 3 BY TELEGLOBE TO THE ASSESSEE, AND, THEREFORE, THE P ROVISIONS OF SECTION 9(1)(VII) OF THE ACT DID NOT APPLY. WE FIND THAT THE TRIBUNAL HAS RIGHTLY DISMISSED THE APPEAL AFTER TAKING INTO CONSIDERATION THE AGREEMENT BETWE EN THE ASSESSEE AND TELEGLOBE AND THE NATURE OF SERVICES P ROVIDED BY TELEGLOBE TO ASSESSEE. IT WAS A SIMPLE CASE OF PAYMENT FOR THE PROVISION A BANDWIDTH. NO TECHNICAL SERVIC ES WERE RENDERED BY TELEGOBE TO THE ASSESSEE. 8. UNDER THE CIRCUMSTANCES, WE DO NOT FIND ANY INF IRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND ACCORDINGLY, WE UPHOLD THE SAME. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/5/2011, UP ON CONCLUSION OF HEARING. SD/- SD/- [A.D. JAIN] [A.D. JAIN] [A.D. JAIN] [A.D. JAIN] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 23/5/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3.CIT 4.CIT (A) 5. DR, IT AT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES