M/s. Bharti Hexacom Ltd., Gurgaon V. ACIT, New Delhi

ITA 5980/DEL/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6767 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 30-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Relationship of principal and agent; Revenue expenditure; Capital expenditure
• Section: 201(1)

Judgement Text

1 ITA NOS. 5732 & 5980/DEL/2012 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI G. D. AGRAWAL, VICE PRESIDENT AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A .NO.-5732/D EL/2012 (A.Y 2009-10) DCIT CIRCLE-2(1) NEW DELHI (APPELLANT) VS BHARTI HEXACOM LTD. BHARTI CRESCENT 1, NELSON MANDELA ROAD, VASANT KUNJ, PHASE-II, NEW DELHI AABCH1766P (RESPONDENT) I.T.A .NO.-5980/D EL/2012 (A.Y 2009-10) BHARTI HEXACOM LTD. BHARTI CRESCENT 1, NELSON MANDELA ROAD, VASANT KUNJ, PHASE-II NEW DELHI AABCH1766P (APPELLANT) VS ACIT CIRCLE-2(1) NEW DELHI (RESPONDENT) APPELLANT BY SH. SANJAY JAIN, CIT DR. RESPONDENT BY SH. ANIL BHALLA, CA ORDER PER SUCHITRA KAMBLE, JM ITA NO. 5732/DEL/2012 IS FILED BY THE DEPARTMENT AN D ITA NO. 5980/DEL/2012 IS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 28/09/2012 PASSED BY CIT (A)-V, NEW DELHI FOR A.Y 2 009-10. DATE OF HEARING 09.08.2016 DATE OF PRONOUNCEMENT 08.11.2016 2 ITA NOS. 5732 & 5980/DEL/2012 2. THE ASSESSEE WAS CARRYING OUT THE BUSINESS OF CE LLULAR PHONE AND LAND LINE SERVICE AND ITS ASSOCIATED VALUE ADDE D SERVICE FOR THE RELEVANT ASSESSMENT YEAR 2009-10. THE ASSESSING OFF ICER COMPLETED THE ASSESSMENT AT AN INCOME OF RS. 373,50,77,083/- AGAINST THE RETURNED INCOME OF NIL AFTER MAKING FOLLOWING ADDITIONS/DISALLOWANCES: (1) AMORTIZATION OF LICENSE FEE AND SEPCTRUM CHARGES U/S 35ABB OF THE ACT 149,06,33,99 0/- (2) DISALLOWANCE OF FREE AIRTIME TO DISTRIBUTORS U/S 40(A)(IA) 107,94,10,100/- (3) DISALLOWANCE OF ROAMING CHARGES PAID U/S 40(A)(IA) 11,95,70,267/- (4) LEASE RENTAL PAID TO IBM 6,23,19,912/- 3. BEING AGGRIEVED WITH THE SAID ACTIONS OF THE ASS ESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE C IT (A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. THEREFORE, THE ASSESSEE AS WELL AS THE REVENUE FILED PRESENT APPEALS. 4. THE LD. AR SUBMITTED THAT GROUND NO. 1 OF THE RE VENUES APPEAL RELATING TO APPLICABILITY OF SECTION 35ABB T O LICENSE FEE AND SPECTRUM CHARGES AMOUNTING TO RS. 149,06,33,990/- I S COVERED BY THE DECISION OF THE ITAT DELHI BENCH IN ASSESSEES OWN CASE IN RESPECT OF A.Y. 2008-09 (ITA NO. 2795/DEL/2012 DATE D 3 ITA NOS. 5732 & 5980/DEL/2012 21.04.2016) WHEREIN THE HONBLE DELHI HIGH COURTS DECISION IN ASSESSEES OWN CASE WAS FOLLOWED FOR A.Y. 2004-05. THE HONBLE DELHI HIGH COURT HELD THAT THE EXPENDITURE INCURRED TOWARDS LICENCE FEE IS PARTLY REVENUE AND PARTLY CAPITAL. L ICENCE FEE PAYABLE UPTO 31 ST JULY, 1999 SHOULD BE TREATED AS CAPITAL EXPENDITUR E AND LICENCE FEE ON REVENUE SHARING BASIS AFTER 15 TH AUGUST, 1999 SHOULD BE TREATED AS REVENUE EXPENDITURE. THUS CAPITAL EXP ENDITURE IS QUALIFIED FOR DEDUCTION AS PER SECTION 35ABB OF THE ACT IN THE SAID CASE AS PER THE FINDING OF THE HONBLE HIGH COURT. THUS THE SAID ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE BY THE H ONBLE DELHI HIGH COURT. BESIDES THIS FOR A.Y. 2003-04, 2004-2005, 20 06-07 AND 2007-08 ALSO THE SAID ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE BY THE ITAT. 5. THE LD. AR SUBMITTED THAT GROUND NO. 2 OF THE RE VENUES APPEAL RELATING TO ADDITION ON ACCOUNT OF LEASE REN T PAID TO IBM THAT OF RS. 6,23,19,912/- IS ALSO COVERED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF THE ITAT DELHI BENCH IN ASSESSEES OWN CASE FOR A.Y. 2008-09(ITA NO. 2795/DEL/2012 DATED 21.04.2016) WHE REIN THE TRIBUNAL HELD THAT THE SERVICE CUM LEASE AGREEMENT BETWEEN THE ASSESSEE AND IBM AS WELL AS NORTEL CLEARLY LAYS LIA BILITY ON IBM AND SUBSTANCE OF THE TRANSACTION SUGGESTS THAT THE BENE FICIAL OWNERSHIP REMAINED WITH IBM AND NOT WITH ASSESSEE AND THEREFO RE THE ASSESSEE HAD RIGHTLY CLAIMED THE ENTIRE LEASE RENT PAID BY IT TO IBM. 6. IN RESPECT OF THE ASSESSEES APPEAL, THE LD. AR SUBMITTED THAT GROUND NO. 1 TO 1.4 OF THE APPEAL IS RELATED TO APP LICABILITY OF 4 ITA NOS. 5732 & 5980/DEL/2012 SECTION 194H OF THE ACT TO DISCOUNT ALLOWED TO DIST RIBUTORS ON THE SALE OF PREPAID CARDS WHICH CARRY RIGHT TO USE OF AIRTIME. THE ASSESSING OFFICER MADE DISALLOWANCE OF RS. 107,94,1 0,000/- U/S 40(A)(IA) OF THE ACT. THE SAID ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE ITAT DELHI BENCH I N ASSESSEES OWN CASE FOR A.Y. 2008-09(ITA NO. 2795/DEL/2012 DATED 2 1.04.2016) AND A.Y. 2006-07 AS WELL WHEREIN THE TRIBUNAL HELD THAT THOUGH THE HONBLE JURISDICTIONAL HIGH COURT IS AGAINST THE AS SESSEE ON THE ISSUE OF APPLICABILITY OF PROVISIONS OF SECTION 194 H OF THE ACT, BUT IN ASSESSEES OWN CASE FOR A.Y. 2008-09, ITAT, JAIPUR BENCH (A.Y. 2004-05 TO 2009-10) AS WELL AS GAUHATI BENCH (A.Y. 2006-07 TO 2010-11) HELD THAT THE ASSESSEE IS NOT IN DEFAULT U /S 201 OF THE ACT ON ACCOUNT OF NON-DEDUCTION OF TDS U/S 194H IN REGA RD TO DISCOUNT ALLOWED TO DISTRIBUTORS ON PREPAID CARDS. THE VIEW BENEFICIAL TO THE ASSESSEE WAS TAKEN AND ACCORDINGLY ASSESSEES APPEA L WAS ALLOWED BY DELETING THE ADDITION U/S 40(A)(IA) OF THE ACT. THUS, THE LD. AR SUBMITTED THAT NO TAX WAS DETERMINED AS DEDUCTIBLE UNDER CHAPTER XVIIB AND COMPUTATIONAL PROVISIONS OF SECTION 40(A) (IA) CANNOT OPERATE IF MACHINERY PROVISIONS OF CHAPTER XVII-B SECTION 201 READ WITH SECTION 194H OF THE ACT ARE NOT APPLICABL E. 7. GROUND NO. 2 TO 2.4 OF THE ASSESSEES APPEAL, TH E LD. AR SUBMITTED THAT THE SAME IS RELATED TO APPLICABILITY OF SECTION 194J OF THE ACT TO THE PAYMENT MADE BY THE ASSESSEE COMP ANY FOR ROAMING CHARGES TO OTHER TELECOM SERVICE PROVIDERS FOR RS. 11,95,70,267/-. THE LD. AR SUBMITTED THAT THIS ISSU E IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION I N CASE OF THE ITAT 5 ITA NOS. 5732 & 5980/DEL/2012 DELHI BENCH IN ASSESSEES OWN CASE FOR A.Y. 2008-09 (ITA NO. 2795/DEL/2012 DATED 21.04.2016 AND A.Y. 2006-07 AS WELL WHEREIN THE TRIBUNAL HELD THAT SINCE JAIPUR BENCH O F TRIBUNAL HAS HELD FOR A.Y. 2008-09 THAT PROVISIONS OF SECTION 19 4J ARE NOT APPLICABLE, THE APPEAL OF THE ASSESSEE WAS ALLOWED. THE LD. AR SUBMITTED THAT ADDITION U/S. 40(A)(IA) OF THE ACT H AS BEEN DELETED AS THE ASSESSEE HAS BEEN HELD NOT TO BE IN DEFAULT U/S 201 OF THE ACT IN RESPECT OF APPLICABILITY OF SECTION 194J OF THE ACT. IN ASSESSEES OWN CASE FOR A.Y. 2008-09, ITAT, JAIPUR BENCH (A.Y. 2004-05 TO 2009-10) AS WELL AS GAUHATI BENCH (A.Y. 2006-07 TO 2010-11) HELD THAT THE ASSESSEE IS NOT IN DEFAULT U/S 201 OF THE ACT ON ACCOUNT OF NON-DEDUCTION OF TDS U/S 194J IN REGARD TO ROAMING CHARGES TO OTHER TELECOM SERVICE PROVIDERS. THUS NO TAX WAS DE TERMINED AS DEDUCTIBLE UNDER CHAPTER XVII-B. THE COMPUTATIONAL PROVISIONS OF SECTION 40(A)(IA) OF THE ACT CANNOT OPERATE IF MACH INERY PROVISIONS OF CHAPTER XVII-B - SECTION 201 READ WITH SECTION 194J OF THE ACT ARE NOT APPLICABLE. 8. THE LD. DR COULD NOT SUBMIT ANY ARGUMENT CONTRAR Y TO THESE FACTS AND THE LEGAL POSITION. 9. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH TH E ORDERS PASSED BY THE ITAT NEW DELHI BENCH, JAIPUR BENCH AN D GAUHATI BENCH AS WELL AS HONBLE JURISDICTIONAL HIGH COURT IN CASE OF ASSESSEE FOR VARIOUS ASSESSMENT YEARS. 9.1 GROUND NO. 1 OF THE REVENUES APPEAL, THE ISSUE IN THE PRESENT ASSESSMENT YEAR IS THAT AN AMOUNT OF RS. 214,23,97, 00/- WAS 6 ITA NOS. 5732 & 5980/DEL/2012 DEBITED AS PAYMENT TOWARDS LICENSE FEE AND SPECTRUM CHARGES. THE LICENSE FEE PAID UNDER SECTION 35ABB CONFERRED A RI GHT ON THE TELECOM OPERATORS TO OPERATE TELEPHONY SERVICES FOR A NUMBER OF YEARS. UNDER SECTION 35ABB THE FEE WAS HELD TO BE C APITAL AND ALLOWABLE IN AN APPROPRIATE PROPORTION OVER THE NUM BER OF YEARS. FROM 01.07.1999 THE WHOLE SCHEME OF PAYMENT WAS CHA NGED AND LICENSE FEE WAS DIRECTLY LINKED WITH THE ANNUAL REV ENUE GENERATED BY THE TELECOM OPERATORS. THE PAYMENT IS ANNUAL. THE L ICENCE WILL GET REVOKED IN CASE OF NON PAYMENT OF LICENCE FEE. AS P ER SETTLED LAW, ANY EXPENDITURE WHICH DOES NOT CREATE AN ASSET AND WHICH IS PAID FOR THE SPECIFIC YEAR AND NOT FOR YEARS IS NOT CAPI TAL EXPENDITURE BUT REVENUE EXPENDITURE. THE HONBLE DELHI HIGH COURT H ELD AS FOLLOWS: 47. IN VIEW OF THE AFORESAID FINDINGS, THE SUBSTAN TIAL QUESTION MENTIONED ABOVE IN ITEM NOS. 1 TO 9 IS ANSWERED IN THE FOLLOWING MANNER: (I) THE EXPENDITURE INCURRED TOWARDS LICENCE FEE IS PAR TLY REVENUE AND PARTLY CAPITAL. LICENCE FEE PAYABLE UPT O 31 ST JULY, 1999 SHOULD BE TREATED AS CAPITAL EXPENDITURE AND L ICNENCE FEE ON REVENUE SHARING BASIS AFTER 15 TH AUGUST, 1999 SHOULD BE TREATED AS REVENUE EXPENDITURE. (II) CAPITAL EXPENDITURE WILL QUALIFY FOR DEDUCTION AS P ER SECTION 35ABB OF THE ACT. IN RESPECT OF REVENUES APPEAL, THE FIRST ISSUE IS AGAINST THE REVENUE, AS CAPITAL EXPENDITURE IS QUALIFIED FOR DE DUCTION AS PER 7 ITA NOS. 5732 & 5980/DEL/2012 SECTION 35ABB OF THE ACT AS PER THE FINDING OF THE HONBLE JURISDICTIONAL HIGH COURT AS DISCUSSED ABOVE. THE S AME IS ALSO FOLLOWED IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 ITA 2795/DEL/2012 AS WELL AS FOR ASSESSMENT YEAR 2003-0 4 & 2004-05 ITA NOS. 150 & 4552/DEL/2007. 9.2 THE SECOND ISSUE IN REVENUES APPEAL IS REGARD ING ADDITION ON ACCOUNT OF LEASE RENT PAID TO IBM TO THE EXTENT OF RS. 6,23,19,912/-. THE SAME IS ALSO IN FAVOUR OF THE ASSESSEE AS PER T HE TRIBUNALS ORDER IN ASSESSEES OWN CASE FOR A.Y. 2008-09 WHERE IN IT IS HELD THAT THE SERVICE CUM LEASE AGREEMENT BETWEEN THE ASSESSE E AND IBM AS WELL AS NORTEL CLEARLY LAYS LIABILITY ON IBM AND SU BSTANCE OF THE TRANSACTION SUGGESTS THAT THE BENEFICIAL OWNERSHIP REMAINED WITH IBM AND NOT WITH ASSESSEE AND THEREFORE THE ASSESSE E HAD RIGHTLY CLAIMED THE ENTIRE LEASE RENT PAID BY IT TO IBM. TH E FACTS ARE IDENTICAL IN THE PRESENT ASSESSMENT YEAR 2009-10. 9.3 IN RESPECT OF ASSESSEES APPEAL, GROUND NO. 1 T O 1.4 REGARDING TO APPLICABILITY OF SECTION 194H OF THE ACT TO DISC OUNT ALLOWED TO DISTRIBUTORS ON THE SALE OF PREPAID CARDS WHICH CAR RY RIGHT TO USE OF AIRTIME AND DISALLOWANCE TO THAT EXTENT FOR RS. 1,07,94,10,000/- BY THE AO. ADDITION UNDER SECTION 40(A)(IA) HAS TO BE DELETED AS THE ASSESSEE WAS NOT IN DEFAULT UNDER SECTION 201 OF TH E ACT IN RESPECT OF APPLICABILITY OF SECTION 194H OF THE ACT. THE AS SESSEE COMPANY WAS CARRYING OUT TELECOM BUSINESS IN THE RAJASTHAN CIRCLE AND NESA. THE JAIPUR BENCH OF ITAT HELD THAT THE ASSESS EE IS NOT IN DEFAULT IN ASSESSMENT YEAR 2004-05 TO 2008-09 AND A SSESSMENT 8 ITA NOS. 5732 & 5980/DEL/2012 YEAR 2009-10 ITA NO. 656/JP/2010 (WHICH IS THE PR ESENT ASSESSMENT YEAR). THE JAIPUR BENCH OF ITAT RECORDED A FINDING IN PARA 6 (ITA NO. 656/JP/2010) AS FOLLOWS: 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVIALBLE ON THE RECORD. RE CENTLY THIS BENCH HAS DECIDED SIMILAR ISSUE IN THE CASE OF TATA TELE SERVICES, WHICH IS IDENTICAL TO THE ASSESSEES CASE. THE FACT S OF THE CASE HAS BEEN DEMONSTRATED BY THE AR THAT THE ASSESSEE WAS I SSUING BILL ON NET AMOUNT ON MRP HAS BEEN FIXED ON PREPAID CARD SOLD. THE ASSESSEE HAS NOT TRANSFERRED ANY INCOME TO THE DIST RIBUTOR BUT THE DISTRIBUTOR WAS ALLOWED TO AVAIL THE AIRTIME TO THE EXTENT OF MRP PRICE. IN BOOKS OF ACCOUNT, THE ASSESSEE HAD CREDIT ED THESE RECEIPTS ON NET BASIS. THE FINDING ON THE CASE OF T ATA TELE SERVICES IS REPRODUCED AS UNDER: 2.23. WE FIND MERIT IN THE CONTENTION OF LD. COUNSE L THAT THERE IS NO JURISDICTIONAL HIGH COURT JUDGMENT ON THIS ISSUE . HONBLE KARNATAKA HIGH COURT JUDGMENT IS ELABORATE, DETAILE D, CONSIDERS THE PREVIOUS DELHI AND KERALA HIGH COURT JUDGMENT AGAINST THE ASSESSEE AND IS LATEST COMPREHENSIVE AD JUDICATION ON THE ISSUE. EVEN IF IT IS HELD THAT THERE EXIST D IVERGENCE OF JUDICIAL OPINION A VIEW FAVOURABLE TO THE ASSESSEE IS TO BE ADOPTED AS HELD BY HONBLE SUPREME COURT IN VEGETAB LE PRODUCTS LTD. AND VATIKA TOWNSHIP CASE (SUPRA). FRO M THIS ANGLE ALSO IN THESE FACTS AND CIRCUMSTANCES HONBLE KARNA TAKA HIGH 9 ITA NOS. 5732 & 5980/DEL/2012 COURT JUDGMENT IS APPLICABLE TO THE ASSESSEES CASE . RESPECTFULLY FOLLOWING THE SAME WE HOLD THAT: A. THE RELATIONSHIP BETWEEN ASSESSEE AND ITS DISTRI BUTORS QUA THE SALE OF IMPUGNED PRODUCTS IS ON PRINCIPAL T O PRINCIPAL BASIS; THE CONSIDERATION RECEIVED BY ASSESSEE IS SA LE PRICE SIMPLICITER. B. THERE IS NO RELATIONSHIP OF PRINCIPAL AND AGENT BETWEEN ASSESSEE AND DISTRIBUTORS AS HELD BY AUTHORIZES BEL OW THEIR ORDERS ARE REVERSED. C. LOOKING AT THE TRANSACTION BEING OF SALE/PURCHAS E AND RELATIONSHIP BEING OF PRINCIPAL TO PRINCIPAL THE DI SCOUNT DOES NOT AMOUNT TO COMMISSION IN TERMS OF SEC. 194H, THE SAM E IS NOT APPLICABLE TO THESE TRANSACTIONS. THEREFORE, ASSESS EE CANNOT BE HELD IN DEFAULT; IMPUGNED DEMAND RAISED APPLYING SE C. 194H IS QUASHED. ASSESSEES GROUNDS ARE ALLOWED. BY RESPECTFULLY FOLLOWING OUR OWN DECISION ON SIMIL AR FACT, WE REVERSE THE ORDER OF THE LD CIT (A) AND ALLOW THE A PPEAL OF THE ASSESSEE ON THIS GROUND. SIMILARLY IN THE CASE OF BHARTI HEXACOM LIMITED, IT AT GUWAHATI BENCH HAS HELD THAT ASSESSEE TO BE NOT IN DEFAULT U /S 194H OF THE ACT. THUS NO TAX WAS DETERMINED AS DEDUCTIBLE UNDER CHAPTER XVII- B. COMPUTATIONAL PROVISIONS OF SECTION 40(A)(IA) CA NNOT OPERATE IF MACHINERY PROVISIONS OF CHAPTER XVII-B SECTION 20 1 READ WITH SECTION 194H OF THE ACT ARE NOT APPLICABLE. 10 ITA NOS. 5732 & 5980/DEL/2012 9.4 IN RESPECT OF GROUND NO. 2 TO 2.4 OF THE ASSESS EES APPEAL AS REGARDS TO APPLICABILITY OF SECTION 194J OF THE ACT TO THE PAYMENT MADE BY THE ASSESSEE COMPANY FOR ROAMING CHARGES TO OTHER TELECOM SERVICE PROVIDERS TO THE EXTENT OF RS. 11,9 5,70,267/-. THE JAIPUR BENCH OF ITAT RECORDED A FINDING IN PARA 11 (ITA NO. 656/JP/2010) AS FOLLOWS: 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. AFTER GOING THROUGH THE ORDER OF THE ASSESSING OFFICER, LD CIT(A); SUBMISSI ONS OF THE ASSESSEE AS WELL AS GOING THROUGH THE PROCESS OF PROVIDING R OAMING SERVICES; EXAMINATION OF TECHNICAL EXPERTS BY THE ACIT TDS, N EW DELHI IN THE CASE OF BHARTI CELLULAR LTD.; THEREAFTER CROSS EXAM INATION MADE BY M/S BHARTI CELLULAR LTD.; ALSO OPINION OF HONBLE T HE THEN CHIEF JUSTICE OF INDIA MR. S.H. KAPADIA DATED 03.09.2013 AND ALSO VARIOUS JUDGMENTS GIVEN BY THE ITAT AHMADABAD BENCH IN THE CASE OF CANARA BANK ON MICR AND PUNE BENCH DECISION ON DATA LINK SERVICES. WE FIND THAT FOR INSTALLATION/SETTING UP/REPAIRING/SERVICING/MAINTENANCE CAPACITY AUGMENT ATION ARE REQUIRE HUMAN INTERVENTION BUT AFTER COMPLETING THI S PROCESS MERE INTERCONNECTION BETWEEN THE OPERATORS IS AUTOMATIC AND DOES NOT REQUIRE ANY HUMAN INTERVENTION. THE TERM INTER CONN ECTING USER CHARGES (IUC) ALSO SIGNIFIES CHARGES FOR CONNECTIN G TWO ENTITIES. THE COORDINATE BENCH ALSO CONSIDERED THE HONBLE SUPREM E COURT DECISION IN THE CASE OF BHARTI CELLULAR LTD. IN THE CASE OF I-GATE COMPUTER SYSTEM LTD. AND HELD THAT DATA LINK TRANSF ER DOES NOT REQUIRE ANY HUMAN INTERVENTION AND CHARGES RECEIVED OR PAID ON 11 ITA NOS. 5732 & 5980/DEL/2012 ACCOUNT OF THIS IS NOT FEES FOR TECHNICAL SERVICES AS ENVISAGED IN SECTION 194J READ WITH SECTION 9(1)(VII) READ WITH EXPLANATION 2 OF THE ACT. IN CASE BEFORE US THE ASSESSEE HAS PAID RO AMING CHARGES I.E. IUC CHARGES TO VARIOUS OPERATORS AT RS. 10,18,92,35 0/-. RESPECTFULLY FOLLOWING ABOVE JUDICIAL PRECEDENTS, WE HOLD THAT T HESE CHARGES ARE NOT FEES FOR RENDERING ANY TECHNICAL SERVICES AS EN VISAGED IN SECTION 194J OF THE ACT. THEREFORE, WE REVERSE THE ORDER OF THE LD. CIT(A) AND ASSESSEES APPEAL IS ALLOWED ON THIS GROUND ALSO. 9.5 ONCE THE ORDER U/S 201(1) OF THE ACT IS SET ASI DE THEN THE ISSUE RELATED TO SECTION 40(A) (IA) OF THE ACT DOES NOT S USTAIN. THUS THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT IN RESPECT OF FREE AIRTIME TO DISTRIBUTORS AND ROAMING CHARGES BY THE ASSESSING OFFICER DOES NOT SUSTAIN IN LIGHT OF THE ORDER PASSED BY T HE ITAT, JAIPUR BENCH AND GAUHATI BENCH IN ASSESSEES OWN CASE. ALL THE ISSUES IN BOTH APPEALS THAT OF REVENUE AND ASSESSEE ARE COVER ED AS DISCUSSED HEREINABOVE. 10. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 08 TH OF NOVEMBER, 2016. SD/- SD/- (G. D. AGRAWAL) (S UCHITRA KAMBLE) VICE PRESIDENT JUDIC IAL MEMBER DATED: 08/11/2016 R. NAHEED * COPY FORWARDED TO: 12 ITA NOS. 5732 & 5980/DEL/2012 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT R EGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 09.08.2016 PS 2. DRAFT PLACED BEFORE AUTHOR 09.08.2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 08.11.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 08.11.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.