VODAFONE DIGILINK LTD., Jaipur V. ITO, Jaipur

ITA 81/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5486 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 24-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA; O P BATEJA
• Assessee Lawyers: MANASVINI BAJPAI S
• Keywords: Period of limitation; Relationship of principal and agent
• Section: 201(1); 10

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 75 TO 81/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2004-05, 05-06, 06-07, 07-08, 08-09, 09-10 & 10-11. VODAFONE DIGILINK LTD., CIRCLE OFFICE, 5 TH FLOOR, GAURAV TOWERS, MALVIYA NAGAR, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, TDS-2, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAACA 3202 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT /KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI DEEPAK CHOPRA AND MS MANASVINI BAJPAI (ADVOCATES) JKTLO DH VKSJ LS@ REVENUE BY : SHRI B.K. GUPTA (CIT) & SHRI O.P. BATEJA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 21.01.2016. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 5/02/2016. VKNS'K@ ORDER PER BENCH : THESE ARE SEVEN CONNECTED APPEALS FILED BY THE ASSE SSEE AGAINST THE ORDER OF LD. CIT (APPEALS)-III, JAIPUR DATED 15 TH NOVEMBER, 2012 FOR THE A.YS. 2004-05 TO 2010-11. THE COMMON GROUNDS RAISED IN THE APPEALS ARE AS UNDER :- 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT (A) HAS ERRED IN HOLDING THAT THE ORDER PASSED UNDE R SECTION 201(1)/201(1A) OF THE ACT FOR THE SUBJECT ASSESSMEN T YEAR IS NOT BARRED BY LIMITATION AND HENCE, IS NOT BAD IN LAW. 2 ITA NO. 75-81/JP/2013 A.Y 2004-05 TO 10-11. VODAFONE DIGILINK LTD. VS ITO TDS-2 JAIPUR. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT (A) HAS ERRED IN HOLDING THAT ROAMING CHARGES PAID BY THE APPELLANT QUALIFY AS FEE FOR TECHNICAL SERVICES AND THUS, SUB JECT TO TAX DEDUCTION AT SOURCE UNDER SECTION 194J OF THE ACT. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT (A) HAS ERRED IN NOT DIRECTING THE LEARNED TDS OFFI CER TO VERIFY PAYMENT OF TAX IN RESPECT OF THE RECIPIENT TELECOM OPERATORS F OR WHOM THE APPELLANT COULD NOT FURNISH CONFIRMATIONS DESPITE THE FACT TH AT OTHER REQUISITE DETAILS FOR SUCH VERIFICATION WERE AVAILABLE WITH THE LEARN ED CIT (A)/TDS OFFICER. 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT (A) HAS ERRED IN DIRECTING THE LEARNED TDS OFFICER TO LEVY INTEREST UNDER SECTION 201(1A) ON THE TAX DEMAND RAISED UNDER SECT ION 201(1) OF THE ACT. 2. THE TRIBUNAL VIDE ORDER DATED 27.11.2015 HAS DEC IDED GROUND NO. 1 AGAINST THE ASSESSEE WHEREBY THE TRIBUNAL HAS HELD THAT THE PRO CEEDINGS INITIATED AND COMPLETED UNDER SECTION 201(10/201(1A) WERE WITHIN THE PERIOD OF LIMITATION. 3. AT THE OUTSET, THE LD A/R FOR THE ASSESSEE HAS S UBMITTED THAT THE BENCH IN THE MATTER OF M/S. BHARTI HEXACOM LTD. VS. ITO IN ITA N O. 256/JP/2010, IN THE IDENTICAL FACTS AND CIRCUMSTANCES HAS HELD IN FAVOUR OF THE A SSESSEE. BESIDES THAT, IT WAS ALSO SUBMITTED THAT THE OTHER BENCHES OF CHENNAI, IN THE MATTER OF M/S. VODAFONE CELLULAR LTD. VS. DCIT VIDE ORDER DATED 31.07.2015 HAS HELD THAT THE CHARGES PAID FOR ROAMING SERVICES DO NOT FALL UNDER THE FEE FOR TECHNICAL SE RVICES AND, THEREFORE, PROVISIONS OF SECTION 194J OF THE ACT COULD NOT BE ATTRACTED IN T HE CASE OF THE ASSESSEE. 3.1. THE LD. D/R FOR THE REVENUE, HAS RELIED UPON T HE ORDER PASSED BY THE AUTHORITIES BELOW. IN ADDITION TO THAT IT WAS ALSO POINTED OUT THAT THE MATTER IS NOW PENDING 3 ITA NO. 75-81/JP/2013 A.Y 2004-05 TO 10-11. VODAFONE DIGILINK LTD. VS ITO TDS-2 JAIPUR. ADJUDICATION BEFORE HONBLE SUPREME COURT IN THE AP PEAL FILED BY VODAFONE, THE LAST DATE CAME UP FOR HEARING ON 6 TH JANUARY, 2016 BEFORE THE HONBLE SUPREME COURT AND THE FINAL OUTCOME OF THE MATTER WOULD BE KNOWN TO T HE PARTIES AS SOON AS THE HEARINGS ARE CONCLUDED AND THE JUDGMENT IS PRONOUNCED BY THE HONBLE SUPREME COURT. 3.2. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE FACTS OF THE PRESENT APPEAL AND AS THA T OF THE APPEAL BEARING NO. 656/JP/2010 ARE SAME AND, THEREFORE, THE JUDGMENT P ASSED BY THE COORDINATE BENCH IS EQUALLY APPLICABLE TO THE CASES IN HAND. FOR READY REFERENCE, WE ARE HEREBY REPRODUCING THE FACTS MENTIONED IN PARA 3 OF THE OR DER PASSED BY THE AO TDS. THE SAME ARE AS UNDER :- THE ASSESSEE HAS RELIED ON THE DECISION OF HONBL E DELHI HIGH COURT IN THE CASE OF BHARTI CELLULAR LTD. ON THE BASIS OF WHICH THE HONBLE APEX COURT HAS REMANDED THE MATTER TO THE AO FOR FRESH A DJUDICATION. FIRSTLY, THE MATTER IS PENDING BEFORE THE AO AND THUS THE IS SUE HAS NOT REACHED FINALITY IN THAT CASE. SECONDLY, THE FACTS OF THIS CASE ARE ENTIRELY DIFFERENT FROM THE PRESENT CASE. THE ISSUE UNDER CONSIDERATIO N IN THE CASE RELIED BY THE ASSESSEE ABOVE WAS PAYMENT OF PART ACCESS / INT ERCONNECT CHARGES WHEREAS IN THE PRESENT CASE, THE ISSUE IS REGARDING PAYMENT OF ROAMING CHARGES. FURTHER, IN THE ABOVE CASE, THE HONBLE CO URT FOUND THAT THERE WAS NO INVOLVEMENT OF HUMAN INTERFACE IN PROVIDING INTERCONNECT/PART ACCESS FACILITY WHEREAS IN PRESENT CASE THERE IS NE CESSARILY HUMAN INTERFACE INVOLVED IN PROVIDING ROAMING SERVICE. TH ERE IS NO DOUBT THAT THERE IS INTENSIVE USE OF SOPHISTICATED MACHINES AN D MODERN TECHNOLOGY BUT SIMULTANEOUSLY THERE IS CONSTANT INVOLVEMENT OF HUMAN MIND AND SKILL 4 ITA NO. 75-81/JP/2013 A.Y 2004-05 TO 10-11. VODAFONE DIGILINK LTD. VS ITO TDS-2 JAIPUR. WHICH IS REQUIRED FOR PROVIDING ROAMING SERVICES. F OR EXAMPLE, THERE IS REQUIREMENT OF TECHNICAL AND SKILLED EMPLOYEES FOR FOLLOWING PROCEDURES INVOLVED IN PROVIDING ROAMING SERVICES :- 1. TO MAINTAIN AND OPERATE CUSTOMER CARE CENTRE ROUND THE CLOCK FOR THE SUBSCRIBERS OF ASSESSEE COMPANY. 2. TO IMPLEMENT GSM SERVICES IN ACCORDANCE WITH THE GS M SPECIFICATIONS. 3. SETTLEMENT OF BILLS. 4. TO MONITOR TECHNICAL ASPECTS CONCERNING BOTH THE PR E-COMMERCIAL AND COMMERCIAL PHASES OF GSM NATIONAL ROAMING. 5. TO IMPLEMENT FRAUD PREVENTION PROCEDURES. ALL THE ABOVE ACTIVITIES REQUIRE CONSTANT HUMAN INV OLVEMENT FOR MONITORING AND FOR UNHINDERED OPERATIONS. MOREOVER, SERVICE T AX ACT HAS ALSO RECOGNIZED THE ROAMING AS SERVICE FOR THE PURPOSE O F SERVICE TAX VIDE THE FINANCE BILL, 2007. THUS THE RELIANCE ON THE DECIS ION IN THE CASE OF BHARTI CELLULAR LIMITED PLACED BY THE ASSESSEE IS MISPLACE D. HERE IT IS ALSO PERTINENT THAT THE DEFINITION OF FEES FOR TECHNICAL SERVICES IS VERY WIDE. IT COVERS WITHIN ITS AMBIT ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES RENDERED BY A PERSON. THE S ERVICE OF THIS NATURE INVOLVES HUMAN SKILL AS WELL AS COMPUTERIZED MACHIN ES. IT IS NOT AUTOMATIC. BUT IT IS FULLY SUPPORTED BY SERVICES OF PERSONNEL AND REQUIRES HUMAN APPLICATION OF MIND ALONG WITH TECHNICAL EQUI PMENTS. THE FACTS MENTIONED IN THE ORDER OF THE TRIBUNAL IN ITA NO. 656/JP/2010 AT PARA 9 ARE TO THE FOLLOWING EFFECT :- 9. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE REVENUES PROPOSITIO N IS THAT THOGH THE ROAMING HAPPENS AUTOMATICALLY BUT BECAUSE EQUIP MENT IS USED TO 5 ITA NO. 75-81/JP/2013 A.Y 2004-05 TO 10-11. VODAFONE DIGILINK LTD. VS ITO TDS-2 JAIPUR. RENDER THE ROAMING SERVICE, BECAUSE TECHNICAL MANPO WER IS NEEDED TO OPERATE AND MAINTAIN THE TECHNICAL EQUIPMENT THEREF ORE, ROAMING PER SE IS RENDERING OF TECHNICAL SERVICES AND THEREFORE , THE AMOUNT PAID FOR ROAMING IS TECHNICAL FEE IN TERMS OF SECTION 19 4J READ WITH EXPLANATION 2 TO SECTION 9(1)(VII) OF THE ACT. THE L D AR EXPLAINED THE ROAMING SERVICE AND SUBMITTED THAT HEXACOM SUBSCRIB ER IN JAIPUR TRAVELS OF MUMBAI SWITCHES ON HIS MOBILE DEVICE AFTE R REACHING MUMBAI. WHERE THE SUBSCRIBER TRAVELS BY LAND HE AUT OMATICALLY RECEIVES A MESSAGE TRANSFERRING TO THE ROAMING NETWO RK ON VISITING ANOTHER TELECOM, CIRCLE. * VISITING NETWORK (E.G. AIRTEL IN MUMBAI) LOCATES M OBILE DEVICE AND IDENTIFIES THAT IT IS NOT REGISTERED WITH ITS SYSTEM S, I.E. VLR. * VISITING NETWORK AUTOMATICALLY CONTACTS HOME NETWOR K OF HEXACOM SUBSCRIBER, I.E. HLR AND GETS SERVICE INFORMATION A BOUT ROAMING DEVICE USING IMSI NUMBER-IMSI NUMBER IS A UNIQUE SU BSCRIBER IDENTITY NUMBER GRANTED TO THE CUSTOMER AT THE TIME OF SUBSCRIPTION. * VISITING NETWORK MAINTAINS TEMPORARY SUBSCRIBER RE CORD FOR THE SAID MOBILE DEVICE AND PROVIDES AN INTERNAL TEMPORARY PH ONE NUMBER FROM BACKEND SYSTEM TO THE MOBILE DEVICE WHICH IS NOT VIS IBLE TO HUMAN. * HOME NETWORK ALSO UPDATES ITS REGISTER TO INDICATE THAT THE MOBILE IS ON VISITOR NETWORK SO THAT INFORMATION SENT TO THAT DEVICE IS CORRECTLY ROUTED. * THE HEXACOMS SUBSCRIBER IN MUMBAI, WHO IS TEMPORAR ILY REGISTERED AS AIRTELS SUBSCRIBER MAKES CALLS IN MUMBAI AND TH E MINUTES ARE REGISTERED IN HIS IDENTITY FOR WHICH HE HAS TO PAY T HROUGH HEXACOM JAIPUR. * ALTERNATIVELY, A CALLED FROM JAIPUR MAKES A CALL TO HEXACOMS SUBSCRIBER WHICH IS ROUTED TO THE HOME NETWORK OF HE XACOM SUBSCRIBER IN JAIPUR. 6 ITA NO. 75-81/JP/2013 A.Y 2004-05 TO 10-11. VODAFONE DIGILINK LTD. VS ITO TDS-2 JAIPUR. * HOME NETWORK THEN FORWARDS ALL INCOMING CALLS TO TH E TEMPORARY PHONE NUMBER WHICH TERMINATES AT THE DEVICE OF ROAMI NG, SUBSCRIBER (IN MUMBAI) WHO IS NOW USING THE SERVICES OF THE VISI TING NETWORK (I.E. AIRTEL): * THE ENTIRE PROCESS ABOVE IS AUTOMATIC AND DOES NOT INVOLVE ANY HUMAN INTERVENTION AT ANY STAGE. BILLING PROCESS * USAGE OF ROAMING SUBSCRIBER IN VISITED NETWORK IS CAPTURED IN A FILE CALLED TP, I.E. TRANSFERRED ACCOUNT PROCEDURE FOR GS M/CIBER, I.E., CELLULAR INTER-CARRIER BILLING EXCHANGE RECORD FOR. * TAP FILE CONTAINS DETAILS OF CALLS MADE BY SUBSCR IBER, VIZ., LOCATION, CALLING PARTY, TIME OF CALL AND DURATION, ETC. * TAP/CIBER FILES ARE RATED AS PER TARIFFS CHARGED BY VISITING NETWORK OPERATOR. * SUCH TAP/CIBER FILE IS TRANSFERRED TO HOME NETWORK OF SUBSCRIBER (I.E. TO HEXACOM). * HOME NETWORK (I.E. HEXACOM) THEN BILLS THESE CALLS TO THE HEXACOMS SUBSCRIBER AND PAYS ROAMING CHARGES BASED ON THE TA P TO THE VISITED NETWORK OPERATOR (I.E. AIRTEL). THE ROAMING OPERATOR CHARGES AS PER THE ROAMING AGREEMENT WITH HEXACOM, WHEREAS THE SUBSC RIBER IS BILLED AS PER THE TARIFF SUBSCRIBED. * THE ENTIRE PROCESS IS AUTOMATIC. IT IS CONCLUDED THAT THE ABOVE TRANSACTION FLOW TH AT THE SERVICE OF PROVIDING AIRTIME BY VISITING TELECOM CIRCLE IS DIR ECTLY TO THE SUBSCRIBER AND NOT TO HEXACOM. THE SUBSCRIBER OF HEXACOM USES T HE NETWORK SET UP BY THE VISITING CIRCLE AND INSTEAD OF AMOUNT BEI NG RECOVERED FROM THE ROAMING SUBSCRIBER, THE VISITING CIRCLE SENDS T HE AIR MINUTES TO BE RECOVERED FROM THE ROAMING SUBSCRIBER TO THE HOME C IRCLE FOR RECOVERY FROM THE SUBSCRIBER WHO HAD VISITED THE VIS ITING CIRCLE. 7 ITA NO. 75-81/JP/2013 A.Y 2004-05 TO 10-11. VODAFONE DIGILINK LTD. VS ITO TDS-2 JAIPUR. TECHNICAL FEES * IT IS AN ACCEPTED FACT THAT TECHNICAL SERVICE CAN BE SAID TO HAVE BEEN RENDERED IF THERE IS AN INVOLVEMENT OF HUMAN ELEMEN T OR THERE HAVE BEEN USE OF CEREBRAL FACULTIES IN THE PROVISION OF TECHNICAL SERVICES BY THE RECIPIENT OF FEE. * THIS IS SO BECAUSE THE WORD TECHNICAL COMES IN BE TWEEN THE WORDS MANAGERIAL AND CONSULTANCY SERVICES. BASED UPON T HE PRINCIPLES OF NOSITUR A SOCIIS THERE HAS TO BE AN ELEMENT OF MA NUAL INTERVENTION AT THE TIME WHEN THE SERVICE IS BEING RENDERED. * TECHNICAL SERVICES SHOULD HAVE A FACT SITUATION OF IMPARTING TECHNICAL KNOWLEDGE INVOLVING OR CONCERNING APPLIED AND INDUST RIAL SCIENCE. THE LD AR FURTHER ARGUED THAT FINDING OF THE LD CIT(A ) ARE BASED ON CONTRACT BETWEEN TWO OPERATORS BUT CONTRACT HAS NO R ELEVANCY ON THE NATURE OF THE SERVICE WHETHER TECHNICAL OR OTHER WISE. THE LD CIT(A) PARTLY ACCEPTED THAT ROAMING PROCESS IS TECHN ICAL BECAUSE IT USES VARIOUS INSTRUMENTS SUCH AS MSC (MOBILE SWITCH ING CENTRE), VLR (VISITOR LOCATION REGISTER), RADIO NETWORK, TOWER S, BTC ETC. BUT THE SYSTEM IS OPERATED/MANAGED BY THE HIGHLY SKILLE D PROFESSIONALS. THE ASSESSEES ARGUMENT WAS THAT THE ROAMING SERVICE IS MANAGED AUTOMATICALLY BY MACHINES AND PAYMENT FOR ROAMING C HARGES ARE NOT FEES FOR TECHNICAL SERVICES. IN CASE OF FAULT IN A BREAKDOWN OF A SYSTEM, THE PROFESSIONAL PEOPLE ARE REQUIRED TO MON ITOR THE TELECOM NETWORK TO BE IN A ROBUST CONDITION IN ORDER TO DO B USINESS FOR SELF. THIS MONITORING DOES NOT HAVE ANY CONNECTION WITH ROA MING CHARGES PAID BY THE SUBSCRIBER. IF A TELECOM NETWORK BREAKS DOWN THERE IS NO BUSINESS AND THUS NO PAYMENT. EXISTENCE OF IMSI IS ONLY A FACILITY TO COMMUNICATE AND DOES NOT RESULT THE ROAMING SERV ICES PROVIDED 8 ITA NO. 75-81/JP/2013 A.Y 2004-05 TO 10-11. VODAFONE DIGILINK LTD. VS ITO TDS-2 JAIPUR. ON A STANDARD FACILITIES TO BE A TECHNICAL SERVICE. THE WHOLE ROAMING PROCESS IS AUTOMATICALLY AND THERE IS NO HUMAN INTE RFERENCE IN IT. THE HUMAN INTERFERENCE IS REQUIRED TO MAINTAIN THE R OBUST NETWORK ONLY TO ENSURE BREAK DOWN FREE SERVICE TO THE SUBSCR IBER. THE NETWORK OWNER HAS TO MAINTAIN FOR ITSELF, ITS NETWORK IN ROBUST CONDITION. THE TECHNICAL SUPPORT OF THE STAFF IS REQ UIRED TO MAINTAIN THE EQUIPMENT AND GAZETTES BUT IT IS NOT A SERVICE FOR ROAMING FACILITY PROVIDED TO THE SUBSCRIBER. THERE IS COMMER CIAL ARRANGEMENT TO CONNECT THE TECHNICAL NETWORKS BASICALLY TO BE AB LE TO DO BUSINESS. IN FACT DOT MANDATES THAT IT SHOULD BE SO CONNECTED. THERE IS NO PAYMENT MADE FOR CONNECTING THE NETWORKS. PAYMENTS ARE MADE FOR CALLS WHICH THE ROAMING SUBSCRIBER MAK ES. IF NO CALLS ARE MADE NO PAYMENT IS MADE IN SPITE OF THE FACT TH AT THE NETWORKS ARE INTER CONNECTED. HE FURTHER RELIED ON THE DECIS ION IN THE CASE OF CIT VS. BHARTI CELLULAR LTD. 319 ITR 139 (DEL) WHEREIN IT HAS BEEN HELD BY THE HONBLE DELHI HIGH COURT THAT ROAMING S ERVICES NOT INVOLVING HUMAN INTERFERENCE AND IS NOT TECHNICAL S ERVICES AS CONTEMPLATED UNDER EXPLANATION 2 TO SECTION 9(1)(VI I) OF THE ACT AND NOT LIABLE FOR TAX DEDUCTION AT SOURCE U/S 194J OF THE ACT. THIS VIEW HAS BEEN EARLIER HELD BY THE HONBLE MADRAS HIGH CO URT IN THE CASE OF SKYCELL COMMUNICATIONS LTD. VS. DCIT (2001) 251 ITR 53 (MAD) ORDER DATED 23/2/2001 WHEREIN THE HONBLE HIGH COUR T HAS HELD THAT PROVISIONS OF CELLULAR MOBILE TELEPHONE FACILITY TO SUBSCRIBE IS NOT A TECHNICAL SERVICE. DEDUCTION OF TAX AT SOURCE NEED NOT TO BE MADE FROM SUBSCRIPTIONS U/S 194J OF THE ACT. HE FURTHER RELIED ON THE DECISION IN THE CASE OF JAIPUR VIDYUT VITRAN LIMIT ED VS. DCIT (2009) 9 ITA NO. 75-81/JP/2013 A.Y 2004-05 TO 10-11. VODAFONE DIGILINK LTD. VS ITO TDS-2 JAIPUR. 123 TTJ 888 (JP TRIB) WHEREIN IT HAS BEEN HELD THAT SE CTION 194J WOULD HAVE APPLICATION ONLY WHEN THE TECHNOLOGY OR T ECHNICAL KNOWLEDGE OF PERSON IS MADE AVAILABLE TO OTHER AND N OT WHERE BY USING TECHNICAL SYSTEMS, SERVICES ARE RENDERED TO O THERS. RENDERING OF SERVICES BY ALLOWING USE OF TECHNICAL SYSTEM IS D IFFERENT FROM CHARGING FEES FOR TENDERING TECHNICAL SERVICES. THE APPLICABILITY OF SECTION 194J WOULD COME INTO EFFECT ONLY WHEN BY MAKI NG PAYMENT OF FEE FOR TECHNICAL SERVICES, ASSESSEE ACQUIRES CE RTAIN SKILL/KNOWLEDGE/INTELLECT WHICH CAN BE FURTHER USED B Y HIM FOR ITS OWN PURPOSE/RESEARCH. WHERE FACILITY IS PROVIDED BY USE OF MACHINE/ROBOT OR WHERE SOPHISTICATED EQUIPMENTS ARE INSTALLED AND OPERATED WITH A VIEW TO EARN INCOME BY ALLOWING THE CU STOMERS TO AVAIL OF THE BENEFIT BY USER OF SUCH EQUIPMENT, THE SAME DOES NOT RESULT IN THE PROVISION OF TECHNICAL SERVICE TO THE CUSTOMER FOR A FEE. THEREFORE, HE ARGUED THAT IN ROAMING CHARGES PAID BY THE ASSESSEE TO THE OTHER OPERATORS ARE NOT FEES FOR TECHNICAL S ERVICES. THE LD AR FURTHER RELIED ON THE DECISION IN THE CASE OF IGATE COMPUTER SYSTEMS LTD. VS. DCIT IN ITA NO. 1301 TO 1303& 1616/ PN/2013 FOR A.Y. 2007-08 TO 2010-11 WHEREIN THE HONBLE PUNE BE NCH OF ITAT HAD CONSIDERED WHETHER ANY HUMAN INTERVENTION IS RE QUIRED FOR PROVIDING THE DATA LINK SERVICES AND ARE LIABLE TO BE DEDUCTED TDS U/S 194J OF THE ACT AND HELD THAT PAYMENTS MADE FOR UTILIZING SUCH SERVICES WAS NOT IN THE NATURE OF TECHNICAL SERVICES GOVERNED BY SECTION 194J OF THE ACT. HE FURTHER RELIED ON THE D ECISION OF ITAT AHMADABAD BENCH IN THE CASE OF CANARA BANK VS. ITO 305 ITR (AT) 189 WHEREIN MICR CHARGES PAID TO SBI HELD NOT TO BE COVERED U/S 10 ITA NO. 75-81/JP/2013 A.Y 2004-05 TO 10-11. VODAFONE DIGILINK LTD. VS ITO TDS-2 JAIPUR. 194J READ WITH SECTION 9(1)(VII) EXPLANATION-2. HE ALSO RELIED ON THE DECISION OF HONBLE BANGALORE ITAT IN THE CASE OF BA NGALORE ELECTRICITY SUPPLY CO. LTD. VS. ITO(TDS) ORDER DATED 16/3/2012 2012(20) ITR (TRIB) 265 WHEREIN PAYMENT MADE BY STATE LOAD DISPATCH CENTER (SLDC) IS HELD NOT LIABLE TO BE DED UCTED TDS U/S 194J OF THE ACT. THE LD AR FURTHER RELIED ON THE DEC ISION OF HONBLE MUMBAI ITAT IN THE CASE OF MAHARASTRA STATE ELECTRIC ITY DISTRIBUTION CO. LTD. 25 TAXMAN 164, SIEMENS LIMITED 30 TAXMANN.C OM 200, ITAT KOLKATA BENCH DECISION IN THE CASE OF RIGHT FLO RISTS PVT. LIMITED ITA NO. 1336/KOL/2011 AND ITA DELHI BENCH DECISION IN THE CASE OF DELHI TRANSCO LTD. (ITA NO. 755(DEL)/2011 A.Y. 2005- 06. HE ALSO RELIED ON THE DECISION IN THE CASE OF DCIT VS. PARAS RAMPURIA SYNTHETICS LTD. 20 SOT 248 (DELHI). THE REVENUE FILE D APPEAL AGAINST THE ORDER OF HONBLE DELHI HIGH COURT IN THE CASE O F BHARTI CELLULAR LTD. BEFORE THE HON'BLE SUPREME COURT. THE HON'BLE S UPREME COURT HAS HELD AS UNDER:- IN CASES REQUIRING EXAMINATION BY TECHNICAL EXPERT S, THE DEPARTMENT OUGHT NOT TO PROCEED ONLY BY THE CONTRAC TS PLACED BEFORE THE OFFICERS. WITH THE EMERGENCE OF OUR COUN TRY AS ONE OF THE BRIC COUNTRIES AND WITH TECHNOLOGICAL ADVANCEMENT, T HE DEPARTMENT OUGHT TO EXAMINE TECHNICAL EXPERTS SO TH AT THE MATTERS COULD BE DISPOSED OF EXPEDITIOUSLY. FURTHER, THIS WO ULD ENABLE THE APPELLATE FORUM, INCLUDING THE SUPREME COURT, TO DE CIDE THE LEGAL ISSUES BASED ON THE FACTUAL FOUNDATION. HELD ACCORDINGLY, REMANDING THE MATTERS FOR DETERMI NATION WITH TECHNICAL ASSISTANCE, THAT IN THESE CASES, IN W HICH A CELLULAR PROVIDER UNDER AN AGREEMENT PAYS INTERCONNECT/ACCESS/PORT CHARGES TO BSNL/MTNL, THE Q UESTION WHETHER THE CELLULAR PROVIDER HAS RENDERED TECHNICAL SERVICES 11 ITA NO. 75-81/JP/2013 A.Y 2004-05 TO 10-11. VODAFONE DIGILINK LTD. VS ITO TDS-2 JAIPUR. AND HAS TO DEDUCT TAX AT SOURCE, DEPENDED ON WHETHER THE CHARGES WERE FOR TECHNICAL SERVICES, AND THIS INVOLV ED DETERMINATION OF WHETHER ANY HUMAN INTERVENTION WAS INVOLVED, WHICH COULD NOT BE DETERMINED WITHOUT TECHN ICAL ASSISTANCE. DECISION OF THE DELHI HIGH COURT IN CIT V. BHARTI CEL LULAR LTD. [2009] 319 ITR 139 SET ASIDE AND MATTER REMANDED TO THE ASSESSING OFFICER WITH DIRECTIONS. AFTER THIS DECISION, THE LD ASSESSING OFFICER EXAMI NED THE TECHNICAL EXPERT OF THE C-DOT ON 29/09/2010 IN RESPECT OF IUC AND WHICH WERE CROSS EXAMINED ON 04/10/2010 BY M/S BHARTI CELL ULAR LIMITED, DELHI. THE TECHNICAL EXPERTS REEXAMINED ON 04/10/201 0 ON THIS ISSUE AND ADMITTED THAT ROAMING SERVICES DOES NOT REQUIRE ANY HUMAN INTERVENTION, IT OPERATES AUTOMATICALLY. THE LD AR A LSO DRAWN OUR ATTENTION ON INDEPENDENT OPINION TAKEN FROM DIRECTO R CMAI, EX- DIRECTOR (C&M), BSNL, EX-MEMBER TELECOM COMMISSION O N 24/12/2010 AND ADMITTED THAT WHOLE INTERCONNECTED US ES PROCESS, NO MANUAL INTERVENTION IS REQUIRED. HE FURTHER DRAWN OUR ATTENTION ON PAGE NO. 651 TO 652 FOR POSTPAID AS WELL AS PREPA ID ROAMING CHARGES CHARGED BETWEEN THE OPERATORS FROM MR. KAPOO R SINGH GULIANI. THE APPELLANT ALSO TAKEN OPINION FROM FORME R CHIEF JUSTICE OF INDIA MR. KAPADIA ON IUC POST TECHNICAL EXAMINAT ION, CROSS EXAMINED AND REEXAMINATION. WHO ALSO OPINED THAT HO N'BLE SUPREME COURT DECISION DATED 12/08/2010 IS AN ORDER NOT JUDGMENT AS THE PRINCIPLE OF LAW WAS NOT RES-INTEGRA. THE WORD T ECHNICAL SERVICES HAVE GOT TO BE READ IN NARROW SINCE AS HEL D BY THE VARIOUS HONBLE HIGH COURTS AND THE TRIBUNAL BY APPLYING PRI NCIPLES OF NOSITUR A SOCIIS PARTICULAR BECAUSE THE WORD TECHN ICAL SERVICE IN 12 ITA NO. 75-81/JP/2013 A.Y 2004-05 TO 10-11. VODAFONE DIGILINK LTD. VS ITO TDS-2 JAIPUR. SECTION 9(1)(VII) READ WITH EXPLANATION-2 IN BETWEEN WORD MANAGERIAL CONSULTANCY SERVICES. FINALLY HE OPINED THAT SUCH SETTING UP/INSTALLATION, REPAIRING, SERVICING, MAINTENANCE ARE SEPARATE ACTIVITIES, THEY ARE BACK OFFICE FUNCTIONS AND ARE REQUIRE HUMAN INTERVENTION. BUT THE ROAMING PROCESS BETWEEN PARTIC IPATING ENTITIES IS FULLY AUTOMATIC AND DOES NOT REQUIRE ANY HUMAN I NTERVENTION. ACCORDINGLY, THE INTERCONNECTED USES CHARGE WILL NOT ATTRACT THE PROVISIONS OF SECTION 194J READ WITH SECTION 9(1)(VI I) READ WITH EXPLANATION-2 THERETO. THEREFORE, HE PRAYED TO DELET E THE ADDITION. IF WE EXAMINE THE ISSUE IN BOTH THE MATTERS, A IRRE SISTIBLE CONCLUSION ABOUT THE LIS INVOLVED IN BOTH THE APPEALS ARE THE SAME. ACCORDIN GLY, WE HAVE NO HESITATION TO APPLY THE REASONING GIVEN IN ITA NO. 656/JP/2010 TO THE P RESENT SET OF FACTS. FOR THE SAKE OF CLARITY, WE ARE HEREBY REPRODUCING PARA 6 OF THE SA ID ORDER AS UNDER :- 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. RECEN TLY THIS BENCH HAS DECIDED SIMILAR ISSUE IN THE CASE OF TATA TELE SE RVICES, WHICH IS IDENTICAL TO THE ASSESSEES CASE. THE FACTS OF THE CASE HAS BEEN DEMONSTRATED BY THE AR THAT THE ASSESSEE WAS ISSUING BILL ON NET AMOUNT ON MRP HAS BEEN FIXED ON PREPAID CARD SOLD. THE ASSESSEE HAS NOT TRANSFERRED ANY INCOME TO THE DISTRIBUTOR B UT THE DISTRIBUTOR WAS ALLOWED TO AVAIL THE AIRTIME TO THE EXTENT OF MRP PRICE. IN BOOKS OF ACCOUNT, THE ASSESSEE HAD CREDITED THESE RECEIPT S ON NET BASIS. 13 ITA NO. 75-81/JP/2013 A.Y 2004-05 TO 10-11. VODAFONE DIGILINK LTD. VS ITO TDS-2 JAIPUR. THE FINDING ON THE CASE OF TATA TELE SERVICES IS REPRO DUCED AS UNDER: 2.23. WE FIND MERIT IN THE CONTENTION OF LD. COUNSE L THAT THERE IS NO JURISDICTIONAL HIGH COURT JUDGMENT ON T HIS ISSUE. HONBLE KARNATAKA HIGH COURT JUDGMENT IS ELABORATE, DETAILED, 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 I S TO BE ADOPTED AS HELD BY HONBLE SUPREME COURT IN VEGETAB LE PRODUCTS LTD. AND VATIKA TOWNSHIP CASE (SUPRA). FROM THIS ANGLE ALSO IN THESE FACTS AND CIRCUMSTANCES HONBLE KARNATAKA HIGH COURT JUDGMENT IS APPLICABLE TO THE ASSESSEES CASE. RESPECTFULLY FOLLOWING THE SAME WE HOLD THAT: A. THE RELATIONSHIP BETWEEN ASSESSEE AND ITS DISTRIBUTOR S QUA THE SALE OF IMPUGNED PRODUCTS IS ON PRINCIPAL T O PRINCIPAL BASIS; THE CONSIDERATION RECEIVED BY ASSE SSEE IS SALE PRICE SIMPLICITER. B. THERE IS NO RELATIONSHIP OF PRINCIPAL AND AGENT BETWE EN ASSESSEE AND DISTRIBUTORS AS HELD BY AUTHORITIES BE LOW THEIR ORDERS ARE REVERSED. C. LOOKING AT THE TRANSACTION BEING OF SALE/PURCHA SE AND RELATIONSHIP BEING OF PRINCIPAL TO PRINCIPAL THE DI SCOUNT DOES NOT AMOUNT TO COMMISSION IN TERMS OF SEC. 194H , THE SAME IS NOT APPLICABLE TO THESE TRANSACTIONS. THEREFORE, ASSESSEE CANNOT BE HELD IN DEFAULT; IMPUGNED DEMAND RAISED APPLYING SEC. 194H IS QUASHED. ASSESSEES GROUNDS ARE ALLOWED. BY RESPECTFULLY FOLLOWING OUR OWN DECISION ON SIMILA R FACT, WE REVERSE THE ORDER OF THE LD CIT(A) AND ALLOW THE APPEAL OF TH E ASSESSEE ON THIS GROUND. 14 ITA NO. 75-81/JP/2013 A.Y 2004-05 TO 10-11. VODAFONE DIGILINK LTD. VS ITO TDS-2 JAIPUR. 3.3. IN THE LIGHT OF ABOVE, RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE BENCH IN THE MATTER OF M/S. BHARTI HEXACOM LTD. FOR THE ASSE SSMENT YEAR 2009-10, WE HEREBY REVERSE THE ORDER OF LD. CIT (A) AND ALLOW THE APPE ALS OF THE ASSESSEE RELATING TO GROUND NOS. 2, 3 & 4. HAVING ALLOWED THE APPEALS, WE DEEM IT APPROPRIATE TO PUT CAVEAT TO THE EFFECT THAT IN CASE THE HONBLE SUPRE ME COURT IN THE MATTER OF VODAFONE DECIDES THE ISSUE OF ROAMING CHARGES AGAINST THE AS SESSEE, THE AO OR ANY OTHER OFFICER AUTHORIZED IN THIS BEHALF MAY MOVE AN APPROPRIATE A PPLICATION. 4. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5/02/2016. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 5/02/2016. DAS/ VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- VODAFONE DIGILINK LTD., JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE INCOME TAX OFFICER, TDS-2, JAIPUR . 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.75 TO 81/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR 15 ITA NO. 75-81/JP/2013 A.Y 2004-05 TO 10-11. VODAFONE DIGILINK LTD. VS ITO TDS-2 JAIPUR. 16 ITA NO. 75-81/JP/2013 A.Y 2004-05 TO 10-11. VODAFONE DIGILINK LTD. VS ITO TDS-2 JAIPUR.