Appeal details
Counselvise Citation
[2021] 104 COUNSELVISE.COM (IT) 5675 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 10 month(s) 29 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-12-2021
Appeal Filed By
Assessee
Order Result
PartlyAllowed
Bench Allotted
DB-B
Assessment Year
2012-2013
Appeal Filed On
23-01-2020
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD ‘B’ BENCH, HYDERABAD. BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L. P. SAHU, ACCOUNTANT MEMBER (Through Virtual Hearing) ITA Nos.84 & 85/Hyd/2020 (Assessment Years : 2011-12 & 2012-13) M/s. Vodafone Idea Limited (Formerly Idea Cellular Limited) Hyderabad. PAN AAACB2100P .....Appellant. Vs. Dy. Commissioner of Income Tax, Circle 14(2), Hyderabad. .....Respondent. Appellant By : Shri Ronak Doshi (A.R.) Respondent By : Shri Narayan Murthy Naik (D.R.) Date of Hearing : 12.05.2021. Date of Pronouncement : 23.12.2021. O R D E R Per Shri S.S. Godara, J.M. : These two assessee's appeals for Asst. Years 2011-12 and 2012-13 arise against the Commissioner of Income Tax (Appeals)-8, Hyderabad’s common order dt.07.11.2019 passed in case Nos.10601 & 10602/CIT(A)-8/Hyd/2014- 2 ITA Nos.84 & 85/Hyd/2020 15; respectively involving proceedings u/s. 201(1) and 201(1A) of Income Tax Act, 1961 (‘the Act’). Heard both the parties. Case files perused. 2. The assessee's identical former substantive grievance pleads that both the learned lower authorities have erred in law and on facts in taking recourse to section 201(1) and 201(1A) TDS recovery mechanism regarding the alleged commission paid to pre-paid mobile distributors in its telecom services. Learned counsel raised vehemently contended that there exists no principal to agent relation between the assessee and its distributors giving rise to commission element qua the pre-paid recharge coupons. Mr. Doshi rather sought to buttress the point that the assessee has sold its coupons to the distributor giving credit to them regarding latter’s inbuilt profit element than commission attracting TDS deduction u/s. 194H of the Act. We find no merit in the assessee's instant former substantive grievance since the CIT(A) has duly taken note of hon’ble jurisdictional high court decision in M/s. 3 ITA Nos.84 & 85/Hyd/2020 Vodafone Essar South Ltd. Vs. DCIT in ITTA No.291 of 2013 Dt.17.07.2013. Their lordships have upheld the departmental stand pertaining to applicability of section 194H involving identical prepaid recharge coupons issued to the distributors. It further appears that the said assessee was the assessee’s group concern only. We thus adopt their lordships foregoing detailed reasoning mutatis mutandis and reject the instant former substantive grievance. 3. The fact also remains that the legislature has itself incorporated section 201(1) first proviso in the Act vide Finance Act, 2012 w.e.f. 1.7.2012 that an assessee shall not be treated to be the assessee in default for having not deducted TDS provided it furnishes the accountant’s certificate qua its payee to have furnished the latter return of income u/s. 139; taking into account such sum for computation followed by payment of due taxes thereupon; respectively. Case law CIT Vs. Ansal Landmark Township (2015) 377 ITR 635 (Del) holds the foregoing proviso r.w.s. 40(a)(ia) second proviso (inserted in the Act vide Finance 4 ITA Nos.84 & 85/Hyd/2020 Act, 2012 w.e.f. 1.4.2013) to be carrying retrospective effect being curative in nature. We thus restore the instant issue for the Assessing Officer’s factual verification in the very terms. This identical first and foremost substantive grievance is partly accepted for statistical purposes. 4. Next comes the latter common issue of applicability of “royalty” for the purpose of TDS deduction on domestic auto-roaming charges paid to other telecom operators. The CIT(A)’s detailed discussion affirming the Assessing Officer’s action treating the assessee in default for having not deducted TDS on the impugned alleged royalty payment reads as under : 5 ITA Nos.84 & 85/Hyd/2020 ---- Space left intentionally ----- 6 ITA Nos.84 & 85/Hyd/2020 7 ITA Nos.84 & 85/Hyd/2020 8 ITA Nos.84 & 85/Hyd/2020 9 ITA Nos.84 & 85/Hyd/2020 10 ITA Nos.84 & 85/Hyd/2020 11 ITA Nos.84 & 85/Hyd/2020 5. Learned department representative vehemently contended during the course of hearing that the CIT(A) has rightly upheld applicability of the impugned royalty provision 9(1)(vi) of the Act. He invited our attention to the historical background of “ spectrum dyamism” as well as the fact that the Department of Telecommunications, 12 ITA Nos.84 & 85/Hyd/2020 Ministry of Communications, Govt. of India also uses the very term “royalty charges” while receiving such payment from the concerned spectrum allottees. 6. We find no merit in the Revenue’s instant stand. It is made clear that section194J (1)(c) of the Act stipulating TDS deduction on royalty makes it clear in Explanation (ba) that “royalty” shall have the same meaning as in Explanation 2 clause (i) to (vi) of sub-section (1) of section 9 of the Act. The said latter provision defines royalty as follows : “ Section 9(1)(vi) - Explanation 2.—For the purposes of this clause, "royalty" means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head "Capital gains") for— (i) the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property ; (ii) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trade mark or similar property ; (iii) the use of any patent, invention, model, design, secret formula or process or trade mark or similar property ; (iv) the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill ; (iva) the use or right to use any industrial, commercial or scientific equipment but not including the amounts referred to in section 44BB; (v) the transfer of all or any rights (including the granting of a licence) in respect of any copyright, literary, artistic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting 32 [***] ; or (vi) the rendering of any services in connection with the activities referred to in sub-clauses (i) to (iv), (iva) and (v).” 13 ITA Nos.84 & 85/Hyd/2020 There is no indication in the Assessing Officer’s TDS recovery order or in the CIT(A)’s findings as to whether the assessee's impugned payments made to the spectrum holder(s); as the case may be, satisfies any of the foregoing clauses defining royalty or not. All the assessees have availed is a standard facility without any custgomisation. The Revenue’s case is that the assessee fails to dispute the Govt. of India’s action collecting royalty qua spectrum (supra). We observe that the said stipulation between assessee's payee(s) and Govt. to this effect does not in any way mean that it itself has made any royalty payment to very payee(s) for utilizing/uplinking the spectrum in question. We thus rely on the Tribunal’s co-ordinate bench order (supra) that such interlinking of telecom services fails to specify the royalty element test in the very terms. The Revenue’s last argument invoking TDS mechanism going by the assessee suo moto deduction in Assessment Years 2015-16 and 2016-17 (supra) does not ipso facto attract the 14 ITA Nos.84 & 85/Hyd/2020 impugned statutory provisions. We lastly conclude that the specific definition prescribed by the legislature in the Act regarding payment of royalty would override the agreements and corresponding terminology employed between the Govt. of India, Telecom Department with the corresponding spectrum allottees going by stricter interpretation as per hon'ble apex court’s decision in Commissioner of Customs Vs. Dilip Kumar & Co. (2018) 9 SCC1 (SC). We accordingly proceed to decide the assessee's instant identical latter substantive ground in both these appeals against the department. Ordered accordingly. No other ground has been pressed before us. 6. These assessee's appeals are partly allowed in above terms. A copy of this common order be placed in the respective case files. 7. We lastly acknowledge that although the instant appeals are being decided after a period of 90 days from the date of hearing as per Rule 34(5) of the IT(AT) Rules 1963, the same however, does not apply in the 15 ITA Nos.84 & 85/Hyd/2020 covid lockdown situation as per hon'ble apex court's recent directions dated 27-04-2021 in M.A.No.665/2021 in SM(W)C No.3/2020 'In Re Cognizance for extension of limitation' making it clear that in such cases where the limitation period (including that prescribed for institution as well as termination) shall stand excluded from 14th of March, 2021 till further orders. Order pronounced in the open court on 23rd Dec., 2021. Sd/- Sd/- (L.P. SAHU) (S.S. GODARA) Accountant Member Judicial Member Hyderabad, Dt.23.12.2021. * Reddy gp Copy to : 1. M/s. Vodafone Idea Limited, (Formerly known as Idea Cellular Limited), 5-9-62, KLK Estate, Fatehmaidan Road, Basheerbagh, Hyderabad-500 001 2. DCIT, Circle 14(2), Hyderabad. 3. Addl./JT.CIT, TDS Range-1, Hyderabad. 4. CIT(Appeals)-8 / TDS, Hyderabad. 5. DR, ITAT, Hyderabad. 6. Guard File. By Order Sr. Pvt. Secretary, ITAT, Hyderabad.
