Income Tax Appellate Tribunal - Delhi
M/S. Unitech Wireless (Tamilnadu) Pvt. ... vs Acit, New Delhi on 31 May, 2022
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'G', NEW DELHI
Before Sh. Saktijit Dey, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
ITA No. 2355/Del/2015 : Asstt. Year : 2010-11
ITA No. 2356/Del/2015 : Asstt. Year : 2011-12
Unitech Wireless (Tamil Nadu) Pvt. Ltd., Vs ACIT,
The Master Piece Building, Golf Course Circle-78(1),
Road, Sector-54, Gurgaon, New Delhi-110092
Haryana-122001
(APPELLANT) (RESPONDENT)
PAN No. AAACU9188Q
ITA No. 2925/Del/2015 : Asstt. Year : 2011-12
ITA No. 2926/Del/2015 : Asstt. Year : 2012-13
ACIT, Vs Unitech Wireless (Tamil Nadu) Pvt. Ltd.,
Circle-78(1), Basement, 6, Community Centre, Saket,
New Delhi-110092 New Delhi-110017
(APPELLANT) (RESPONDENT)
PAN No. AAACU9188Q
Assessee by : Sh. Deepak Chopra, Adv. &
Ms. Manasvi Bajpai, Adv.
Revenue by : Sh. H. K. Choudhary, CIT DR
Date of Hearing: 17.03.2022 Date of Pronouncement: 31.05.2022
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeals have been filed by the assessee as well as the Revenue against the orders of ld. CIT(A)-13, New Delhi dated 27.02.2015.
2 ITA Nos. 2355, 2356, 2925 &2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
Brief facts and background of the case
2. The assessee company is engaged in the business of prepaid mobile telecommunication services. A survey operation u/s 133A of the Act was conducted in the business premises of the appellant to verify the applicability of TDS provisions. Subsequently, the case was picked up for verification u/s 201(1)/201(1A) of the Act and assessment was completed on 16.03.2012 and 25.03.2013 raising a demand of Rs.3,62,76,960/- and Rs.21,45,41,917/-, respectively, on account of non deduction of taxes on margin of profit given to the prepaid distributors on sale of prepaid talk time and also non deduction of taxes on roaming charges. The demand raised also includes Rs.9,26,035/- and Rs.21,37,550/- for A.Y. 2010- 11 and 2011-12 respectively, as demand raised in the ITD software for defaults found in filing of quarterly returns.
3. Aggrieved the assessee filed appeal before the Ld. CIT(A) who confirmed the order of the Assessing Officer.
1) Sale of prepaid talk time:
4. The AO treated prepaid distributor as an agent of the company to whom the company sold the prepaid cards at a rate lower than the MSC (Maximum Service Charge) printed on the prepaid card as an outright sale, thus resulting in a spread between the two values. The AO has applied the provisions of Section 194H to such a spread and has consequently held this spread as a commission given to the distributors. On this commission, the AO has determined that the company should have deducted tax which was not done and therefore, he 3 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
computed the tax in default u/s 201(1) & 201(1A) to be Rs.3,49,35,242/-.
5. The AO relied on the decision of Hon'ble jurisdictional High Court in the case of Idea Cellular Ltd., 325 ITR 148. The appellant's contention is that the relationship between the appellant and the prepaid distributors is not that of 'Principal to Principal' and hence not in the nature of commission and Section 194H is not applied. The appellant also argued that there is no payment made to the distributors and nor any amount credited into their accounts and hence Section 194H is not applicable. It was also pleaded that the decision of the jurisdictional High Court in the case of Idea Cellular Ltd. is distinguishable in-facts. It was argued that the decision of the Hon'ble High court of Karnataka in the case of Bharti Airtel Ltd. are similar to the case of the assessee wherein the Hon'ble High Court held that in the case of transaction of prepaid telephony, where prepaid cards are sold at discount price there is no relationship of principle to agent which is a condition president for application of Section 194H of the Act.
6. The ld. Counsel has also tried to distinguish the distributorship agreement on account of consideration, non- compete clause and termination which is as under:
4 ITA Nos. 2355, 2356, 2925 &2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
Relevant Clauses of the Contract Particulars CIT v. Idea Cellular, Distributorship Agreement with Remarks/Differenc [2010] 325 ITR 148 M/s. Agarwal Enterprises dated e (Del.) HC [Relevant 21.10.2009 Paragraphs Extracted]
1. - Discount offered 5. Consideration - The Hon'ble a. In consideration of the High Court of Considera Distributor fulfilling its Delhi in the tion obligations contemplated under case of Idea this Agreement, UNITECH Cellular WIRELESS shall provide to the concluded that Distributor, the Service Cards the relationship at Landed Price as may be between communicated to the Distributor telecom service by UNITECH WIRELESS from provider and the time to time. PMA was of principal-to-
b. The Distributor shall be paid agent thus the commission and/or incentives discount offered for Services rendered as agreed was treated as rom lime to time. The said commission.
commercial terms shall also
form part of fits Agreement - In the facts of
the present
c. The commission and/or case, telecom
incentive are subject to service provider
variation during the term of this has paid
Agreement at the sole commission for
discretion of UNITECH the services
WIRELESS and the same shall provided under
be communicated in writing to the agreement
the Distributor. and also
withheld tax on
d. Where applicable, any sums or the same.
commissions due to the
Distributor by UNITECH
WIRELESS may be offset by
U N IT E C H W IR E L E S S a g a i n s t a n y
payments due to UNITECH
WIRELESS by the Distributor.
5 ITA Nos. 2355, 2356, 2925 &
2926/Del/2015
Unitech Wireles Tamil Nadu Pvt. Ltd.
2. Non- "2.............. The terms - There is no non-compete clause - In the case of compete of in the agreement entered between CIT v. Idea Clause agreement further the assessee and the distributor. Cellular, it is provided that without evident from the written consent of non-compete ICL the distributors clause that the (PMAs) shall not distributors were directly or indirectly: in complete control of the
(i) Market, solicit, telecom service sell, offer and provider, accept offers for establishing telephony services principal- agent that compete with relationship.
ICL's telephony
services. - However, in the
assessee's
(ii) Induce or refer contract, there is
any actual or no non-compete
prospective clause implying
subscriber of ICL's that the intent of
telephony seivices to the assessee was
subscribe to any never to hire an
Competitive agent, rather the
Telephony Services. distribution
channel was
(iii) Provide any based on
Company or principal- to-
Customer principal basis.
information/data to
any competitive
entity"
6 ITA Nos. 2355, 2356, 2925 &
2926/Del/2015
Unitech Wireles Tamil Nadu Pvt. Ltd.
3. "25. No doubt, as 12. Effect of Termination - This is based on
Terminati per Clause 6(a) of standard market
on Clause the Agreement, PMA a. The parties agree that upon practice wherein
is supposed to make termination of this Agreement for all unused stock is the payment in any reason the Distributor, shall returned to the advance. That would immediately return all equipment telecom service not make a n y a n d f u r n i t u r e s u p p l i e d b y U N IT E C H p r o v i d e r because difference to the WIRELESS forthwith upon request he is no more the nature of transaction and remove all UNITECH WIRELESS distributor in view of Clause signage and all other items however no refund 25(d) of the indicating that the Distributor's is paid on the Agreement, which Office was operated as UNITECH unused talk-time. stipulates as under: WIRELESS distributorship.
"25(d) Upon the
termination or d. The Distributor and its
expiration of this personnel shall cease to promote,
Agreement for any market, or advertise for the
reason, PMA shall Services for Unitech Wireless with
discontinue the immediate effect and shall not be
marketing/distributin released from any obligation
g/offering for sale, arising out or any transaction Idea Chitchat Pre- entered into or completed prior to paid Services, and the date of such termination or shall forthwith return expiry.
to ICL the entire stock of Pre-paid SIM e. The Distributor shall at its own Cards/Recharge expense return to UNITECH Coupons remaining WIRELESS promptly all with him and/or his information, documentation, Authorized Retailer. samples, advertising, promotional ICL shall pay to PMA or sales materials relating to the for such Pre-paid Services in possession of the SIM Distributor and materials Cards / R e c h a r g e c o n f i d e n t i a l t o U N I T E C H W IR E L E S S Coupons received by and / or software and future it from the marketing plans or future models distributor." o f t h e U N I T E C H W IR E L E S S t o g e t h e r with any copies thereof or any other documents entrusted to the D i s t r i b u t o r b y U N I T E C H W IR E L E S S , f. The Distributor shall within 7 days of termination, settle all the outstanding dues of Unitech Wireless & retailers, arrange to return all the documents and properties of Unitech Wireless or cost thereof.
13. Termination Assistance Distributor shall, at Unitech Wireless's request, provide assistance in transferring Services back to Unitech Wireless, or a Third Party nominated by Unitech Wireless upon termination or expiration of this Agreement ("Termination Assistance"). The Termination 7 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
7. In this background, we have gone through the order of the ld. CIT(A) wherein the following facts emerge:
• The reason given by AO, the submission of the appellant and the judicial pronouncements discussed by AO as well as by the appellant are considered. The appellant submitted that from January, 2007 it appoints distributors for sale of prepaid connection that includes recharge vouchers, electronic top-up, internet and other modes of electronic services. For this purpose, the appellant enters into arrangements in the form of agreement with the distributors on a principal-to-principal basis. Under this arrangement, the appellant transfers its pre-paid products to its distributors at a discount and the distributors in turn distribute the same to the retailers. The retailers, thereafter, transfer the same to the ultimate subscribers. At each level of the distribution, the party distributing the pre-paid products retains a margin for its efforts and risks assumed, while the appellant, being the service provider assumes the responsibility for provision of service to the subscriber, similar to what a manufacturer owes by assuming the product liability towards the consumer. Accordingly, the appellant provides discount on the MRP of the cards and only the net income is recorded in the books of accounts.
• The appellant also distinguished the case of Idea Cellular Ltd. 325 ITR 148 relied on by the AO on the ground that there is no provision of post delivery loss, pilferage or damage of pre-paid SIM card/recharge coupons in the 8 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
agreement between the appellant and the distributor as it was a factor in the decision of Hon'ble High Court of Delhi in the case of Idea Cellular Ltd. Further, the appellant submitted that in its case, the agreement entered into between the appellant and the pre-paid distributors does not provide that the appellant would be responsible to take back the unsold stock upon termination of the agreement. On the contrary, the agreement entered into by the appellant and its pre-paid distributors specifically provides that upon termination of the agreement, the Appellant shall not be liable to pay any kind of compensation to the said distributors and hence, shall not liable to compensate the distributors for any unsold stock as in the case of Idea. The aforesaid fact further proves that the relationship between the Appellant and its pre-paid distributors is that of a 'principal to principal' and the pre-paid distributors do not act as an agent of the Appellant. Hence, the appellant concluded that the decision of the Hon'ble Delhi High Court in the case of Idea Cellular Ltd. is clearly distinguishable on facts and hence cannot be applied to the appellant's case.
• The applicability of Section 494H in the case of amount received by the appellant from the distributors of prepaid SIM cards depends on two issues, whether there is any principal to principal relationship or principal to agent relationship. In the case of principal to principal relationship there is no applicability of 194H and in the case of principal to agent relationship the TDS provision will apply. This issue depends on whether sale of SIM card 9 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
to the distributor is a service or commodity. In the cases of M/s Vodafone ESSAR South Ltd. and M/s Idea Cellular Ltd. it has been held that the sale of prepaid SIM Cards is done through agreement entered into between the assessee and his dealers and hence the agreement establishes principal and agent relationship between the two parties and therefore, any discount, commission made to such parties are liable for deduction to tax at source u/s 194H of the Act. In the case of BSNL Vs. UOI 282 ITR 273 the Hon'ble Supreme Court held that telephone service is nothing but a service. There is no sales element apart from the obvious one related to the hand set. It is also held that the SIM Card sold to the customer is not goods sold but supplied as a part of service. Against this principle of the Hon'ble Supreme Court the appellant relied on the decision in the case of Bharti Airtel Ltd. Vs. DCIT (2014) 52 Taxmann.com 31(Kar), wherein it is held that "Sale of SIM cards involves sale of right to services. Therefore, the relationship between the assessee and the distributor would be that of principal and principal and not principal and agent. Moreover, where SIM card is sold at discounted price, there is no payment of commission or brokerage to the distributor. Hence, TDS u/s 194H is not applicable on sale of SIM card and prepaid discharge coupons by telecom companies to distributors at discounted MRP."
• However, the Hon'ble High Court also observe that in the case of prepaid SIM card subscriber pays for the talk time in advance and its balance depletes as and when he uses it. For continuation of using the card the user buy a 10 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
recharge voucher. Thus, at least in the case of prepaid SIM card, the concept of goods sold is not applicable. Moreover, the decision of the Hon'ble jurisdictional High Court in. the case of Idea Cellular Ltd. is challenged by the assessee in the Apex Court. The decision in the case of Bharti Airtel Ltd. given by Hon'ble Karnataka High Court (Supra) emphases on 'right to service' which is transferable. The concept of 'right to service' and 'service' has not reached the finality in this case.
• Second issue is regarding the accounting principle applied in the recording of the discount amount. If on delivery of the card, the assessee raise bill for Rs.100 and records Rs. 100 as sale and debits Rs. 20 in the P& L account, then certainly the discount given on Rs.20 is liable for TDS. But if the assessee raises the bill for Rs. 80 and records only Rs. 80 in the credit side of the P &L account, then the TDS provision will not be applicable. As submitted by the appellant, the appellant is crediting Rs. 80 in the P & L account and thus, no TDS will be applicable on this amount as the MRP is not recorded in the account at all. In view of this, the AO is directed to verify the accounting principle applied by the appellant in this case. However, respectfully following the decision of the jurisdictional Hon'ble high court in the case of idea cellular limited 325 ITR 148 on this issue, it can be held that the distributors appointed by the appellant are rendering service to the principal company thereby there is a principal agent relationship and hence discount offered to the distributors is in the nature of commission liable to TDS u/s 194H of the Act.
11 ITA Nos. 2355, 2356, 2925 &2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
Therefore, the addition raised is confirmed and the ground of appeals dismissed.
8. Having gone through the order of the ld. CIT(A) and after hearing the arguments of the assessee and also after going through the different clauses of the agreement which do not tangibly differentiate from the facts examined by the Hon'ble Jurisdictional High Court in the case of Idea Cellular Ltd., we decline to interfere with the order of the ld. CIT(A).
2) Non-deduction of Tax u/s 194J on the Roaming Charges:
9. The other ground raised by the assessee pertains to non deduction of tax u/s 194J on the roaming charges paid by the appellant to other telecom operators.
10. The appellant relied on the decision of Hon'ble Delhi High Court in appellant's own case in respect of 'inter connection charges'. The contention of the appellant is that treatment of roaming charges as 'fees for technical services' on the basis of human intervention is not correct as manual interference exists only at the time of set up and fault repair.
11. For A.Y. (2010-11), the AO raised a demand u/s 201(1) & section 201 (1A) of Rs. 4,15,684/- on an amount of Rs.26,46,126/- being the amount of roaming charges paid to Idea Cellular Limited. Similarly, for A.Y. 2011-12, on an amount paid on account of roaming charges Rs. 12,73,37,034/-, the AO raised demand of Rs.204,72,785/-. As per the Ld.CIT(A), 12 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
12. The AO also provided a copy of the expert's opinion to the appellant for cross examination. The contention of the appellant was that roaming charges are not in the nature of 'fee for technical services' has not been considered by the AO on the basis of the order of the AO in the case of Vodafone Essar Mobile Services Ltd. (VEMSL) for F.Y. 2002-03, as per the direction of the Hon'ble Supreme Court in Civil Appeal No. 6692 dated 12.08.2010.
13. The AO reproduced the entire statement recorded on this issue from C-DOT Considering the facts and circumstances of appellant's case similar to VEMSL, the AO considered the roaming charges paid to the distributors as 'fee for technical services'. Since, the appellant failed to make TDS on these fee for technical services, the AO raised the demand u/s 201 of the Act.
14. The AO relied on the order in the case of VEMSL where based on the expert opinion, it was held that there is human intervention involved in the process of transfer of calls from the appellant to other service providers and hence the payment made by the appellant to other service providers is in the nature of 'fees for technical service' involving TDS under the provision of Section 194J. On the other hand, the contention of the appellant is that roaming charges is in fact a payment on behalf of the subscriber of the appellant who has temporarily become a subscriber of another service provider. Even if this is considered as payment by the company on its own right, the judgment in the case of Skycell will still apply and additionally 13 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
the decision of Hon'ble Delhi High Court in the case of Bharti Airtel.
15. The AO's decision is based on the order passed by the Hon'ble Supreme Court in the case of CIT vs. Bharti Cellular & other in 193 Taxman 97 (SC). The Hon'ble Apex Court vide its order dated August 12, 2010 observed that human intervention is essential for any fee/charges to get covered under the definition of 'fees for technical services' as defined in Explanation 2 to clause (vii) of section 9(1) of the Act. However, since the expert opinion was not available on record on whether any 'human intervention' is involved in the provision of interconnect services, the Hon'ble Supreme Court remanded the matter back to the office of the learned TDS officer for seeking expert opinion on this aspect and thereafter for fresh adjudication on this matter basis such facts. In accordance with the direction of Hon'ble Supreme Court, examination of the technical experts - Mr. Tanay Krishna, Group Leader (Project Planning) at C-DOT, Delhi and Mr. Ashok Mittal Group Leader (CLH) at C-DOT, Delhi was conducted in the office of the CIT- TDS, New Delhi (CIT-TDS) on September 29, 2010, wherein, their statements were recorded and thereafter, the appellant was also given an opportunity to cross examine the technical experts. Subsequently, the AO passed an order u/s 201(1)/201(1A) dated 31.12.2010 concluding that human intervention is required in the process of interconnection.
16. The AO held that although the exercise of obtaining expert's opinion during the proceedings u/s 201 of the Act was not carried out in appellant's case, considering similar facts of 14 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
the case, prominence can very well be drawn. The appellant argues to distinguish the findings of the expert opinion in the case of VEMSL on the ground that in the roaming transaction process, there is no delivery of service by any human. The appellant admits that human intervention is required to maintain robust network to ensure break down free service to the subscriber. It is mentioned that technical support staff is used for correcting the system to keep the network in robust condition. The appellant contended that the maintenance of network has no relation to the roaming calls.
17. The revenue relied on opinion by the experts that "no human intervention is required in the process of carriage of calls, which is fully automatic and is a standard facility available to all. Human intervention is required at the interconnect set up stage including configuration, installation, testing etc. and capacity enhancement, monitoring including network monitoring, maintenance, fault identification and repair of telecom network by the roaming operators'' and came to a conclusion that it cannot be said that roaming service is not a technical service. The revenue held that there is a technical arrangement between two telecom companies for providing roaming services to their customers which is possible only with use of sophisticated equipment. Roaming service is a technical service provided by one operator to another operator and not directly to the subscriber. It is a service liable for service tax. Hence, the revenue held that provisions of Section 194J of the Act are applicable on the roaming charges paid by the appellant to the telecom companies.
15 ITA Nos. 2355, 2356, 2925 &2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
18. We have gone through the statement recorded by the Assessing Officer, the relevant portions are as under:
Q.3. What is the process of carriage of cells originating on network of one operator and terminating on the network of the other operator?
The call from one network to the other network flows automatically, i.e. without any human intervention. Once a call originates, the call travels automatically. In establishment of a call, there is no human intervention i.e. once a subscriber dials and the call gets connected without any fault, then there is no human intervention. Intervention is required only when the call is not successful, i.e. the call fails due to any reason.
Q.4. Is any human intervention involved in the entire process of carriage of call from one operator to another?
No, as stated above, no human intervention is required in the process of carriage of calls. However, human intervention is required at the inter-connect set-up stage (including configuration, installation, testing etc.) and capacity enhancement, monitoring (including network monitoring), maintenance, fault identification, repair and ensuring quality of service as per interconnect.
Q.5. From the perusal of your answer to Question 4 of your statement, it appears that the phases described thereon are restricted to merely setting up of the inter-connect 16 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
between the networks of the two operators and not during actual carriage of the cal by one operator for the other. Please confirm.
Yes.
Q.6. With reference to your comments under clause (d) in answer to Question 6 of your statement is the network monitoring undertaken specifically for the point of interconnect or such monitoring is required for the telecom network as a whole?
Monitoring is undertaken by the operators for their own network upto the point of interconnect. Failures in the network are thrown up automatically by the system but human intervention is required or attending to them, i.e. for reading the message and taking corrective action.
Q.7. From 0perusal of your answers to various questions posed to you by the Tax Department, you have mentioned that services of a technical expert are required for inter- connect arrangement. Please confirm whether such services are required for provision of inter-connect services, i.e. carriage of calls from one network to another, or are primarily for fault detection and removal.
Please refer to answer to Question 4 of this cross examination.17 ITA Nos. 2355, 2356, 2925 &
2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
Q.8. Regarding your answer to Question 12 of your statement, please re-confirm that monitoring/supervision referred to their relates to monitoring/supervision of their own network by the respective telecom operators.
Yes. It is in the interest of every operator to undertake monitoring of its network to identify faults/defects in the system on a real time basis and take remedial action. The network maintenance is not required at the behest of the other party. Each party maintains its network for itself."
19. The contentions of the revenue in the case of CIT vs. Vodafone South Ltd. which are similar in the instant case are as under:
1) Roaming is not possible unless an agreement is entered into between the two service providers.
2) Entire Roaming facility is based on IMSI which consists of MNC (Mobile Network Code a unique code allotted to assessee) and SIM which is also issued by the assessee.
3) Roaming services is a highly technical service which is possible with the use of equipment such as MSC, VLR, Radio Network, Tower, BTS, BSS and highly advanced technology.
4) It is a technical arrangement between the two telecom service providers to connect their equipments, network and services to enable their customers to have access of telecom network wherever they move.18 ITA Nos. 2355, 2356, 2925 &
2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
5) All the necessary arrangements are being made by the Home service provider to enable its subscriber to get connected in all other circles. The subscriber need not interact act for any roaming services with other service provider. It is the technology established between two service providers which executes roaming system.
6) The subscriber has to get roaming activated through Home Service Provider. Only then he can access the services of service provider of another circle.
7) Whenever the subscriber tries to access the network of service provider of other circle, service provider of other circle shall be authorized by the Home Service provider as per the agreement entered into between the two service provides. If there is no roaming agreement between two operators or if the home telecom operator does not authenticate, subscriber cannot enjoy roaming facility.
8) The subscriber does not require to change the SIM card but by using the SIM card of Home Service provider he can access other network.
9) As per the agreement the other, service provider raises bill on the Home Service provider and only the Home Service Provider is liable to pay the amount irrespective of payment made by subscriber. The subscriber and service provider of other circle are no way liable for any thing with each other.
19 ITA Nos. 2355, 2356, 2925 &2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
10) If the subscriber does use SIM of Home Service provider he cannot access telecom operator of other circle unless he purchases new SIM card.
11) It is clear from the bills raised by telecom operator of other circles that they have changed service tax to assessee and the assessee has paid the same. This simply means that services were provided by one operator to other and not to customers directly. The Service Tax Act has also recognized roaming services as taxable services the Finance Bill, 2007.
12) The entire system is to be monitored/managed by the highly stalled technical. A small technical problem can disturb the connectivity of entire region. To avoid such eventuality the entire process is being monitored by skilled persons.
13) This clearly shows that the service provider of another region to whom roaming charges are paid is not providing services directly to ultimate customer but it is providing services to another telecom operator to facilitate its customers.
14) The provision of section 194J refers to "any sum" paid by the payer and does not distinguish between the payment made by someone on its behalf or its customer's behalf. Therefore, the plea of the assessee that the payment received by the assessee from the customers of the assessee and paid to other mobile 20 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
company does not fall under TDS provision, is not tenable. From the above, it is clear that Home Service Provider takes technical services of other telecom service provider to facilitate the subscriber to access telephone wherever he visits and therefore it is required to deduct TDS from the payments made to obtain these services.
20. The analysis of the Hon'ble High Court of Karnataka in the case of Vodafone South Ltd. is reproduced for clarity:
"9. Now the assessee is in appeal before us. T he ld A R of the assessee has submitted that the re venues proposition is that though the roaming happe ns automatically but because equipm ent is use d to rende r the ro aming service, because technical manpower is nee ded to operate and maintain the technical e quipment therefore , roaming per se is rende ring of technical se rvices and therefore, the amount paid for roaming is technical fee in terms of Sectio n 194J read with Explanation 2 to Section 9( 1) ( vii) of the Act. The ld. AR explaine d the roaming se rvice and submitted that Hexacom subscribe r in Jaipur travels o f Mumbai switche s on his mobile device afte r re aching Mumbai. Where the subscriber travels by land he automatically receives a message transferring to the roaming ne twork on visiting another telecom , circle.
• Visiting netwo rk (e.g. Airtel in Mumbai) locates mobile de vice and identifies that it is not registered with its systems, i.e . VLR.
• Visiting Network automatically contacts home network of Hexacom subscriber, i.e . HLR and gets service informatio n about roam ing de vice using IMSI number -IMSI number is a 21 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
unique subscribe r identity numbe r granted to the customer at the time o f subscriptio n.
• Visiting ne twork maintains tempo rary subscriber reco rd for the said mobile device and pro vides an inte rnal temporary phone number from backend system to the mobile device which is not visible to human.
• Home network also updates its re giste r to indicate that the mobile is on visitor netwo rk so that information sent to that device is co rrectly routed.
• The Hexacom's subscribe r in Mumbai, who is temporarily registere d as Airte l's subscriber makes calls in Mumbai and the minutes are registered in his ide ntity for which he has to pay thro ugh He xacorn Jaipur.
• Alternative ly, a calle d from Jaipur makes a call to Hexacom's subscribe r which is ro ute d to the home netwo rk o f Hexacom subscribe r in Jaipur.
• Home network then fo rwards all incoming calls to the temporary phone number which terminates at the device o f roaming, subscriber (in Mumbai) who is now using the services of the visiting ne twork (i.e ., Airte l): * The entire process above is automatic and does not involve any human interventio n at any stage . Billing process • Usage of ro aming subscribe r in visited netwo rk is captured in a file called T P, i.e . transferre d account procedure for GSM/CIBER, i.e ., cellular inte r-carrier billing e xchange record for.22 ITA Nos. 2355, 2356, 2925 &
2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
• Tap file contains details o f calls made by subscriber, viz., location, calling party, time of call and duration, e tc, TAP/CIBER files are rated as pe r tariffs charged by visiting netwo rk o perator.
• such TAP/CIBER file is transfe rred to home network of subscribe r i.e. to Hexacom).
• Home network (i.e. Hexacom) the n bills these calls to the Hexacom's subscriber and pays ro aming charges based on the TAP to the visite d network ope rator (i.e. A irte l) The roaming operator charges as per the roaming agreement with Hexacom, whereas the subscribe r is bille d as per the tariff-subscribe d. • The entire process is automatic. I t is concluded that the abo ve transactio n flo w that the service of providing airtime by visiting telecom circle is directly to the subscribe r and not to Hexacom. The subscriber of Hexacom uses the netwo rk set up by the visiting circle and instead of amount being recove red from the roaming subscribe r, the visiting circle sends the air m inutes to be recove red fro m the roaming subscriber to the Home circle for reco very from the subscriber who had visite d the visiting circle. Technical fe es • It is an acce pte d fact that technical service can be said to have been rendere d if there is an invo lve ment of human element if there have bee n use of cerebral faculties in the provision of technical se rvices by the recipient o f fee .
• This is so because the wo rd "technical" comes in between the words "managerial and co nsultancy services". Base d upon the principles of "nositur a sociis" the re has to be an e lement of manual interve ntion at the time when the service is being rende red.23 ITA Nos. 2355, 2356, 2925 &
2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
• Technical services should have a fact situatio n of imparting technical knowle dge involving or concerning applied and industrial scie nce.
The ld AR furthe r argued that finding of the ld. CIT(A) are base d on contract be tween two operators but contract has no re levancy on the nature o f the se rvice whe ther technical or o the rwise. The ld. CIT(A) partly accepted that ro aming process is technical because it use s various instruments such as MSC (Mobile Switching Centre) , VLR (Visito r Location Registe r), Radio network, towers, BTC etc, but the system is o perate d/manage d by the Highly skilled pro fessio nals. The assessee's argument was that the roaming service is manage d automatically by machines and payment for ro aming charges are not fees for technical service s. In case of fault in a breakdo wn of a system, the pro fe ssional people are require d to monitor the telecom netwo rk to be in a robust conditio n in order to do business for self. This monito ring does not have any connection with ro aming charges paid by the subscriber. I f a te lecom netwo rk breaks do wn there is no business and thus no payment. Existence o f IMSI is o nly a facility to communicate and does no t result the roaming services pro vided on a standard facilities to be a technical se rvice. The whole roaming process is automatically and the re is no human interfere nce in it. The human inte rference is require d to maintain the robust netwo rk only to ensure break down free service to the subscribe r. The netwo rk owne r has to maintain for itself, its network in ro bust conditio n. The technical suppo rt o f the staff is required to maintain the equipment and gazettes but it is no t a se rvice for roaming facility pro vided to the subscriber. There is commercial arrangement to connect the technical netwo rks basically to be able to do business. In fact DOT mandates that it should be so connecte d. T here is no payment made fo r connecting the networks. Payments are made fo r calls which the ro aming subscriber makes. If no calls are made no 24 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
payment is made in spite of the fact that the networks are inter connecte d. He further relied on the decision in the case of CIT v. Bharti Cellular Ltd. 319 ITR 139 (Del) where in it has been held by the Hon' ble Delhi High Court that roaming services not involving human inte rfe rence and is not technical se rvices as contemplate d unde r Explanation 2 to Section 9(1) (vii) 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 Hon'ble Madras High Court in the case of Skyce ll Communications Ltd. v. DCIT(2001) 251 ITR 53 (Mad) order date d 23.02.2001 where in the Hon'ble High Court has held that provisions of Ce llular mobile tele phone facility to subscribe is not a technical service. De ductio n of tax at source need not to be made from subscriptio ns U/ s 194J o f the Act. He furthe r re lied on the decision in the case of Jaipur Vidyut Vitran Ltd. v. DCIT (2009) 123 TTJ 888 (JP Trib) whe rein it has been held that Sectio n 194J would have application o nly when the techno logy or technical knowle dge of person is made available to other and not where by using technical systems, services are rendere d to others. Rende ring of services by allo wing use o f te chnical system is differe nt from charging fees for tende ring technical services. The applicability o f Section 194J would come into effect only when by making payment of fe e for te chnical services, assesse e acquires ce rtain skill/ knowledge/inte llect which can be furthe r used by him for its own purpo se/re search. Where facility is provide d by use of machine/ro bot o r where sophisticate d equipments are installed and ope rated with a vie w to earn income by allo wing the customers to avail o f the be nefit by user o f such equipment, the same does no t result in the provision of technical service to the customer fo r a fee. Therefo re , he argue d that in roaming charges paid by the assesse e to the o ther ope rato rs are not fees fo r technical services. The ld A R further relied o n the decision in the case ofiGATE Compute r Systems Ltd. v. DCIT in ITA No. 1301 to 1303 & 1616/PN/ 2013 for A ..Y 2007- 08 to 2010- 11 wherein the 25 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
Hon'ble Pune Bench of ITAT had conside red whether any human inte rventio n is re quired fo r providing the data link service s and are liable to be de ducted TDS U/s 194J of the Act and held that payments made fo r utilizing such se rvices was not in the nature o f technical services governed by Section 194J o f the Act. He further relie d on the decision of ITAT Ahmadabad Bench in the case of Canara Bank v. ITO 305 ITR (AT) 189 wherein MICR charges paid to SBI held not to be covere d U/s 194J read with Se ction 9( 1)(vii) Explanation- 2. He also relied on the decision o f Hon'ble Bangalore ITAT in the case o f Bangalore Electricity Supply Co.Ltd. v. ITO (T DS) [2012] 20 ITR (Trib) 265 where in payment made by State Lo ad Dispatch Ce nter ( SLDC) is he ld not liable to be deducted T DS U/s 194J of the Act. T he ld AR furthe r relied on the decision of Hon' ble Mumbai ITAT in the case o f Maharastra State Electricity Distributio n Co. Ltd. v. Addl. CIT[2012] 25 taxm ann.com 164, Siemens limite d 30 taxmann.com 200, ITAT Kalkata Be nch Decision in the case o f Right Florists Pvt. Limited ITA No.1336/ Kol/2011 and IT A Delhi be nch decision in the case of Delhi Transco Ltd. (ITA No. 755(De l)/2011 A.Y. 2005-06. He also relied o n the decision in the case of DCIT v. Parasrampuria S ynthe tics Ltd. 20 SOT 248 (Delhi) . The revenue filed appe al against the order o f Hon' ble Delhi High Court in the case o f Bharti Cellular Ltd. be fore the Hon' ble Supreme Co urt. T he Hon' ble Supreme Court has held as under:
"In cases requiring e xamination by technical experts, the Department ought not to proceed only by the contracts place d before the o fficers. With the emergence of our country as o ne of the BRI C countries and with, technological advancement, the Department ought to examine technical experts so that the matters could be disposed of e xpeditiously. F urthe r, this would enable the appe llate forum, including the Supreme Co urt, to de cide the le gal issues based on the factual fo undation. He ld accordingly, 26 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
remanding the matters for determinatio n with technical assistance , that in these cases, in which a cellular pro vide r under an agreement pays interco nnect/ access/port charges to BSNL/MTNL, the questio n whether the cellular provider has rende red technical services and has to deduct tax at source , depended on whether the charges we re for technical se rvices, and this involved determination of whethe r any hum an intervention was invo lve d, which co uld no t be dete rmine d witho ut technical assistance.
Decision of the Delhi High Court in CIT v. BHARTI CELLULAR LTD.319 ITR 139 (Del) set aside and matter remanded to the Assessing Office r with directions."
After this decisio n, the Assessing Office r examine d the technical expert of the C- DOT on 29.09.2010 in respect of IUC and which we re cross examined o n 04.10.2010 by M/s. Bharti Ce llular Limite d, Delhi. The technical experts ree xamined o n 04.10.2010 on this issue and admitted that ro aming services does no t re quire any human inte rventio n, it operates automatically. The ld AR also drawn our atte ntion on inde pendent opinio n taken from Director CMAI, Ex- Dire ctor (C&M), BSNL, Ex-Member Telecom Commission on 24.12.2010 and admitte d that who le inte rconnected uses process, no manual intervention is require d. He furthe r drawn our atte ntion on page No.651 to 652 fo r postpaid as well as pre paid roaming charges charged be tween the ope rato rs fro m Mr. Kapoor S ingh Guliani. The appe llant also taken opinio n from F ormer Chief Justice of I ndia Mr. Kapadia o n IUC post technical e xamination, cro ss examine d and reexamination. Who also opined that Hon'ble Supreme Court decision date d 12.08.2010 is an o rde r no t j udgment as the principle o f law was not res-integra. The wo rd technical services have got to be re ad in narrow since as held by the various Hon' ble High Courts and the Tribunal by applying principles of "Nositur a sociis'" particular because the word technical se rvice in Sectio n 9(1)(vii) re ad with 27 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
Explanation- 2 in between wo rd m anage rial consultancy services. Finally he opine d that such setting up/ installation, re pairing, servicing, maintenance are separate activities, they are back o ffice functio ns and are require human intervention. But the roaming process between participating entitie s is fully automatic and does not require any human intervention. Accordingly, the inte rconnected uses charge will not attract the pro visions of Section 194J read with Section 9( 1) (vii) read with Explanation- 2 thereto . Therefo re, he prayed to de lete the addition.
10. At the outse t, the ld Sr. DR veheme ntly supported the order of the ld CIT(A).
............
14. Reading o f the above order clearly show that fact - situation was essentially similar to the one here in the case of the assessee . Assessee was also tre ated as one in default for failure to deduct tax at source on roaming charges paid to othe r distributors. There fore the coo rdinate bench o f the T ribunal in the case of Bharti Hexacom Ltd. (supra) would square ly apply. We also find that the said decision has bee n followe d by Ahmedabad bench in the case of Vodafo ne Essar Gujarat Ltd. v. ACI T (TDS) (ITA NO.386/Add/2011, dt.07.07.2015) . F ollowing these , we are o f the opinio n that assessee could not have be en deemed as o ne in default fo r non-deduction o f tax at source on roaming charges paid by it to other service provide rs. Ground 3 is allowed.
15. In its ground no.4, assessee is aggrieve d on the levy of interest u/s.201 (1A) of the Act. This is a consequential ground. We have alre ady he ld that assessee is not at default for deduction o f tax on roaming charges and interest le vie d on the asse ssee o n such amount u/s. 201(1A) of the Act, stands delete d. Ho wever, in so far as inte rest u/s. 201( 1A) of the Act in relatio n to discounts/commissio n 28 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
on prepaid SIM cards and talk time is concerne d, we have remitte d the issue back to the file of the AO fo r conside ratio n afresh in accordance with the judgment of Hon'ble j urisdictional High Court in the case of Bharti Airte l Ltd. (supra). AO is directe d to revise the levy of inte rest accordingly. Ground 4 of the assessee is partly allo wed fo r statistical purposes."
7. The aforesaid shows that the T ribunal by re lying upo n the decision of the Delhi High Court found that the fact situation are also the same and the payment made for roaming connectivity cannot be termed as "technical se rvices" and, ultimate ly, it was found that the assessee could no t be said as in de fault fo r no n deduction o f TDS at source on the ro aming charges paid by it to the other service provide r and the appe als are allo wed to that exte nt. Under the circumstances, the pre sent appeals before this Court.
8. We have heard Mr. K.V. Aravind, learned counsel appearing for the appe llants - Revenue in all the appeals. The learne d Co unsel relie d upo n two decisions of the Apex Court for canvassing the contention that the roaming charges paid by the assessee to the other se rvice pro vide r can be said as 'technical services'; o ne was the decisio n of the Apex Court in the case of CIT v. Bharti Cellular Ltd. [ 2010] 193 Taxman 97/[ 2011] 330 ITR 239 ( SC); and the another was the decision o f the A pex Court in the case of CIT v. Kotak Securities Ltd. [2016] 67 taxmann.com 356/ 239 Taxman 139/383 ITR 1 (S C) and it was submitte d that if the observations made by the Apex Court in the above re ferred decisio ns are conside red, the decision o f the Tribunal would be unsustainable and conseque ntly, the questions may arise fo r consideration befo re this Court in the prese nt appeals.
9. We may reco rd that in the decision of the Ape x Co urt in the case of Bharti Ce llular Ltd.(supra) the A pex Court after having found that 29 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
whethe r human interve ntion is re quired in utilizing ro aming se rvices by one te lecom mobile se rvice provider Company from anothe r mobile se rvice provide r Company, is an aspect which may require furthe r examination of the evidence and there fore , the matte r was remande d back to the Asse ssing Office r. Furthe r, in the impugned order of the Tribunal, after conside ring the abo ve referred decisio n of Bharti Ce llular. Limite d, the Tribunal has further not o nly conside red the o pinio n, but fo und that as pe r the said o pinion the roaming process between participating entities is fully automatic and does not require any human interventio n. There fore , we do not find that the aforesaid decision in the case of Bharti Ce llular Ltd. wo uld be of any he lp to the appe llants - Revenue .
10. In the ano the r decision of the Apex Co urt, in the case of Ko tak Securities Ltd. the matter was pertaining to the charges of the Stock Exchange and the Apex Court, ultim ately, found that no TDS on such payment was de ductible under Section 194J of the Act. But the learned Counse l for the appellants - Revenue attempted to conte nd that in paragraphs 7 and 8 of the above referred decision of the Ape x Court, it has been observe d that if a distinguishable and identifiable service is pro vided, then it can be said as a "technical services". Therefo re, he submitted that in the present case , ro aming services to be pro vided to a particular mobile subscriber by a mobile Company is a customize base d service and there fore , distinguishable and se parately ide ntifiable and he nce, it can be terme d as "technical services".
11. I n our vie w, the contention is not only misconce ived, but is on non-existent premise., because the subject matter of the present appe als is no t ro aming services pro vide d by mobile service pro vider to its subscriber o r customer, but the subject matter is utilizatio n o f the roaming facility by payment of roaming charges by one mobile service provide r Company to anothe r mobile service provide r 30 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
Company. Hence , we do no t find that the obse rvatio ns made are of any he lp to the Re venue .
12. As such, e ven if we co nsider the observations made by the Ape x Court in the case of Bharti Cellular Ltd.supra, whether use of roaming service by o ne mobile service provide r Company from another mobile service provider Company, can be te rmed as "technical se rvice s" or no t, is essentially a questio n of fact. The Tribunal, after co nside ring all the material pro duced before it, has found that roaming process be twe en participating e ntities is fully automatic and do es not require any human interve ntio n. Coupled with the aspe ct that the Tribunal has relied upon the decision of the Delhi High Court for taking support of its view.
13. I n our view, the Tribunal is ultimately fact finding autho rity and has held that the roaming process between participating company canno t be termed as technical services and, there fore, no TDS was deductible . We do not find that any error has been co mmitted by the Tribunal in reaching to the aforesaid co nclusion. Apart from the above , the questions are already- covered by the above refe rre d decision of the De lhi High Co urt, which has been considere d by the Tribunal in the impugne d decision.
14. In view o f the abo ve, we do not find that any substantial question of law wo uld arise fo r co nsideratio n.
Hence, the appe als are dismisse d.
[2016] 241 TAXMA N 497 (KARN),[ 2016] 290 CTR 436 ( KARN)"
21. After considering the entire issue, the Hon'ble High Court held that "after going through the order of the Assessing Officer, ld. CIT(A) submissions of the assessee as well as going 31 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
through the process of providing roaming services, examination of technical experts by the ACIT TDS, New Delhi in the case of Bharti Cellular Ltd., thereafter cross examination made by M/s. Bharti Cellular Ltd., also opinion of Hon'ble the 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, it was found that for installation/setting up/repairing/servicing/maintenance capacity augmentation are required human intervention but after completing this process mere interconnection between the operators is automatic and does not require any human intervention. It was held that the term Inter Connecting User Charges (IUC) also signifies charges for connecting two entities. The Coordinate Bench also considered the Hon'ble Supreme Court decision in the case of Bharti Cellular Ltd. in the case of in iGATE Computer System Ltd. and held that Data Link transfer does not require any human intervention and charges received or paid on 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."
22. To conclude, • The primary issue in the appeal was whether the roaming charges paid by the assessee to the other telecom service providers were in the nature of 'Fee for technical Services' and hence, liable for TDS under section 194J.
32 ITA Nos. 2355, 2356, 2925 &2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
• The issue was considered by the Supreme Court of India in the case of CIT vs. Bharti Cellular Ltd.
• The Apex Court restored the issue to the AO for reconsideration after seeking the support of technical expert to ascertain if any human intervention is required in providing interconnect/roaming services.
• Karnataka High Court in the case of CIT vs. Vodafone South Ltd held that payment made by a mobile service provider to another mobile service provider for utilization of roaming mobile date and connectivity cannot be termed as technical service and therefore, no TDS was deductible u/s194J of the Act.
• The High Court upholding the order of ITAT observed that the ITAT had examined the facts and came to the conclusion that payment made for roaming connectivity cannot be termed as "technical services".
23. Hence, we hereby hold that no TDS u/s 194J is deductible in case of roaming charges paid.
ITA No. 2925/Del/2015 : A.Y. 2010-11 ITA No. 2926/Del/2015 : A.Y. 2011-1224. The solitary grounds taken up by the revenue is as under:
"1. On the facts and circumstances of the case, the ld. CIT(A) has erred in deleting the demand raised u/s 201(1A) on the basis of the decision in the case of M/s Hindustan Coca Cola Beverage (P) Ltd. Vs. CIT (2007) 163 Taxman 355 (SC) whereas the assessee was liable 33 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
to pay the interest u/s 201(1A) even though the relevant amount might have been included by the respective deductee in their respective income tax returns."
25. The issue pertains to non-applicability of Section 201(1) & 201(1A) of the Income Tax Act, 1961, when the tax due has already been paid by the payee, no demand can be levied due to mismatch in TDS details in ITD software.
26. The ld. CIT(A) relied on the order in the case of M/s Hindustan Coca Cola Beverage (P) Ltd. Vs. CIT (2007) 163 Taxman 355 (SC) and held that once the deductee has paid the taxes, there is no liability on the deductee with regard to the tax payment. The issue raised by the revenue before us is pertains to Section 201(1A). We need to differentate between the provisions to Section 201(1) and Section 201(1A) which has been inserted by Finance Act 2012 w.e.f. 01.07.2012.
27. The said provisions of Section 201(1A) reads as under:
"(1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest,--
(i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and 34 ITA Nos. 2355, 2356, 2925 & 2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
(ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200:
Provided that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso to sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident."
28. We find that the Hon'ble Supreme Court in Hindustan Coca Cola Beverages P. Ltd. Vs. CIT (supra) noted the contents of the Circular No.275/201/95-IT(B) dated 29.1.1997 issued by the CBDT, which declares as under:
"10. The circular declares "no demand visualized under section 201(1) of the Income-tax Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS, that taxes due have been paid by the deductee-assessee. However, this will not alter the liability to charge interest under section 201(1A) of the Act till the date of payment of taxes by the deductee-assessee or the liability for penalty u/s 271(1)(c) of the Income- tax Act."35 ITA Nos. 2355, 2356, 2925 &
2926/Del/2015 Unitech Wireles Tamil Nadu Pvt. Ltd.
29. Following the ratio laid down by the Apex Court in Hindustan Coca Cola Beverages P. Ltd. Vs. CIT (supra) and Instruction of CBDT as per its Circular No.275/201/95-IT(B) dated 29.1.1997 interest under section 201(1A) of the Act is chargeable up to the date of payment of taxes by the deductee/payee. Accordingly, we direct the Assessing Officer to re-compute the interest under section 201(1A) of the Act in line with the instructions of CBDT till the date of payment of taxes by the respective deductee/payee in the respective Assessment Years. The Assessing Officer shall afford reasonable opportunity of hearing to the assessee in this regard and re-compute the interest chargeable under section 201(1A) of the Act. In the result, the ground of appeal raised by the revenue is allowed for statistical purpose.
30. In the result, the appeals of the assessee are partly allowed and that of the Revenue appeals are allowed for statistical purpose.
Order pronounced in the open Court on 31/05/2022 Sd/- Sd/-
(Saktijit Dey) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: 31/05/2022
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR