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https://www.mhc.tn.gov.in/judis  Tax Case Appeal Nos.831, 832, 833, 836 and 838 of 2016

2. The succintly stated facts are as under:

2.1. The respondent/assessee is engaged in the business of providing pre-

paid telecommunication services, including cellular service, data services, and mobile services, through various telecom networks across the country. As part of its business operations, the respondent enters into roaming agreements with other telecom service providers to facilitate its subscribers in availing roaming facilities when they travel outside the home network area. During the course of its business transactions, the respondent has made payments to other telecom operators in the form of roaming charges without deducting Tax at Source (TDS) under Section 194J of the Income Tax Act, 1961 (in short, “the Act”). The roaming charges represent the consideration paid by the respondent to the host operators for providing telecommunication services to its subscribers, while they are outside the home network coverage area. According to the respondent, the roaming services offered by the host operators are standard automated services and they do not classify the roaming charges paid to the host operators as fees for technical services and hence, there is no obligation to deduct tax at source under Section 194J of the Act.

The subscriber of a service provider who is not 'roaming' gets services from his home operator, while a subscriber who is roaming will get services from both, https://www.mhc.tn.gov.in/judis  Tax Case Appeal Nos.831, 832, 833, 836 and 838 of 2016 the host operator and the home operator. The host operator charges the home operator for providing telecom services to the subscriber of the later. Roaming services are made available to a subscriber by the host operator by virtue of the roaming arrangement entered into by and between the home operator and the host operator for an agreed charges to be paid by the home operator to the host operator. Thus, in essence, roaming charges are payments being made by the appellant to the other sundry telecom operators as consideration for telecom services provided by the said other telecom operators to the subscribers of the appellant. The appellant calls roaming services offered by the host operators as "STANDARD AUTOMATED SERVICES". The appellant refuses to recognize the roaming charges paid to the host operators as "fees for technical services" and hence not considered same for deduction of tax as required by Section 194J. Whereas the assessing officer has treated the roaming charges as fees for technical services hereinafter called 'FTS' for the sake of brevity, and held that the appellant is liable to deduct tax on FTS. As the appellant failed to deduct tax on the FTS, the AO has declared the appellant as assessee in default and passed the impugned orders for the concerned assessment years. The appellant has argued that the roaming charges do not qualify for TDS as human intervention is not involved for rendering the roaming service. According to the appellant, roaming services are provided without the aid of human skills. Therefore, roaming services in the case are not technical services by human skills. In short, the appellant says that the charges paid for the technical services rendered by human beings alone would qualify as FTS and became eligible for deduction of tax.

8.3.3. Without prejudicing what is stated in the above paragraph, the issue may be examined in the light of the definition for FTS as provided in the explanation to Section 9(1)(vii) of the I.T.Act, 1961 which reads as under:-

'For the purposes of this clause, fees for technical services means any consideration (including any lumpsum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or life project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "salaries".' 8.3.4. It may be noted that there is no mention about human intervention as a pre-condition in the above explanation. Whether there is involvement of human being or not, if the service is of technical steering then the consideration paid for such service shall qualify to be FTS. Even otherwise also the roaming service provided by the host operators to the appellant is effectively possible only when there is constant, 24 hrs, perennial and exclusive standby arrangement with the backing support of technically qualified persons is maintained in live and serviceable condition by the host operator. So the presence of human intervention in some form or other cannot be altogether eliminated. In the roaming service in question, there is always present "in-

absentia human intervention", atleast in trouble free times. But when the trouble comes human intervention will come to play a major role along with technology. Therefore, in the case of roaming service, technology and technically qualified persons cannot be isolated.

https://www.mhc.tn.gov.in/judis  Tax Case Appeal Nos.831, 832, 833, 836 and 838 of 2016 8.3.5. Human intervention is bound to be there in the form of passive or dormant supervision even in trouble free times. A close scrutiny would be able to segregate two elements from the explanation 2 to Section 9(i)(vii) of the IT Act viz., (1) purely technical service without the association of personnel and (2) service of technical person (service with the association of technical person) either of which if rendered for a consideration, such consideration shall have all the characters of FTS. Therefore, the presence of human intervention is not a pre-condition for the consideration to qualify as FTS. In the light of the above discussions, I am of the considered view that the roaming charges paid by the appellant in this case shall by all means qualify to be characterised as FTS which is subject to tax deduction by the appellant, such FTS has been paid to the host operators in pursuance of a contract for service since the appellant failed to deduct tax from the roaming charges of Rs.49,26,563/- paid to sundry host operators, the AO has righlty held the appellant as assessee in default and passed the impugned order dated 27.03.2023. The above proposition is applicable to all the assessment years in question. Hence, I am not inclined to interfere with the orders of the AO in respect of all assessment years in appeal.