Commissioner Of Income Tax Delhi I New ... vs M/S. Bharti Airtel Limited on 10 January, 2018
4.7. The article 12(4)(b) clearly states that for in service to be
classified as an included service the technical knowledge should
be made available to the recipient or as to enable him to apply
the technology to be used In the present case the
communication charges are being paid for inter communication
services. These can in no manner be seen to make available in
knowledge to the recipient of the service that is the appellant in
this case. In the absence of any knowledge being available the
consideration being paid cannot fall within the definition of fee
for included services. Therefore, the amount would not be
taxable under DTAA. The services under the domestic
legislation also do not constitute technical services specifically
in view of decision of CIT vs. Bharti Airtel of the Delhi High
Court which was in principle agreed to by the H'bl Supreme
Court. In view of these facts and the clear judicial mandate of
the jurisdictional High Court the communication charges paid
would not constitute fee for included services in the hands of
the recipient. As a result the amount received by the company
which is a non-resident is not taxable under the act or the treaty.
Once the same (the payment made) does not include any
taxable amount no liability u/s 195 arises. The disallowance u/s
40(a)(ia) is therefore not warranted
4.8. The AO in his remand report has further submitted that
the services sought by the appellant were from M/s Tata
Incorporated, US. The AO indicates that as per the guidelines
of Department of Telecommunications. The telecom resources
have been provided by an entity (Tata Communications,
America) who did not have requisite license to provide the
services in India. It has been submitted by the appellant that the
services being rendered by the non- resident company at the
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ITA No.7295/Del./2019
foreign end and not at the Indian end The license required is for
a case where the point of presence is in India. Without going
into detailed technicalities requirement it is seen that the terms
and conditions of the DOT are prima facie not relevant to the
taxability of the same being paid The appellant has taken some
services which are inter connection services from an entity in
Us. The sum paid to the US entity is not taxable in India. This
fact per se is sufficient to insulate the assessee from the
provisions of section 40(a)(ia). In view of the above discussion,
the addition of Rs.1,52,72,504/- on account of communication
charges paid is hereby deleted."