2016 (10) TMI 1123 - HC - Income Tax

TDS u/s 194J or 194C - payment made by the assessee in form of transmission/ wheeling/ SLDC charges - Held that - The issues are required to be answered in favour of the assessee against the department. See Commissioner of Income Tax Vs. Bharti Cellular Ltd. (2010 (8) TMI 332 - Supreme Court of India ) Commissioner of Income Tax Vs Bharti Cellular Ltd (2008 (10) TMI 321 - DELHI HIGH COURT ) wherein decided providing assistance or aid services not involving human interface hence services are not technical services as contemplated under Explanation 2 to section 9(1)(vii) - interconnect charges/port access charges cannot be regarded as fees for technical services hence not liable for tax deduction at source - Decided against revenue

Summary

Issues:
1. Whether the Tribunal was justified in holding that certain payments made by the assessee were not liable for TDS under Section 194J or 194C of the Income Tax Act?
2. Whether the Tribunal was justified in holding that the provisions of Section 194J or 194C were not attracted in the case of the assessee?
3. Whether the Tribunal was justified in holding that the assessee was not liable to pay interest under section 201(1A) of the Act?

Analysis:

Issue 1:
The department challenged the Tribunal's decision that the assessee was not required to deduct TDS on certain payments. The provisions of Section 194C and 194J were cited, which mandate TDS deduction on specified payments. The Tribunal's decision was based on the interpretation of these sections in relation to the payments made by the assessee.

Issue 2:
The Tribunal's decision was further scrutinized to determine if the provisions of Section 194J or 194C were applicable to the case. The department argued that the assessee was obligated to deduct TDS for services received, as per the Explanation 2 to Section 9(1)(vii) of the Act. However, the respondent relied on various legal precedents to support the conclusion reached by the Tribunal.

Issue 3:
The question of whether the assessee was liable to pay interest under section 201(1A) of the Act was also raised. The respondent's counsel contended that the issue had already been settled by decisions from the Bombay High Court and the Delhi High Court, which were upheld as the matter was not granted Special Leave Petition (SLP). Consequently, the appeals were dismissed in favor of the assessee based on the precedents cited.

This comprehensive analysis of the judgment highlights the key issues raised, the legal provisions invoked, and the basis for the decision reached by the High Court.