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2017 (2) TMI 587 - AT - Income TaxTDS u/s 194C OR 194J - payment as SMS and short code charges - assessee in default u/s 201(1) - TDS on connectivity charges - Held that:- It is a kind of a standard connectivity facility which has been provided by the Telecom operator, nothing else. The agreement is more in the nature of works contract with the Telecom Operator for which the assessee has rightly deducted the TDS under section 194C. Even, the assessee from its customers, like Income-tax department for providing such services has received the payment which has been subjected" to TDS under section 194C. Thus, it cannot be held that the assessee is making any payment for use or right to use any equipment. Further, the concept of 'use' or 'right to use any equipment' alludes to the concept of 'leasing', which here in this case admittedly is not there. Much emphasis has been laid by the ld DR as well as by the CIT (A) that, it is a kind of a 'process' and, therefore, in view of Explanation 6 brought with retrospective effect by the Finance Act, 2012 whereby the 'process' includes transmission by satellite, cable, optic fiber or by any other similar technology whether or not such process is not secret. Even if such a contention of the Department is to be accepted, then whether at the time of making the payment where no such amendment was brought in the statute, can assessee be accepted to deduct the TDS? Here, the maxim of "lex non cogit ad impossplia, that is, the law of the possibly compelling a person to do something which is impossible, that is, when there is no provision for taxing an amount in India then how it can be expected that a tax should be deducted on such a payment. This view has-been upheld by in catena of decisions including the ITAT Mumbai Benches in the case of Channel Guide India Ltd, v. Asstt. CIT [2012 (9) TMI 95 - ITAT MUMBAI] wherein, it has been held that, assessee cannot held to be liable for deducting TDS in view of the retrospective amendment which has come at a much later date. Thus, we hold that assessee was not liable to deduct TDS by treating the payment in the nature of 'Royalty' in terms of section 194J or in terms of retrospective amendment brought from subsequent date. Accordingly, assessee cannot be treated as assessee in default within section 201(1). - Decided in favour of assessee
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