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2018 (2) TMI 1461 - HC - Income TaxAddition u/s 40(a)(i) - TDS liability - bandwidth allocation by overseas service provider - fee for technical services - whether the charges paid by the assessee to the MCI WorldCom Asia P. Limited (a non-resident overseas Singapore based entity) ought to have been subjected to tax deduction? - income by way of amounts paid to the overseas entities or non-residents - Held that:- In the present case the relevant provisions of the master service agreement have been extracted by the CIT(A). The relevant conditions state that “service” would mean “the specific telecommunication service rendered by WorldCom outside India to the customer and as identified in the relevant Service Order” The agreement also places certain restrictions upon the re-sale of the services to the third parties which are provided by the MCI Worldcom Asia P. Limited. If these contractual conditions are taken into account, it is quite apparent that the nature of services in issue is not merely internal bandwidth connectivity but whole range of other services. The payments for these services are determined by relevant “service orders”, which are agreed to and refused from time to time. In the present case, clearly the Revenue did not examine as to whether the services or any of them fulfil the character of “fee” so as to result in taxability of the payment in India, in terms of Section 9(1)(vii) of the Act. Thus the impugned order cannot be sustained. It is hereby set aside. The matter is remitted to the Assessing Officer, who shall proceed to examine the materials before him and call for additional expert or technical advice, as is necessary, having regard to the declaration of law in the case of Bharti Cellular Ltd. (2008 (10) TMI 321 - DELHI HIGH COURT).
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