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2019 (12) TMI 206 - AT - Income TaxTDS liability on UC/bandwidth Charges paid to foreign carriers - Rectification of order u/s 154 by the AO - The department has held that these payments are taxable in the hands of the recipients both as Royalty as well as FTS and therefore, the assessee was liable to deduct TDS and since, the assessee has not done so, demand is raised u/s 201 (1) and 201 (1A). Held that:- as per the tribunal order of Delhi bench rendered in the case of Bharti Airtel Ltd. [2016 (3) TMI 680 - ITAT DELHI], on both aspects i.e. Royalty and FTS, the issue was decided in favour of the assessee but on one aspect i.e. Royalty aspect, the tribunal order in assessee’s own case is against the assessee and this tribunal order is challenged by the assessee before Hon’ble Karnataka High Court and the appeal is pending there. It is apparent that the earlier tribunal order in assessee’s own case for A. Ys. 2008 – 09 to 2012 – 13 was not brought to the notice of DRP because even in A. Y. 2012 – 13 for which tribunal order in assessee’s own case in the proceedings u/s 201 (1) is against the assessee on one aspect i.e. Royalty aspect, DRP has decided the issue in favour of the assessee and held that no TDS was required to be deducted. When on one aspect, the matter is decided against the assessee i.e. Royalty aspect in the present case, it cannot be held that no TDS is required to be deducted even if on some other aspect i.e. on FTS aspect in the present case, it is held that TDS is not required to be deducted on that aspect. Moreover, the department has not accepted this proposition because the AO in the draft assessment order decided the issue against the assessee and because of that, objection was raised by the assessee before DRP and revenue cannot file appeal before the tribunal against DRP directions in these years. The consideration paid by the assessee as IUC/Bandwidth charges for alleged inter connect service falls within the ambit of process Royalty and element of income was involved and therefore, the assessee was bound to deduct the TDS on such payment. On the second aspect as to whether the consideration paid by the assessee as IUC/Bandwidth charges for alleged inter connect service falls within the ambit of FTS and element of income was involved or not, we find force in the submissions of the learned AR of the assessee that this issue is squarely covered in favour of the assessee by the tribunal order of Delhi Bench rendered in the case of Bharti Airtel Ltd. Vs. ITO (Supra) because on this aspect, no adverse order could be pointed out by the learned DR of the revenue. Decided partly in favor of assessee.
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