TMI Blog2013 (9) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer had mechanically accepted what the assessee wanted him to accept without any application of mind or enquiry - Similarly, no evidence had been placed that the claim made by the assessee was objectively examined or considered by the Assessing Officer either on record or in the assessment order – Following Arvee International v. Addl. CIT [2006 (1) TMI 173 - ITAT BOMBAY-High court ] - The perusal of the assessment order passed by the Assessing Officer does not show any application of mind - It is simply says in one line that loss returned by the assessee is accepted - It was held that no greater evidence is required than the mere reproduction of the aforesaid order from the assessment order to establish that it was a case where the Assessing Officer has mechanically accepted what the assessee wanted him to accept without any application of mind or enquiry - No evidence had been placed that the claim made by the assessee was objectively examined or considered by the Assessing Officer either on record or in the assessment order - It was because of such non-consideration of the issues on the part of the Assessing Officer that the loss claimed by the assessee stood automatical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Act. This issue has also been adjudicated by the hon'ble Delhi High Court in favour of the Revenue in the judgment of CIT v. Idea Cellular Ltd. [2010] 325 ITR 148 (Delhi) ; [2010] TIOL 139 , wherein the relationship between the assessee, who was telecom service provider like the assessee in the present case, and the distributors was held to be one of principal-to-agent and claimed discounts were held as commission liable to TDS under section 194H of the Income-tax Act. (ii) Disallowance of roaming charges paid under section 40(a)(ia) of the Income-tax Act. During the assessment year 2008-09, the assessee has paid roaming charges and inter connection charges at Rs. 13.74 crores to various other operators. Since the payments were clearly and non-ambiguously in the nature of fee for technical services liable for deduction of TDS under section 194J of the Income-tax Act. However, the assessee has not deducted TDS on the same and hence the payments were disallowed under section 40(a)(ia) of the Income-tax Act." The learned Commissioner of Income-tax observed that the nature of business of the assessee is the same for the assessment year 2007-08 also and apparently it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elecom operators for allowing its subscribers to roam into other networks. These payments were in the nature of fee for technical services. Failure to comply with the provisions of section 194J renders the deduction claimed on account of roaming charges to be disallowed under section 40(a)(ia). The Assessing Officer has not examined this issue in the assessment year 200708. In its arguments, the assessee has stated that there is no difference between the roaming and interconnection facility in so far as they both are a standard facility in which highly sophisticated machinery is used. However, the Assessing Officer in the assessment year 2008-09 has verified that while the assessee is drawing an analogy between roaming and interconnection charges, it has deducted TDS on inter connection charges while no TDS has been made of roaming. Thus, there is a fundamental incoherence in the argument of the assessee. In light of the above discussion, the learned Commissioner of Incometax held that order dated November 30, 2009 passed under section 143(3) of the Act is set aside under section 263 of the Income-tax Act, as the same is held to be prejudicial to the interests of the Revenue in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o other telecom service providers. The Commissioner of Income-tax has not fulfilled his obligation of recording a detailed justification for holding that such charges were for payment of technical services. Nor has the Commissioner of Income-tax made an independent judgment on the applicability of provisions of section 194H. The Commissioner of Income-tax has not shown that the view taken by the Assessing Officer was not sustainable in law. The order of the Commissioner of Income-tax under section 263 must be quashed." Learned counsel for the assessee further placed reliance on the catena of case laws including the following : (i) CIT v. Hindustan Coco Cola Beverages P. Ltd. [2011] 331 ITR 192 (Delhi) ; (ii) CIT v. Vikas Polymers [2012] 341 ITR 537 (Delhi) ; (iii) CIT v. Vikram Aditya and Associates P. Ltd. [2006] 287 ITR 268 (Delhi) ; (iv) CIT v. Arvind Jewellers [2003] 259 ITR 502 (Guj) ; (v) CIT v. Max India Ltd. [2007] 295 ITR 282 (SC) ; (vi) Metallizing Equipment v. Joint CIT [2005] 96 TTJ (Jd) 827 ; (vii) Sical Logistics Ltd. v. Addl. CIT [2010] 5 ITR (Trib) 801 (Chennai) ; (viii) Bagaria Vegetable Products Ltd. v. Joint CIT [2008] 303 ITR (AT) 278 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the assessment order. Similarly, we find that the Assessing Officer has not issued any query in this regard and not obtained necessary details. Hence, it cannot be said that the Assessing Officer has applied one of the two views possible. Roaming charges paid : On this issue the Revenue's contention is that the assessee was liable to deduct TDS under section 194J on the roaming charges paid by it to other telecom operators for allowing its subscribers to roam into other networks. These payments were in the nature of fee for technical services. That failure to comply with the provisions of section 194J renders the deduction claimed on account of roaming charges to be disallowed under section 40(a)(ia). On this issue, learned counsel for the assessee accepted that there is no discussion by the Assessing Officer in the assessment order in this regard. However, he contended that the Assessing Officer has applied his mind and not found any shortcomings. He also conceded that there is no enquiry in this regard made by the Assessing Officer. Learned counsel for the assessee further submitted that there is no difference between the roaming and interconnection facility in so far as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer has not made any discussion regarding these aspects in the assessment order, nor has he raised any query/enquiry in this regard. As regards the case law referred by learned counsel for the assessee, we find that they are not supporting the case of the assessee. We further find that in Arvee International v. Addl. CIT [2007] 290 ITR (AT) 8 (Mum), the Income-tax Appellate Tribunal, Mumbai has held that the perusal of the assessment order passed by the Assessing Officer does not show any application of mind. It is simply says in one line that loss returned by the assessee is accepted. It was held that no greater evidence is required than the mere reproduction of the aforesaid order from the assessment order to establish that it is a case where the Assessing Officer has mechanically accepted what the assessee wanted him to accept without any application of mind or enquiry. No evidence had been placed that the claim made by the assessee was objectively examined or considered by the Assessing Officer either on record or in the assessment order. It was because of such non-consideration of the issues on the part of the Assessing Officer that the loss claimed by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
