TMI Blog2014 (2) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income Tax (Appeals) held that Clickatel which is a non-resident carrier rendered services outside India and no part of the payment made to Clickatel is chargeable to tax in India. See CIT v. Bharti Cellular Ltd [2010 (8) TMI 332 - Supreme Court of India]. - Decided against revenue. Income accrued not offered to tax - CIT(A) deleted addition - Held that:- Assessee received advance income from its customers and whenever services were provided by the assessee, assessee adjusts the advances received from customers and recognizes the income in the year in which services were rendered. Since the appellant maintains books on accrual system, income shall be recognized only when it accrues. In the given case, the income accrues only wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out deduction of tax at source. 4. The Assessing Officer while completing the assessment found that assessee incurred carrier expenditure by making payments to BSNL and Clickatel, which is the service provider similar to BSNL and situated in South Africa. Since the assessee did not deduct TDS on the payments made to Clickatel, the Assessing Officer invoking the provisions of section 40(a) (i) disallowed the same, ignoring the submissions of the assessee that no technical services are involved in utilizing the services of Clickatel, South Africa and it is not payment for fees for technical services. On appeal, Commissioner of Income Tax (Appeals) deleted the disallowance made by the Assessing Officer against which the Revenue is in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case that the nature of services rendered by the non-resident i.e. M/s. Clickatel, as a carrier, is only to transmit the bulk SMS. The nature of service require no technical knowledge and what is rendered is just transmission of data, which requires no technical skill. The carrier is just a medium for sending the bulk SMS and as such cannot be considered to be rendering any technical service. However, the AO has considered the payment made to M/s. Clickatel, residing in South Africa, as technical service and disallowed a sum of ₹ 51,97,532/- u/s 40(a)(i) for non-deduction of TDS. Whereas the appellant contended that the service rendered by the Carrier is not a technical service and hence no disallowance is required to be made. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of make available . The services are considered to be make available where the recipient of such service is at the liberty to use the technical knowledge, skills and process in his own right. This view has been upheld in the case of NQA Quality systems Registrar Ltd. v. Dy. CIT [2005] 92 TTJ 946 (Delhi). In the view of the decisions mentioned supra, I am of the considered opinion that the services rendered by the non- resident carrier do not fall, under the clause fee for technical service ; 6.5 Further, after having gone through the facts of the case, I am of the considered opinion that AO was' not justified in invoking the provisions u/s 40(a)(i), on the payment made to M/s. Clickatel a .non- resident Carrier, for the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97,532./-u/s 40(a)(i) of the Act. This ground of appeal is allowed.' 8. On going through the order of the Commissioner of Income Tax (Appeals), we find that the nature of services rendered by non-resident i.e. M/s. Clickatel is only to transmit bulk SMS. The nature of service provided by Clickatel requires no technical knowledge and what was rendered was just transmission of data which requires no technical skill. The finding of the Commissioner of Income Tax (Appeals) that carrier which is a medium for sending bulk SMS and as such cannot be considered to be rendering any technical services. The Commissioner of Income Tax (Appeals) held that Clickatel which is a non-resident carrier rendered services outside India and no part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the event of failure to render contracted services. It was also the observation of the Assessing Officer that there is no specific clause in the agreement that the client gets refund in case the assessee fails to render the service. On appeal, Commissioner of Income Tax (Appeals) deleted the addition. 11. The Departmental Representative vehemently supported the order of the Assessing Officer in making the addition. 12. The counsel for the assessee supports the order of the Commissioner of Income Tax (Appeals) and relies on the decision of the Hon'ble High Court in the case of CIT v. Coral Electronics (P.) Ltd. 274 ITR 336and submits that the Hon'ble High Court held that service charges received in advance for the services to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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