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TMI Blog2014 (2) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... lay in filing of cross objection. We have perused the reasons and are satisfied that there is a reasonable cause for the delay in filing of the cross objection. In the interest of justice, we condone the delay of 43 days in filing of the cross objection and the same is admitted. 3. First we take up appeal of the Revenue. The first ground of appeal of the Revenue is that the Commissioner of Income Tax (Appeals) erred in deleting disallowance made under section 40(a)(i) of the Act in respect of carrier payments made to M/s. Clickatel, South Africa without 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed orders of lower authorities and the decisions relied on. The Commissioner of Income Tax (Appeals) has elaborately considered the facts, submissions of the assessee and the contentions of the Assessing Officer as to whether fee paid by the assessee to Clickatel, South Africa is for technical services or not and whether any TDS is required to be made on such payment observing as under:- "6.2 I have perused the observations of the AO. and the written submissions of the AR of the appellant in this regard. It is seen from the facts of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e definition. The decision rendered by the Hon'ble Supreme Court in the case of Bharti Cellular Ltd, provides .that for a service to be labelled as technical in nature 'human intervention is necessary. In a similar case, CIT v. Bharti Cellular Ltd. [2009] 319 ITR 139, the Hon'ble Delhi High court has held that as these services do not involve Human intervention, these cannot be regarded as Fee for technical service as contemplated under the income tax laws. 6.4 Further, it is also noticed that, fee for technical service apart from other conditions, shall fulfill the requirement of "make available". The services are considered to be "make available" where the recipient of such service is at the liberty t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation to withhold the tax. (b) The AO has viewed that Board's Circular,786 dated 7.2.2000 has been withdrawn and therefore it cannot be relied upon further. Since the law related to withholding of tax u/s 195 of the Act has not been changed even after withdrawal of the above circular issued by the. CBDT the AO's view is not acceptable. 6.6 In view of the' discussion made in the above paras, the AO is not justified In making the disallowance u/s 40(a)(i) as the payment made to M/s. Clickatel, non-resident carrier is not chargeable to tax in India. Therefore the AO is directed to delete the above disallowance of Rs. 51,97,532./-u/s 40(a)(i) of the Act. This ground of appeal is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the Commissioner of Income Tax (Appeals) in holding that payment made by the assessee to Clickatel is not fees for technical services and no TDS is required to be made. 9. The next issue in the grounds of appeal of the Revenue is that Commissioner of Income Tax (Appeals) erred in deleting the addition of Rs. 1.33 crores made by the Assessing Officer towards income accrued not offered to tax. 10. The Assessing Officer while completing the assessment made addition of Rs. 1.33 crores on the ground that assessee has received this amount in advance from the customers and this is liable to be assessed as income as there is no liability attached to the assessee in the event of failure to render contracted services. It was also the obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crual system, income shall be recognized only when it accrues. In the given case, the income accrues only when the appellant sends the required no. of SMS. Therefore, the service charges received in advance for the service to be rendered in future years are not liable to tax in the year of receipt. Only on completion of the service, the appellant has right over the amount that was received in advance. In view of the above, the action of the AO is not justified in making the above disallowance of Rs. 1,33,01,684/- and hence directed to be deleted. This ground of appeal is allowed." 14. On reading of the above order, we do not find any good reason to interfere with the findings of the Commissioner of Income Tax (Appeals). Thus, the ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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