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2016 (2) TMI 235 - ITAT CHENNAI

2016 (2) TMI 235 - ITAT CHENNAI - TMI - TDS u/s 195 - carrier payments made to M/s. Clikatel, South Africa without deduction of tax at source - Held 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 med .....

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ble Delhi High Court the case of CIT Vs. Bharti Cellular Ltd. (2008 (10) TMI 321 - DELHI HIGH COURT ) held that these services do not involve human intervention and these services cannot be regarded as fee for technical services. No good reason to interfere with the decision 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 - Decided against revenue

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s 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 and hence directed to be deleted. - Decided against revenue - ITA No. 1651/Mds/2015, C.O.No.111/Mds/2015 - Dated:- 6-1-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER For The Appellant by : Shri A.B.Koli, JCIT For The Respondent by : Smt. Jharna B. Harilal, CA ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBE .....

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filed by the assessee and we are of the opinion that there is good and sufficient reason for filing the cross-objection belatedly. Accordingly, the delay is condoned and the cross-objection is admitted for adjudication. 3. The first ground in Revenue s appeal is with regard to deleting the disallowance made u/s.40(a)(i) in respect of carrier payments made to M/s. Clikatel, South Africa without deduction of tax at source. 4. We have heard both the parties. In our opinion, the same issue was cons .....

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ca 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 knowledge and what is rendered is just transmission of data .....

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be made. 6.3 In order to determine whether the services rendered by the non-resident carrier comes under technical services, the provisions of Double Taxation Avoidance 'Agreement (DTAA) need to be looked into. When the appellant enters into a transaction with a non-resident, the provisions of the Income Tax Act or the Double Taxation Avoidance Agreement (DTAA) whichever is favourable shall apply. As per DTAA between India and South Africa, the fee for technical service has been defined as, .....

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Ltd, provides .that for a service to be labelled as technical in nature 'human intervention is necessary. In a similar case, 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 ser .....

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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 following reasons: . a) The non-resident Carrier would get payment for transmitting the bulk 'SMS data. As the services are rendered outside. India the provisions of section 5 cannot be applied to the payment made to the nonresident Carrier so as to make it taxable in India. It .....

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ncome is chargeable to tax in India, there is no obligation 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 dis .....

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s 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 nonresident carrier rendered services outside India and no part of the payment made to Clickatel is chargeable to tax in India. The Com .....

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f 2012 dated 7.11.2013 held that collection of fees for usage of standard facility would not amount to payment made for providing technical services. In the circumstances, we do not find any good reason to interfere with the decision 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. In view of the above, this ground of appeal of the Revenue is dismissed. 5. The next ground in .....

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