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TMI Blog2016 (4) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO.. III. Levy of interest under Section 201(1A) of the Act". 2. The relevant facts qua the issues involved are that, the assessee company is CDMA service provider offering full telecommunication services to its telecom subscribers across Pan India. Prior to December, 2008, the assessee was exclusive CDMA service provider hence, there was no occasion for making any payment of roaming charges to any other telecom operator. Post December 2008 and January 2009, the assessee company entered into a "Roaming Agreement" with Reliance Telecom Ltd., which provides GSM services in eight telecom circles in the country where assessee-company did not had GSM license. Explaining the nature of roaming facility, the assessee's contention, in brief, before the AO was as under:- (i) Roaming is defined as the ability for a telecom subscribers to automatically make and receive voice calls, send and receive data, or access other services, including home data services, when travelling outside the geographical coverage area of his telecom operator's network (termed as "home network") by means of using the network of another operator having coverage in such geographical (termed as "visiting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. 3. In support of the above contentions that such kind of automated standard facility cannot be reckoned as rendering of technical services because it is without much human intervention, strong reliance was placed on following decisions, which has been incorporated and discussed by the AO at pages 2 to 4 of the order:- Name of the Case Citation a) Skycell Communications Ltd. 251 ITR 53(Mad) b) Idea Cellular Ltd. 2008-TIOL 739(Del) c) Bharati Cellular Ltd (2011) 330 ITR 239 (SC) 4. By way of an alternative argument, the assessee company further submitted that, the payee company, that is, Reliance Telecommunication Ltd. to whom the roaming charges were paid is regularly assessed to tax and furnished their declarations along with their PAN details and the jurisdiction of the AO in which they were assessed. Thus, it was submitted that in view of the decisions of Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverage Pvt Ltd. vs CIT, reported in 293 ITR 226 and also in the case of Bharati Cellular Ltd. (supra) if the recipient payee has paid the taxes or shown it as their income, then assessee (payer) could not be treated as "assessee-in-default ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f technical services. He went a step further in holding that, each machine requires human intervention without which no machines can operate. Even Robots also require human makers. Thus, machines operating automatically require human intervention right from installation, activation, maintenance to up-gradation and decision making. Therefore, the payments made has to be reckoned in the nature of "fees for technical services" in terms of Explanation 2 to section 9(1)(vii) and hence liable for deduction of tax under section 194J. 6. However, he accepted the assessee's alternate submission that in view of the decision of Hon'ble Apex court in the case of Bharati Cellular Ltd. ( supra ) and Hindustan Coca Cola Beverages Pvt Ltd. ( supra ), assessee cannot be treated as assessee-in-default under section 201(1), because the assessee has furnished the declaration from the payees and has also furnished the PAN and the jurisdiction details of the AOs. Thus, so far as liability u/s 201(1), the same is not enforceable. But, he held that the assessee would be liable for payment of interest under section 201(1A) which he worked out at Rs. 78,58,690/- for the assessment year 2010-11 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecause in any case, no tax was payable by these deductees. In support, the assessee had relied upon the decision of Hon'ble Allhabad High Court in the case of CIT vs ITC Ltd. [albeit no citation or reporting or Appeal number of this case is given in the order]. The Ld. CIT(A), though accepted the assessee's plea in principle, but, finally dismissed the ground of the assessee after observing and holding as under:- "Alternatively appellant has also taken a plea that as the deductees have incurred use losses during the year under review there was no loss to revenue on account of non- deduction of TDS by the appellant while making the payment, as in any case no tax was payable by these deductees. For the same appellant has cited decision given by Honorable High Court of Allahabad in the case of CIT versus ITC Ltd. I have gone through the same and having read the same I am in agreement with appellant that if deductees income itself was not taxable, the appellant cannot be held as an assessee in default for non-deduction of tax for the amount paid to that deductees. Thus in principle I am in agreement with the appellant on the same following the decision, however it is noted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of non-deduction of TDS, and secondly , finding of CIT(A) on this score is also diverse from her own observation. If she had any doubt, then clarification should have been sought. Therefore, no interest under section 201(1A) can be levied. 10. On the other hand, Ld. DR strongly relied upon the order of the AO as well as CIT(A). On the main issue he submitted that, now in the background of the Supreme Court decision in the case of Bharti Cellular Ltd ( supra ) and in line of Supreme Court direction the AO in the case of Vodafone Essar Mobile Services Ltd. ( supra ) had carried out cross examination of technical experts/ employees which has been elaborately discussed in the order of the AO. In light of this fact, the entire perspective will get changed and matter can be restored back to the file of the AO as all the decisions relied upon by the Ld. Counsel in the course of hearing have not taken into account the outcome of the Supreme Court decision after the matter has been restored back. Regarding 201(1) and 201(1A), he submitted that the matter can be verified again by the AO. 11. We have heard the rival submissions put forth by the parties and also gone through the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been the contention of the assessee that, roaming facility is nothing but use of standard telecom infrastructure facilities provided by telecom operator of the visiting network. It is a standard facility provided through Cell towers or cable network, etc. There is no technical service provided by any human per se who is giving constant services through his technical skills or experience. The call carriage during the roaming process is fully automated by virtue of sophisticated technological advanced telecom network. 12. The concept of human intervention/involvement stems from the meaning assigned for "income by way of fees for technical services" in section 9(1)(vii) read with Explanation 2. The explanation envisages, "------------ any consideration for rendering of any managerial, technical or consultancy services -----------------------." Here the word "technical services" is preceded by the word "managerial" and succeeded by the word "consultancy". It cannot be read in isolation as it takes colour from the words "managerial" and "consultancy" between which it is sandwiched. In such a case principle of " noscitur a sociis" gets attracted, that is, the meaning of the word or ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... face throughout the process. In answer to certain questions, these experts have admitted that when call is connected from one operator to other, it is an automatic connection and there is no human intervention or involvement in the process of carriage of calls, however, certain human intervention is required in case there are some technical snags or fault in the hardware or software or snapping of fiber optic cables, either at the time of installation, testing, maintenance etc. Hence, for these purpose only certain element of human intervention is required. In wake of these circumstances, whether it can be held that, there is an element of human intervention or personalized human skills is involved to cater to the roaming facilities availed by the subscribers are not very clear. The AO has tried to further stretch these observations of the technical experts to the extent of holding that, each machine requires some kind of human intervention, because they have been created by the human only. However, we are too skeptical to endorse this view of the AO. If any person delivers any services through his skills, or experience, or make available any such services either through aid of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges. However, we are not entering into the semantics of the controversy whether human involvement / intervention is there qua the payment of roaming charges. We are keeping this issue open and our observations made above are not final conclusion on this matter, because in the case of Vodafone Essar Mobile Services Ltd., which order has been quoted by the AO extensively has not stood scrutiny or concluded by any appellate authorities or any court, especially in light of any rebuttal which may come from the side of assessee. Thus, we are refraining from deciding the first issue before us. 14. Now coming to the issue, whether assessee can be treated as 'assessee-in-default' under section 201(1) in wake of declaration furnished by the payee and also the details of their income-tax returns, PAN, etc., we find that Ld. CIT(A) without perusing the finding of the AO as noted in the order, has recorded a wrong finding of fact that assessee has not filed any declaration of the deductees and the details of their income in their return of income, wherein, the said payments have been incorporated. From the perusal of the assessment order, especially, in the second last page, as noted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed". (1A) xxxxxxxxxxxx ... "Provided that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso to sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident". In view of the aforesaid provisos , the levy of interest in the cases where assessee has not been deemed to be in default by virtue of first proviso to section 201(1), then levy of interest is only from the date on which tax was deducible to the date of furnishing of return of income by such payee. Though these provisos have been inserted w.e.f. 01.07.2012, however, now there are judicial consensuses that these provisos will have retrospective effect, especially in wake of Hon'ble Delhi High Court decision in the case of CIT vs Ansal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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