TMI Blog2018 (2) TMI 1461X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia to the customer and as identified in the relevant Service Order” The agreement also places certain restrictions upon the re-sale of the services to the third parties which are provided by the MCI Worldcom Asia P. Limited. If these contractual conditions are taken into account, it is quite apparent that the nature of services in issue is not merely internal bandwidth connectivity but whole range of other services. The payments for these services are determined by relevant “service orders”, which are agreed to and refused from time to time. In the present case, clearly the Revenue did not examine as to whether the services or any of them fulfil the character of “fee” so as to result in taxability of the payment in India, in terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar ( AY ) 2001-02 and ₹ 64,28,065/- for the AY 2002-03 had to be subjected to deduction and brought to tax. The assessment order does not contain any reasons in support of the conclusions. The CIT(A) differed with the view of the AO and after analysing certain provisions of the master service agreement held that the amount was not liable to tax by relying upon the decision of this Court in the case of Commissioner of Income Tax vs. Estel Communications (P) Ltd., 318 ITR 185 (Del.). In that decision, the question involved was payment of amounts on account of bandwidth allocation by overseas service provider. The Court notices that there was no privity of contract between the overseas service provider and the assessee s subscribers; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertinently states as under:- 6. The question basically involved in the lead case is: whether TDS was deductible by M/s. Bharti Cellular Limited when it paid interconnect charges/access/port charges to BSNL? For that purpose, we are required to examine the meaning of the words fees for technical services under Section 194J read with clause (b) of the Explanation to Section 194J of the Income Tax Act, 1961, [Rs.Act', for short] which, inter alia, states that fees for technical services shall have the same meaning as contained in Explanation 2 to clause (vii) of Section 9(1) of the Act. Right from 1979 various judgments of the High Courts and Tribunals have taken the view that the words technical services have got to be read in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed without any technical assistance available on record. 8. There is one more aspect that requires to be gone into. It is the contention of Respondent No.1 herein that Interconnect Agreement between, let us say, M/s. Bharti Cellular Limited and BSNL in these cases is based on obligations and counter obligations, which is called a revenue sharing contract . According to Respondent No.1, Section 194J of the Act is not attracted in the case of revenue sharing contract . According to Respondent No.1, in such contracts there is only sharing of revenue and, therefore, payments by revenue sharing cannot constitute fees under Section 194J of the Act. This submission is not accepted by the Department. We leave it there because this submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the re-sale of the services to the third parties which are provided by the MCI Worldcom Asia P. Limited. If these contractual conditions are taken into account, it is quite apparent that the nature of services in issue is not merely internal bandwidth connectivity but whole range of other services. The payments for these services are determined by relevant service orders , which are agreed to and refused from time to time. In the present case, clearly the Revenue did not examine as to whether the services or any of them fulfil the character of fee so as to result in taxability of the payment in India, in terms of Section 9(1)(vii) of the Act. In these circumstances, the Court is of the opinion that the impugned order cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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