TMI Blog2021 (7) TMI 1197X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the nature of works contract which comes u/s.194C f the Act. AO as well as the ld.CIT(A) has erred in holding the assessee as an assessee in default u/s.201(1) / 201(1A) of the Act to compute short deduction of TDS and interest thereon. Accordingly, we set aside the order of the ld.CIT(A) and direct the AO to delete additions made towards short deduction of TDS and interest u/s.201(1) / 201(1A) - Appeal filed by the assessee is allowed. - ITA No.: 2842/CHNY/2019 - - - Dated:- 28-7-2021 - Shri V. Durga Rao, Judicial Member And Shri G. Manjunatha, Accountant Member For the Appellant : Shri T.S. Lakshmi Narayanan, FCA For the Respondent : Shri G. Suresh Periasamy, JCIT ORDER PER G. MANJUNATHA, AM: This app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be deleted and justice rendered. 3. The ld.AR for the assessee at the time of hearing submitted that there is a delay of 1 day in filing appeal before the Tribunal for which necessary petition for condonation of appeal along with affidavit has been filed explaining the reason for delay in filing the appeal. The ld.AR further submitted that the delay in filing the said appeal was neither willful nor deliberate but due to circumstances beyond the control of the assessee. Having heard both sides, we are of the considered view that reason given by the assessee for not filing the appeal within the time allowed under the Act comes under reasonable cause as provided under the Act for condonation of delay and hence, delay in filing of above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because applicable rate of TDS for the nature of payments made by the assessee is 10% as per section 194J of the Act, whereas, the assessee has deducted TDS at the rate of 2% as per section 194C of the Act. Therefore, the AO has passed an order u/s.201(1) and 201(1A) of the Act and computed short deduction of TDS and interest. The assessee carried the matter in appeal before the CIT(A) but could not succeed. The CIT(A) for the reasons stated in his appellate order dated 25.06.2019 confirmed additions made by the AO on the ground that services rendered by the service providers does not fall u/s.194C of the Act but, was in the nature of fees for technical services which attracts TDS as per provisions of section 194J of the Act. Aggrieve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no error in the findings recorded by the authorities below to hold assessee as assessee in default u/s.201(1) 201(1A) of the Act. 7. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We have also gone through Equipment Housing (Colocation) Master Service Agreement between assessee and M/s. Bharti Airtel Ltd., and M/s. Reliance Communications Ltd., and ascertained the fact that, as per agreement between parties, the nature of services provided by the supplier to the assessee is to provide customers with a specified bandwidth of network connectivity. We, further noted that the assessee has purchased bulk bandwidth data from M/s. Bharti Airtel Ltd., and M/s. Relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t held that mere payment by the assessee for internet bandwidth did not mean that technical services were rendered by the supplier to the assessee and therefore, provisions of section 194J of the Act did applies. A similar view has been taken by the Hon ble Madras High Court in the case of Skycell Communications Ltd., vs. DCIT, [2001] 251 ITR 53. 8. In this view of matter and considering facts and circumstances of this case, we are of the considered view that payments made by the assessee for bulk purchase of bandwidth from service providers like M/s. Bharti Airtel Ltd., and M/s. Reliance Communications Ltd., cannot be considered as fees for technical services because such services have been provided through optical fiber cable without a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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