TMI Blog2021 (11) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2011-12 respectfully following the findings of this Tribunal (supra) we direct the AO to delete the disallowance. TDS u/s 194J - Disallowances of telecommunication expense paid to Domestic Telecom Operators - AO disallowed the payments made for these telecom connectivity services - HELD THAT:- It is true that the agreement between the assessee, Bharti Airtel and Reliance clearly show that each party was responsible for its network and for the provisions of services related to it. We are of the considered view that the telecom operators provided connecting, transit and termination services to each other on a reciprocal basis and neither of the parties had any rights in the equipments or in the network of the other parties. The FTOs do not grant any possession or control of any equipment or in the network deployed by them to the assessee. As relying on case of Bharti Airtel [ 2016 (3) TMI 680 - ITAT DELHI ] payment cannot be termed as covered by Explanation 2 read with Section 9(vi) - Decided in favour of assessee. Short grant of credit for TDS - HELD THAT:- We find that on short grant of TDS given by the AO, the assessee has moved a rectification application which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lecommunication services should commence prior to 1, April 2005. Since the assessee did not provide any segmental income expenditure for NLD and ILD services, proportionate disallowance is made on the basis of revenue. 8. The proportionate disallowance for the year under consideration is as under:- 9. Assessee carried the matter before the CIT(A) but without any success. 10. Before us the Counsel for the assessee drew our attention to the decision of this Tribunal in assessee's own case for A.Y. 2011-12 and pointed out the relevant findings of this Tribunal claiming that the issue has been decided by the Tribunal in favour of the assessee. 11. Per contra the DR did not bring any distinguishing decision in favour of the revenue. 12. We have carefully considered the orders of the authorities below and have carefully perused the decision of this Tribunal in assessee's own case for A.Y. 2011-12. 13. We find force in the contention of the counsel. This Tribunal in A.Y. 2011-12 has resolved this quarrel in favour of the assessee. The relevant findings read as under:- 14. Since the factual matrix and the arguments are identical. Facts consider in A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered by this Tribunal in assessee's own case for A.Y. 2011-12 and has decided in favour of the assessee. The relevant findings read as under;- 24. On finding parity of facts with the facts of A.Y. 2011-12, respectfully following the findings of this Tribunal (supra) we direct the AO to delete the disallowance. 25. Ground No. 7 to 10 in A.Y. 2010-11, ground No. 3 to 3.6 in A.Y. 2013-14 and ground No. 8 to 11 in A.Y. 2015-16 are allowed. 26. The next grievance relates to the disallowances of telecommunication expense of ₹ 30,08,982/- paid to Domestic Telecom Operators in A.Y. 2010-11. 27. The underlying facts in this issue are that though the assessee possesses the requisite licenses and permissions to render the telecommunication services in India but it is not in a position to provide the same services outside India. Also, in some cases the assessee does not possess the requisite infrastructure to provide telecommunication services in a few parts of India. Therefore, in order to serve its customers all over India, the assessee procured telecom connectivity services from Indian telecom operators. 28. The AO disallowed the payments made for these tele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A perusal of these agreements demonstrate that, each party under the agreement remains responsible for its own network and for the provision of services related to it. The Telecom Operator provide connecting, transit and termination services to each other on a reciprocal basis and neither of the parties shall have any rights in the equipments or in the network of other parties The agreement are not for renting, hiring, letting or leasing out of any of the network elements or resources to the other parties or for rendering telecommunication services on a reciprocal basis ....The Assessee is nowhere concerned with the route, equipment, process or network elements used by the FTO in the course of rendering such sendees. In the case of telecom industry, all the telecom operators have similar infrastructure and telecom networks in place, for rendition of telecommunication services. The process embedded in the networks of all telecom operators is the same. The equipments, resources etc. employed in the execution of the process may be different in physical terms i.e. in terms of ownership and physical presence, but the process embedded in the execution of a telecom infrastruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice and in a broader sense a communication service ..... Thus the factual finding of the Jurisdictional High Court in this very facts and circumstances is that technical services is being provided by the FTO's to the assessee but that such Technical Service is not FTS as defined u/s. 9(1)(vii) of the Act as there is no human intervention Under such circumstances, the question of taking a contrary view that it is not a technical services , but a case where the FTP had granted the assessee a right to use a process and the payment is for 'royalty' cannot be countenanced. Applying the binding decision of the Hon'ble Jurisdictional High Court we have to hold that the payment cannot be termed as covered by Explanation 2 read with Section 9(vi) of the Act. 35. On finding parity with the facts, respectfully following the decision of the coordinate Bench (supra) we direct the AO to delete the disallowance ground No. 11 to 14 in A.Y. 2010-11 are allowed. 36. The next grievance relates short grant of credit for Taxes Deducted at Source ('TDS') in A.Y. 2013-14 and 2015-16. 37. We find that on short grant of TDS given by the AO, the assessee has moved ..... X X X X Extracts X X X X X X X X Extracts X X X X
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