TMI Blog2016 (11) TMI 1739X X X X Extracts X X X X X X X X Extracts X X X X ..... lays liability on IBM and substance of the transaction suggests that the beneficial ownership remained with IBM and not with assessee and therefore the assessee had rightly claimed the entire lease rent paid by it to IBM. TDS u/s 194H - discount allowed to distributors on the sale of prepaid cards which carry Right to Use of Airtime - HELD THAT:- Addition under Section 40(a)(ia) has to be deleted as the assessee was not in default u/s 201 of the Act in respect of applicability of Section 194H - The Assessee company was carrying out telecom business in the Rajasthan Circle and NESA. The Jaipur Bench of ITAT held that the assessee is not in default in Assessment Year 2004-05 to 2008-09 and Assessment Year 2009-10. Similarly in the case of assessee itself has held that assessee to be not in default u/s 194H of the Act. Thus no tax was determined as deductible under Chapter XVIIB. Computational provisions of Section 40(a)(ia) cannot operate if machinery provisions of Chapter XVII-B Section 201 read with Section 194H of the Act are not applicable. TDS u/s 194J - Payment made by the assessee company for roaming charges to other telecom service providers - HELD THAT:- Jai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Delhi High Court s decision in assessee s own case was followed for A.Y. 2004-05. The Hon ble Delhi High Court held that the expenditure incurred towards licence fee is partly revenue and partly capital. Licence fee payable upto 31st July, 1999 should be treated as capital expenditure and licence fee on revenue sharing basis after 15th August, 1999 should be treated as revenue expenditure. Thus capital expenditure is qualified for deduction as per Section 35ABB of the Act in the said case as per the finding of the Hon ble High Court. Thus the said issue is decided in favour of the assessee by the Hon ble Delhi High Court. Besides this for A.Y. 2003-04, 2004-2005, 2006-07 and 2007-08 also the said issue is decided in favour of the assessee by the ITAT. 5. The Ld. AR submitted that ground no. 2 of the Revenue s appeal relating to addition on account of lease rent paid to IBM that of Rs. 6,23,19,912/- is also covered in favour of the assessee by the decision of the ITAT Delhi Bench in assessee s own case for A.Y. 2008-09(ITA No. 2795/Del/2012 dated 21.04.2016) wherein the Tribunal held that the service cum lease agreement between the assessee and IBM as well as Nortel clearly la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n deleted as the assessee has been held not to be in default u/s 201 of the Act in respect of applicability of Section 194J of the Act. In assessee s own case for A.Y. 2008-09, ITAT, Jaipur Bench (A.Y. 2004-05 to 2009-10) as well as Gauhati Bench (A.Y. 2006-07 to 2010-11) held that the assessee is not in default u/s 201 of the Act on account of non-deduction of TDS u/s 194J in regard to roaming charges to other telecom service providers. Thus no tax was determined as deductible under Chapter XVII-B. The Computational provisions of Section 40(a)(ia) of the Act cannot operate if machinery provisions of Chapter XVII-B - Section 201 read with section 194J of the Act are not applicable. 8. The Ld. DR could not submit any argument contrary to these facts and the legal position. 9. We have heard both the sides and gone through the orders passed by the ITAT New Delhi Bench, Jaipur Bench and Gauhati Bench as well as Hon ble Jurisdictional High Court in case of assessee for various assessment years. 9.1 Ground No. 1 of the Revenue s appeal, the issue in the present assessment year is that an amount of Rs. 214,23,97,00/- was debited as payment towards license fee and spectrum charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act to discount allowed to distributors on the sale of prepaid cards which carry Right to Use of Airtime and disallowance to that extent for Rs. 1,07,94,10,000/- by the AO. Addition under Section 40(a)(ia) has to be deleted as the assessee was not in default under Section 201 of the Act in respect of applicability of Section 194H of the Act. The Assessee company was carrying out telecom business in the Rajasthan Circle and NESA. The Jaipur Bench of ITAT held that the assessee is not in default in Assessment Year 2004-05 to 2008-09 and Assessment Year 2009-10 ITA No. 656/JP/2010 (which is the present Assessment Year). The Jaipur Bench of ITAT recorded a finding in para 6 (ITA No. 656/JP/2010) as follows: 6. We have heard the rival contentions of both the parties and perused the material avialble on the record. Recently this bench has decided similar issue in the case of Tata Tele Services, which is identical to the assessee s case. The facts of the case has been demonstrated by the AR that the assessee was issuing bill on net amount on MRP has been fixed on prepaid card sold. The assessee has not transferred any income to the distributor but the distributor was allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ITAT recorded a finding in para 11 (ITA No. 656/JP/2010) as follows: 11. We have heard the rival contentions of both the parties and perused the material available on the record. After going through the order of the Assessing Officer, ld CIT(A); submissions of the assessee as well as going through the process of providing roaming services; examination of technical experts by the ACIT TDS, New Delhi in the case of Bharti Cellular Ltd.; thereafter cross examination made by M/s Bharti Cellular Ltd.; also opinion of Hon ble the then Chief Justice of India Mr. S.H. Kapadia dated 03.09.2013 and also various judgments given by the ITAT Ahmadabad Bench in the case of Canara Bank on MICR and Pune Bench decision on Data Link Services. We find that for installation/setting up/repairing/servicing/maintenance capacity augmentation are require human intervention but after completing this process mere interconnection between the operators is automatic and does not require any human intervention. The term Inter Connecting User Charges (IUC) also signifies charges for connecting two entities. The Coordinate Bench also considered the Hon ble Supreme Court decision in the case of Bharti Cellula ..... X X X X Extracts X X X X X X X X Extracts X X X X
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