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Income Tax Appellate Tribunal, “A”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH, JM
आदेश / O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A)- 14, Mumbai dated 30/04/2013 for A.Y.2010-11 in the matter of order passed u/s.201(1) & 201(1A) of the Income Tax Act. 2. Nobody appeared on behalf of the assessee inspite of giving so many opportunities. This case was originally heard on 28/02/2018. When nobody appeared on behalf of the assessee nor any adjournment was sought for, inspite of giving opportunity, thereafter, case was again fixed on 10/05/2018 for clarification but nobody appeared. Thereafter, the case M/s. Loop Mobile (India) Ltd., was again fixed on 26/06/2018, 03/08/2018 and finally on 05/10/2018 and none appeared on behalf of the assessee. Bench, therefore decided to dispose the appeal after hearing learned DR and considering the material placed on record. We have gone through the orders of the authorities below. Facts in brief are that the assessee company is engaged in providing cellular telephone network services. From the records of the assessee, the AO observed that the appellant was not deducting tax on certain items. Therefore, he initiated proceedings under section 201(1). During the course of these proceedings, the AO obtained the relevant information from the assessee as well as the replies to certain queries raised in this regard. After considering the same, the AO held the assessee to be an assesses in default for not deducting tax at source in respect of trade discount given to its distributors on prepaid SIM cards and prepaid recharge vouchers. The AO also held the assessee to be in default for not deducting the tax on 'roaming charges' paid to other service providers. The AO, thus computed the demand of tax and interest at Rs.10,50,72,916/- against the assessee in respect of the above two aspects.
By the impugned order CIT(A) confirmed the action of the AO after observing as under:- 5.3 I have carefully considered the Appellant's submissions. Based on the Hon ble Supreme Court's decision in the case of Bharti Cellular (330 ITR 239), it is a settled position that for a particular service to partake the character of 'fees for technical services', presence of human element is essential. Thus, in order to characterize the Roaming charges as fees for M/s. Loop Mobile (India) Ltd., technical services, it is imperative to ascertain the existence and extent of human involvement required in the said process. 5.4 It is seen that this aspect has been examined in detail in the case of Vodafone Essar Mobile Services Ltd by ACIT, Circle 51(1), New Delhi, wherein he has examined the whole process after interrogating Shri Tanay Krishna, group leader (Project Planning) at C-DOT, Delhi. The AO has quoted extensively from the statement of Shri Tanay Krishna in the impugned order. Similarly, statement of Shri Ashok Mittal. group leader (CLH) at C-DOT, Delhi was also recorded in the said case and the same has also been quoted extensively by the AO in the impugned order. In the said case, these statements were confronted to the experts of the assessee company i.e. Vodafone Essar Mobile Services Ltd and as a result thereof, it was concluded that human intervention is required for providing these services. The details of the conclusions have been summarised by the AO on page 14 of the impugned order. 5.5 It is thus evident that as per the directions of the Hon'ble Supreme Court in the case of Bharti Cellular (supra), it has been ascertained that human involvement is required in the said process. Since the process is quite technical in nature, obviously the payments made by the appellant to the third party service providers are in the nature of 'fees for technical services'- Hence the appellant was required to deduct tax at source as per the provisions of section 194J of the Act. Therefore, I uphold the order of the AO in this regard. 5.6. Further, in view of the ruling of Supreme Court in the case of Hindustan Coea-Beverages Pvt. Ltd (supra) and the CBDT circular number 8, dated 24.11.09, I also that wherever the appellant company proves that tax has been paid by the deductees, recovery of demand cannot be enforced. If the appellant produces such certificate to the extent such certificates are produced, recovery of the TDS amount u/s. 194H, shall not be enforced. The AO is directed accordingly. 5.7 Above grounds of appeal
are accordingly adjudicated.
6. Additional submissions: 6.1 The appellant has also made submissions reproduced herein-below. However, no ground of appeal has been taken in this regard. 1, Assessee places reliance on the Judgement of Honourable ITAT - C Bench, Mumbai, in case of Pfizer Ltd, vs. Income tax Officer (TDS)(OSD) - / 2010. A copy of the case law is furnished here with for your reference and record. Sir, we draw your kind attention to para 12 of the above Judgment pronounced by the Honourable ITAT, an extract whereof is produced below:
M/s. Loop Mobile (India) Ltd., ". . , . . . .... . .. Once an amount u/s disallowed under Section 40(a)(ia)……………….the same cannot be subject to the provisions of TDS under Section 201(1) on the reason that assessee should have deducted the tax. If the Order of AO were to be accepted then disallowance under Section.40(a)(i) and Section 40(a)(ia) cannot be made and provisions to that extern man become otiose. " Sir, we have received Assessment Order u/s 143(3) for A.Y. 2010-11 from ACIT-6(3), Mumbai, where the disallowance u/s 40(a)(ia) for non deduction of TDS- - u/s 194H Rs. 11,64,93,420 - u/s 194JRs. 46,06,02,012 in aggregate the disallowance is Rs.57,70,95,432. The assessee is subjected to tax on account of disallowance of the expenditure incurred for the sole reason of non deduction of TDS cannot be once again subjected to tax under Section 201 & 201(1A) of the Income tax Act, 1961. A copy of the AO is furnished here with for your reference and record. Based on the above judgement, assessee company prays that the demand of Tax under the provisions of Section 201 and levy of Interest under Section 201(1 A) does not hold good in law and the tax demanded is void. Hence the tax deposited of Rs. 75 Lacs, challans thereof are furnished here with for record and reference, against the demand of Rs. 10.51 Crore be refunded with Interest u/s 244A. 6.2 I have considered the above submissions of the appellant However, I note that neither the appellant has raised any ground of appeal in this regard as per the appeal memo, nor it has filed any additional ground of appeal for adjudication on this aspect Hence, no relief can be given to the appellant on account of this reason itself. 6.3 Further, in the above submissions, the appellant has relied upon the decision of ITAT, Mumbai in the case of Pfizer Ltd. vs. Income tax Officer (TDS)(OSD), where the facts were totally different In that case, the assessee had suo-moto disallowed the entire amount of the provision created under sections 40(a)(i)/ 40(a)(ia), on account of non-deduction of tax and hence the provision was reversed in the next assessment year. Hence, in these circumstances, because the assessee had not claimed any such expenditure in the relevant year, the Hon'ble ITAT, Mumbai held that assessee cannot be subjected to the provisions of IDS under Section 201(1) for the case of the appellant however, no such disallowance was made suo-moto under sections 40(a)(i)/ 40(a)(ia) and it was only at the time of regular assessment M/s. Loop Mobile (India) Ltd., proceedings that the AO has disallowed the same. The appellant has also not admitted that the said disallowance u/s 40(a)(ia) has been accepted by it. Hence, the decision of ITAT, Mumbai in the case of Pfizer Ltd (supra) does not at all applying to the case of the appellant. 6.4 The above arguments of the appellant are rejected, both on account of technicalities as well as on merits.