VODAFONE MOBILE SERVICES LTD.,,NEW DELHI vs. ITO, KARNAL

PER H.S. SIDHU, JM

The Assessee have filed these appeals, which are emanate from

their respective orders of the Ld. Commissioner of Income Tax (TDS),

Chandigarh passed u/s. 263 of the I.T. Act, 1961 and orders of Ld.

Commissioner of Income Tax (Appeals), Karnal passed u/s. 250(6) of the

I.T. Act, 1961 pertaining to A.Yrs. 2007-08, 2008-09 & 2009-10. Since

the issues involved in these appeals are identical and inter-connected,

hence, the appeals were heard together and are being disposed of by this

common order for the sake of convenience.

ITA No. 3779 to 3781/Del/2013:-

“The Appellant respectfully submits that:

On the facts and circumstances of the case and in law,

the notice issued under section 263 of the of Income

Tax Act, 1961 ('Act') by the learned Commissioner of

Income Tax (TDS), Chandigarh (hereinafter referred to

as the 'learned CIT (TDS)') and the order passed under

section 263 of the

Act are illegal, bad in law and without jurisdiction.

2 On the facts and in circumstances of the of

the case and in law, the learned CIT(TDS) erred in 2

assuming the jurisdiction under section 263 of the Act

since:-

2.1 the revisionary proceedings under section

263 of the Act have merely been initiated on the basis

of the letter received from Assistant Commissioner of

Income Tax (TDS), Chandigarh ('ACIT') and the CIT

(TDS) did not arrive at any independent satisfaction for

initiation of such proceedings.

2.2 by acceding to the request of the learned

ACIT, the CIT(TDS) has effectively enhanced the time

limitation prescribed under section 201(3) of the Act for

completion of201 proceedings by a TDS officer.

2.3 the order passed by the learned ACIT is

neither 'erroneous' nor 'prejudicial' to the interest of the

revenue since the learned ACIT took one of the two

permissible views after conducting a detailed enquiry in

respect of applicability of withholding tax provisions on

the roaming charges paid by the appellant to the other

telecom operators .

3 On the facts and circumstances of the case

and in law, the learned CIT(TDS) has erred in not

appreciating the fact that the other telecom operators,

to whom the roaming charges have been paid, would 3

have offered income arising from roaming charges

received from the appellant to tax and hence, no

prejudice would have been caused to the revenue and

hence, initiation of 263 proceedings is bad-in-law and

void ab-initio.

Without prejudice to the above Grounds

4 On the facts and in circumstance of the case

and in law, the learned CIT (TDS) has erred in

concluding that roaming charges paid to other telecom

operators by the appellant attracts provisions of section

194J without appreciating the facts that -

(i) Roaming charges paid by the appellant to

the other telecom operators represent payments made

for standard facility provided by such telecom operators

and hence, cannot be classified as FTS for the purposes

of the Act.

(ii) No human intervention, which is sine qua

non for a service to qualify as technical service, is

involved in provision roaming services and therefore,

roaming charges cannot be construed as Fee for

Technical Services for the purposes of the Act.

(iii) The reports of the technical experts clearly

establish the fact that roaming payments made to other

telecom operators for allowing use of their network to

appellant's subscribers are in the nature of provision of

a standard facility, which does not involve any human

intervention at all and hence, such payments cannot be

classified as FTS liable for deduction of tax at source

under Section 194J of the Act.

(iv) No demand U/S 2011201(1A) of the Act can

be raised where taxes so deductible but not deducted

by the payer are directly paid by the recipient and such

an action would result in double recovery of the

demand.

All the above grounds are without prejudice to each

other. The Appellant craves leave to add, amend, vary,

omit or substitute any of the aforesaid grounds of

appeal at any time before or at the time of hearing of

the appeal.

The Appellant prays that appropriate relief be granted

based on the said grounds of appeal and the facts and

circumstances of the case.”

718/Del/2017:-

The Appellant respectfully submits that:

On facts and circumstances of the case and in law, the

learned Commissioner of Income (Appeals), Karnal

['learned CIT(A)'] has erred in passing the order under

section 250 of Income Tax Act, 1961 ('Act'), confirming the

contentions of the Income Tax Officer - Karnal ('learned

TDS officer') that the Appellant is liable to deduct tax at

source on 19 charges as per the provisions of the section

194J of the income tax act (' Act').

Each of the ground is referred to separately, which may

kindly be considered independent of each other.

Ground No.1 - The order passed by the learned TDS officer

is bad in law

1.1 On the facts and circumstances of the case and in law,

the learned CIT(A) has erred in upholding the order passed

by the learned TDS officer, which is bad-in-law.

1.2 On the facts and circumstances of the case and in law,

the learned CIT(A) officer has erred in upholding the order

of the learned TDS Officer in treating the Appellant as

'assessee in default', despite of the provisions of section 6

201 (1) read with section 191 of the Act and the judgment

of Jagran Prakashan Limited Vs DCIT(TDS) (345 ITR 288)

(All HC), as there is no finding by the learned TDS officer

with respect to the failure of the roaming partners to pay

tax directly, which is a jurisdictional pre-requisite.

Ground No.2 - Disallowance under section 194J of the Act

on account of non-deduction of tax at source on domestic

roaming charges paid to other telecom operators

2.1 On the facts and in the circumstances of the case

and in law, the learned CIT(A) has erred in upholding the

contention of the learned TDS officer that the Appellant was

required to deduct tax under section 194J of the Act on the

'roaming charges' paid/payable by the Appellant to other

telecom operators, during the subject financial year.

2.2 On the facts and in the circumstances of the case

and in law, the learned CIT(A)/TDS officer have erred in not

appreciating the fact that roaming services are standard

automated services requiring no human intervention which

is sine qua non for a service to qualify as a technical service

for the purposes of section 194J of the Act.

2.3 On the facts and in the circumstances of the case

and in law, the learned CIT(A)/TDS officer have erred in not

appreciating that even as per the statement of technical 7

experts, the carriage of calls is an automatic activity and

human intervention, if any, is required only at the stage of

inter-connect set-up, capacity enhancement, monitoring,

maintenance, fault identification, repair, etc.

2.4 On the facts and in the circumstances of the case

and in law, the learned CIT(A)/TDS officer have erred in

ignoring the statement of technical experts recorded by the

income-tax authorities in case of Vodafone Cellular Limited

(now merged with Appellant itself), in the context of

roaming services, wherein it has been clearly observed that

roaming services are automated services requiring no

human intervention.

2.5 On the facts and in the circumstances of the case

and in law and without prejudice to Grounds 2.2 to 2.4, the

learned CIT(A)/TDS Officer has erred in not holding that

characterization of a payment must be done having regard

to the dominant purpose/ intention of the payment.

2.6 On the facts and in circumstances of the case and

in law the learned CIT(A} has erred in not following the

principles laid down in judicial precedents cited by the

Appellant and also ignoring the binding Apex Court

judgment in the case of CIT vs Delhi Transco Limited 68

taxmann.com 231 and CIT vs Kotak; Securities Limited 67

taxmann.com 356.

201(1) of the Act can be recovered from the Appellant

3.1 On the facts and circumstances of the case and in law,

the order of the learned CIT(A)/TDS Officer is bad in law in

so far it seeks to recover tax demand under section 201 of

the Act in contradiction to the settled principle that the

payer cannot be held liable for payment of the tax demand

in cases involving non-deduction of tax at source and only

interest liability under section 201(IA) of the Act, If any,

can be levied in such cases.

3.2 Without prejudice to Ground No. 3.1, on the facts and

circumstances of the case and in law, the Ld. CIT(A)/TDS

Officer has erred in raising demand under section 201(1)

of the Act even though taxes would have been paid on

roaming charges by the recipient parties. Such an action

has resulted in double recovery of taxes, which is against

the rules of taxation principles.

3.3 Without prejudice to Ground No. 3.1 and 3.2

above, on the facts and circumstances of the case and in

law, the learned CIT(A)/TDS Officer has erred in not

verifying the aforesaid fact, relating to payment of taxes by 9

the roaming partners, which could have been verified basis

the name, address and PAN details furnished by the

Appellant.

Ground No.4 - No interest under section 201(1A) of the Act

can be charged

4.1 On the facts and circumstances of the case and in

law, the learned CIT(A) has erred in confirming the action

of the TDS officer in charging interest under section

201(IA) of the Act.

4.2 Without prejudice to Ground No 4.1 above, on the

facts and circumstances of the case and in law,

consequential interest under section 201 (l A) of the Act

should be computed from the due date of payment of

withholding tax by the Appellant to the date of payment of

taxes by the payees/recipients of such income or filing of

original return of income, whichever is earlier.

The above grounds are without prejudice to each other. The

Appellant craves leave to add, mend, vary, omit or

substitute any of the aforesaid grounds of appeal at any

time before or at the time of hearing of the appeal.

The Appellant prays that appropriate relief be granted

based on the said grounds of appeal and the facts and

circumstances of the case.”

to 2009-10), together being issues similar and identical, by dealing with

ITA No. 3779/Del/2013 (AY 2007-08).

have not dealt with the issue of TDS on Roaming Charges/Interconnect Charges paid by the Assessee.

In view of above facts and in the interest of natural justice, before passing any order u/s. 263 an opportunity of being heard is given to the assessee, vide Ld. CIT’s office letter No. 6518 dated 23.03.2012 and the case was fixed for hearing on 29.03.2012. On said date, a letter requesting to adjourn the case on any other convenient date was received. The case was fixed for hearing on 27.04.2012 and finally on 23.03.2013. The assessee submitted its reply stating therein as under:-

In this regard, on behalf of and under instruction of our subject client, we wish to submit that a reply providing our detailed submission against initiation of revisionary proceedings under section 263 of the Act and also on the merits of the case has been filed vide our letter dated April 27, 2012. In the above reply, it was inter-alia submitted as under:

Conditions pre-requisite for initiation of revisionary proceeding under section 263 of the Act are not present in the instant case and hence, section 263 of the Act cannot be invoked to hold that the TDS order passed by the 12

learned TDS Officer was not erroneous and prejudicial to the interest of the revenue and resultantly, hold VDL as an assessee in default for non deduction to tax at source from roaming charges paid to other telecom operators during the subject financial years.

The aforesaid order passed by the learned TDS Officer was no erroneous as it was passed after due enquiries were conducted by the learned TDS Officer with respect to applicability of withholding tax provisions to the roaming charges paid by VDL to the other telecom operators.

On merits of the ease, roaming charges paid by VDL to other telecom operators are not subject to tax deduction at source under the provisions of the Act and hence, VDL cannot be held as an assessee in default for non-deduction of tax at source thereon.

In addition to the above submission made vide our letter dated April 27, 2012 and the judicial decisions cited therein, we wish to submit as follows. 13

Further reliance is placed on the recent decision of the Hon'ble Mumbai bench of the Income Tax Appellate Tribunal ('Tribunal') in the case Reliance Communications Ltd (ITA No. 2915/Mum/2012), wherein it has been held that an order passed by the assessing officer cannot be held to be erroneous merely because the assessing officer has adopted one of the two possible views and hence, revisionary proceedings under section 263 of the Act cannot be initiated in such a case. Relevant extract of the decision is reproduced below:

"Suffice to say, we are dealing with proceedings U/S 263. The scope of such proceedings is restricted to revising an order which is erroneous and prejudicial to the interests of the Revenue. An order cannot De

said to be erroneous when the AO followed one of the legally sustainable view out of ihe two views available on the point. The CIT cannot call an assessment order to be erroneous simply because he is inclined to follow the other legally sustainable view in preference to the one followed by the AO. The Hon'ble Summit Court in Malabar Industrial Co. Ltd., v. CIT [(2000) 243 ITR 83 (SC)] has held that: 'Where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income Tax Officer is unsustainable in law. Tthe same view has been reiterated by several Hon'ble High Courts including the Hon'ble Delhi High Court in CIT Vs. Ansal Properties & Ind. Pvt. Ltd., (2009) 315 ITR 225 (Del). In this case it has been noticed that: That at the time when the Commissioner issued the notice under section 263 and passed the order dated March 23, 2004, the question of surcharge on undisclosed income was a debatable one. When an issue was debatable, the provisions of section 263 could not be invoked. From the above discussion it is axiomatic 15

that no revision can be done on a debatable issue. An issue becomes debatable if two legally sustainable views exist on a particular point. When the AO accepts and adopts one possible view, the power of the CIT is ousted to revise the assessment order on his finding the other legally sustainable view as more logical in preference to the one adopted by the AO.

The aforesaid view also been upheld and followed by the Hon’ble Ahmedabad High Court in the case of Narayan Organics Pvt. (in ITA No. 690/Ahd/2012).

Applicability in case of VDL

We wish to reiterate that in the present case, during the TDS proceedings, the learned TDS officer conducted detailed enquiries regarding various expense heads including roaming charges paid by VDL to other telecom operators and applicability of withholding tax provisions on such charges. Based on the submission filed by VDL, he came to a conclusion that roaming charges paid are not subject to tax deduction at source under the provisions of the Act and thus, did not hold VDL as an assessee in default for non deduction of tax at source thereon.

It cannot be said that the learned TDS Officer had taken an impossible view, rather he had taken one of the legally possible view and the said view was well supported by numerous judicial decisions cited by VDL in the submissions filed with the learned TDS Officer, Since the learned TDS Officer has certainly followed the legally sustainable view while not treating VDL as assessee in default for non deduction of tax at source from roaming charges paid to other telecom operators, the order passed by the learned TDS Officer cannot treated as erroneous.

II. On facts, circumstances and in law, roaming charges are not subject to tax deduction at source under section 194J of the Act.

Without prejudice to the above contention, we wish to submit that roaming charges paid by VDL do not fall within the scope and ambit of the withholding tax provisions contained under the Act and hence, VDL is not under an obligation to withhold taxes thereon.

A. Payment is for use of standard facility.

We wish to reiterate that roaming represents a standard facility provided by a telecom operate to 17

the subscribers of the other telecom operator and hence, roaming charges do not fall within the purview of the definition of the term fee for technical service (FTS as defined under section 9(1)(vii) of the Act.

Provision of roaming services by the other telecom operators involves provision of standard services resulting into transmission of calls/SMS when a roaming subscriber makes/ receives calls while he is roaming in the telecom service area of the other telecom operator for which it is entitled to receive appropriate service charges from VOL. It is imperative to note that services provided by the other telecom operators are standard automated services, which are available for any telecom operator willing to avail those services (to enable its subscribes to make/receives calls when the subscribers are roaming) in consideration for payment of appropriate charges.

Reliance in this regard is placed on the decision of the Hon'ble Madras High Court in the case of Skycell Communications Vs DCIT 251 ITR 53, wherein it has been held as under:

"Technical service referred in section 9(1) (vii) contemplates rendering of a "service" to the payer of the fee. Mere collection of a "for use of a standard facility provided to all those willing to pay for it does not amount to the fee having been received for technical services."

The Hon'ble High Court thus came to the following conclusion:

"At the time the income tax act was enacted in the year 1961, as also, at the time when explanation 2 to section 9(1)(ii) was introduced by the Finance (No. 2) Act, with effect from April 1, 1977, the products of technology had not been in such wide use as they are today. Any constructions of the provisions of the Act must be in the background of the realities of day-to day life in which the products of technology play an important role in making life smoother and more convenient. Section 194J as also Explanation 2 in section 9(1)(vii) of the Act were not intended to cover the charges paid by the average house-holder or consumer for utilizing the products of modern technology, such as, use of the telephone fixed or mobile, the cable T.V., the internet, the

automobile, the railway the aero plane, consumption of electrical energy, etc. Such facilities which when used by individuals are not capable of being regarded as technical service cannot become so when used by firms and companies. The facility remains the same whoever the subscriber may be -individual, firm or company".

Applying the aforesaid principle to the instant case, VDL enters into an arrangement with other telecom operators merely to enable its subscribers to avail the service provided by the other telecom operator resulting in transmission of their calls SMS while they are roaming in the telecom service area of the other telecom operator. This is merely a standard facility that can be availed by any telecom operator holding a valid telecom license.

Further reliance in this regard on the decision of the Hon'ble Mumbai Tribunal in the case of Pacific Internet India Pvt. Ltd., (318 ITR 179), where in the context of payments made by an internet service providers for obtained bandwidth from MTNI/VSNL for provisions of internet services to its subscribers, the Hon'ble Tribunal has held that bandwidth

represents standard facility provided by MTNI/VSNL and hence, payments made by the assessee for bandwidth availed by the assessee cannot be construed as FTS for the purpose of the Act.

In view of the above judicial precedents, it is clear that payments made for use of standard facility provided by the service provider, even where it involves use of sophisticated equipment and trained personnel by the service provider, cannot be construed as FTS for the purpose of the Act. In the present case as well, roaming charges paid by VDL to other telecom operators represent payments made for standard facility provided by such telecom operators and hence, cannot be classified as FTS for the purpose of the Act.

B. No human intervention is involved in provision of roaming services.

As per section 9 of the Act, FTS has been defined to mean "any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any 21

construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries".

In absence of specific meanings of the terms 'technical', 'managerial' and 'consultancy' in the Act, reliance can be placed on the dictionary meanings of such terms. The same has been listed below:

As per the Concise Oxford Dictionary, the term 'technical' has been defined to mean, "requiring special knowledge to be understood". The Black's Law Dictionary defines the word technical as "belonging or peculiar to an art or profession".

The word "management" is derived from the word "manager" which a per the Concise Oxford Dictionary is defined as "a person controlling or administering a business.

In view of the above definitions, we wish to submit that since the word technical is used in conjunction with the word 'managerial" and 'consultancy', applying the rule of Noscitur a sociis, the term 'technical' shall be read in a narrower sense so as to include only those services which involve 22

human intervention in performance thereof Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in the case of Bharti Cellular Limited (330ITR 239), wherein the Hon'ble Apex Court has upheld the above contention and has pbseroed that the term 'technical services' should be read in a narrower sense.

C. Report of the technical expert of human intervention involved in roaming services. Having discussed the judicial precedents pronounced by the Indian judiciary and their applicability to the present case, we wish to highlight the comments/ observations of an independent technical (Mrs. Vasanthi Ramamurthy -Divisional Engineer, BSNL, Coimbatore) examined by the income tax authorities in Coimbatore during similar proceedings conducted in the case of a group company Vodafone Cellular Limited to ascertain the extent of human intervention involved in provision of roaming services.

No demand under section 201 (1)/201 (IA) of the act can be raised on account of non-deduction of tax at source under section 194J of the act from roaming charges paid to other telecom operators.

Without prejudice to the contention that the roaming charges paid to other telecom operators do not get covered within the purview of section 194J of the Act, it is humbly submitted that it is trite law that no tax demand under section 201(1) of the act can be raised where taxes so deductible but not deducted by the payer to as the 'Circular'), relevant extract of which is a follows:

"Demand for non/short deduction of tax should not be enforced against the Payer if he satisfies the Income Tax Authority that such taxes have been paid by the Payee".

Reliance in this regard is placed on the judgment in the case of the Deputy Commissioner of Income Tax (TDS) Vs Jaran Prakash Limited (supra), 2012, wherein the Hon'ble Allahabad High Court has not only held that no demand under section 201 of the Act can be raised where the recipient has paid the taxes, but has also held that the deductor cannot be treated as an assessee in default till it is found that the recipient has also failed to pay such tax directly.

CIT Vs Bharti Cellular Limited & other 330 ITR 239 (Supreme Court). The Hon'ble Supreme Court held 24

that in case where taxes have been paid no demand can be raised under section 201(1) of the Act.

Vodafone Essar Limited Mumbai Vs DCIT (TDS) 113 ITJ 385 (Mumbai Tribunal): The Mumbai Tribunal, relying upon the decision of the Supreme Court in case of Hindustan Coca Cola Beverage Pvt. Ltd., (supra) held that the recovery could not once again be made from the tax deductor where the payee included the income on which tax was alleged to have been short deducted in its taxable income and paid taxes thereon.

In view of the aforesaid submissions and facts and in circumstances of the case, we wish to summarize that the order passed by the learned TDS Officer was neither erroneous nor prejudicial to the interests of revenue and hence, 'Section 263 of the Act cannot be invoked in the present case. Even on merits of .the case, roaming charges paid VDL to the other telecom operators do not qualify as FTS for the purpose of the Act and hence, are not subject to tax deduction at source under section 194J of the Act……

paid by it, which is prejudicial to the interest of revenue. I am therefore, satisfied that the provisions of section 263 of the Income tax Act, 1961 are attracted for all the years.

human intervention is required to provide fault free services of interconnection. This human intervention is of highly qualified and trained technical professional having expertise and experience in that particular area of relevant technology. In these circumstance, these interconnection charges/roaming charges fall under the ambit of section 194J of the Income tax Act, 1961.

of M/ s Bharti Cellular Ltd. to the Assessing Officer of Gurgaon who completed the order under section 201(1)/201(lA) of the Income tax Act, 1961.

Ld. Counsel of the assessee has stated that the notice 8.

issued under section 263 of the of Income Tax Act, 1961 by the

learned Commissioner of Income Tax (TDS), Chandigarh and the

order passed under section 263 of the Act are illegal, bad in law and

without jurisdiction. He further stated that Ld. CIT(TDS) erred in

assuming the jurisdiction under section 263 of the Act since the

revisionary proceedings under section 263 of the Act have merely

been initiated on the basis of the letter received from Assistant

Commissioner of Income Tax (TDS), Chandigarh and the Ld. CIT

(TDS) did not arrive at any independent satisfaction for initiation of

such proceedings; by acceding to the request of the learned ACIT,

the CIT(TDS) has effectively enhanced the time limitation

prescribed under section 201(3) of the Act for completion of 201

proceedings by a TDS officer; the order passed by the learned ACIT

is neither 'erroneous' nor 'prejudicial' to the interest of the revenue

since the learned ACIT took one of the two permissible views after

conducting a detailed enquiry in respect of applicability of

withholding tax provisions on the roaming charges paid by the

appellant to the other telecom operators. He further stated that Ld.

CIT has not appreciated the facts that the other telecom operators,

to whom the roaming charges have been paid, would have offered

income arising from roaming charges received from the assessee to

tax and hence, no prejudice would have been caused to the revenue

and hence, initiation of 263 proceedings is bad in law and void ab

initio. He further stated that learned CIT(TDS) has erred in

concluding that roaming charges paid to other telecom operators by

the assessee attracts provisions of section 194J without

appreciating the facts that - Roaming charges paid by the assessee

to the other telecom operators represent payments made for

standard facility provided by such telecom operators and hence,

cannot be classified as FTS for the purposes of the Act; No human

intervention, which is sine qua non for a service to qualify as

technical service, is involved in provision roaming services and

therefore, roaming charges cannot be construed as Fee for

Technical Services for the purposes of the Act; The reports of the

technical experts clearly establish the fact that roaming payments

made to other telecom operators for allowing use of their network

to assessee’s subscribers are in the nature of provision of a

standard facility, which does not involve any human intervention at

all and hence, such payments cannot be classified as FTS liable for

deduction of tax at source under Section 194J of the Act; no

demand u/s. 201/201(1A) of the Act can be raised where taxes so

deductible but not deducted by the payer are directly paid by the

recipient and such an action would result in double recovery of the

demand. In support of his arguments, he draw our attention

towards the page no. 27 to 32 of the Paper Book which is copy of

the order u/s. 201(1) & 201(1A) of the I.T. Act, 1961 dated

29.3.2011 passed by the ITO (TDS), Karnal and relied upon the

order of the AO and stated that Section 194J of the Act is not

applicable in the present case. He further draw our attention

towards page no. 47 of the PB which is a copy of notice of proposal

for revision u/s. 263 of the Act issued by the Ld. CIT(TDS) dated

23.3.2012 and further draw our attention towards the page no. 48-

76 of the PB filed by the assessee which are the copy of the

submission/reply to the show cause notice of the Ld. CIT in which it

is was specifically mentioned that the issue in dispute has been duly

examined by the AO. Further, Ld. Counsel of the assessee draw our

attention towards page no. 77-104 which is copy of submission/

reply dated 28.3.2013 filed before the Ld. CIT(TDS). Ld. Counsel of

the assessee as regards the validity of initiation of revisionary

proceedings under section 263 of the Income Tax Act has relied

upon the following cases laws, by filing the copies thereof in the

shape of paper book:

- CIT vs. Vodafone Essar South Limited (212 Taxman

184) (as affirmed by the Hon’ble Supreme Court in

CC 9308/2013) (Page no. 1-8 of PB).

- CIT vs. Vodafone Essar South Limited (CC

9308/2013) – Hon’ble Supreme Court (page no. 9

of PB).

- CIT vs. Sunbeam Auto Ltd. (322 ITR 167) – Delhi

High Court (Page no. 10-21a of the PB).

8.1 As regards applicability of section 194J of the I.T. Act on

roaming charges paid to roaming partners, the Ld. Counsel of the

assessee has relied upon the following case law, the copies thereof

are attached with the Paper Book. He further submitted that in

these cases the Tribunal held that assessee will not fall under the

category of ‘Fees for technical serviced’ and therefore, the

provisions of section 194J of the Act would not be attracted.

- Dishnet Wireless Limietd vs. DCIT(TDS) 45 ITR(T) 430 Chennai Bench of the Tribunal) (Page no. 53-62 of PB) 32

- CIT (TDS) vs. VodaFone South Limited (290 CTR 436)

Hon’ble Karnataka High Court. (Page No. 63-73 of PB) and

- Bharti Airtel Ltd. vs. ITO(TDS) (2016) 67 taxmann.com

223 (Delhi-Trib.) and

- Vodafone Cellular Limited vs. DCIT(TDS) (ITA No. 2802 &

2803/MDS/2014) (Chennai Bench of the Tribunal) (Page

no. 90-96 of the PB).

In view of the above, Ld. Counsel of the assessee submitted that 8.2 AO has passed his order dated 29.3.2011 u/s. 201(1) & 201(1A) of the Income Tax Act, 1961 judiciously after making all the enquiries / verification, which has been replied and on the basis of the said reply, the AO has passed the order by relying upon the Hon’ble High Court and ITAT decision. Despite that the Ld. Commissioner of Income Tax has wrongly invoked Section 263 of the Act, which is not sustainable in the eyes of law and therefore, the same should be quashed.

alongwith Paper Book filed by the Assessee as well as the Written Submissions filed by the Revenue before us. After perusing the aforesaid order of the Ld. CIT, we are of the considered opinion that the order of the Ld. CIT is wrong in

assuming the jurisdiction under section 263 of the Act because the

revisionary proceedings under section 263 of the Act have merely

been initiated on the basis of the letter received from Assistant

Commissioner of Income Tax (TDS), Chandigarh and the Ld. CIT

(TDS) did not arrive at any independent satisfaction for initiation of

such proceedings; by acceding to the request of the learned ACIT,

the CIT(TDS) has effectively enhanced the time limitation prescribed

under section 201(3) of the Act for completion of 201 proceedings

by a TDS officer; the order passed by the learned ACIT is neither

'erroneous' nor 'prejudicial' to the interest of the revenue since the

learned ACIT took one of the two permissible views after conducting

a detailed enquiry in respect of applicability of withholding tax

provisions on the roaming charges paid by the appellant to the other

telecom operators. We further note that Ld. CIT has not appreciated

the facts that the other telecom operators, to whom the roaming

charges have been paid, would have offered income arising from

roaming charges received from the assessee to tax and hence, no

prejudice would have been caused to the revenue and hence,

initiation of 263 proceedings is bad in law and void ab initio. He

further stated that learned CIT(TDS) has erred in concluding that

roaming charges paid to other telecom operators by the assessee

attracts provisions of section 194J without appreciating the facts

that - Roaming charges paid by the assesse to the other telecom

operators represent payments made for standard facility provided

by such telecom operators and hence, cannot be classified as FTS

for the purposes of the Act; No human intervention, which is sine

qua non for a service to qualify as technical service, is involved in

provision roaming services and therefore, roaming charges cannot

be construed as Fee for Technical Services for the purposes of the

Act; the reports of the technical experts clearly establish the fact

that roaming payments made to other telecom operators for

allowing use of their network to assessee’s subscribers are in the

nature of provision of a standard facility, which does not involve any

human intervention at all and hence, such payments cannot be

classified as FTS liable for deduction of tax at source under Section

194J of the Act; no demand u/s. 201/201(1A) of the Act can be

raised where taxes so deductible but not deducted by the payer are

directly paid by the recipient and such an action would result in

double recovery of the demand. This fact was not appreciated and also

the fact and information provided by AO, the Ld. CIT wrongly invoked the

provision of 263 of the I.T. Act and directed to AO to examine the default

of the assessee to the extent of not deducting tax at source on roaming /

interconnect charges paid during these years and chargeability of interest

under section 201(1) read with section 201(1A) of the I.T. Act, 1961 by

examining the issues on the lines as directed by Hon’ble Supreme Court in

the case of M/s Bharti Cellular Ltd. to the AO of Gurgaon who completed

the order under section 201/201(1A) of the Income Tax Act, 1961. In our

considered opinion, the order of Ld. CIT is wrong and bad in law, because

AO has passed the order dated 29.3.2011 judiciously after making

all the enquiries / verification, which has been replied and on the basis of the said reply, the AO has passed his order dated

29.3.2011 by relying upon the Hon’ble High Court and ITAT

decision. Despite that the Ld. Commissioner of Income Tax

has wrongly invoked Section 263 of the Act, which is not

sustainable in the eyes of law and therefore, the same deserve

to be quashed. We further find that Hon’ble Supreme Court in the case

of CIT vs. Green World Corporation 314 ITR 81 (SC) has held as under:-

“The jurisdiction u/s. 263 can be exercised only when both the

following conditions are satisfied:

i) The order of the AO should be erroneous; and

ii) It should be prejudicial to the Revenue interest. These

conditions are conjunctive. An order of assessment passed by

the AO should not be interfered with only because another

view is possible.”

10.1 An order would be erroneous only when the AO makes no enquiries

during the course of assessment proceedings. This principle was noticed

by the Delhi High Court in Geevee Enterprises vs. Addl. CIT 99 ITR 375

(Del.). In arriving at this decision, the Delhi High Court drew strength

from the principles laid down by the Supreme Court in Rampyari Devi

Sarogi vs. CIT 67 ITR 84 (SC) and Tara Devi Agarwal vs. CIT, 88 ITR 324

(SC). The underlying principle which emerges from these judgments is

that if an assessment order is passed without making any enquiries, then

such an order would be erroneous. But in the present case, the order

passed by the learned ACIT is neither 'erroneous' nor 'prejudicial' to

the interest of the revenue since the learned ACIT took one of the

two permissible views after conducting a detailed enquiry and after

issue of show cause notice in respect of applicability of withholding

tax provisions on the roaming charges paid by the assessee to the

other telecom operators; no demand u/s. 201/201(1A) of the Act

can be raised where taxes so deductible but not deducted by the

payer are directly paid by the recipient and such an action would

result in double recovery of the demand; the validity of initiation of

revisionary proceedings under section 263 of the Income Tax Act is

not proper in the present case in view of the following cases laws:-

- CIT vs. Vodafone Essar South Limited (212 Taxman

184) (as affirmed by the Hon’ble Supreme Court in

CC 9308/2013) (Page no. 1-8 of PB).

- CIT vs. Vodafone Essar South Limited (CC

9308/2013) – Hon’ble Supreme Court (page no. 9

of PB).

- CIT vs. Sunbeam Auto Ltd. (322 ITR 167) – Delhi

High Court (Page no. 10-21a of the PB).

10.2 And the applicability of section 194J of the I.T. Act on

roaming charges paid to roaming partners are not applicable, in

view of the following decisions:-

- Dishnet Wireless Limietd vs. DCIT(TDS) 45 ITR(T) 430

Chennai Bench of the Tribunal) (Page no. 53-62 of PB)

- CIT (TDS) vs. VodaFone South Limited (290 CTR 436)

Hon’ble Karnataka High Court. (Page No. 63-73 of PB) and

- Bharti Airtel Ltd. vs. ITO(TDS) (2016) 67 taxmann.com

223 (Delhi-Trib.) and

- Vodafone Cellular Limited vs. DCIT(TDS) (ITA No. 2802 &

2803/MDS/2014) (Chennai Bench of the Tribunal) (Page

no. 90-96 of the PB).

10.3 We further find that the case laws cited by the Ld. DR are not

applicable in the present case.

3781/Del/2013 (AYrs. 2007-08 to 2009-10) stand allowed.

order of the Ld. CIT(TDS), Chandigarh passed u/s. 263 of the Act. Since we have quashed the proceedings u/s. 263 of the Act in the assessee’s own case as aforesaid while dealing with ITA Nos. 3779 to 3781/Del/2013 (AYRS. 2007-08 to 2009-10), the consequential appeals being ITA Nos. 716 to 718/Del/2017 (Ayrs. 2007-08 to 2009-10) have become infructuous and the same are dismissed as such.

Order pronounced on 07/11/2017.

Sd/- Sd/-

(PRASHANT MAHARISHI) (H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER

Date:07/11/2017 "SRBHATNAGAR" Copy forwarded to: - 1. Appellant - 2. Respondent - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY By Order,

Assistant Registrar, ITAT, Delhi Benches 40