M/S. IDEA CELLULAR LIMITED,INDORE vs. THE DCIT (TDS), INDORE
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, AM:
This is an appeal filed by the assessee for the financial year 2010-11 relevant to assessment year 2011-12 against appeal order dated 28.11.2013 passed u/s 250 of the Income-tax Act, 1961 by CIT(A)-II, Indore [“CIT(A)”] which in turn arises out of order dated 31.01.2013 passed by DCIT (TDS), Indore u/s 201(1)/(1A) of the Income-tax Act, 1961.
The background facts leading to this appeal are such that the assessee-company is engaged in the business of providing telecom services
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ITA No. 225/Ind/2014 – AY 2011-12 M/s Vodafone Idea Ltd. (Formerly M/s Idea Cellular Ltd.)
through pre-paid and post-paid connections. In order to provide such
services, the assessee allowed certain amounts to distributors/dealers of
pre-paid vouchers. Further, the assessee also took services from other
telecom operator (OTOs) and paid ‘roaming charges’ to those OTOs. The AO
passed order dated 31.01.2013 u/s 201(1)/(1A) treating the assessee as
defaulter for non-deduction of tax at source (TDS) out of (i) amounts allowed
to distributors/dealers of pre-paid vouchers and (ii) roaming charges paid to
OTOs. The AO created demand of tax plus interest. Aggrieved, the assessee
carried the matter in first appeal to CIT(A) but could not succeed. Now, the
assessee has come in next appeal before us challenging the orders of lower
authorities on following grounds :-
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We have heard learned Representatives of both sides and case-records
perused.
Ground Nos. II & III relate to TDS out of the amounts allowed to
distributors/dealers of pre-paid vouchers. Precisely, the revenue is treating
the amounts allowed by the assessee as ‘commission’ requiring TDS u/s
194H. Ld. AR for assessee submitted that this issue has been recently
settled by Hon'ble Supreme Court in Bharti Cellular Limited vs. ACIT,
(2024) 160 taxmann.com 12 (S.C.) wherein the Hon'ble apex court has
held that there is no ‘commission’ and section 194H is not applicable, the
concluding para of order is reproduced below :-
“42. In view of the aforesaid discussion, we hold that the assessees would not be under a legal obligation to deduct tax at source on the income/profit component in the payments received by the distributors/franchisees from the third parties/customers, or while selling/transferring the pre-paid coupons or starter-kits to the distributors. Section 194H of the Act is not applicable to the facts and circumstances of this case. Accordingly, the appeals filed by the assessee-cellular mobile service providers, challenging the judgments of the High Courts of Delhi and Calcutta are allowed and these judgments are set aside. The appeals filed by the Revenue challenging the judgments of High Courts of Rajasthan, Karnataka and Bombay are dismissed. There would be no orders as to cost. Pending applications, if any, shall stand disposed of.”
Ground No. IV relates to TDS out of roaming charges paid by
assessee to OTOs. This issue has also been decided by this very Bench in a
consolidated order for I.T.A. Nos. 415/Ind/2014 & 265/Ind/2018 dated
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23.04.2024 in favour of assessee. For the sake of brevity, we re-produce only
concluding para of the order of ITAT:-
“15. We have considered rival submissions of both sides and perused the controversy involved in the light of provisions of law and the decisions cited before us. The precise controversy before us is whether or not the payment of roaming charges made by assessee to OTOs constituted ‘FTS’ or ‘Royalty’ so as to attract TDS u/s 194J? After a careful consideration, we find that it is vehemently held in various decisions, as narrated above, that such payment of roaming charges is neither in the nature of ‘FTS’ nor ‘Royalty’ and hence did not require TDS u/s 194J. Therefore, respectfully following the orders of different appellate forums, we are of the view that the assessee cannot be held as ‘assessee-in-default’ for non-deduction of tax at source out of payment of roaming charges. Accordingly, the grounds of assessee are allowed.”
Thus, Ld. AR contended, the Ground No. II, III & IV raised by assessee
must succeed in view of above cited authority. Ld. DR for Revenue though
dutifully supported the orders of lower-authorities but, however, could not
rebut or controvert the submissions of Ld. AR. Respectfully following the
pre-existing available authority on the issues as noted in foregoing paras, we
hold that the assessee was not liable to TDS. Accordingly, ground nos. II, III
& IV are allowed.
Ld. AR for assessee submitted that once ground No. II, III & IV are
allowed, remaining grounds would be rendered academic requiring no
adjudication. Since we have allowed ground No. II, III & IV, we are not
required to adjudicate all other grounds as prayed for by Ld. AR.
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Resultantly, this appeal is allowed.
Order pronounced in open court on 24.04.2024.
Sd/- sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER
Indore िदनांक / Dated :24.04.2024. CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPYAssistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore
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