DISHNET WIRELESS LIMITED,CHENNAI vs. DCIT, CHENNAI

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

All the appeals and stay petitions of the assessee are

directed against the common order passed by the Commissioner of

Income Tax (Appeals)-VII, Chennai, dated 30.12.2013 and pertain

to assessment years 2007-08 to 2011-12. Therefore, we heard all

the appeals together and disposing the same by this common order.

submitted that the assessee-company is engaged itself in the

business of providing telecommunication services, namely, cellular

services, data access services, etc. in various telecom circles in the

country. A survey was conducted under Section 133A of the

Income-tax Act, 1961 (in short 'the Act') at the Registered Office of

the assessee during the financial year 2012-2013. Subsequently,

the Assessing Officer passed an order under Section 201(1) and

201(1A) of the Act for the assessment years 2007-08 to 2011-12,

holding that the assessee defaulted in deduction of tax in the

following account:-

(1) Provision for site restoration expenses (2) Year-end provisions

3 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 (3) Roaming charges

passed by the Assessing Officer treating the assessee as assessee

in default for non-deduction of tax before the CIT(Appeals).

However, the CIT(Appeals) upheld the orders of the Assessing

Officer. Hence, the assessee preferred appeals before this

Tribunal.

deducting tax regularly and filing quarterly statement within the time

prescribed. Referring to the provision for site restoration expenses,

the Ld. Sr. counsel pointed out that the nature of the business of the

assessee requires to take premises from other landlords on long

term lease for installing telecom equipment such as towers, etc.

Generally the assessee would enter into long term lease for 20

years with various landlords. As per the terms of the lease deed,

the assessee was required to restore the leased premises on “as is”

basis upon expiry of the lease period. The Ld. Sr. counsel further

clarified that on termination of lease agreement, the assessee was

required to restore the property to the lessor in the same position as

it was existing at the time when the lease was entered into.

Referring to certain lease agreements, a copy of each are available

4 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 at paper-book, the Ld. Sr. counsel pointed out that under para 5

“Licensor Covenants”, it is specifically mentioned that the said

agreement is for a period of 20 years and under para 6, it was

specifically mentioned that upon termination of the license, the

licensee shall leave the premises after restoring the same “as is

where is” basis. In fact, according to the Ld. Sr. counsel, copies of

this agreement were also submitted that before the CIT(Appeals)

and Assessing Officer.

that the revenue authorities disallowed the claim of the assessee on

the ground that once an expenditure was kept under provision, the

same would fall within the ambit of Section 194C of the Act. The

revenue authorities found that it is to be presumed that the work had

to be carried out by a contractor and the payment for that work had

been deferred to a future date falling outside the relevant

accounting year. According to the Ld. Sr. counsel, Accounting

Standard – 29 issued by Institute of Chartered Accountants of India,

enables the assessee to make a provision in the books of account,

on an estimate basis, with respect to an expenditure like site

restoration expenses. The Ld. Sr. counsel invited our attention to

Accounting Standard - 29 issued by Institute of Chartered

5 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 Accountants of India, more particularly para 14 and submitted that

the Accounting Standard clearly recognizes a provision when an

enterprise has a present obligation as a result of past event. It also

recognizes a reliable estimate can be made of the amount of the

obligation. According to the Ld. Sr. counsel, in fact, the assessee

made a provision with regard to site restoration expenses in the light

of the Accounting Standard - 29 issued by the Institute of Chartered

Accountants of India. According to the Ld. Sr. counsel, the site

restoration expenses creates an asset in the books of account in the

name of “asset retirement obligation” and simultaneously a

provision is created of the same amount. The Ld. Sr. counsel

further pointed out that the said asset forms part of depreciation

schedule as per the books of account.

the assessee at the time of preparation of return of income adds

back the book depreciation, including the depreciation charged on

“asset retirement obligation” debited to Profit & Loss account. The

Ld. Sr. counsel further clarified that “asset retirement obligation”

does not form part of block of asset. Therefore, the assessee does

not claim any tax deduction for site restoration expenses / asset

6 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 retirement obligation in its return of income either through

depreciation chart or otherwise.

that the expenditure on site restoration will be incurred only upon

the expiry of the lease term and it is only at that point of time the

various parties / contractors would be engaged for dismantling the

towers installed and restored the building to its original position.

According to the Ld. Sr. counsel, the assessee may also set up its

own department to undertake the work of dismantling and

restoration work. Therefore, according to the Ld. Sr. counsel, at the

time of provision in the books of account, no service has been

received by the assessee. Accordingly, there was no liability

towards any party for making payments. According to the Ld. Sr.

counsel, when the expenses actually incurred and the payments

were made to the respective contractors, if any, the tax will be

deducted and paid to the Government. However, when the

provision was made in the books of account, the place, point of time

at which the expenses will be actually incurred are not known.

Moreover, it is also not known who will be the contractor and what

will be the amount required to be paid for restoration. In fact,

according to the Ld. Sr. counsel, the expenses required to be

7 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 incurred only after the expiry of lease period which would normally

be about 20 years. Therefore, the assessee is not within its

knowledge the contractor who is likely to be engaged after 20 years

and how much amount is likely to be paid to the contractor. The Ld.

Sr. counsel further pointed out that after making provision, majority

of the site restoration expenses was reversed in the financial year

2010-11 and the details of such reversals were furnished before the

CIT(Appeals). Even before this Tribunal, according to the Ld. Sr.

counsel, such details are available at page 181 of the assessee’s

paper-book.

further submitted that since the assessee could not identify the

contractor and could not quantify the amount to be paid to the

contractor for demolition of tower and restore the site, the entire

mechanism for deduction of tax at source would fail. In other words,

according to the Ld. Sr. counsel, the assessee could not identify the

contractor and the amount of expenses that would be incurred after

20 years. Therefore, a provision made in the books of account by

following the Accounting Standard - 29 does not require the

assessee to deduct tax in respect of site restoration expenses.

8 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 9. Shri N. Venkataraman, the Ld. Sr. counsel, further submitted

that Sections 194C and 194J of the Act require to deduct tax in case

any amount is credited to a suspense account in the books of a

person liable to pay such amount. The primary intent of introducing

Explanation to Section 194C was to nullify the practice prevailing at

that point of time wherein the TDS provisions were being

circumvented by the payers by adopting a device of crediting the

sum payable to payee or any other account. The Ld. Sr. counsel

further pointed out that even after introduction of Explanation to

Section 194C of the Act, tax was required to be deducted only in

such cases where there is a constructive credit to the account of the

payee of a specified amount calculated in accordance with the

terms and conditions of the arrangements entered into with the

payee. Referring to the circular dated 8.11.1978 issued by CBDT,

the highest administrative body under the Income-tax Act, the Ld.

Sr. counsel pointed out that tax would be deducted at source in

respect of the provision created under mercantile system of

accounting only when the payee is identified and the sum payable is

also ascertained. The credit should be a constructive credit to the

account of the payee. In the case before us, according to the Ld.

Sr. counsel, the payee is not identified and it is not known which

contractor would be engaged by the assessee for demolition of the

9 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 tower and restoration of the cite. The sum payable to the contractor

is also not ascertained. In those circumstances, according to the

Ld. Sr. counsel, the assessee is not liable to deduct tax in respect of

the provision made for site restoration expenses. Since the

assessee is not aware of the payee, there is no question of

deduction of tax.

invited out attention to Form 16A framed by CBDT under Rule

31(1)(b) of the Income-tax Rules, 1962 and submitted that Form

16A specifically requires the assessee to indicate name and

address of the deductee and the PAN of the deductee. It also

requires the assessee to specify the amount paid or credited. Apart

from this, the assessee is also required to mention the date on

which the payment was made. In this case, according to the Ld. Sr.

counsel, the assessee has not identified the contractor sofar,

therefore, the assessee could not disclose in Form 16A the name

and address of the deductee. Similarly, the PAN of deductee could

not also be informed to the Department. Since the amount payable

to the contractor is not ascertainable, the assessee may not be in a

position to declare the amount paid/credited to the Department.

Apart from them, the date of payment/credit also could not be

10 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 informed since no payment was made and amount was not credited

in favour of any particular individual/person. Therefore, according to

the Ld. Sr. counsel, the entire machinery for TDS would fail in

respect of the provision made by the assessee for site restoration

expenses.

year-end provisions, the assessee could not identify the payee and

could not ascertain the sum payable. Therefore, the assessee is

not expected to deduct tax at the time of making provision. The Ld.

Sr. counsel placed his reliance on the judgment of Delhi High Court

in UCO Bank v. Union of India & Others in WP(C) 3563/2012 and

submitted that in the case before the Delhi High Court, certain

deposits were made with a bank in the name of Registrar General of

High Court, in terms of directions issued by the High Court. The

issue arose before the Delhi High Court was whether the banks are

required to deduct tax at source and issue certificates in the name

of Registrar General. The Delhi High Court found that no TDS is

required to be deducted as the ultimate beneficiary or payee is not

identifiable. The Ld. Sr. counsel filed a copy of the judgment of the

Delhi High Court.

11 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 12. Shri N. Venkataraman, the Ld. Sr. counsel, invited our

attention to Section 194A of the Act and submitted that the

expression “payee” under Section 194A of the Act would only mean

the recipient of the income whose account is maintained by the

person paying the interest. In the present case, according to the Ld.

Sr. counsel, although the FD is made in the name of the Registrar

General, the account represents funds, which are in custody of the

Court and the Registrar General is neither the recipient of the

amount credited to that account nor the interest accruing thereon.

Therefore, the Delhi High Court found that the Registrar General

cannot be considered as a payee for the purpose of Section 194A of

the Act. The credit by the petitioner bank in the name of Registrar

General would not attract the provisions of Section 194A of the Act.

The Ld. Sr. counsel further pointed out that there is no assessee to

whom interest income from the deposits in question can be paid, no

person can file a return claiming the interest payable by the

petitioner as income. Therefore, the Delhi High Court found that the

TDS is not be deducted. In this case also, according to the Ld. Sr.

counsel, the payee is not identified and no person could claim the

amount payable by the assessee by filing return of income as found

by the Delhi High Court. The Ld. Sr. counsel submitted that a

situation would be created for recovery of tax without corresponding

12 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 income being assessed in the hands of any person. The Ld. Sr.

counsel also placed his reliance on the decision of Mumbai Bench

of this Tribunal in Industrial Development Bank of India v. ITO

(2007) 293 ITR (AT) 267. The Ld. Sr. counsel also placed reliance

on the decision of Bangalore Bench of this Tribunal in DCIT v. Telco

Construction Equipment Co. Limited in I.T.A. No.478/Bang/2012, a

copy of which is filed by the Ld. Sr. counsel.

further pointed out that the provisions of Sections 194A and 194H of

the Act are pari materia to Explanation in Section 194C and 194J of

the Act. Therefore, the ratio of the above decision would apply to

the assessee also.

Venkataraman, the Ld. Sr. counsel for the assessee, submitted that

the assessee engages various service providers for rendering

services like address verification, credit certification, content

development, etc. At the year end, to close the books of account,

the assessee estimates the amount of expenditure incurred in the

month of March with respect to various services rendered by the

service providers for which invoices are yet to be received by the

assessee. According to the Ld. Sr. counsel, the provisions are

13 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 made on estimate basis as it is not identifiable what amount is to be

paid to such service providers. In other words, according to the Ld.

Sr. counsel, the payee is not identified and the amount to be paid is

also not ascertainable. Therefore, according to the Ld. Sr. counsel,

the assessee is not liable to deduct tax in respect of provision made

for year-end expenditure. The Ld. Sr. counsel further pointed out

that when the new connections are offered throughout India in the

month of March and the service providers would conduct customer

verifications. At the year end, the assessee would know how many

number of connections are offered in the month of March.

However, the assessee would not know as to how many customer

verifications have been done with each service provider engaged by

the assessee. Therefore, the assessee would not know the exact

amount payable to the above said service providers. Therefore, the

assessee by an overall basis, estimates the customer verifications

expenditure in relation to expenditure incurred in the past and make

necessary provision in the account. The Ld. Sr. counsel further

clarified that the amount is not paid or credited in any particular

account, only a provision was made in the account. According to

the Ld. Sr. counsel, since the name of the payee and that the name

of service providers are not identifiable in the month of March, the

assessee was unable to deduct tax at source in the month of March.

14 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 However, as and when the service providers raise an invoice, the

assessee duly deducts the TDS at source and discharges the

obligation cast upon it.

Ld. Sr. counsel for the assessee, submitted that roaming is a facility

provided by the cellular provider to its customers automatically to

connect and receive voice calls. The Ld. Sr. counsel clarified that

when a customer of one circle visits another telecom circle, he

would be automatically connected with other service provider in the

visiting circle and he can make and receive voice calls and access

data and other services without any human intervention. Similarly,

when a customer travels outside the geographical area, even

outside India, he can have the services without any human

intervention automatically. The Ld. Sr. counsel further pointed out

that when a subscriber of a mobile phone in the State of Assam

goes to Ahmedabad, such subscriber will be automatically able to

make and receive voice calls, send and receive data or access

other services with the help of telecom service provider at telecom

circle in Ahmedabad with which the assessee has already entered

into a bilateral roaming agreement. The assessee has also entered

15 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 into same agreement with various other telecom provides like Bharti

Airtel, Vodafone, TATA, Idea, etc.

Cellular Limited (330 ITR 239), the Ld. Sr. counsel for the assessee

submitted that the word “technical” is preceded by the word

“managerial” and succeeded by the word “consultancy”. Therefore,

Section 9(1)(vii) of the Act has to be interpreted by the expression

from the surrounding word, i.e. from the context. According to the

Ld. Sr. counsel, the word “technical” would take its colour from the

word “managerial” and “consultancy”. Managerial services and

technical services can be given by human only and not by means of

any equipment. Therefore, the word “technical” has to be construed

in the same sense involving direct human involvement without

which the technical services cannot be held to have been rendered.

The Ld. Sr. counsel invited our attention to an observation made by

the Apex Court and submitted that whenever the services rendered

without direct human involvement, it cannot be construed to be a

technical service. The Ld. Sr. counsel has placed his reliance on

the judgment of Madras High Court in Skycell Communication

Limited v. CIT (119 Taxman 496) and submitted that the telecom

services are not in the nature of technical services.

16 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15

further submitted that in the case before Apex Court in Bharti

Cellular Limited (supra), the revenue authorities obtained expert

opinion from Sub-Divisional Engineer of BSNL in respect of the

nature of service rendered by the telecom service providers. The

Sub-Divisional Engineer of BSNL categorically stated that no human

intervention is required while rendering roaming services. He

clarified that human intervention is required for doing necessary

configurations for providing roaming services. Once configuration is

completed, it is not required. In view of the above clarification of an

expert in the field, according to the Ld. Sr. counsel, since the

roaming services are provided without human intervention, it cannot

be considered for technical service. The human intervention is

required, according to the Ld. Sr. counsel, whenever customers are

facing problems during roaming. The Ld. Sr. counsel further

pointed out there are millions of calls which flow from one network

to another network every minute and connecting them manually is

beyond human capability. According to the Ld. Sr. counsel, human

intervention is required only at the time of maintenance or at the

time certain technical defect that might have come into telecom

17 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 network/equipments. According to the Ld. Sr. counsel, the customers pay for roaming charges and not for human intervention.

Tribunal in iGate Computer Systems Limited v. DCIT in I.T.A. Nos.

1301 to 1303 and 1616/PN/2013, the Ld. Sr. counsel submitted that

Merely because human intervention is required for maintenance that

cannot lead to the conclusion that the services rendered are

technical services within the meaning of Section 194J of the Act.

According to the Ld. Sr. counsel, while providing roaming facility to

its customers, the assessee in fact utilizing the standard facilities

provided by the other telecom service provider which connects

automatically once the necessary configurations were made in the

system. Apart from that, the recipients of the amount also confirms

that they have included the amount received towards roaming

charges in their total income and filed return before the respective

Assessing Officers. In fact, the assessee has filed as many as 100

certificates before the lower authorities. Placing reliance on the

judgment of the Apex Court in Hindustan Coca cola Beverages v.

CIT (293 ITR 226), the Ld. Sr. counsel submitted that once the

recipients paid the tax by including the amount in the total income,

there cannot be any reason to treat the assessee as assessee in

18 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 default. The Ld. Sr. counsel further submitted that it is also an

obligation of the TDS officer to verify whether the recipient has paid

the taxes as required under the Income-tax Act. The Ld. Sr.

counsel placed his reliance on Special Bench decision of this

Tribunal in Mahindra & Mahindra Limited v. DCIT (2009) (313 ITR

(AT) 263) and judgment of Allahabad High Court in Jagran

Prakashan Limited v. DCIT (345 ITR 288) and judgment of

Karnataka High Court in Ramco (Bhel) House Building Co-operative

Society Limited v. ITO in W.P. No.17037-43/2014. Therefore,

according to the Ld. Sr. counsel, the roaming charges cannot be

categorized as fee for technical services and hence, the assessee is

not liable to deduct tax.

further submitted that orders for the first three years and three

quarters of the fourth year are barred by limitation. According to the

Ld. Sr. counsel, under Section 201(3)(i) of the Act, the Assessing

Officer is expected to pass an order within two years from the end of

the financial year in which quarterly statement was filed. Apart

from that, Section 201(3)(ii) of the Act further provides that no order

can be passed beyond six years from the end of the financial year in

which the payment is made or credit is given, in any other case.

19 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 According to the Ld. Sr. counsel, all the quarterly statements have

been filed by the assessee within the time limit, hence, the first

three years and three quarters of the fourth year, the orders passed

by the TDS officer, in the month of March, 2003, are beyond

prescribed time limit. Therefore, it is barred by time limit. The Ld.

Sr. counsel further submitted that for the first two years, the orders

are passed beyond the stipulated time limit of March, 201(1).

Therefore, it was also barred by limitation. Referring to the

amendment brought in by Finance Act, 2014, the Ld. Sr. counsel

submitted that limitations for passing the order under Sections

201(1) and 201(1A) of the Act have been extended to seven years

from the end of the financial year in which payment is made or

credit is given. This provision is applicable prospectively with effect

from 1.10.2014. Therefore, the amended provisions of Sections

201(1) and 201(1A) cannot be made applicable for the assessment

years under consideration.

Representative, submitted that the assessee defaulted to deduct tax

in respect of provision for site restoration expenses, year-end

provisions and roaming charges. Therefore, the Assessing Officer

treated the assessee as assessee in default under Sections 201(1)

20 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 and 201(1A) of the Act. According to the Ld. D.R., in respect of site

restoration, the assessee due to misconception of Accounting

Standard/principle to circumvent the statutory obligation, failed to

deduct tax on the provisions made in site restoration expenses.

According to the Ld. D.R., no Accounting Standard has been

created to override the specific provisions of Income-tax Act. Even

otherwise, according to the Ld. D.R., Accounting Standard cannot

override the specific provisions of the Act. The Ld. D.R. further

submitted that provision can be made in the books of account only

when actual liability of expenditure has accrued but could not be

spent within the relevant accounting year for bonafide reasons.

However, the expenditure kept in provision should be spent

immediately in the ensuing days of succeeding financial year. In

case the expenditure is indefinitely kept under provision, then the

purpose of accounting system would be defeated. Therefore,

according to the Ld. D.R., once an expenditure is kept under

provision, the same would fall within the ambit of Section 194C of

the Act. In other words, it has to be presumed that the work had to

be carried out by a contractor and the payment for that work has to

be deferred to a future date falling outside the period of relevant

accounting year. Referring to Section 194C(2) of the Act, the Ld.

D.R. submitted that clause (iv) of Section 194C(2) takes care of this

21 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 kind of situation. By virtue of these provisions, it is crystal clear that

if any amount of liability payable to the contractors is credited to any

account, by whatever name it is called, then the assessee is liable

to deduct tax as required under Section 194C of the Act. Therefore,

according to the Ld. D.R., the contention of the assessee that it is

only an provision is not justified. The Ld. D.R. placed his reliance

on the judgment of the Allahabad High Court in CIT v. British India

Corporation (P.) Ltd. (1973) 92 ITR 38 and also on the judgment of

Madras High Court in CWT v. Crompton Engineering Co. (Madras)

Ltd. (1983) 140 ITR 320.

pointed out the assessee made provision for address verifications,

credit certification charges, ICU charges and lease line expenses.

The contention of the assessee is that the payees are not

identifiable. The Ld. D.R. pointed out that the assessee engaged

services from outsource service providers. Therefore, the

contention of the assessee that the service providers are not

identifiable is not acceptable.

that the assessee had arrangement with other cellular service

providers outside the home network. In case the subscriber of the

22 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 service provider travels outside the jurisdiction of the home network

operator, the subscriber would get service from both the host-

operator and home-operator. The host-operator charges the home-

operator for providing telecom service to the latter. Roaming facility

is made available to subscribers by the host-operator by virtue of

roaming arrangement entered into between the home-operator and

host-operator. Therefore, according to the Ld. D.R., the roaming

charges are nothing but the payments made by the assessee to

other telecom service provider for rendering technical services to

the assessee which would in turn be used by the subscribers of the

assessee during roaming. Referring to the expert opinion said to be

obtained from the Sub-Divisional Engineer of BSNL, the Ld. D.R.

pointed out that regarding interconnectivity, initially human

intervention is required for establishing the physical connectivity and

also for doing the required configuration. Therefore, it cannot be

correct to say that human intervention is not required for connecting

the subscribers’ call during their visit to other service provider’s

area. Referring to the judgment of the Madras High Court in Skycell

Communications Ltd. (supra), the Ld. D.R. pointed out that the case

before Madras High Court was for use of service by a mobile

subscriber. In the case before us, one of the operators provided

technical service to another operator. Therefore, the judgment of

23 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 the Madras High Court in Skycell Communications Ltd. (supra) may

not be applicable to the facts of the case. Referring to the decision

of Authority For Advance Rulings in Ajmer Vidyut Vitran Nigam Ltd.

(2012) 24 taxmann.com 300, the Ld. D.R. submitted that the

Electricity Transmission Corporation made payment to another

company to ensure constant voltage at distribution point. The

Authority For Advance Rulings found that the amount paid was for

technical services, therefore, TDS has to be made. Referring to the

issue of limitation, the Ld. D.R. pointed out that under sub-section

(3) of Section 201, the limitation of two years is provided and it is

applicable only where the statement under Section 200 was filed.

Otherwise, the limitation is either four years or six years, as the

case may be, from the end of the financial year in which the

payment is made or credit is given. In the instant case, the

quarterly TDS returns were filed by the assessee which do not

contain the transactions which were disputed by the assessee.

Therefore, the provisions of sub-section (3) of clause (ii) is not

applicable at all. Therefore, the orders passed by the TDS officers

are within the period of limitation. Hence, the contention of the

assessee that the orders are barred by limitation has no leg to

stand.

24 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 23. We have considered the rival submissions on either side and

perused the relevant material on record. Admittedly, the assessee,

a telecom operator, made provision for site restoration expenses,

however, TDS was not made. The purpose for which the provision

was made is not in dispute. In other words, the admitted case of

both the parties is that the assessee made the provision for

dismantling the towers and restoration of site to its original position

after termination of the lease period. The lease period is normally

20 years and above. The assessee by placing reliance on the

Accounting Standard - 29 claims that a provision would be made in

respect of an obligation. In other words, the assessee had an

obligation to incur the expenditure after termination of the lease

period. Revenue, however, contends that due to misconception and

ignorance of law and with an intention to circumvent the statutory

provisions, the assessee made the provision. The fact remains that

the payment was not made to anyone and it is not credited to the

account of any party or individual. The account does not disclose

the person to whom the amount is to be paid. The contractor who is

supposed to be engaged for dismantling the tower and restore the

site in its original position is not identified. As contended by the

assessee, the assessee by itself engaging its own labourers may

dismantle the towers and restore the site to its original position. In

25 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 such a case, the question of deducting tax at source does not arise.

The assessee has to pay only the salary to the respective

employees. Suppose the work is entrusted to a contractor, then

definitely the assessee has to deduct tax. In this case, the

contractor would be identified after the expiry of lease period.

Therefore, even if the assessee deducts tax, it cannot be paid to the

credit of any individual as rightly pointed out by the Ld. Sr. counsel.

The assessee has to issue Form 16A prescribed under Rule

31(1)(b) of the Income-tax Rules, 1962 for the tax deducted at

source. The assessee has to necessarily give the details of name

and address of deductee, the PAN of deductee and amount or

credited. In this case, the assessee could not identify the name and

address of deductee and and his PAN. The assessee also may not

be in a position to quantify the amount required for incurring the

expenditure for dismantling and restoration of site to its original

position. In those circumstances, this Tribunal is of the considered

opinion that the provision which requires deduction of tax at source

fails. Hence, the assessee cannot be faulted for non-deduction of

tax at source while making a provision. Therefore, we are unable to

accept the contention of the Ld. D.R. Accordingly, the orders of the

lower authorities are set aside and this ground of appeal is allowed.

26 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 24. Now coming to the issue of year-end provisions, the

contention of the assessee is that it is engaged in various services

like address verifications, credit certification, content development

etc. The assessee claims that provisions are made on estimation

basis since it is not identifiable as to what amount has to be paid to

the service providers. In case of new service connections, the

assessee has to necessarily verify the customers’ address and

identification. The claim of the assessee is that in the last month of

the financial year, it is not known how many customer verifications

have been completed and the exact amount required to be paid.

However, on the basis of the past experience, the assessee is

making an overall provision for incurring this expenditure. From the

order of the CIT(Appeals) it appears that apart from identification

and address verification, the assessee has also made provision

towards ICU charges and lease line expenses, etc. From the order

of the CIT(Appeals) it appears that the assessee also has to pay the

various other service providers for providing value added service to

its subscribers like daily horoscopes, astrology, songs, wall paper

downloads, cricket scores, etc. Admittedly, the assessee made

arrangement with other service provides for providing these kind of

value added services. There may be justification with regard to the

expenditure for availing the services of identification and verification

27 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 for the last month of financial year, since the assessee may not

have the exact details on verification done by the concerned

persons and the amount required to be paid. However, in respect of

the downloads and value added service, etc. the entire details may

be available in the system. Therefore, this Tribunal is of the

considered opinion that wherever the particulars and details

available and amount payable could be quantified, the assessee

has to necessarily deduct tax. In respect of value added services

like daily horoscopes, astrology, customer acquisition forms are all

from specific service providers and these value added services are

monitored by system. Therefore, even on the last day of financial

year, the assessee could very well ascertain the actual

quantification of the amount payable and the identity of the payee to

whom the amount has to be paid. To that extent, the contention of

the assessee that the payee may not be identified may not be

justified. The exact facts need to be examined. However, this

Tribunal is of the considered opinion that the matter needs to be

reconsidered by the Assessing Officer. In other words, the

Assessing Officer has to examine whether the payment to the party

/payee is identifiable on the last day of financial year and whether

the quantum payable by the assessee is also quantified on the last

date of financial year. In case, the Assessing Officer finds that the

28 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 payee could not be identified on the last day of financial year and

the amount payable also could not be ascertained, the assessee

may not require to deduct tax in respect of that provision. However,

in case the payee is identified and quantum is also ascertainable on

the last day of the financial year, this Tribunal is of the considered

opinion that the assessee has to necessarily deduct tax at source.

Since the details are not available on record, the orders of the lower

authorities are set aside and the issue of year-end provision is

remitted back to the file of the Assessing Officer. The Assessing

Officer shall re-examine the issue afresh as indicated above and

thereafter decide the issue in accordance with law after giving

reasonable opportunity to the assessee.

assessee is that human intervention is not required for providing

roaming facility, therefore, it cannot be considered to be a technical

service. We have gone through the judgment of Apex Court in

Bharti Cellular Limited (supra), The Apex Court after examining the

provisions of Section 9(1)(vii) of the Act, found that whenever there

was a human intervention, it has to be considered as technical

service. In the light of the above judgment of the Apex Court, the

Department obtained an expert opinion from the Sub-Divisional

29 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 Engineer of BSNL. The Sub-Divisional Engineer clarified that

human intervention is required for establishing the physical

connectivity between two operators for doing necessary system

configurations. After necessary configuration for providing roaming

services, human intervention is not required. Once human

intervention is not required, as found by the Apex Court, the service

provided by the other service provider cannot be considered to be a

technical service. It is common knowledge that when one of the

subscribers in the assessee’s circle travels to the jurisdiction of

another circle, the call gets connected automatically without any

human intervention. It is due to configuration of software system in

the respective service provider’s place. In fact, the Sub-Divisional

Engineer of BSNL has explained as follows in response to Question

No.23:-

“Regarding roaming services as explained to question no.21. Regarding interconnectivity, initially human intervention is required for establishing the physical connectivity and also for doing the required configuration. Once it is working fine, no intervention is required. In case of any faults human intervention is required for taking necessary corrective actions.”

In view of the above, once configuration was made, no human

intervention is required for connecting the roaming calls. The

subscriber can make and receive calls, access and receive data

30 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 and other service without any human intervention. Like any other

machinery, whenever the system breakdown, to set right the same,

human intervention is required. However, for connecting roaming

call, no human intervention is required except initial configuration in

system. This Tribunal is of the considered opinion that human

intervention is necessary for routine maintenance of the system and

machinery. However, no human intervention is required for

connecting the roaming calls. Therefore, as held by the Apex Court

in Bharti Cellular Limited (supra), the roaming connections are

provided without any human intervention and therefore, no technical

service is availed by the assessee. Therefore, TDS is not required

to be made in respect of roaming charges paid to the other service

providers. Accordingly, the orders of the lower authorities are set

aside in respect of provision for site restoration expenditure and

roaming charges. However, in respect of year-end provision, the

issue is remitted back to the file of the Assessing Officer. The issue

of limitation raised by the assessee for passing order under

Sections 201(1) and 201(1A) is also remitted back to the file of the

Assessing Officer.

31 I.T.A. Nos.320 to 329/Mds/14 S.P. Nos.324 to 333/Mds/15 26. In the result, appeals of the assessee are allowed for statistical purposes. Since the appeals are allowed, the stay petitions of the assessee become infructuous and dismissed.

Order pronounced on 20th July, 2015 at Chennai.

sd/- sd/- (ए. मोहन अलंकामणी) (एन.आर.एस. गणेशन) (A. Mohan Alankamony) (N.R.S. Ganesan) लेखा सद�य/Accountant Member �या�यक सद�य/Judicial Member

चे�नई/Chennai, �दनांक/Dated, the 20th July, 2015.

Kri. आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A)-VII, Chennai-34 4. आयकर आयु�त/CIT (TDS), Chennai 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF.