Income Tax, Issue Update

Roaming charges paid to telecom operator: Scope of ‘Fees for Technical Services’ and applicability of Tax deduction at source

Case: Dy. CIT vs Vodafone India Ltd. (Formerly Known As Vodafone Essar Ltd.), Mumbai ITAT

Outcome: Assessee


  • The ground of appeals raised by the revenue was that on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) erred in not appreciating the factual and legal matrix brought out by the order passed by the Assessing Officer, wherein the Assessing Officer had relied on the examination of technical expert wherein it was confirmed that interconnectivity/ roaming charges were in the nature of technical service as there existed human intervention and hence, tax at source under Section 194J was required to be deducted.

Key points

  • It is common knowledge that when one of the subscribers in the Assessee’s circle traveled to the jurisdiction of another circle, the calls got connected automatically without any human intervention and it was for this the roaming charges was paid by the Assessee to the visiting operator for providing this service.
  • Further, reliance was placed on the decision in the case of Commissioner of Income Tax Vs. Vodafone South Ltd., wherein it was held that the process involved in the roaming connectivity did not involve the human intervention and thus, the services did not fall within the ambit of technical services.
  • Therefore, the roaming charges paid by the Assessee to other telecom companies were not covered under fees for technical services and such payments were out of the purview of tax deducted at source provisions of 194J of the Act.

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