Case: DCIT (TDS) – 2(3) vs VODAFONE INDIA LTD. (FORMERLY KNOWN AS VODAFONE ESSAR LTD.), MUMBAI ITAT

Outcome: Assessee

Facts

  • The issue involved in the appeal filed was whether the interconnection usages charges (IUC) were in the nature of fees for technical services and whether the Assessee was liable for deduct tax at source under Section 194J of the Act on the same.

Key Points

  • The Tribunal placed reliance on the order passed by Ahmedabad Tribunal in the case of M/S. Bharti Airtel Ltd, wherein it was concluded that the roaming charges paid by the Assessee to other telecom companies were not covered under fees for technical services and were out of the purview of Tax Deducted at Source provisions under section 194J of the Act.
  • It was observed that there was no manual or human intervention involved in the process of interconnection charges. In fact it was common knowledge that when one of the subscribers in the Assessee’s circle travels to the jurisdiction of another circle, the calls get connected automatically without any human intervention and it is for this, the roaming charges are paid by the Assessee to the visiting operator for providing this service. The interconnection charges paid by the Assessee to other telecom operators were therefore, not in the nature of fees for technical services and therefore, there was no liability to deduct tax thereon.
  • Thus, the Assessee was not required to deduct tax at source under section 194J on the IUC Charges.

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