Case Law Details
The learned D.R has vehemently contended before us that no assessee can be said to be providing telecommunication services unless such services are provided from one end to the other end. According to him, the assessee is operating as backbone industry and connect the calls received through other service providers and, therefore, does not provide any service to the actual user of the phone. In my opinion, this contention cannot be accepted for the reason that legislature itself has allowed the deduction to telecommunication services through satellite or turnking network. Both these services are provided by backbone industry which do not have any direct link with actual consumer of such services. The customers of satellite network are the service providers who have access to actual consumers like all mobile service providers and Mahanagar Telephone, Nigam Ltd., Bharat Sanchar Nigam Ltd., Department of Telecommunication, etc. If the contention of the learned D.R in accepted, then inclusion of words like satellite service or turnking network would become ineffective. Such construction would be absurd and, therefore, cannot be accepted.
Before parting with this issue it may be mentioned that at the end of the hearing of the case, both the parties were requested to furnish further material, if any, which may help the Bench in understanding the meaning of the expression “basic or cellular”. In this connection, the assessee has furnished copies of letters dated 23rd February, 1994, 5th March, 1997 and 14th January, 1999, issued by the Government of India, Department of Telecommunications, New Delhi. In the letter dated 23rd February, 1994, it has been stated “the Government have decided that VSNL will have monopoly for 10 years in basic services (voice telephoning) starting from 1st April, 1994”. In the letter dated 5th March, 1997, it has been stated “Videsh Sanchar Nigam Limited is the only entity authorized by the Government of India to provide basic international telephone services to and from India”. To the same effect is the letter dated 14th January, 1999. In view of these letters it is prayed by the assessee that the activity of the assessee regarding transmission of voice through earth station be considered as basic telecommunication services. In my opinion, these letters do not help the case of the assessee, for the reasons – (1) prior to assessment year 1996-97, the assessee was engaged in the business of voice communication at the international level through the sea cables which was conventional method of telecommunication and was being considered as basic telecommunication services as discussed in the earlier part of the order and, (2) nowhere in these letters it is stated that telecommunication services through satellite could be considered as basic telecommunication services. The first letter was issued prior to the commissioning of the earth station and at that time the assessee was engaged in the business of providing telecommunication services through sea cables and it is because of this reason, perhaps, the Government of India issued such letters. Further, the first letter was issued in connection with assessee’s Euro issue and therefore the same cannot be considered in deciding such legal issue. The other letters are general in nature. In view of the same, the contention of the assessee cannot be accepted on the basis of such letters.
In view of the above discussion, it is held that the telecommunication services through earth station set up by the assessee cannot be characterized either basic or cellular and, therefore, the assessee would not be entitled to deduction under section 80IA for the year under consideration.
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI SPECIAL BENCH ‘G’ MUMBAI
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