Taking into consideration, the principle laid down consistently by the Jurisdictional High Court as considered in the case of Nestle India Ltd (cited supra), Delhi Public School (cited supra) and Maruti Udyog Ltd.(cited supra), we are of the view that in the facts of the case before us where no case has been made out by the Revenue to show that the assessee has acted dishonestly and/or in a mala fide manner.
The impugned order deserves to be upheld. The fact that there is a short deduction of tax in the present case where it was linked with the performance incentive paid to the employee on the basis of achievement of fixed percentage, the estimated TDS deducted in a bona fide manner as per the settled legal position cannot be faulted with. There being no allegation of even an iota of mala fide on the part of the assessee, the relief granted by the CIT(A) though on different reasoning is sustained.
Services provided without human intervention cannot be treated as technical service– In this case Admittedly the payments are made to MTNL & BSNL etc. for providing space for transmission of date for carriage of voice and for availing the service of inter-communication, port access for which as per the settled uncontested legal position is that no human intervention is necessary. Nothing has been placed before us on behalf of the department to show that the facts have not been correctly appreciated in the case of the assessee. Accordingly, in the facts as they stand the view taken is in alignment with the judgement of the Hon’ble Delhi High Court in the case of Bharti Cellular which had followed the reasoning of the Hon’ble Madras High Court in the case of Skycell Communication Ltd. The fact that the Hon’ble Apex Court in the case of Bharti Cellular has remanded the issue back does not detract from the position as considered by the Hon’ble High Court. The lack of human intervention in making use of the service provided by BSNL and MTNL etc domains and in the fact as they stated the finding cannot be faulted with. Accordingly, being satisfied by the reasoning and finding arrived in the impugned order, ground no-2 of the department is also dismissed.
INCOME TAX APPELLATE TRIBUNAL, DELHI
BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER
AND
SMT. DIVA SINGH, JUDICIAL MEMBER
I.T.A. Nos. 3966 & 3967/Del/2011
(ASSESSMENT YEARs-2004-05 & 2005-06)
ACIT
Vs
Hughes Software Systems Ltd.
(Now known as Aricent Technologies (Holdings) Ltd.)
ORDER
PER DIVA SINGH, JM
These are two appeals filed by the revenue against the order dated 14.06.2011 of CIT (A)-XXX, New Delhi pertaining to 2004-05 & 2005-06 assessment years. Both these appeal are being decided by a common order for the sake of convenience.
In ITA No-3966/Del/2011, the grounds raised by revenue are read as under:-
“1. In deleting the demand raised on account of considering the performance incentive as part of salary for the purpose of computation of exemption u/s 10(13A) of the I.T.Act, 1961 in respect of HRA paid to the employees.
2. In deleting the demand raised u/s 201(1)/201(1A) of the I.T.Act, on account of considering the link charges as technical services u/s 194J of the I.T.Act.
The appellant craves leave to add, alter or amend any of the grounds of appeal at the time of hearing.”
2. The relevant facts of case are that the assessee company formerly known as Hughes Software Systems Ltd at the assessment stage and at the time of filing of the appeal before the assessee and by the department, the name of M/s Aricent Technologies {Holding} Ltd., (Erstwhile Hughes Software Systems Ltd.), 5, Jain Mandir Marg (Annexe), Connaught Place, New Delhi.
3. The assessee as per material available on record, was engaged in the business of software development of products and providing software services in India and overseas. The assessee was subjected to a survey u/s 133A at the office premises on 16.11.2004 in order to verify whether the assessee had deducted and deposited TDS in government account or not. The assessee in the present proceedings was treated as “assessee in default” u/s 201(1) of the Income Tax Act vide order dated 31.03.2009 of ACIT, Circle-50(1), New Delhi in response of:-
(i) Non-deduction of tax source u/s 192 of the Act in respect of non-inclusion of performance incentive for the purposes of calculating exemption u/s 10(13A) of the Act; and
(ii) Non deduction of TDS u/s 194J from the payment made for the use of telecommunication services i.e telephone charges, link charges and band width charges as “fee for technical services” u/s 9(1)(vii) of the Act.
4. As a result thereof, the AO raised a demand for both the financial year 2003- 04 & 2004-05 as under:-
“The total default for both the financial years i.e F.Y. 2003-04 and 2004-05 as discussed are as under :-
