Case Law Details
Brief of the Case
ITAT Bangalore held In the case of M/s. Idea Cellular Ltd. vs. ACIT that there is no human intervention involved in providing roaming services, therefore, roaming charges paid by the assessee do not amount to fee for technical services u/s 194J.
On the matter of discount to distributors, it was held that in the case of Bharti Airtel Ltd. & others 372 ITR 33 jurisdictional high court held that the relationship between the assessee and the distributor is that of principal to principal and, therefore, when the assessee sells the SIM cards to the distributor, he is not paying any commission; by such sale no income accrues in the hands of the distributor and he is not under any obligation to pay any tax as no income is generated in his hands. The deduction of income tax at source being a vicarious responsibility, when there is no primary responsibility, the assessee has no obligation to deduct TDS. Accordingly matter remanded back to AO to decide the issue in light of this judgment.
Facts of the Case
The assessee is a telecom operator providing cellular services in the State of Karnataka. A survey u/s 133A was conducted at the business premises of the assessee on 15/12/2010 to verify the compliance of TDS provisions. The AO noted that the assessee has not deducted TDS on discount/commission allowed to distributors u/s 194H and inter-operator/national roaming charges u/s 194J. The AO was of the view that this discount represents income earned by the distributor and the nature of which in its very substance and effect is commission. The AO held that roaming costs paid to other telecom/mobile operators was fee for technical service within the meaning of sec.194J and that the assessee failed to deduct tax on such payments.
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