No TDS to be deducted by the assessee on payment of interconnecting User Charges: Delhi HC
The main question raised in the present appeal had been filed whether the ITAT was correct in holding that no TDS under Section 194J of the Income Tax Act was required to be deducted by the assessee on payment of interconnecting user charges as it could not be categorized as a fee for technical services?
In CIT, Bangalore vs. Vodafone South Ltd., 2016 (72) taxmann.com 347 (Karnataka) the court decided the issue in favour of the assessee.
The Karnataka High Court and various Tax Tribunals have taken the view that there is no human intervention involved in providing the interconnect services whether it be for data links or roaming. The Supreme Court in Berger Paints India Ltd. vs. Commissioner of Income Tax, (2004) 135 Taxman 586 has held that if the revenue has not challenged the correctness of the law laid down by the High Court and has accepted it in the case of one assessee, then it is not open to the revenue to challenge its correctness in the case of another assessee without just cause.
Taking the aforesaid mandate of law and the letter into consideration, the Court held that the appellant, revenue had consciously elected not to challenge the aforesaid judgment of the Karnataka High Court, which hold that no TDS is required to be deducted by the assessee on payment of interconnecting user charges as it cannot be categorized as a fee for technical services.
Therefore, this Court held that it is not open to the revenue to challenge the correctness of the finding rendered by the Karnataka High Court in Vodafone South Ltd. in the case of other assessees without just cause. Accordingly, no substantial question of law would arise for consideration in the present appeal and the same was dismissed.
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