20 July 2010
No TDS deductible. Telephone services are not covered - When a person decides to subscribe to a cellular telephone service in order to have the facility of being able to communicate with others, he does not contract to receive a technical service. What he does agree is to pay for the use of the airtime for which he pays a charge. The fact that the telephone service provider has installed sophisticated technical equipment in the exchange to ensure connectivity to its subscriber does not on that score make it provision of a technical service to the subscriber. The subscriber is not concerned with the complexity of the equipment installed in the exchange, or the location of the base station. All that he wants is the facility of using the telephone when he wishes so, and being able to get connected to the person at the number to which he desires to be connected. What applies to cellular mobile telephone is also applicable to fixed telephone service. Neither service can be regarded as ‘technical service’ for the purpose of section 194J of the Act - Skycell Communications Ltd. v. Dy. CIT [2001] 251 ITR 53 (Mad.).
20 July 2010
PACIFIC INTERNET (INDIA) (P) LTD. vs. INCOME TAX OFFICER (TDS)
Bandwidth and network operating facilities availed of by assessee from other telecommunication concerns being standard facilities are not includible in technical services within the meaning of s. 194J r/w Expln. 2 to cl. (vii) of s. 9(1), not attracting deduction of tax at source under s. 194J. In favour of : Assessee Cases referred to HFCL Infotel Ltd. vs. ITO (2006) 99 TTJ (Chd) 440 Skycell Communications Ltd. vs. Dy. CIT (2001) 170 CTR (Mad) 238 : (2001) 251 ITR 53 (Mad) Wipro Ltd. vs. ITO (2004) 84 TTJ (Bang) 685 : (2003) 86 ITD 407 (Bang)
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