ITAT rules no TDS on roaming charges under IT Act

ITAT rules no TDS on roaming charges under IT Act

Cites the judgment of the Karnataka High Court in a similar case

The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that no tax can be deducted at source on roaming charges under the Income Tax Act, 1961.

The assessee company, Unitech Wireless (Tamilnadu) Private Limited is engaged in the business of providing telecommunication services. It sells service products, including pre-paid vouchers, Sim-cards, and E-Load.

For selling its products, the company entered into an agreement with the distributors. On the upfront sale of service products, it offered discounts to the distributors on the difference between the MRP and the distributor's sale price.

The Assessing Officer (AO) maintained that the assessee did not deduct tax on roaming charges paid to various operators on which provisions of the IT Act were applicable. Aggrieved by the AO's order, the assessee appealed before the Commissioner of Income Tax (Appeals).

Thereafter, the CIT(A) held, "The services rendered by the other operators about roaming facility was the technical services for which provision of Section 194J are applicable. Therefore, the AO rightly invoked the IT Act."

However, the bench comprising Yogesh Kumar US (judicial member) and Shamim Yahya (accountant member) cited the judgment of the Karnataka High Court in the CIT vs Vodafone South Ltd case.

The court had held that payment made by a mobile service provider to another mobile service provider for utilization of roaming mobile data and connectivity, could not be termed as technical service. Therefore, no Tax Deducted at Source (TDS) was allowed under the IT Act.

The tribunal, thus, observed, "Following the aforesaid precedent, we set aside the order of the CIT(A). No TDS was required under the IT Act."