ITA Nos.1177 & 1178/DEL/2018

[Assessment Years: 2012-13 & 2013-14]

Unitech Wireless (Tamilnadu) Private Limited, The Master Piece Building, Golf Course Road, Sector-54, Gurgaon-122001  VsDeputy Commissioner of Income Tax, TDS Circle-78(1), New Delhi
Assessee Revenue
Assessee byMs. Manasvini Bajpai, Adv.
Revenue byMs. Yagya Saini Kakkar, CIT-DR
Date of Hearing26.09.2022
Date of Pronouncement12.10.2022



These are appeals filed by the assessee are directed against the respective orders of the Ld. CIT(A)-41, New Delhi, both dated 22.12.2017 pertaining to Assessment Years 2012-13 & 2013-14, respectively.

  • Since, the issues are common and the appeals were heard together, these are being consolidated and disposed of together for  the sake of convenience.
  • One  issue  raised  in both  Assessment  Years 2012-13 and  2013-14 is that the assessee is not liable to tax u/s 194H of the Act on account of discount provided by the distributors to provision of prepaid telecom

products being recharge vouchers. For the sake, we are referring the facts of Assessment Year 2012-13.

  • Brief facts of the case are that the assessee company is engaged in the business of providing telecommunication services. To provide telecommunication service, it sells service products such as pre-paid vouchers, Sim-cards and E-Load etc. For selling service products, the company entered into a distribution agreement with the distributors. On upfront sale of service products discount was offered to the distributors to the extent of the difference between the MRP and the distributor’s sale price. As per AO on this discount provision of TDS under section 194H was applicable but the appellant did not comply with  the same.  Further, the assessee has also not deducted tax on  roaming  charges  paid  to various operators on which provisions of section 194J are applicable.
  • Upon assessee’s appeal, the Ld. CIT(A) noted the submission of the assessee, however, he partly upheld the action of the AO by holding as under:-

“6. I have considered  the  facts  and  circumstances  of  the case, submission of the appellant and perused the order of the AO. I find that so far as invoking section 194H is concerned, on identical facts, the Hon’ble Delhi High Court has decided this issue in the case of CIT -XVII vs. Idea Cellular Ltd. reported in (2010)189 Taxman 118 (Delhi)/[2010] 325 ITR 148

(Delhi)/[2010j 230 CTR 43 (Delhi), in  which the Hon’ble court has held

“Section 194H of the Income-tax Act, 1961 – Deduction of tax at source – Commission or brokerage etc. – Assessment years 2003-04 and 2004-05 – Assessee-

company was engaged in business of providing cellular telephone network through a card called Subscriber Identification Module (SIM) – Pre-paid or post-paid connections were provided to subscribers through distributors called Pre-paid Market Associates (PMAs) appointed by assessee – Assessee offered discount on pre-paid calling services to its distributors – As per agreement, at all times pre-paid SIM card recharge coupons  were  owned  by  assessee;  maximum  price  of SIM cards/recharge coupons was  decided  by  assessee; and PMAs had to comply with all requirements of assessee in respect of invoicing and accounts, maintenance of brand image and providing monthly sale reports and other information relating to business – Minimum performance targets for distributors were also set by assessee which reserved right to terminate agreement unilaterally – Ultimate agreement was entered into between subscribers and assessee creating legal relationship between them – Whether, on facts, relationship between assessee and its  distributors  was that of principal and agent and, consequently, amount of discount offered by assessee to its distributors was in nature of commission liable to tax deduction at source under section 194H – Held, yes”

  • Following the above decision, the demand raised by the AO under section 194H is confirmed.
    • So far as invoking section 194J is concerned, on perusal of the facts, it is clear that the appellant had received technical services in lieu of getting roaming services from the net work of another operators through an  automated  process  undertaken by a series of highly advanced telecom network equipment but the same requires constant human intervention to make the process of roaming services effectively  operational,  thereby,  I am of the considered view that the services rendered  by  the other operators with regard to roaming facility was the technical services for which provision of section 194J are applicable, therefore, the AO  had  rightly  invoked  section  194J of the IT Act in this regard”.
  • Against this order, the assessee is in appeal before us.
  • We have heard both the parties and perused the records. The Ld.

DR submitted that this issue is squarely covered in favour of the Revenue by the decision of the ITAT in assessee own case for AY 2010-11 and 2011-12, vide order dated 31.05.2022, qua issue of 194H of the Act.

  • Per contra, the ld. counsel for the assessee has filed Miscellaneous Application against the order of the ITAT and sought  to distinguish  the said decision.
  • Upon careful consideration, we note that the ITAT in assessee’s own case has considered identical issue and held that no TDS was to be deducted in case of roaming charges u/s 194J of the Act by holding as under:-

“22.    To conclude,

  • The primary issue in the appeal was whether the roaming charges paid by the assessee to the other telecom service providers were in the nature of ‘Fee for technical Services’ and hence, liable for TDS under section 194J.
    • The issue was considered by the Supreme Court of India in the case of CIT vs. Bharti Cellular Ltd.
  • The Apex Court restored the issue to the AO for reconsideration after seeking the support of technical expert to ascertain if  any human intervention is required in providing interconnect/roaming services.
    • Karnataka High Court in the case of CIT vs.  Vodafone South Ltd held that payment made by a mobile service provider to another mobile service provider for utilization of roaming mobile date and connectivity cannot be

termed as technical service and therefore, no TDS was deductible u/sl94J of the Act.

  • The High Court upholding the order  of  ITAT  observed that the ITAT had examined the facts and came to the conclusion that payment made for roaming connectivity cannot be termed as “technical services”.

23. Hence, we hereby hold that no TDS u/s 194J is deductible in case of roaming charges paid.”

  1. As regards non deduction of TDS u/s 194H, the  ITAT  in  the aforesaid order, rejected the assessee’s arguments by holding that the Hon’ble Delhi High Court decision in the case of Idea Cellular Ltd. was applicable. The ITAT has concluded as under:

“Having gone through the order of the Ld. CIT(A) and after hearing the arguments of the assessee and also after going through the different clauses of the agreement which do not tangibly differentiate from the facts examined by the Hon’ble jurisdictional High Court in the case of Idea Cellular Ltd., we decline to interfere with the order of the Ld. CIT(A).”

  1. Accordingly, in light of the  aforesaid  order  of  the  Co-ordinate Bench of the Tribunal in assessee’s own case,  which  has  not  been reversed by the Hon’ble jurisdictional High Court, we hold that the Ld. CIT(A)’s order is to be upheld as regards on non-deduction of TDS  u/s 194H is concerned. As regards  non-deduction  of  TDS  u/s  194J  of  the Act, following the aforesaid precedent, we set-aside the order of the Ld. CIT(A) on this issue and hold that no TDS was to be required u/s 194J of the Act.
  1. In the result, appeal for the AY 2012-13 is partly allowed and the appeal for the AY 2013-14 stands dismissed.

Order pronounced in the open court on 12th October, 2022.