INCOME TAX ACT, 1961

Section 195

Tax deduction at source - Under section 195 - Interconnect Usage Charges ('IUC') and bandwidth payments made to foreign carriers - Payment falling within the ambit of royalty--Assessee pleading no liability to deduct tax on account of holding in its favour on the aspect of 'FTS'

Assessee, a telecom operator claimed deduction of Interconnect Usage Charges ('IUC') and bandwidth payments made to foreign carriers. AO held the payment to be in the nature of fee for technical services and accordingly, denied deduction or want of TDS. Assessee contended that issue was squarely covered in favour of assessee by Tribunal order of Delhi Bench rendered in Bharti Airtel Ltd. v. ITO (2016) 178 TTJ 708 (Del-Trib) : 2016 TaxPub(DT) 1376 (Del-Trib). CIT(A) sustained disallowance treating IUC and bandwidth payments as royalty under amended provisions of section 9(1)(vi). Assessee contended that as CIT(A) had decided the issue in assessee's favour on one aspect, i.e., FTS, no tax was required to be deducted on another aspect, i.e., royalty.Held: Consideration paid by assessee as IUC/Bandwidth charges for alleged inter connect service fell within the ambit of 'Royalty' and element of income was involved and, therefore, assessee was bound to deduct tax from such payment and assessee was required to so even if on some other aspect, i.e., on FTS it was held that TDS was not required to be deducted.

REFERRED : Bharti Airtel Ltd. v. ITO (2016) 178 TTJ 708 (Del-Trib) : 2016 TaxPub(DT) 1376 (Del-Trib).

FAVOUR : Partly in assessee's favour.

A.Y. : 2013-14 & 2014-15

INCOME TAX ACT, 1961

Section 90 Section 206AA

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