Commissioner Of Income Tax (Tds) -2 v. %Date Of Decision: 30[Th]May, 2022

$~13 IN THE HIGH COURT OF DELHI AT NEW DELHI +ITA 1417/2018 COMMISSIONER OF INCOME TAX (TDS) -2..... Appellant versus %Date of Decision: 30[th]May, 2022 CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J (Oral): 1.Present appeal has been filed raising the following question of law:-“Whether the ITAT was correct in holding that no TDS under“Whether the ITAT was correct in holding that no TDS underSection 194J of the Income Tax Act was required to be deductedby the assessee on payment of interconnect user charges as itcould not be categorized as fee for technical services?”by the assessee on payment of interconnect user charges as itcould not be categorized as fee for technical services?” 2.Admittedly the Karnataka High Court in Commissioner of IncomeTax, TDS, Bangalore vs. Vodafone South Ltd., 2016 (72) taxmann.comTax, TDS, Bangalore vs. Vodafone South Ltd., 2016 (72) taxmann.com ITA 1417/2018 347 (Karnataka) has decided the aforesaid issue in favour of the respondent-assessee. However, learned counsel for the appellant-revenue states that theBombay High Court has admitted the similar question of law forconsideration. 3.Learned predecessor Division Bench vide order dated 22[nd]March,2021 had opined that as no Special Leave Petition has been filed against thejudgment of the Karnataka High Court, the said view would be binding onthe appellant-revenue. Learned predecessor Division Bench had directed thecounsel for the appellant-revenue to obtain necessary instructions from theCBDT as to the way forward. 4.Mr. Zoheb Hossain, learned standing counsel for the revenue hashanded over a letter dated 21[st]April, 2022 written by JDIT(OSD)(L&R),New Delhi addressed to the Commissioner of the Income Tax, High CourtCell (Judicial), New Delhi. The said letter is taken on record. The said letterreads as under :- “To, The Commissioner of Income Tax (Judicial),High Court Cell, Delhi Respected Sir, Sub:UrgentInstructionsrequiredinthecaseofCommissioner of Income Tax (TDS-2) vs M/s TataTeleservices Ltd. [ITA No. 1417/2018]- regarding. Kindly refer to your e-mail dated 11[th]April 2022 on theabove-mentioned subject. In this regard, I am directed to convey that SLP in the caseof CIT (TDS), Bangalore vs. Vodafone South Ltd. (2016) 72Taxmann.com 347 (Kar) has not been approved by Board forthe following reason: "As it has been repeatedly established in various cases,involving the issue of liability of deduction of TDS us 194J forpayments to other telecom companiesfor interconnectcharges/access/port charges for reaming and data link thatno human intervention was involved in the interconnectwhether it was for data link or roaming, the charges paidcould not be held to be in the nature of fees for technicalservices for the purposes of section 9(1) and section 194J ofthe Act." In view of above, SLP in the case of CIT (TDS), Bangalorevs. Vodafone South Ltd. (2016) was not filed. This is for yourkind information and the needful.” 5.LearnedcounselfortherespondentemphasisesthatJDIT(OSD)(L&R) functions under the Directorate, L&R, CBDT. Therefore,he contends that the decision to accept the decision of the Karnataka Highcourt in Vodafone South Ltd. (supra) was taken at the highest level of theappellant-revenue. He further states that the Bombay High Court was notaware of the aforesaid judgment of the Karnataka High court when itadmitted the questions of law as alleged by learned counsel for the appellant. 6.Learned counsel for the respondent further contends that theappellant-revenue having taken a conscious decision to accept the judgmentof the Karnataka High Court cannot be permitted to take the opposite standin the present case.In support of his submission, he relies upon thefollowing judgments:- A.Birla Corporation Ltd. vs. Commissioner of Central Excise,(2005) 6 SCC 95 6.Learned counsel for the respondent further contends that theappellant-revenue having taken a conscious decision to accept the judgmentof the Karnataka High Court cannot be permitted to take the opposite standin the present case.In support of his submission, he relies upon thefollowing judgments:- A.Birla Corporation Ltd. vs. Commissioner of Central Excise,(2005) 6 SCC 95 “5. In the instant case the same question arises for considerationand the facts are almost identical. We cannot permit the Revenueto take a different stand in this case. The earlier appeal involving ITA 1417/2018 identical issue was not pressed and was therefore, dismissed. Therespondent having taken a conscious decision to accept theprinciples laid down in Pepsico India Holdings Ltd.(supra) cannotbe permitted to take the opposite stand in this case. If we were topermit them to do so, the law will be in a state of confusion andwill place the authorities as well as the assessees in a quandary.” B. Commissioner of Central Excise, Navi Mumbai vs. Amar Bitumen & Allied Products Private Limited & Ors., (2010) 13 SCC 76 “5. This Court in a catena of cases has consistently taken the viewthat if an earlier order is not appealed against by the Revenue andthe same has attained finality, then it is not open to the Revenue toaccept the judgment/order on the same question in the case of oneassessee and question its correctness in the case of some otherassesses. Revenue cannot pick and choose......” 7.Admittedly, the Karnataka High Court and various Tax Tribunalshave taken the view that there is no human intervention involved inproviding the interconnect services whether it be for data link or roaming. 8.The Supreme Court in Berger Paints India Ltd. vs. Commissioner ofIncome Tax, (2004) 135 Taxman 586 has held that if the revenue has notchallenged the correctness of the law laid down by the High Court and hasaccepted it in the case of one assessee, then it is not open to the revenue tochallenge its correctness in the case of other assessee without just cause. 9.Keeping in view the aforesaid mandate of law and the letter dated 21[st]April, 2022, this Court is of the view that the appellant-revenue hasconsciously elected not to challenge the aforesaid judgment of the KarnatakaHigh Court, which hold that no TDS is required to be deducted by theassessee on payment of interconnect user charges as it cannot be categorizedas fee for technical services. ITA 1417/2018 10.Consequently, this Court is of the view that it is not open to therevenue to challenge the correctness of the finding rendered by theKarnataka High Court in Vodafone South Ltd. (supra) in the case of otherassessees without just cause. Accordingly, no substantial question of lawarises for consideration in the present appeal and the same is dismissed. MANMOHAN, J MAY 30, 2022KA MANMEET PRITAM SINGH ARORA, J ITA 1417/2018 Page 5 of 5