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Tamil Nadu
TDS can be collected on mobile roaming charges, rules Madras HC
The bench set aside ITAT’s order, which failed to consider roaming charges as fees paid for technical services.
Madras High Court
Madras High Court(File photo | Express)
R Sivakumar
Updated on:
18 May 2024, 7:29 am
2 min read
CHENNAI: In a significant judgment likely to have a pan-India impact, a division bench of Madras High Court has held that tax deduction at source (TDS) is applicable on the roaming charges for mobile communication paid by one service provider to another since the charges qualified as fees for ‘technical services’ under section 194 J of the Income Tax Act.
The order was passed by a division bench of Justices R Mahadevan and Mohammed Shaffiq during a special sitting on Friday on an appeal filed by the Income Tax department challenging the orders of the I-T Appellate Tribunal (ITAT) in Chennai in a case involving Dishnet Wireless Limited. The bench set aside ITAT’s order, which failed to consider roaming charges as fees paid for technical services.
Allowing the appeals filed by the I-T department, the bench added that orders passed by the Assessing Officer and the Commissioner of Income Tax (Appeals) requiring TDS on the roaming charges are upheld.
Senior standing counsel for the I-T department Dr B Ramaswamy contended that roaming charges represented the cost paid for highly technical telecommunication services provided to the respondent’s subscribers outside the home network area. Seamless carriage of calls and data during roaming requires constant monitoring and human intervention to ensure uninterrupted service, he submitted.
However, Dishnet Wireless Limited submitted that no human intervention is required for connecting individual roaming calls once the configurations are completed.
The bench concurred with Ramaswamy’s submission that roaming services involve significant human intervention and technical expertise. Dishnet Wireless Limited is engaged in the business of pre-paid telecommunication services namely, cellular service, data services, mobile services, etc., with various telecom networks in the country. During the course of business, the assessee had paid roaming charges to other telecom operators without deduction of TDS.
