TDS IS A MUST ON ROAMING SERVICES: LANDMARK JUDGMENT BY THE DIVISION BENCH OF MADRAS HIGH COURT – ARGUED BY DR. B RAMASWAMY, SENIOR STANDING COUNSEL, INCOME TAX DEPARTMENT

TDS IS A MUST ON ROAMING SERVICES: LANDMARK JUDGMENT BY THE DIVISION BENCH OF MADRAS HIGH COURT – ARGUED BY DR. B RAMASWAMY, SENIOR STANDING COUNSEL, INCOME TAX DEPARTMENT

LANDMARK JUDGMENT BY THE HON’BLE CHARTER COURT OF MADRAS HIGH COURT DIVISION BENCH BY THE HON’BLE MR. JUSTICE R. MAHADEVAN AND HON’BLE MR. JUSTICE MOHAMMED SHAFFIQ DELIVERED JUDGMENT TODAY 17.5.2024

“Section 194J – Fees for Professional or Technical Services.”

This landmark judgment of today (17.05.2024) may have a national importance where professional services rendered by a person in the course of carrying technical consultancy or any profession as is notified is to be charged TDS by the Department of Revenue, Ministry of Finance hereafter.
Income Tax Department has filed in 2016 an appeal against ITAT Order stating that under Section 194J, human intervention is insufficient to mandate tax deduction under Section 194J. This has been overpowered by the above Division Bench with continuous argument by Dr. B Ramaswamy, the Senior Standing Counsel, Income Tax Department, Ministry of Finance since 2020/22/23 onwards having argued consistently and finally Dr. B Ramaswamy, Senior Standing Counsel won the case for the Department of Revenue which is of national importance.
The bench significantly held that roaming services involve significant human intervention and technical expertise.
Dr. B Ramaswamy vehemently argued that National GSM Roaming Agreement explicitly acknowledges the need for human intervention in various aspects of roaming services.
As per the Hon’ble Supreme Court direction, Department of Revenue appointed an expert to study the human intervention in technological operations. Dr. B Ramaswamy, Senior Standing Counsel used that study and explained to the Division Bench to substantiate this argument that even the technical experts had explicitly submitted the report stating that human intervention in technology cannot be separated, it is inevitable indeed.
The Division Bench strongly held that roaming charges indeed qualify as fees for technical services under Section 194J. Hon’ble Division Bench set aside the Order of ITAT and consequently, the orders passed by the Assessing Officers of Income Tax Department and the Commissioner of Income Tax (Appeals) requiring Tax Deduction at Source (TDS) on the roaming charges are upheld accordingly, the appeals filed by the Revenue are allowed.