The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the payment made towards internet and telecom charges does not attract TDS under section 194J of the Income Tax Act, 1961.
RBS Business Services Pvt. Ltd, the assesseemade payment made towards internet and telephone charges.The DCIT(TDS) held that the assessee has defaulting in not deducting tax u/s 194J o f the Income Tax Act, 1961 on payment made to M/s Airtel and M/s Reliance Industries for lease line charges and broad band charges.
Dr. B. R. R. Kumar, Accountant Member, directing the TDS authorities to re-compute TDS and held that the lease rentals are governed by Section 194-I whereas the maintenance charges are governed by Section 194-C.
“The provisions of Section 194C relates to deduction of tax at source for carrying out any work in pursuance of a contract between the contractor and a specified person . The primary requisites are there should a “contract” there should be a “work”. As per the Section work includes advertising , broadcasting and telecasting including production of programmes for such broadcasting or telecasting , carriage of goods or passengers by any mode of transport other than by railways, catering and manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer. In the instant case , the payments made were for the usage of rights for the internet and telecom facility which were made available to the assessee as well as the public at large on payment of fees. The provisions of standardized facilities do not fall in the nature of “work” as defined u/s 194C of the Act. The facilities availed by the assessee are seamless transmission of the data and the services related to it,” the Tribunal said.
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