TDS provisions not applicable on internet leaseline charges u/s 194-I 194C or 194J of Income Tax Act as assessee only availed internet connection and was not using any asset, plant or machinery which involved payment of rent.
ABCAUS Case Law Citation:
ABCAUS 2052 (2017) (08) ITAT
Important Case Laws Cited/relied upon by the parties:
Sktcekk Communication Ltd V/s DCIT (2001) 251 ITR 53) Madras High Court
Wipro Ltd V/s ITO (2004) 80 TTJ 191)
CIT V/s Bharti Cellur Lte
CIT V/s Escotel Mobile Communication Limited
CIT V/s Hutchinson Essar Tel Ltd (2008) (Del)
Brief Facts of the Case:
During the course of assessment proceedings, the AO observed that the assessee had paid lease line charges and internet charges on which according to AO TDS u/s 194-I of the Act had not been deducted.
Accordingly, the AO (TDS) issued notice to the assessee which was replied by the assessee by submitting that the payment to the above said company was for the internet connection and not for use of any plant or equipments and therefore the provisions qua TDS were not applicable either u/s 194-C or 194-I or 194-J of the Income Tax Act, 1961.
The AO, did not find the reply of the assessee convincing and raised demand of tax and interest thereon by treating the assessee in default.
In the appellate proceedings, the CIT(A) dismissed the appeal of the assessee by holding that the provisions of TDS u/s 194I of the Act were applicable on the leaseline/internet charges.
Observations made by the Tribunal:
The Tribunal found that the assessee had availed internet services and paid internet /lease charges for the same.
It was observed that the assessee had only availed the internet connection and was not using any asset, plant or machinery which involved payment of rent.
The leaseline charges/internet charges paid were only for use of internet connection and do not fall within the provisions of section 194-I ,194-C and 194-J of the Act.