The Income Tax Appelate Tribunal (ITAT), Mumbai, has said that the roaming charge paid by one operator to another is not liable for deduction of tax at the source. The ITAT Mumbai, in an order on 22 December 2010, on an appeal filed by Vodafone Essar, said that the service provider’s role is limited to collecting roaming charges from users and pass it on to the other operator whose facility is used by the subscriber. Therefore, the service provider is not required to deduct tax.
The ITAT also dismissed the alternate view offered by the assessing officer that national roaming charges are in fact rent for the use of telecom equipment and is liable for deduction of tax at the source. According to ITAT, a payment could be construed as rent, only if a space is earmarked exclusively for the use of the taxpayer . However, in this case, no such earmarking of space is involved.
The Tribunal added that the tax payer company is a facilitator between the subscriber and the other operator, enabling the subscriber to make a call while roaming. The taxpayer’s task is only to collecting the roaming charges from the subscriber and transfer it to the other service provider. In such a case, the tax payer does not use the equipment involved in providing the roaming facility.
