HC exempts income tax on transit charges of telecom operators

New Delhi, Nov 2 (UNI) Delhi High Court has exempted private telecom operators from paying Income tax on the 'Transit Fee paid by them to the state-owned telecom companies which do the routing of calls for their subscribers.

A bench comprising Justice B D Ahmed and Justice Rajive Shakdhar said telecom companies are not liable to pay Income tax on the transit charges as it is a computerised service and not a technical one.

The bench overruled the contention of Income tax department which said the services provided to cellular companies come within the ambit of technical services, which is taxable under the Income Tax Act.

Giving a reprieve to telecom companies, the Bench held that the services do not come under the ambit of technical services as there is no human element involved in the whole process and it is done by machines.

"The facilities provided by MTNL and other companies for interconnection/ port access is one which is provided automatically by machines. It is independently provided by the use of technology and that too sophisticated technology but that does not mean that MTNL and other companies which provide such facilities are rendering any technical service under the Income tax act," the bench said.

"The expression 'Technical service' would have reference to only technical services rendered by a human, it would not include any service rendered by machines or robots,'' the court said.

UNI SNG LS AS1818