Tds on internet service providers

Its Under 194C depending on the cases...

Here's one cases as under...

 

Payment made to the bandwidtth providers for purchase of internet facility cannot be treated as a fee for technical services. The taxpayer buys bandwidtth from MTNL and VSNL and provides internet facility to its customers. The AO treats it as technical service and holds the taxpayer in default for not deducting tax at source and raises demand u/s

201(1) and 201(1A). The CIT (A) agrees with the AO's view. The Mumbai Tribunal held that the payment made to the bandwidtth providers for purchase of internet facility and the other infrastructure cannot be treated as a fee for technical  services within the meaning of Section 194J read with Section 9(1)(vii) of the Act as there is no rendering of any technical service involved in the entire process. It is a mere act of purchase and sale of internet access facility.

 

CIT v. Estel Communications (P.) Ltd. [2008] 217 CTR 102 (Del) followed

Pacific Internet (India) Pvt Ltd v. ITO [2009] 27 SOT 523 (Mumbai)

(Judgment Date: 23 December 2008)