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2012 (12) TMI 294 - AT - Income TaxTDS u/s 194H - Commission or discount to distributors of SIM cards/recharge coupons - AO observed that upto financial year 2007-08, assessee has deducted TDS on amounts paid on sale of recharge coupons by treating the same as commission - held that:- transaction between BSNL and purchase dealer was on principal to agent basis - Assessee, a cellular operator, provides prepaid connections to the subscribers through distributors called prepaid market associates (PMAs) appointed by it - It offers discount for prepaid calling services to its distributors - Legal relationship is established between the assessee and the ultimate consumer/subscriber, who is sold the SIM card by the agents further appointed by the PMAs with the consent of the assessee Fact that the PMA is supposed to make the payment in advance as per the agreement does not make any difference to the nature of the transaction in view of the other terms of the agreement - Even though advance payment is made by the PMA qua SIM cards, it does not amount to ‘sale’ of goods in as much as unsold SIM cards are to be returned to the assessee and it is required to make payment against them - This is an antithesis of ‘sale’ Therefore, the discount offered by the assessee to the distributors on payments made by the latter for the SIM cards/recharge coupons which are eventually sold to the subscribers at the listed price is commission and it is subject to TDS under s. 194H - Contention of the assessee that s. 194H is not applicable as there is no ‘payment or credit’ by the assessee to the distributor cannot be accepted."- no infirmity in the order passed by the learned CIT(A). Therefore, this ground of appeal raised by the assessee for both the assessment years under consideration is dismissed. Decision in CIT v. Idea Cellular Ltd. [2010 (2) TMI 24 - DELHI HIGH COURT] followed.
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