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2015 (7) TMI 204 - AT - Income TaxPenalty u/s.271C - non-deduction of tax at source from discount extended to its pre-paid distributors - assessee has moved the Stay Application for stay on realisation of the outstanding demand levied u/s.271C for the A.Yrs. 2007-08 to A.Y. 2012-13 being penalty for failure to deduct tax at source - Held that:- It is an admitted fact that the quantum appeals levying interest u/s.201(1) and 201(1A) are pending for disposal before the Tribunal. The Tribunal in assessee’s own case for A.Y. 2001-12 and 2012-13 in the quantum proceedings has already granted stay holding that assessee has made out a prima-facie case for grant of stay of outstanding demand. The Pune Bench of the Tribunal in the case of Idea Cellular Ltd.[2015 (7) TMI 191 - ITAT PUNE] under identical facts and circumstances has granted stay on realisation of demand raised u/s.271C of the I.T. Act. It is also an admitted fact that different high courts have taken different views on the applicability of provisions of section 194H of the Act to the transactions in question. While Hon’ble Karnataka High Court has decided the issue in favour of the assessee the Hon’ble Delhi High Court and Hon’ble Calcutta High Court have decided the issue against the assessee. The matter is now pending before the Hon’ble Supreme Court for adjudication. However, it is also a fact that the Jaipur Bench of the Tribunal in a recent decision in the case of M/s.Bharti Hexacom Ltd. Vs. ITO, TDS-2, Jaipur [2015 (7) TMI 175 - ITAT JAIPUR] has decided the issue in favour of the assessee holding that the sale of prepaid products from the company to the distributor is actually a sale of right to service and the provisions of section 194H of the Act do not apply. In the said decision the Tribunal has considered various decisions including the decisions of the Hon’ble Kerala High Court, Hon’ble Delhi High Court and Hon’ble Calcutta High Court who have decided the issue against the assessee. Therefore, we are of the considered view that the Ld. Counsel for the assessee has made out a prima-facie case in its favour so far as the realisation of the outstanding demand is concerned that too in a penalty proceeding. The Hon’ble Bombay High Court in the case of UTI Mutual Funds and UTI Trustees Company Pvt. Ltd. (2012 (3) TMI 333 - BOMBAY HIGH COURT ) has held that where a direct prima-facie case has been made out, calling upon the assessee to deposit would itself occasion undue hardship. We therefore allow the stay petitions filed by the assessee and grant stay on realisation of outstanding demand for the A.Yrs. 2007-08 till 2012-13 for a period of 180 days from today or the date of the order of the Tribunal in appeal, whichever is earlier. The request of the assessee for out of turn hearing of the appeals is also accepted and the appeals are fixed for hearing on 16-09-2015. Since the date of hearing is mentioned in this stay order, therefore, this itself will be construed as notice of hearing to both sides. - Decided in favour of assessee.
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