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2017 (11) TMI 115 - AT - Income TaxTDS u/s 194H - TDS on discount provided by the assessee on the sale of pre-paid talk time - assessee was selling the recharge coupon / vouchers and starter pack to the customers through the net of distributors - AO has treated the discount given by the assessee to its distributors on the sale of recharge coupons/ starter pack as commission expenses - assessee treated the aforesaid transaction as sale at a price net of discount in the books of accounts - nature of agreement - Held that:- On perusal of the agreement it can be inferred that the transaction between the assessee and the distributor was based on principal to principal basis and which is in the nature of purchase and sale transaction. There was no clause in the agreement suggesting that the assessee is liable for the payment of the commission to the distributors. The distributor was authorized to sale the prepaid recharge coupons at a price of its/ his choice but not exceeding MRP determined by the assessee. We also find that all the risks & rewards attached with the product were shifted to the distributor. Thus we hold that there was no agreement between the assessee and the distributor as of principal and agent. under the post-paid connection there are certain services rendered by the assessee such as collection of documents for proof of identity, delivery of SIM cards, collection of charges etc. Against these services the distributors are paid the amount of agreed commission by the assessee after deducting TDS u/s 194H of the Act. As we find that in case of prepaid connection the recharge coupons are sold to the distributors on outright sale basis at a discounted price. The amount of discount is not recorded in the books of accounts. Therefore we hold the transaction between the assessee and prepaid distributor for recharge coupons is nature of sale & purchase. Thus amount of discount cannot be equated with the commission as envisaged under section 194H of the Act. the provisions of TDS under section 194H of the Act are not attracted on the sale of recharge coupons for the prepaid talk time to the distributors and accordingly the assessee cannot be treated as assessee in default for non deduction of TDS u/s 201. See Bharti Airtel Limited Vs. CIT & ANR. [2014 (12) TMI 642 - KARNATAKA HIGH COURT ] - Decided in favour of assessee.
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