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2024 (3) TMI 1322 - DELHI HIGH COURTTDS u/s 194H - non deduction of TDS on transaction between the Appellant and the distributors in respect of sale of the SIM Card/Recharge Voucher - scope of expression ‟acting on behalf of another person” - relationship between the Appellant and distributors is that of principal and agent OR principal and principal - HELD THAT:- As decided in Bharti Cellular Limited [2024 (3) TMI 41 - SUPREME COURT] he term ‟agent” denotes a relationship that is very different from that existing between a master and his servant, or between a principal and principal, or between an employer and his independent contractor. Although servants and independent contractors are parties to relationships in which one person acts for another, and thereby possesses the capacity to involve them in liability, yet the nature of the relationship and the kind of acts in question are sufficiently different to justify the exclusion of servants and independent contractors from the law relating to agency. Term ‟agent” should be restricted to one who has the power of affecting the legal position of his principal by the making of contracts, or the disposition of the principal's property; viz. an independent contractor who may, incidentally, also affect the legal position of his principal in other ways. We hold that the assessees would not be under a legal obligation to deduct tax at source on the income/profit component in the payments received by the distributors/franchisees from the third parties/customers, or while selling/transferring the pre-paid coupons or starter-kits to the distributors. Section 194-H of the Act is not applicable to the facts and circumstances of this case. Accordingly, the appeals filed by the assessee - cellular mobile service providers, challenging the judgments of the High Courts of Delhi and Calcutta are allowed and these judgments are set aside. As a consequence of our finding that the appellant could not have been treated as an assessee in default bearing - Decided in favour of assessee.
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