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TMI Blog2012 (11) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the assessee initiating his arguments submitted that the assessee appellant is a partnership firm engaged in trading business of electrical goods including the business of recharge vouchers, SIM cards & mobile phone handsets and various services like cellular phone service, basic telephone service, data service, booking connection and other BSNL products, the firm has executed Franchiseeship Agreement with Bharat Sanchar Nigam Ltd. (BSNL) on dt.08-02-2007, dt.13-07-2007 and dt.28-01-2008. The assessee firm has its five branches in the State of Odisha at Berhampur, Keonjhar, Phulbani, Kendrapara, Rajgangpur (Rourkela). The assessee firm filed the Audited accounts by taking all the transactions of all the branches along with Head Office in to consideration. The assessee during the Assessment Year under consideration allowed discount to its Sub-Franchise/retailers at all the branches. The learned Counsel for the assessee submitted that the assessee firm, basing on the agreement, is duty bound to carry on the business of the products and services offered by the BSNL within the frame work of the Agreements. It is a matter of record that the assessee's business has been restricted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which the BSNL has nothing to say. It is also a matter on record that the assessee firm out of his own commission @6.5% received from the Principal, has paid discount on Bills raising from @ 4.5% to @5.5% as and where applicable, as per the market potentialities in order to compete in the market. The BSNL has already deducted TDS on the Commission given to the assessee firm U/s.194H of the IT Act as clearly revealed from the TDS Certificates issued by BSNL. In view of this, the learned Counsel for the assessee argued that due to such TDS deduction, there is no scope at all for non-disclosure of any turnover/business with BSNL to the IT Department. Once the TDS has been deducted from the commission, there should not be further deduction from any portion of same said commission by the assessee firm from the payment received from the sub-franchisee/retailers due to selling of the products and as such Sec. 40(a)(ia) of the IT Act does not attract as the nature of deduction is nothing but trade discount not necessarily construed as commission, thereby there is no scope of applicability of Sec-194H of the IT Act. He contended that the very meaning of commission and discount are not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is trite law that each case has its fate and fragrance. Therefore, time and again it has been held by the Hon'ble Apex Court that without examining the fact and issues of a case no reliance can be placed thereon. Hence Assessing Officer committed grave error both on fact and law in reaching into the conclusion by placing reliance on the decision which has no application to the facts and issues in the instant case. The learned AR of the assessee distinguished the facts in the case of Vodafone ESSAR Cellular Ltd., with that of the present assessee as under : VODAFONE M/S. PAREEK ELECTRICALS (assessee) Assessee was VODAFONE who provides cellular Service to customers. Assessee M/s. PAREEK ELECTRICALS is not providing any Cellular Service of his own. (Rather BSNL is cellular service provider) It is the SIM Card that links the subscriber to the assessee i.e. Vodafone network. Hence, Vodafone is the principle. Assessee does not have any cellular Service Network and Assessee is not the principal. (Rather BSNL is having own network and BSNL is principal) Assessee is accountable under the service contract which is arranged the distributor for the Assessee. Assessee is not all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,95,000. But, the rent paid to the land lady is at Rs. 1,92,000 which is below the prescribed limit for which the assessee firm has not deducted any TDS U/s. 194-I of the IT Act as the land lady requested not to deduct TDS by giving Form 15-G which is not disputed by the authorities below. In view of the above, the learned AR of the assessee submitted that the authorities below have erred on facts as well as law in not taking note of the fact that the age of the land lady for the Assessment Year 2008-09 was more than 65 years, thereby the income in her hand at Rs. 1,95,000 which is not at all coming under the taxable net, more so the land lady submitted form 15-G with request not to deduct any amount towards TDS as she does not have any other source of income except the rent which she was receiving from the assessee firm. In paragraph 9.1 of the order, the First Appellate Authority took into consideration the submission of form 15-G by the Land Lady but failed to appreciate that in the circumstances non deduction of TDS is justified. The learned AR of the assessee submitted that the disallowance of Rs. 1,92,000 made u/s.40(a)(ia) of the I.T.Act is not justified and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovide as service to the consumer. These are all features of agency relationship. The learned CIT(A) therefore, came to the conclusion that the discount given to the distributors was commission within the meaning of Explanation (i) on which tax was deductible u/s.194H. She fully relied on the orders of the authorities below. 3.1 With respect to the non-deduction of tax at source on account of rent paid for shop and godown by the assessee to the land lady being a Senior citizen, the Assessing Officer found some infirmity in the Form 15G filed by the assessee which never got clarity insofar as the provisions of Section 194-I are violated for disallowance of the rent claimed as expenditure u/s.40(a)(ia). The learned CIT(A) therefore, rightly considered to uphold such disallowance. 4. We have heard the rival contentions and perused the impugned orders of the authorities below and the material available on record. On consideration of the facts and circumstances of the case, we are inclined to hold that the agreements as produced by the rival parties in support of the contentions that the assessee falls in line as in accordance with the case laws cited in the case of Vodafone Essar Cel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hisees would lost its identity as commission in the first place and also cannot be appreciated as a matter of contract between the service provider and the assessee's franchisee or distributors. Purchase and sales have been acknowledged by the service provider when the maximum retail price has been rendered to tax by the service provider for the purpose of deduction of tax at source being commission u/s.194H. The same income cannot be taxed again in the hands of different recipients which are a matter of business conducted being the fast network availability of BSNL products was not considered by the learned CIT(A) to establish that the discount available to the second and third tier franchisees was a matter of availability of products at its maximum retail price and not because they had made income from the service provider. In the case of Vodafone Essar Cellular Ltd and Idea Cellular Ltd., (supra) it was marking of the selling price below the price they were sold resulted in consideration of invoking the provisions of Section 194H or Section 194C was considered by the Hon'ble High Courts in the case of Vodafone Essar Cellular Ltd and Idea Cellular Ltd. (supra). In this view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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