TMI Blog2015 (6) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... .R. MEENA, JJ. For the Appellant : Shri Ronak G Doshi, C.A. For the Respondent : Smt. Neena Jeph, JCIT ORDER PER R.P. TOLANI, JM The above mentioned appeals have been filed by the assessee and the Revenue against order of the ld. CIT(A)-III, Jaipur dated 02-01-2012 for the assessment years 2007-08 to 2010-11 wherein both the parties have raised common grounds in its appeals. These appeals pertains to deciding the issue of applicability of Section 194H and assessee's liability thereunder u/s 201(1) and 201(1A) of the I.T. Act. 2.1 The grounds raised by the assessee are as under:- Ground NO.1: Non-deduction of tax at sources (TDS) u/s 194H of the Act on discount given to the prepaid distributors. 1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in confirming the order passed by the ITO (TDS)-2, Jaipur u/s 201(1)/201(1A) of the Act, by treating the discount offered by the assessee to the distributors as commission and thereby treating the assessee in default u/s 201(1) read with Section 194H of the Act. 2. The assessee most humbly prays that the discount allowed to the distributors be held as not liable to T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company ignoring the fact that:- (a) the assessee company did not provide the details of the deductees regarding filing of IT Returns before the AO(TDS) during the proceedings. (b) the details provided before the ld. CIT(A) did not reflect the correct figure of commission shown by the deductees in their I.T. Returns as the ld. CIT(A) directed the AO to verify the figures. (c) Many of the deductees did not have PAN ad therefore, the claim of filing of I.T. Return by them could not have been considered. (d) Incomplete and unverified information could not have been considered as additional evidence u/r 46a of the Income Tax Rule. 2.3 During the course of hearing, the ld. Counsel for the assessee contends that the issues in question as raised in assessee's and Revenue s appeals are squarely covered by consolidated order dated 13-03-2015 of ITAT, Jaipur Bench, Jaipur in the case of Tata Telesevices Ltd. vs. ITO (ITA No.309/JP/2012 and 502 to 505/JP/12 ). This very Bench in turn has considered Hon ble Karnataka High Court Judgment in Tata Tele Services Ltd. (ITA No. 158 of 2013 dated 14-08-2014) published in 52 Taxman. Com 31 which has examined all available judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen they sell this right to service and not when they purchase this right to service from assessee. vi As at the time of sale of prepaid card by the assessee to the distributor, income has not accrued or arisen to the distributor, there is no primary liability to tax on the Distributor. In the absence of primary liability on the distributor at such point of time, there is no liability on the assessee to deduct tax at source. The difference between the sale price to retailer and the price which the distributor pays to the assessee is his income from business. It cannot be categorized as commission. Merely because sale is subject to agreed conditions and stipulations cannot convert the relationship of principal to principal into that of principal and agent relationship. 2.23. We find merit in the contention of ld. Counsel that there is no jurisdictional high court judgment on this issue. Hon ble Karnataka High Court Judgment is elaborate, detailed, considers the previous Delhi and Kerala High Court judgment against the assessee and is latest comprehensive adjudication on the issue. Even if it is held that there exist divergence of judicial opinion a view favourable to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to impugned order of the AO in which following submissions of the assessee have been reproduced. Thus to summarize, The distributor does not render any services to the company by realizing more than the selling price fixed between the parties. It does not benefit the company in any way. It is a trading income of the distributor himself. The distributor does not ipso facto earn income just by purchasing the tickers from the company. Only if it is able to sell it, we can say that it has earned income. Hence, there is no fixed amount of commission from the agreement. Since the distributor is allowed to sell at any price between the selling price of the company and the MRP, there is a complete freedom of pricing. The difference between the MRP and the selling price is in the nature of trade discount as can be deduced from various definitions of trade discount. Even regarding the accounting, the company records only the net amount red from the distributor as its revenue. In view of the foregoing, we humbly submits that there is no commission which is being paid to the distributors, the distributors are given a trade discount, there is complete freedom of pricing, the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: i. Only particular clause of agreement has been read by ld. DR to support her arguments. SIM card as such has no property as without data encrypted on it, the SIM card is a worthless piece of plastic. Thus what is sold is the data, the residuary class of ownership is retained as an alternate means to recall the SIM in case of any malpractice or violation of conditions of agreement by distributors. ii. To ensure safety and security such residuary recall power is retained by many vendors when there is possibility of violation of sale agreement. Only on case of such recall the sale transaction will be terminated. In this eventuality also there is no payment of commission as what was paid was actual sale price i.e. MRP Discount and on termination of sale what will be payable by the assesse is only this amount. Thus looking from any angle, even in case of rarest of rare contingency pointed out by ld. DR the facts do not detract the transaction being in the nature of sale and purchase and the relationship between assesse and distributor being that of principal to principal. iii. Hon ble Karnataka High court if Tata Tele Services (supra) has consciously dealt with the this ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
