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M/s. Bharti Hexacom Ltd. Versus The Income Tax Officer TDS -2, Jaipur

2015 (11) TMI 1521 - ITAT JAIPUR

TDS u/s 194H - discount given to distributors on sale of pre-paid products, being, "right to use Airtime for a specified value" - non-deduction of tax - Held that:- The relationship between assessee and its distributors qua the sale of impugned products is on principal to principal basis; the consideration received by assessee is sale price simpliciter.There is no relationship of Principal and agent between assessee and distributors as held by authorities below their orders are reversed. Looking .....

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e margin paid to the distributor is not a commission which is liable for deduction of tax at source u/s 194H. When there is no commission, the liability for deduction of tax at source does not arise at first place. In any case, the ld. CIT(A) has given a specific direction ‘’the alternative plea of the appellant was allowed in view of the decision of M/s. Hindustan Coca Cola Beverages (P) Ltd. (2007 (8) TMI 12 - SUPREME COURT OF INDIA ). AO is directed to allow the benefit of taxes paid by the d .....

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The assessee has filed the above appeals against the common order of the ld. CIT(A)-III, Jaipur dated 18-12-2012 for the assessment year 2004-05 to 2008-09. In all the appeals the grounds are common except for additional ground on limitation in respect of A.Y. 2004-05, 2005-06 and 2006-07. For the sake of convenience, the grounds raised by the assessee for the assessment year 2004-05 are taken up for adjudication which are as under:- 1. The learned Income Tax Officer, TDS-2 (A .....

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the company and the distributor as principal to agent as against the actual relationship of principal to principal. The learned Commissioner of Income Tax (Appeals) has further erred both on facts and in law in upholding the action of the learned Assessing Officer. 1.2 The learned AO has erred both on facts and in law in passing an order u/s 201(1) and holding the assessee company to be in default in respect of non-deduction of tax amounting to ₹ 837,842/- u/s 194H on the diffe .....

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ner of Income Tax (Appeals) has further erred both on facts and in law in ignoring the information filed by the company to substantiate that distributor has already paid tax on the disputed amount. 2. The learned AO has erred both on facts and in law in applying the provisions of Section 194J of the Income Tax Act, 1961 to the transaction of roaming charges. The learned Commissioner of Income Tax (Appeals) has further erred both on facts and in law in upholding the action of the learn .....

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ct. The learned Commissioner of Income Tax (Appeals) has further erred both on facts and in law in upholding the action of the learned AO. 3. The learned AO has erred both on facts and in law in charging interest of ₹ 4,905,761/- u/s 201(1A) of the Act. The learned Commissioner of Income Tax (Appeals) has further erred both on facts and in upholding the action of the ld. AO 4. The learned AO has erred both on facts and in law in passing an order u/s 201(1) .....

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deration, the earlier decision of the coordinate Bench should be followed. 3. The ld. DR relied on the orders of the lower authorities but he could not controvert the arguments of the ld. AR regarding matter being covered by the order of the Coordinate Bench (supra). 4. We have heard the rival contentions and perused the materials available on record. We have gone through the earlier order of the Coordinate Bench in assessee's own case (in ITA No. 656/JP/2010 for the as .....

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ount on MRP has been fixed on prepaid card sold. The assessee has not transferred any income to the distributor but the distributor was allowed to avail the airtime to the extent of MRP price. In books of account, the assessee had credited these receipts on net basis. The finding on the case of Tata Tele Services is reproduced as under:- 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 .....

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ee s case. Respectfully following the same we hold that:- a. The relationship between assessee and its distributors qua the sale of impugned products is on principal to principal basis; the consideration received by assessee is sale price simpliciter. b. There is no relationship of Principal and agent between assessee and distributors as held by authorities below their orders are reversed. c. Looking at the transaction being of Sale/Purchase and relationship bein .....

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wing the decision of Coordinate Bench in assessee's own case for the assessment year 2009-10 (supra), we reverse the order of the ld. CIT(A) and allow the appeal of the assessee relating to Ground No. 1 to 1.2. 6. Now we take up Ground No. 1.3 of the assessee regarding demanding the tax of ₹ 8,37,842/- which is already subjected to tax in the hands of the distributor. 7. We have already held while deciding Ground No. 1 to 1.2 that the margin paid to the distribut .....

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rification . However, the ld. AR has not pointed out as to how the said direction causes prejudice to the assessee. Hence, we find no reason to interfere with the findings of the ld. CIT(A) on this issue. 8. Now we take up the Ground No. 2 and 2.1 of the assessee against confirming the addition u/s 194J of the Act for not deducting tax on roaming charges paid by the assessee to other telecom operators. 9. The ld. AR contended that Ground No. 2 and 2.1 in all the appeals are .....

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nch in assessee's own case (in ITA No. 656/JP/2010 for the assessment year 2009-10.) and observed that this issue has already been dealt with by the Coordinate Bench by allowing these grounds vide para 11 of its order as under:- 11. We have heard the rival contentions of both the parties and perused the material available on the record. After going through the order of the Assessing Officer, ld CIT(A); submissions of the assessee as well as going through the process of providing r .....

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tion are require human intervention but after completing this process mere interconnection between the operators is automatic and does not require any human intervention. The term Inter Connecting User Charges (IUC) also signifies charges for connecting two entities. The Coordinate Bench also considered the Hon'ble Supreme Court decision in the case of Bharti Cellular Ltd. in the case of i-GATE Computer System Ltd. and held that Data Link transfer does not require any human interv .....

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rder of the ld CIT(A) and assessee s appeal is allowed on this ground also. 12. In the light of the above, respectfully following the decision of Coordinate Bench in assessee's own case for the assessment year 2009-10 (supra), we reverse the order of the ld. CIT(A) and allow the appeal of the assessee relating to Ground No. 2 and 2.1. 13. Ground No. 3 of the assessee is regarding charging of interest of ₹ 49,05,761/- u/s 201(1A). We have already held in deciding .....

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os. 252 to 256/JP/2013). 15. Ground No. 4 of the assessee is specific to A.Y. 2004-05 to 2006- 07 and pertains to orders passed by the AO being barred by limitation and upholding the same by the ld. CIT(A) for the financial years 2003-04 to 2005-06. 16. The assessee has taken up this ground before the ld. CIT(A) but without any success. The ld. CIT(A) has given his findings at para 5.2 on pages 14 to 16 of his order which is reproduced as under:- 5.2 I have duly .....

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for a F.Y. commencing on or before 01-04- 2007 may be passed at any time on or before 31-04-2011. Memorandum explaining the provisions of the Finance Bill 2009 also states that to provide sufficient time for pending cases, time limit has been extended upto 31-03-2011. In the instant case, the proceedings for F.Y. 2003-04 to 2005-06 were initiated on 25-11- 2008 and were pending before the amendment made by Finance Act 2009. Hence, all these proceedings were allowed to be completed by 31-03-2011 .....

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2010 and 22-02-2011. The decision of Special Bench, Mumbai in the case of Mahindra and Mahindra Ltd. was delivered on 09-04-2009 i.e. before the amendment brought by Finance Act 2009. Since the amendment prescribed the specific limitation for order u/s 201(1), the Tribunal s decision is no more applicable. Similarly, the other decisions relied upon by the ld. AR were delivered without considering the amendment made in Section 201 of the Act by Finance Act 2009. Hence, the same are no .....

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However, at the same time, Section 201(3) talks about time limit for completion of proceedings and is silent about the initiation of the proceedings. As far as initiation of proceeding, the ld. AR relied on the decision of Hon'ble Delhi High Court in the case of NHK Japan Broadcasting Corporation 305 ITR 137 and has drawn a specific reference to para 19 to 21 and 25 of its order which is reproduced as under:- 19. Even though the period of three years would be a reasonable period a .....

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g the proceedings must be the same, if not less. Nevertheless, the Tribunal has given a grater period for commencement or initiation of proceedings. 21. We are not inclined to disturb the time limit of four years prescribed by the Tribunal and are of the view that in terms of the decision of Supreme Court in Bhatinda Dist. Coop. Mil P. Union Ltd. (supra) action must be initiated by the competent authority under the IT Act, where no limitation is prescribed as in s. 201 of t .....

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is a vicarious liability and, therefore, he cannot be put in situation which would prejudice him to such an extent that the liability would remain hanging on his head for all times to come in the event the IT department decides not to take any action to recover the tax either by passing an order u/s 201 of the Act on through making an assessment of income of the deductee. [Emphasis supplied] 18. We have heard the rival contentions and perused the material available on reco .....

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r:- No order shall be made under sub-section (1) deeming a provision to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of :- (i) two years from the end of the financial year in which the statement is filed in a case where the statement referred in Section 200 has been filed; (ii) four years from the end of the financial year in which payment is made or credit is give i .....

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Section 201(3) read with proviso were introduced by Finance Act, 2009 w.e.f. 01-04-2010. At that point in time, the subject proceeding had already been initiated (by issuance of show cause notice dated 25-11-2008) and were pending for completion. Thereafter, the proceedings were completed by passing an order on 24-03-2011, well before the due date as prescribed in the proviso to section 201(3) i.e, before 31-03-2011. In light of that, proviso to Section 201(3) is clearly applicable in the insta .....

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ew reference to the decision of Hon'ble Delhi High Court in the case of NHK Japan Broadcasting Corporation 305 ITR 137 which provides that proceedings must be initiated within four financial year from the end of the relevant financial years and submitted that the principles laid down by Hon'ble Delhi High Court should be applied in the instant case. 21. In this regard, it is be noted that legislature has brought in specific limitation provision for the first time in Section 20 .....

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on of proceedings. Secondly, the legislature in its wisdom has decided not to prescribe a specific time limit for initiation and has only provided for period of completion of proceedings. The same is thus inbuilt in the overall period of limitation as prescribed. In view of that, in context of Section 201(3), two years from the end of the financial year, in a case where the statement referred in Section 200 has been filed, would be the reasonable period for initiation and completion of proceedin .....

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o provide sufficient time for pending cases, time limit has been extended upto 31-03-2011. In our view, the legislature has carved out an exception for such pending cases of the relevant financial years and the said time limit cannot be curtailed as the same will result in making the proviso infructuous. In our view, applying the principle of harmonious construction, where the proceedings have already been initiated for any financial year commencing on or before April 1, 2007 and the same was pe .....

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