TMI Blog2017 (2) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... me of sale, on the other hand, the face value of the recharge coupon was credited to the sales account and the cash receipts was debited to the cash account. The discount offered was debited to the discount account. When purchasing the SIM cards and recharge coupons from BSNL, the assessee had to deposit the money in advance. Undisputed, it is to customers directly and to petty shopkeepers, that the SIM cards and recharge coupons were sold in cash. The customers and shopkeepers were offered discount on the face value of the SIM cards. Apropos the recharge coupons, on the other hand, a small margin was kept by the assessee out of the commission/discount offered by BSNL. Then, activation charges were given by BSNL to the assessee on new connections, and a major portion thereof was given to the customers as discount. As discussed, it was on the basis of the mistaken presumption of existence of relationship of principal and agent, that the discount offered by the assessee to its customers was considered by the Assessing Officer as commission. This, however, is not so, to reiterate it was only discounts offered to the customers, on a principal to principal basis, on which, no TDS w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The Ld.AR at the outset submitted that the point at issue is covered in favour of the assessee by virtue of the order dated 22.02.2013 passed by the ITAT in the case of assessee Others in ITA No.3522/Del/2011 pertaining to 2008-09 AY. Copy of the said order was filed in the Court. Attention was invited to para 5 of the impugned order where cognizance of this fact has been taken note of and the conclusion of the CIT(A) in the last page of her order it was submitted also makes a reference to the very same facts as considered by the ITAT. 3. Ld.Sr.DR who already had been provided a copy of the said order by the Ld.AR prior to the date of hearing fairly submitted that there is no change in the facts and circumstances of the case and the point at issue is covered. No contrary decision or argument was relied upon by the Ld.Sr.DR in order to canvass a contrary view. 4. The facts of the case are that the assessee in the year under consideration as in the earlier years continued to be engaged in the business of sim cards and rechargeable coupons besides being engaged in wholesale trading of medicines. The AO accepted the results of wholesale trading in medicines after issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the ITAT. Convinced with the explanation offered on facts and position of law thereon the CIT(A) deleted the addition holding as under:- 6. I have considered both the view of AO and the appellant submitted before me. As per the Scope of marketing and distribution of the assessee in the agreement with BSNL, It shall provide services to walk -in Customers and also establish direct contact through its sales force, with prospective customers and register as many new BSNL Customers as possible subject to a minimum number. No dealer/sub -dealer has been appointed either by BSNL or by the appellant for marketing the products/services of BSNL. Therefore, the entire sales are to the customers may be direct customers or shop keeper who in turn render the services to the customer's .Further, the entire sales are in cash as evident from the daily collection reports (indicating the discount offered) furnished by the appellant. Regarding the disallowance made by the AO on the ground of non furnishing of evidence regarding the genuineness of expenses, it is seen that all the book of account and other vouchers and daily collection reports have been submitted before the AO. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no addition can be made on the basis of surmises, suspicious and conjectures. Reliance for this proposition is placed on 37 ITR 271(SC) Uma Charan Shaw Bros. Co. v.CIT and other decision 37 ITR 151(SC) Omar Salay Mohammad Sait v CIT 26 ITR 736 (SC) Dhirajlal Girdharilal v CIT, Bombay, 26 ITR 775 (SC) Dhakeshwari Cotton Mills ltd. V CIT, 37 ITR 288 (SC) Lal Chand Bhagat Ambica Ram v CIT, 91 ITR 8 (SC) CIT v Calcutta Discount Company Ltd. Further, this issue is covered by the this office order for A.Y. 2008-09. In view of the above, the addition is deleted and this ground of appeal is allowed. Regarding the disallowance made by the AO also on the ground of non deduction of TDS u/s 194H and disallowance U/S 40(a)(ia) of the I T Act 1961. This issue has already decided by the ITAT vide order dated 22-02- 2013, in assessee's own case in assessee's favour. In view of the above, the disallowance made by the AO under activation scheme and discount amounting to ₹ 39,52,845/- and ₹ 76,46,656/-totaling ₹ 1,15,99,501/- is hereby deleted and the grounds of appeals are' allowed. 6. The said finding is challenged by the Revenue. 7. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expense as commission in its Profit Loss Account; that therefore, even though the payments were covered u/s 194H of the IT Act, no TDS had been deducted thereon. It was on this basis that the Assessing Officer made the disallowance. The Ld.CIT(A) deleted the same. 17. The question is as to whether the Ld.CIT(A) correctly deleted the disallowance, holding that there was no principal to agent relationship between assessee and the customers. Now, undoubtedly, the commission in question was, in fact, Discount . It was only that there being no head of discount in ITR-4, the depiction was of commission in column No.23 of the Profits Loss Account. Thus, however, by itself does not lead to the conclusion that it was commission rather than discount . As per the agreement between the BSNL and the assessee:- The Franchisee shall provide BSNL services to walk-in-customers. It shall also establish, through its sale-force, direct contact with prospective customers and register as many new BSNL customers as possible subject to a minimum number fixed by BSNL. Franchisee shall also distribute all types of authorized telecom services for marketing to its Franchisees a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be commission, since it was deal on a principal to principal basis and there was no element of agency involved. No TDS was held to be done u/s 194H of the Act. 21. In Surndra Buildtech (supra), the assessee was in the real estate business. It received commission from builders for booking flats. Portion of such commission was paid to buyers of flats. It was held that this was like giving a discount to buyers and was not commission and so section 194H of the Act did not apply. 22. In Ahmedabad Stamp Vendors Association (supra) it was held by the Hon ble Gujarat High Court that where licensed stamp vendors take delivery of stamp papers on payment of full price less discount and they sell such stamp papers to retail customers, neither of the two activities, i.e, buying from the Government and selling to the customers, can be termed as service in course of buying and selling of goods; and that so the discount made available to the license stamp vendors was outside the expression commission or brokerage u/s 194H of the It Act and as such, no TDS is required to be made from the discount. 23. The SLP filed by the Department was dismissed by the Hon ble Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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