TMI Blog2018 (6) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... enue - ITA No. 1204 &1302/Kol/2016, ITA No.2490/Kol/2016 & ITA No.22/Kol/2017 - - - Dated:- 31-5-2018 - Shri S. S. Godara, Judicial Member And Dr. A. L. Saini, Accountant Member By Assessee : Mrs. Somdipta Basu, Staff of Company By Revenue : Md Usman, CIT-DR S. Dasgupta, Addl. CIT-DR ORDER Per S.S.Godara, Judicial Member The assessee and Revenue have filed their respective cross-appeals in assessment years in former AY 2012-13 against Commissioner of Income-tax (Appeals)-24, Kolkata s order dated 17.03.2016 in case No.1534, 882, 1275/CIT(A)24/Kol/2012-13 13-14 (taken up together) and dated 31.10.2016 in appeal No.1590/CIT(A) 24/Kol/2015-16 in latter AY 2013-14; respectively involving proceedings u/s 201(1)/201(1A) of the Income Tax Act, 1961; in short the Act . 2. We proceed assessment year-wise for the sake of convenience and brevity. Former assessment year 2012-13 involves assessee s and Revenue s cross-appeal ITA No.1204 1302/Kol/2016. The taxpayer s appeal s sole substantive issue pleads that both the lower authorities have erred in law as well as on facts is treating it to be an assessee in default u/s 201(1) and 201(1A) of the Act on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant is that the distributors are not its agents, that the distributors are not being paid commissions by the appellant and that the distributors are acting as independent business partners. The appellant has relied on various judicial decisions on the point of above said liability determined by the A.O. 5.1 The issue is covered in favour of Revenue by the following decisions of the High Courts:- a) Vodafone Essar Cellular V. ACIT (2010) 7 Taxman (Ker). b) Bharati Cellular Ltd. V. ACIT(2013) 354 ITR 507 (Cal.)(HC) 5.2 Though conflicting decisions are there on the issue I am following the above decisions of the Hon'ble High Court of Calcutta and of Kerala as these two decisions according to me correctly define the relations between the appellant and its distributors and the payments involved. According to the above decision of the Kerala High Court, the discounts given to the distributors at the time of sale of SIM Card or Recharge coupons is nothing but commission on which tax is deductible. The test to be applied has been held as one to see whether or not assessee appellant has made any payment and whether it was for services rendered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of LPB which has after following the decision of Jagran Prakashan Ltd. (supra), categorically held as under: The onus is on the revenue to demonstrate that the taxes have not been recovered from the person who had the primarily liability to pay tax, ands it is only when the primary liability is snot discharged that vicarious recovery liability can be invoked. Once all the details of the person to whom payments have been made are on record, it is for the Assessing Officer, who has all the powers to requisition the information from such payers and from the income-tax authorities, to ascertain whether or not taxes have been paid by the persons in receipt of the amounts from which taxes have not been withheld. As a result of the judgment of Hon'ble Allahabad High Court in Jagran Prakashan Ltd. case, there is a paradigm shift in the manner in which recovery provisions u/s.201 (1) can be invoked. As observed by Their Lordships, the provisions of section 201(1) cannot be invoked and the tax deductor cannot be treated an assessee in default till it is found that assessee has also failed to pay such tax directly. Once this finding about the non-payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actually paid by the appellant deductor. The grounds are treated as partly allowed as above. 5. We have given our thoughtful consideration to rival pleadings qua the instant issue. The assessee vehemently contends that both the Assessing Officer and CIT(A) ought not to have treated it to be in default u/s. 201(1) and interest u/s. 201(1A) of the Act. We find that instant issue as to whether there is commission element embedded or not in sale of prepaid SIM cards /prepaid vouchers/recharge coupons is no more res integra in view of hon'ble jurisdictional high court s judgment in Bharti Cellular Ltd. vs. ACIT (2013) 354 ITR 507 (Cal). It is submitted from the taxpayer s side that various hon'ble high courts have also deleted the very kind of demand as well. We find no merit since all the relevant issues involved herein including that of principle to principle relationship stands adjudicated in hon ble jurisdictional high court against the assessee. We thus decline assessee s instant ground challenging correctness of the impugned demand. 6. The assessee s next plea is that the interest u/s. 201(1A) of the Act is not leviable in its case as well. Same is the Revenue s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds raised against holding roaming charges liable to TDS are as under:- 1. On the fact and circumstances of the case, it appears that the DCIT erred in treating the Appellant as an assessee in default u/s. 201(1) of the Act for non-deduction of tax u/s 194J of the Act on roaming charges paid to the OTOs 2. The DCIT failed to appreciate and ought to have held that: a. The aforesaid payments were made to the network operators for providing roaming facilities which were not subject to deduction of tax at source under any of the provisions of Chapter XVII of the Act. b. Payment for the use of standard facility does not amount to fees for technical services u/s. 9(1)(vii) LWS 194J of the Act. c. In absence of human intervention during the actual roaming process, amount paid cannot constitute fees for technical service u/s. 9(1)(vii) of the Act. d. Without prejudice, the payment is towards roaming facility, which is for the use of other telecom operator s network and not for the use of a earmarked equipment and therefore, falls outside the ambit of Section 194J read with Explanation 2(iv)(a) to Section 9(1)(vi) of the Act. The appellant pray ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see s roaming charges payments as royalty liable for TDS deduction. We find no substance in Revenue s instant grievance. It fails to rebut the CIT(A) s clinching finding of fact that the assessee had availed / used standard facilities only not amounting to royalty u/s. 9(1)(vi) of the Act. We quote hon'ble Delhi high court s judgment in Asia Satellite Telecommunications Co. Ltd vs. DIT 332 ITR 340 (Del) holding that mere use of an equipment not in assessee; s control without any right vested in it for using standard services does not amount to royalty u/s 9(1)(vi) of the Act as followed in co-ordinate bench s decision in Yahoo (India) Pvt. Ltd. in ITA 506/Mum/2008 decided on 24.06.2011. Learned Departmental Representative quotes retrospective amendment in Section (9)(1)(vi) inserting Explanation-4 with effect from 01.06.1976 by Finance Act, 2012 as well. This plea is also declined in view of hon'ble Bombay high court s judgment in CIT vs. N.G.C. Network Pvt. Ltd. in Tax Appeal No.397 of 2015 decided on 29.01.2018 concluding that above amendment cannot be held applicable retrospectively as per doctrine of impossible compliance. We therefore reject Revenue s latter substantiv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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