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TMI Blog2018 (7) TMI 1852X X X X Extracts X X X X X X X X Extracts X X X X ..... s / retailers was made directly by the mobile companies to them through the assessee, and the companies issued debit/credit note to assessee in respect thereof and accordingly, the assessee passed entries in its books of account. Thus, there was no payment on part of assessee and provisions of section 194H are not applicable to mere entries of neutral effect recorded in the books of account, without there being any actual payment. Thus, the impugned addition deserves to be deleted. 1.2 That, the Ld. AO has further erred in ignoring the fact that any commission other than referred to in Ground of Appeal No. 1.1 above, was merely forwarded by assessee out of the commission received by him from the mobile companies on which TDS already stood made by the mobile companies and no further TDS could be made on the same amount. Thus, the impugned addition deserves to be deleted. 1.3 That, the Ld. CIT(A) as well as the Ld. AO has failed to consider the fact that the entire amount stood paid during the year itself and no amount remained payable as on the end of the year. Therefore, as per the settled law, provisions of section 40(a)(ia) do not apply to the present case. 2. On the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough sale of mobile connection through pre/post paid sim cards, for which incentive/Commission is payable to them. Since, the nature of industry is such that it is not possible for a wholesale dealer to reach individual customers in entire region on one to one basis, they are allowed to appoint retailers/sub distributors in their region and payment to them is made on the basis of total number of SIM cards/ recharge coupons sold by them. It is pertinent to note here that payment to be made to retailers/sub distributors is of the sole discretion of Telecom company and wholesale dealers like appellant are intermediaries and play no role except providing information about the quantity sold through such sub-dealer. In fact, dealer sends a list of all the retailers/sub distributors to telecom companies, who makes payment to them directly. In other words, appointment of retailers/sub distributors by dealers is merely for the sake of convenience and completely upon the terms and conditions decided by telecom companies as it is not possible for telecom companies to appoint retailers/sub distributors in interior villages and semi urban areas, on a large scale to cover and provide the telecom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. Once the payment in question was not made by the assessee and it was directly paid by the company and further the quantum and percentage of the said commission/discount was also in the full control of the company and not in the hands of the assessee, then merely because the assessee has passed the contra entry of the said amount would not bring the said transaction in the category of commission paid by the assessee so as to attract the provisions of section 194H. The Coordinate Bench of this Tribunal in the case of Chocopack Enterprises vs. ITO (supra) has considered an identical issue in para 9 as under :- "9. I have considered the rival submissions as well as relevant material available on record. The assessee's firm engaged in the business of distributorship of Idea recharge cards. The issue involved in case of theassessee is in respect of sale of recharge coupons and not the sale of sim cards. Therefore to the extent the issue of sale of sim cards by the service provider it is held by the Hon'ble Karnatka High Court in the case of Bharati Airtel Ltd. vs. CIT (supra) that the assessee is the service provider had no obligation to deduct TDS and accordingly when the serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir credit and other details, it would not be assessable to sales tax. In our opinion the High Court ought not to have finally determined the issue. In any event, the High Court erred in including the cost of the service in the value of the SIM card by relying on the aspects doctrine. That doctrine merely deals with legislative competence. As has been succinctly stated in Federation of Hotel and Restaurant Association of India v. Union of India [1989] 3 SCC 634- "subjects which in one aspect and for one purpose fall within the power of a particular Legislature may in another aspect and for another purpose fall within another legislative power. They might be overlapping ; but the overlapping must be in law. The same transaction may involve two or more taxable events in its different aspects. But the fact that there is overlapping does not detract from the distinctiveness of the aspects". No one denies the legislative competence of the States to levy sales tax on sales provided that the necessary concomitants of a sale are present in the transaction and the sale is distinctly discernible in the transaction." Therefore, as the issue of sale of sim cards is concerned the Hon'ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for paying the said commission and therefore, the provisions of section 194H are not attracted against the distributor. Accordingly, when the assessee is not directly and indirectly in deciding the quantum of alleged commission/discount as well as determining the retail price at which the recharge coupons is sold to the customer then the provisions of section 194H cannot be applied on the assessee. Consequently disallowance made by the AO u/s 40 (a)(ia) is deleted." Thus the Coordinate Bench has followed the decision of Hon'ble Supreme Court in the case of Bharat Sanchar Nigam Ltd. vs. Union of India, 282 ITR 273 (SC). It is pertinent to note that the issue in case of Bharat Sanchar Nigam Ltd. vs. UOI (supra) as well as in the cases which are relied upon by the ld. CIT (A) was regarding the nature of the payment made by the operating companies whether it was commission or discount allowed by the Cellular/Mobile operators. Therefore, even otherwise the decisions on those cases are not directly applicable in the case of the assessee where the assessee is a distributor and an intermediatory between the Cellular/Mobile operator and the retailers. Following the decision of the Coordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled, rather the assessee has offered excess commission of Rs. 7,531/-. The ld. AR has thus submitted these details have not considered by the authorities below and therefore, the same may be remitted to the record of the AO for verification of the reconciliation of the differences. 8. On the other hand, the ld. DR has relied upon the orders of the authorities below and submitted that despite sufficient opportunities given by the AO as well as ld. CIT(A) the assessee has not reconciled and explained the difference of more than Rs. 10 lacs in the commission credited in the profit and loss account and actual amount received by the assessee as per the information received from the mobile operating companies. 9. We have considered the rival submissions as well as relevant material on record. Though there is a difference of more than Rs. 10 lacs in the commission receipt credited in the profit and loss account and commission payment shown by the mobile/cellular operating companies. As pointed out by the AO the discrepancy in the amount could not be reconciled properly by the assessee, therefore, the addition was made by the AO. Now we find that the assessee has explained the differenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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