TMI Blog2018 (7) TMI 1852X X X X Extracts X X X X X X X X Extracts X X X X ..... der reporting of commission by the assessee - difference of more than ₹ 10 lacs in the commission receipt credited in the profit and loss account and commission payment shown by the mobile/cellular operating companies - Held that:- Now we find that the assessee has explained the difference in the amount due to service tax reimbursement and commission directly paid to the retailer by the companies. The amount of commission as shown in show notice ₹ 55,73,370/- Excess commission shown by us ₹ 7,531/-. Since, these details and relevant recorded have not been examined by the AO, therefore, we remit this issue to the record of the Assessing officer for verification and considering the reconciliation furnished by the assessee. - Decided in favour of assessee for statistical purposes. - ITA No. 238/JP/2016 - - - Dated:- 19-7-2018 - SHRI VIJAY PAL RAO, JM SHRI BHAGCHAND, AM Assessee by : Shri Manish Agarwal (C.A.) Revenue by : Shri P.P. Meena (JCIT) ORDER PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 28.12.2015 of CIT (A), Jaipur for the assessment year 2011-12. The assessee has raised the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,27,298/-deserves to be deleted. 3. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in upholding the addition of ₹ 2,234/- being the difference of interest on Income Tax refund by completely ignoring that the actual interest received u/s 244A is of ₹ 7,200/- only whereas, the Ld. AO has held the same to be ₹ 9,434/- without any basis. Thus, the addition of ₹ 2,234/- deserves to be deleted. 4. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal. 2. The assessee is an individual and wholesale dealer of M/s Sistema Shyam Teleservices Pvt. Ltd. and Idea Cellular Ltd. The assessee is engaged in purchase and sale of mobile accessories, SIM Cards, Recharge coupons etc. During the course of assessment proceeding the AO noted that the assessee has not deducted tax at source on the commission paid to the retailer/sub-dealer to the tune of ₹ 28,00,946/-. In response the assessee submitted that the mobile service provider companies have already deducted TDS as per the provisions of Section 194H on behalf of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealers like assessee. It is pertinent to note here that payment to dealers is made by companies after deduction of tax at source on the whole amount payable to it which is inclusive of payment of retailers/sub-distributors of the region. He has relied upon the decision of the Coordinate Bench of this Tribunal in case of 13.10.2017 in case of M/s Chocopack Enterprises vs. ITO in ITA No. 821/JP/2016 as well as decision dated 24.05.2018 in case of Shri Virendra Kumar Jain vs. ITO in ITA No. 970/JP/2017. Thus, the ld. AR of the assessee has submitted that the issue is covered by the decision of the Coordinate Bench of this Tribunal. 4. On the other hand, the ld. DR has relied upon the orders of the authorities below and submitted that when the assessee is showing the entries of receipt and payment of the commission amount then it is obligatory on the assessee to deduct TDS U/s 194H of the Act failing which the provisions of Section 40(a)(ia) of the Act are applicable. 5. We have considered the rival submissions as well as relevant material on record. At the outset we note that the Coordinate Bench of this Tribunal in case of M/s Chocopack Enterprises vs. ITO (supra) has dealt w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar telephone instruments, SIM cards and other accessories and was also paying Central sales tax and sales tax under the Kerala General Sales Tax Act, 1963, as applicable. The question was one of the valuation of these goods. The State sales tax authorities had sought to include the activation charges in the cost of the SIM card. It is contended by Escotal that the activation was part of the service on which service tax was being paid and could not be included within the purview of the sale. The Kerala High Court also dealt with the case of BPL, a service provider. According to BPL, it did not sell cellular telephones. As far as SIM cards were concerned, it was submitted that they had no sale value. A SIM card merely represented a means of the access and identified the subscribers. This was part of the service of a telephone connection. The court rejected this submission finding that the SIM card was goods within the definition of the word in the State sales tax act. 86. It is not possible for this court to opine finally on the issue. What a SIM card represents is ultimately a question of fact as has been correctly submitted by the States. In determining the issue, however the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ider and assessee is only a distributor and intermediatetory, therefore, the tax liability for paying the commission, if any, is attracted u/s 194H only against the person responsible for paying the commission. In case in hand the assessee is not paying any commission to the retailers but this commission or so called discount is allowed and paid by the service provider. The assessee is an intermediatetory and only recording this transaction in the books of account for the purpose of completeness. Hence, when the assessee is neither competent nor responsible nor actually paying any commission to the retailer on sale of recharge coupons to the retailers then the obligation for deduct tax u/s 194 H is attracted only against the service provider and not against the assessee who is only a distributor and receiving its share of the commission/ margins provided by the service provider. The determination of sale price of recharge coupons is in the sole domain of the service provider and the assessee is no role in determining the retail price at which the retailer is selling the recharge coupons to the customer or end user of the service. Therefore, in the facts and circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen, the assessee is not required to deduct any TDS on the said amount directly paid by the company and only the accounting entries were carried out by the assessee. Therefore, following the decisions of the Coordinate Bench of this Tribunal we delete the disallowance made by the AO u/s 40(a)(ia) of the Act. 6. Ground No. 2 is regarding disallowance made on account of under reporting of commission by the assessee. The assessee has credited commission income of ₹ 45,46,072/-. The AO called the information from the mobile operating companies and as per the details provided by the companies the AO found the total commission received by the assessee during the year was ₹ 55,73,310/-. The AO accordingly asked the assessee to furnish the details of commission and copies of TDS certificate. The assessee filed a revised return showing the commission receipt at ₹ 52,25,514/-, however, there was no consequential change in the total income declared by the assessee as some of the entries were having neutral effect. Thus the assessee explained before the AO that the assessee has shown the net commission income without including the contra entries of receipt and payment to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... By companies for which intimation Received by us in June, 2011 ₹ 6,60,876/- Total ₹ 55,80,901/- The amount of commission as shown in show notice ₹ 55,73,370/- Excess commission shown by us ₹ 7,531/- Since, these details and relevant recorded have not been examined by the AO, therefore, we remit this issue to the record of the Assessing officer for verification and considering the reconciliation furnished by the assessee. The AO then decide the issue after giving appropriate opportunity of hearing to the assessee. 10. Ground No. 3 is regarding of addition on account of interest received U/s 244A of the Act. At the time hearing, the learned counsel for assessee stated at bar that the assessee does not press ground no. 3 and the same may be dismissed as not pressed. The ld. DR has raised no objections if ground No. 3 of the assessee s appeal is dismissed as not pressed. Accordingly the ground No. 3 of the assessee s appeal is dismissed being not pressed. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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