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TMI Blog2019 (6) TMI 1477X X X X Extracts X X X X X X X X Extracts X X X X ..... elecom operatives and providing telecom services. The assessee company provides its services through the distributors by selling them starter packs and rechargeable coupons commonly known as Subscriber Identification Mobile Cards (SIM Card and Prepaid Card). These SIM cards and rechargeable coupons were purchased by distributors/franchisees appointed by the assessee at a rate below the market price and they were sold to the retailers who ultimately sold them to the customers. The Assessing Officer (AO), while going through the records, came to the conclusion that the assessee had paid commission on starter packs and rechargeable coupons to the franchisees and had deducted tax at source in earlier years, but after 2008 such deduction of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to consider, discuss and reject the following case laws while ruling against the assessee: * Hon'ble Karnataka High Court's common judgment in the case of Bharti Airtel Limited, Tata Teleservices Limited and Vodafone South Limited, reported as Bharti Airtel Limited vs. DCIT [(2015) 372 ITR 33 (Kar)] * CIT vs. Vegetable Products Ltd. [(1972) 88 ITR 192 (SC)] * Vodafone Essar Gujarat Limited vs. ACIT, TDS Circle, Ahmedabad- ITA No.386/Ahd/11 * Hindustan Coca Cola Beverages (P.) Ltd. (2007) 211 CTR (SC) 545: (2007) 293 ITR 226 (SC) * Jagran Prakashan Ltd. vs. Dy. CIT (2012) 73 DTR (All) 233: (2012) 251 CTR (All) 65 3. The appellant prays that the demand raised by the DCIT (TDS), Ahmedabad, amounting to Rs. 7,97,946/- (TDS u/s. 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission or brokerage under explanation (i) to Sec. 194H of the Act. It was submitted that the contention of the assessee that the relationship between the assessee and the distributors was on principal to principal basis was incorrect and in fact there was a principal to agent relationship as had been held by the Hon'ble High Court of Delhi in CIT vs. Idea Cellular Ltd. reported in 325 ITR 148 and the Hon'ble High Court of Kerala in the case of Vodafone Essar Cellular Ltd. vs. ACIT reported in 332 ITR 255. It was contended by the Ld. Sr. Departmental Representative that the demand had rightly created by the AO in this case. 5.0 We have heard the rival submissions and have also perused the relevant material on record. We find that the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l High Courts were materially the same as in this case, in conformity with the esteemed views of Hon'ble Karnataka High Court in Bharti Airtlel's case (supra), and hold as follows: (a) On the facts of the case, and as is evident from a reading of the agreements before us, the assessee has sold, by way of prepaid vouchers, e-top ups and prepaid SIM cards., the 'right to service' on principal to principal basis to its distributors. As evident from the terms and conditions for sale, placed at page 136 of the paper-book, not only that the sale was final and the assessee was not responsible for any post-delivery defects in the services, it was specifically agreed that "no request of refund of any money shall be entertained by VEGL (i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard by the assessee to the distributor does not arise. (e) In a situation in which the assessee has credited the sale proceeds at the transaction value (in contrast with the transaction being shown at face value and the difference between face value and the transaction value credited to the distributor), the tax deduction liability under section 194H does not arise. While learned counsel for the assessee has stated at the bar that the sale proceeds are credited at the transaction value, this aspect of the matter is to be verified by the Assessing Officer, and in case the sales is accounted for at the face value, to that extent, the tax withholding liability is to be sustained." 5.1 Accordingly, respectfully following the earlier order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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