2016 (4) TMI 1381 - AT - Income Tax

Tribunal rules in favor of assessee, dismissing Revenue's appeals. Relationship deemed principal-to-principal, not subject to TDS.

ACIT (TDS), Jaipur Versus M/s Bharti Hexacom

The Tribunal dismissed all four appeals by the Revenue, upholding the decisions in favor of the assessee. The Tribunal found that the relationship between ... TDS u/s 194H - commission payment to various distributors - relation between assessee and distributor is that of principal to agent - HELD THAT:- As decided in own case [2015 (7) TMI 175 - ITAT JAIPUR] the relationship between assessee and its distributors qua the sale of impugned products is on principal to principal basis, the consideration received by assessee is sale price simpliciter. There is no relationship of Principal and agent between assessee and distributors as held by authorities below their orders are reversed. Looking at the transaction being of sale/purchase and relationship being of principal to principal the discount does not amount to commission in terms of sec. 194H, the same is not applicable to these transactions. Therefore, assessee cannot be held in default, impugned demand raised applying sec, 194H is quashed. Assessee’s grounds are allowed TDS u/s 194J on roaming charges paid for facilities provided by service provider - HELD THAT:- This issue squarely covered in favour of the assessee by the decision of the Co-ordinate Bench in assessee’s own case pertaining to the assessment year 2009-10 [2015 (7) TMI 175 - ITAT JAIPUR] these charges are not fees for rendering any technical services as envisaged in section 194J of the Act. Therefore, we reverse the order of the ld CIT(A) and assessee’s appeal is allowed on this ground also Issues involved:1. Whether the assessee is liable to deduct TDS u/s 194H of the Income Tax Act, 1961.2. Deletion of demand u/s 201(1) for non-deduction of TDS u/s 194H on commission payments.3. Applicability of TDS u/s 194J on roaming charges paid for facilities provided by a service provider.Comprehensive Analysis:Issue 1:The Tribunal considered whether the assessee should deduct TDS u/s 194H. The counsel for the assessee argued that a similar issue had been decided in the assessee's favor in previous years. The CIT DR contended that the transaction was between Principal to Agent, making section 194H applicable. The Tribunal noted that similar grounds had been decided in the assessee's favor in earlier years by the Co-ordinate Bench. Referring to a specific case, the Tribunal held that the relationship between the assessee and its distributors was on a principal-to-principal basis, not as principal and agent. As no change in facts was pointed out, and no contrary judgment was presented, the Tribunal dismissed the revenue's grounds related to TDS u/s 194H.Issue 2:Regarding the deletion of demand u/s 201(1) for non-deduction of TDS u/s 194H on commission payments, the Tribunal relied on its previous decision in a similar case involving Tata Tele Services. The Tribunal reiterated that the relationship between the assessee and distributors was on a principal-to-principal basis, and the discount did not amount to commission under sec. 194H. As no contrary judgment was cited, the Tribunal dismissed the revenue's grounds on this issue.Issue 3:The Tribunal examined the applicability of TDS u/s 194J on roaming charges paid for services provided by a service provider. The counsel for the assessee argued that this issue had been decided in the assessee's favor in earlier years. The Tribunal referred to a Co-ordinate Bench decision that concluded the charges were not fees for technical services under section 194J. As no contrary binding precedent was presented by the Revenue, the Tribunal upheld the decision in favor of the assessee.In conclusion, all four appeals by the Revenue were dismissed by the Tribunal based on the above analyses and precedents cited in favor of the assessee.