TaxTMI 
TaxTMI 
2013 (5) TMI 327
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.... During the survey in the case of M/s. Vodafone Essar Ltd., it is seen that they were offering mobile cellular service to their customers under both prepaid categories as well as post paid services. In the course of survey it was found that in the case of postpaid services, the initial sale of SIM cards is done through a network of distributors acting as agents of the telecom companies and for each SIM-card sold (subscriber added), a certain amount around Rs.400-500/- per connection is paid to the distributor as commission. Further during the survey, on examination of the accounts, it was found that TDS is paid on this amount of discount paid for postpaid connection u/s.194H. The survey revealed that the modus operandi in the case of prepaid SIM cards was very much the same, in the sense that prepaid SIM cards and recharge vouchers were again sold through the network of distributors and agents who remit the sale proceeds back to the telecom companies, after retaining an amount of approximately 3-4% which is termed as "discount" in the industry. This "discount" represents the income of the distributor on account of the services provided for the sale of SIM-cards and re-charge v....
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....real sense commission paid to the distributors indirectly and the same is covered u/s.194H of the Income Tax Act, 1961. However, in the case of Vodafone Essar Gujarat Ltd for A.Y. 2005-06 TDS has not been deducted on such payments made to distributors/agents. Consequently, the entire expenditure claimed by the assessee in his books needs to be disallowed u/s. 40(a)(ia) of the Act. The assessee has neither disclosed this fact nor filed any details in respect of the fact that the TDS has not been deducted on such expenditure during the assessment/reassessment proceedings. Therefore, the assessee has not made full and true disclosure of all material facts necessary for his assessment. Non-deduction of TDS on roaming charges: During the course of survey, it is also seen that the assessee was not deducting TDS on roaming charges. The charges paid on account of roaming charges are similar to the interconnectivity charges, in the sense that these charges are paid for making use of the network of another operator whose services are utilised for connecting the call. In the present survey, it was seen that TDS was being deducted by the assessee on interconnectivity charges but not T....
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.... was made in the assessment so framed. Reopening of the assessment therefore, was not permissible that too beyond a period of four years from the end of relevant assessment year. 6. On the other hand, learned counsel Ms Paurami Seth for the Revenue opposed the petition contending that after recording proper reasons, the Assessing Officer had issued the notice. The petitioner had though supplied the details of those dealers who received the commission in excess of Rs. 50 lakhs, the details regarding other dealers who may have received such payments below Rs.50 lakhs was not supplied. According to the counsel, this would be the failure on part of the petitioner to disclose true and full facts. 7. Having thus heard learned counsel for the parties, to our mind, issues are quite clear. As noted, notice for reopening was based on two reasons. First was that according to the Assessing Officer, the petitioner having given discount to various dealers on prepaid SIM-cards and recharge vouchers, the petitioner had the liability to deduct the tax at source. Since discount was in the nature of commission, he relied on certain case laws in this aspect. Second reason was that like-wise thou....
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....veyed as under: "7) the details are as per the annexure attached" 10. Such details were also attached along with letter dated 8.11.2007. Since such details run into several pages, it would be too cumbersome for us to reproduce the same in this order. Suffice it to note that the petitioner provided the details of large number of such service providers and instances of payment of roaming charges for different telecom circles totalling to Rs.34.10 crores (rounded off) towards roaming revenue and Rs. 29.54 crores (rounded off) towards roaming expenses. 11. From the above, it becomes abundantly clear that on both the issues, the Assessing Officer now proposed to reopen the assessment beyond a period of four years from the end of relevant assessment year, there was full and true disclosure on part of the petitioner. With respect to the first issue of discount/commission, the Assessing Officer called for the details of such payments in excess of Rs. 50 lakhs. Such details were promptly provided. No further questions arose from the Assessing Officer in this regard. Like-wise, during the assessment, the Assessing Officer also called upon the petitioner to supply full details of the ro....
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....rity what inferences, whether of facts or law, should be drawn. It is not necessary to list the long line of decisions along this line. We may however, refer a recent decision of Division Bench in case of GVK Gautami Power Ltd. v. Asstt. CIT, wherein referring to large number of authorities on the question of reopening the assessment, Division Bench culled out various principles, relevant of which read as under : "(xiv) The words failure to disclose fully and truly all material facts necessary for his assessment, in the first proviso to Section 147, postulate a duty on every assessee to disclose fully and truly all material facts necessary for his assessment. Calcutta Discount Co. Ltd. [1961] 41 ITR 191 (SC). (xv) Every disclosure is not, and cannot be treated to be, a true and full disclosure. A disclosure may be false or true. It may be a full disclosure or it may not. A partial disclosure may very often be misleading. What is required is a full and true disclosure of all material facts necessary for making assessment for that year. Sri Krishna Pvt. Ltd. [1996] 221 ITR 538 (SC) (xvii) The expression "material facts" refers only to primary facts which the assessee is duty....