TaxTMI 
TaxTMI 
2013 (7) TMI 536
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....e-paid categories as well as post-paid services. In the course of survey, it was found that in the case of post-paid 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 post-paid connection under section 194H. The survey revealed that the modus operandi in the case of pre-paid sim cards was very much the same, in the sense that pre-paid 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 per cent. 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 recharge vouchers and the monies received by the telecom companies are net of such discount. Thus, the facts pertaining in this regard are pa....
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.... was in the real sense commission paid to the distributors indirectly and the same is covered under section 194H of the Income-tax Act, 1961. However, in the case of Vodafone Essar Gujarat Ltd. [2011] 332 ITR 255 (Ker) for the assessment year 2005-06 TDS has not been deducted on such payments made to the distributors/agents. Consequently, the entire expenditure claimed by the assessee in his books needs to be disallowed under section 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 w....
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....reopening under communication dated May 22, 2012, contending, inter alia, that the petitioner had disclosed truly and fully all material facts. Reopening, therefore, beyond four years was not permissible. The Assessing Officer, however, rejected the objections, vide his order dated November 16, 2012. Hence, this petition. Having heard learned counsel for the parties, we notice that the Assessing Officer had recorded three separate reasons for issuing the notice for reopening. First was that the petitioner had paid commission to various dealers on pre-paid sim cards and recharge vouchers without deducting tax at source. The second reason was that the petitioner had paid roaming charges to various telecom service providers without deducting tax at source. The third was that as per the amendment to section 115JB of the Act, vide Finance (No. 2) Act, 2009, with retrospective effect on April 1, 2001, Explanation (1) to the said section had been inserted. According to such statutory change, the book profit under section 115JB had to be reworked. To our mind, none of the reasons would permit the Assessing Officer to reopen the assessment beyond a period of four years. In the case of Ca....
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.... required is a full and true disclosure of all material facts necessary for making assessment for that year (Sri Krishna Pvt. Ltd. v. ITO [1996] 221 ITR 538 (SC)). (xvii) The expression 'material facts' refers only to primary facts which the assessee is duty bound to disclose. There is no duty cast on the assessee to indicate or draw the attention of the Income-tax Officer to the inferences which can be drawn from the primary facts disclosed (Calcutta Discount Co. Ltd. [1961] 41 ITR 191 (SC) and Associated Stone Industries (Kotah) Ltd. v. CIT [1997] 224 ITR 560 (SC)). (xviii) What facts are material, and necessary for assessment, will differ from case to case (Calcutta Discount Co. Ltd. [1961] 41 ITR 191 (SC)) . . . (xx) The assessee's obligation, to disclose all material facts necessary for his assessment fully and truly, is in the context of the two requirements-called conditions precedent-which must be satisfied before the Income-tax Officer gets jurisdiction to reopen the assessment under section 147/148. This obligation can neither be ignored nor watered down (Sri Krishna Pvt. Ltd. [1996] 221 ITR 538 (SC))." In the present case, with respect to requirement of deducting tax....
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....o received commission in excess of Rs. 50 lakhs. However, to our mind, this was not material. It is not even the case of the Assessing Officer that the requirement of deducting tax at source had any relevance to the payments in excess of Rs. 50 lakhs or below. With respect to the second reason, namely, of the payment of roaming charges to other telecom service providers, also in response to a query raised by the officer, the petitioner pointed out in communication dated August 14, 2008 as under : "The details of roaming charges as per annexure I" List annexure I to the said communication contained details of large number of such payments in the nature of roaming revenue and roaming expenses. The total of roaming revenue collected by the petitioner during the year under consideration came to 38.29 crores (rounded off). Correspondingly, the roaming charge expenses incurred by the assessee came to Rs.33.73 crores (rounded off). Thus, full details of such payments were readily available with the Assessing Officer during the original assessment itself. Surely, this cannot be stated to be the case of failure on part of the petitioner to disclose true and full facts. The third reason ....