TaxTMI 
TaxTMI 
TaxTMI 
2015 (5) TMI 508
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....peals) has erred in law and on facts/ in the holding the sum of Rs. 3,06,460/- paid by the appellant, though described the same to be Discounts/ Incentives was in the nature of commission so as to attract the provision of section 194H of the Income Tax Act. 2. That the ld CIT(Appeals) was not justified in law in making in disallowance of the sum of Rs. 3,06,460/- by applying the provisions of Section 40a(ia) of the Act on a/c of non-deduction of TDS therefrom and non payment the the same to the credit of Central Govt." 3. The effective grounds raised by the revenue is Ground No.1. Apropos deletion of addition of Rs. 15,84,800/- made by AO on account of discounts and incentives paid to its buyers by the assessee firm since the assessee was the distributor of post paid connections and not of pre-paid connection and the ground No.1 and 2 of C.O. in respect to addition of Rs. 3,06,460/- paid by the assessee described as discounts/ incentive was in the nature of commission so as to attract TDS and disallowance can be made u/s 40a(ia) of the Act for not deducting TDS. Both the issues being common are adjudicate together. 4. Brief facts of the case are that the assessee is a registered....
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....ributorship agreement) dated 28-03:-2007 so as to absolve itself from the liability of its distributors which have been discussed in the preceding paras. Therefore, the appellant firm's status in pre-paid agreement is not so, wherein the telecom company and the appellant firm are working on principal to principal basis and the appellant firm is distributor of the goods & services of the telecom company. Therefore, the expenses claimed by the appellant firm has no correlation with the condition imposed by the telecom company. It is observed that admittedly the Vodafone company deducted T.D.S u/s 194H of the Act on the payment of Rs. 16,15,873/- as the payments are in the nature of brokerage or commission paid to the assessee. Further the appellant in its written submissions has admitted the fact that the payments to the extent of Rs. 15,84,800/- were in the nature of 'commission', which were passed on to the dealers and retailers. It is observed that the details of total claim of total claim of Rs. 15,84,800/- are as under:- Rs.13,01,133/- is F.C.F.R incentive Rs.2,03,155/- is CIFFID Incentive and Rs. 80,152/- is DMS & Market expenses It is observed that while CIFF ....
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....rding direction given by the Telecom Company, copy of distribution/ contract, detail of commission/ compensation paid co-relating the discount/ incentive were not produced before him. And since the commission is given by the Telecom Company to the assessee firm is not against the discount or incentives but service rendered by the assessee under the post paid scheme. And since the Telecom Company have deducted tax at source on the commission under the post paid service, not the compensation in the mode of reimbursement against the discount/ incentive given by the assessee to the whole seller/ retailers. However after hearing the assessee, the ld CIT(A) in Page 11 of his impugned order opined that the assessee is distributor of pre-paid connections and not post-paid connection and the case laws relied upon by the AO are not applicable to the facts of the case since those cases relates to post-paid connection. Ld DR could not bring to our notice any other material which can aid us to take a different opinion on this factual aspect. 8. The question whether the assessee is dealing with post paid or prepaid is immaterial. In both post-paid and pre paid the assessee company or the distri....
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....on to any transaction relating to any assets, valuable article or thing. The assessee was engaged in the business of providing cellular telephone network though a card called subscriber identification module (SIM). Prepaid or post-paid connections were provided to the subscribers through distributes called pre-paid market associated (PMAs) appointed by the assessee. The assessee offered discount for the pre-paid calling services to its distributors. The Assessing Officer noted that under the agreement the distributors were required to store the SIM cards and recharge coupons in such a way as to clearly indicate all times that the pre-paid SIM cards/recharge coupons were owned by the assessee. They were not allowed to remove, obscure or delete any marks placed on the prepaid SIM cards/recharge coupons. The terms of the agreement further provided that without the written consent of the assessee the distributors (PMAs) shall not directly or indirectly: (i) market, solicit, sell, offer and accept offers for telephony services that competed with the assessee's telephony services; (ii) induce or refer any actual or prospective subscriber of the assessee's telephony services to subsc....
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....(a) activation of the SIM card by the assessee in the name of the consumer/ subscriber; (b) service provided by the assessee to the subscriber. Further, dealings between the subscriber and the assessee. The nature of service provided by the assessee to the ultimate consumers/subscribers, whether it was pre-paid or post-paid SIM card remained the same. The SIM cards were pre-paid which were sold by the assessee to the consumers through the medium of PMAs. In the case of post-paid SlM cards, the transaction is entered into directly between the assessee and the subscriber was sent a bill periodically depending upon the user of the SIM card for the period in question. In both the cases, the legal relationship was created between the subscriber and the assessee that too by entering into specific agreement between these two parties. Even if advance payment was made by the PMAs on receipt of the SIM cards, qua those SIM card it did not amount to "sale" of goods. The purpose was to ensure that the payment was received in respect of those SIM cards are to be returned to the assessee and the assessee was required to make payment against them. This was an antithesis of "sale". There could not....