TaxTMI 
TaxTMI 
TaxTMI 
2015 (6) TMI 448
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....r paying any income by way of commission to the distributors in relation to the distribution of pre-paid talk time and accordingly, there was no obligation on the appellant to deduct tax under the provisions of Section 194H of the Act. 1.2 The Ld. CIT(A) has grossly erred in law in not appreciating that the tax deduction provisions under chapter XVII B and section 194H of the Act in particular contemplate deduction of tax at the time of credit of income to the account of the payee or at the time of payment of such income, whichever is earlier, either of which was not present in the facts of the case. 1.3 The Ld. CIT(A) has erred in not appreciating that the relationship between the appellant and the prepaid distributors is that of a 'Principal and Principal' in the context of distribution of pre-paid talk time and merely relying upon the incorrect assumptions, allegations of Ld. A.O. who in turn relied upon irrelevant and extraneous considerations while omitting to consider relevant facts, considerations and correct legal position. 1.4 The Ld. CIT(A) has in the facts and circumstances of the case and in law, erred in not taking cognizance of the fact that wherever any pa....
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....f the principles of natural justice. 4. Without prejudice, the Ld. CIT(A) ought to have not upheld the appellant to be an 'assessee in default' to the extent of taxes that would have been paid by the payee on their own and ought not to have held that the appellant had failed to discharge its onus when addresses and PAN were duly made available within the time-frame allowed by the Ld. A.O. 5. Without prejudice, the Ld. CIT(A) erred in facts and in law in dismissing the ground of the appellant that no interest under section 201(1A) of the Act can be charged when the tax due has already been paid by the payee, without examining the circumstances and facts of the case. The appellant craves leave to add, alter, amend or withdraw any of the above grounds at or before the hearing of the appeal" 2. Only grounds No. 1.3, 2 and 4 of all the appeal has been pressed by the ld AR of the assessee. Remaining grounds were not pressed, therefore, the same are dismissed as not pressed. In other years also, the grounds are identical, therefore, we are not reproducing the same. 3. Ground No. 1.3 of the appeal is against not appreciating the relationship between the appellant and the pre p....
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....tted to your good self. It is also pointed out that agreement should be read in totality not on the basis of one or two para. From the entire reading of agreement, it is very much clear that transaction is between principle, hence provisions of section 194H is not applicable. 2. We have our products marketed through the distributor network under two categories postpaid products and prepaid products. Distributors dealing with products will not deal with prepaid products except for recharge coupons and are called our channel partner. But the distributors of prepaid products shall not deal with postpaid products the number of distributors of the prepaid products is far higher than the channel partners. In post paid category, channel partners acts on behalf of Rainbow in terms of creating a contract for supply of services, collects security deposits, renders outsourced value added services to mobile subscribers etc. thus the Channel partners are the agents of Assessee Company and the relationship is of Principal-Agent. The assessee company has deducted TDS in respect of amount of commission so paid to these distributors. In the case of prepaid products, the distributors are not permi....
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....idhyut Prasaran Nigam Ltd. 287 ITR 354 (Raj.) (iii) NHK, Japan Broadcasting Corporation Vs. DCIT 305 ITR 137 (Delhi). (iv) Manglore Refineries and Petrochemicals Vs. DCIT 113 ITD 85/311 ITR 91 (AT)(Mum). (v) CIT Vs. Eli Lilly and Company India Pvt. Ltd. & Ors. 312 ITR 225. (vi) Rajya Vidhyut Prasaran Nigam Ltd. 287 ITR 354 (Raj.) (vii) TRO Vs. Bharat Hotels Ltd. 28 DTR 27 (Bangalore). After considering the assessee's reply, the ld Assessing Officer held that the assessee has relationship with the distributor as Principal to Agent not Principal to Principal. He also analysed the terms and conditions mentioned in the agreement, which has been reproduced by him on page 8 of the assessment order. Finally he held as under:- 7. In view of the above the following inference is drawn: i. The essence of contract of agency, as distinguished from a contract of sale is that an agent after taking delivery of the property does not sell it as his own property but sells the same as the property of the principal and under his instructions and directions. In the instant case, the commodity involved is inextricably linked to a set of services which are identified and sold under a brand nam....
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....as an independent principal. The ld Assessing Officer calculated the TDS U/s 201 and interest U/s 201A of the Act as under:- Financial Year Tax Interest 2006-07 Rs. 63,815/- Rs. 1,80,796/- 2007-08 Rs. 2,96,332/- Rs. 10,06,087/- 2008-09 Rs. 1,56,513/- Rs. 7,14,184/-. 4. Being aggrieved by the order of the learned Assessing Officer, the assessee carried the matter before the learned CIT(A), who had confirmed the addition by observing as under:- "02.3 I have duly considered the submissions of the Ld. AR and the material available on record. The issue is squarely covered in favour of department by the following decisions of High Court and Tribunal:- 1. ACIT Vs. Bharti Cellular Ltd. (61 DTR 225) (Cal) 2. Vodafone Essar Cellular Ltd. Vs. ACIT (332 ITR 255) (Ker) 3. CIT Vs. Idea Cellular Ltd. (325 ITR 148) (Del) 4. ITO Vs. Vodafone Essar Cellular Ltd. (141 TTJ 461) (Chennai) In the aforesaid decisions, it was held that the essence of contract between the service provider and the distributor is service since the distributors are linking agents in the chain of delivery of services to the customers. The margin paid to distributors was commission payments and not d....
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.... to the retailers or customers directly. He further drawn our attention on audit report at page 25 that service rendered are recognized as service are rendered and are net of discount and service tax. Therefore, he prayed that the assessee was not paying any commission to the distributors and not liable to any TDS U/s 194H on prepaid services. 6. At the outset, the Ld. DR vehemently supported the order of the lower authorities and drawn our attention on audit report at page 16 in schedule 15. The assessee has shown dealers commission, advertisement and publicity expenses and sale promotion expenses, which shows that the assessee was paying the commission to the distributors. In rejoinder, the ld AR submitted that on this commission, the assessee has deducted TDS and paid to the government exchequer. 7. We have heard the rival contentions of both the parties and perused the material available on the record. It is undisputed fact that the assessee has been issuing bills after allowing the discount on MRP in net and charged service tax on it. There is no transfer of income from assessee to distributors but MRP is fixed on the prepaid services. At the time of sale, the distributors r....