TaxTMI 
TaxTMI 
TaxTMI 
2015 (6) TMI 521
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....ised by the revenue- "1.The order of the Learned CIT is opposed to the law and the facts of the case. 2.The learned CIT(A) erred in concluding that the transactions conducted with the franchisees constitute sale of goods on a principal to principal basis owing to collection of consideration in advance at the time of transferring the recharge/top up cards. The learned CIT(A) ought to have appreciated that there is no sale of goods as no sale invoice is raised in the name of the franchisees, delivery of cards is made through the delivery challan only and no VAT is paid by the assessee on transfer of cards to the franchisees. 3.The learned CIT(A) ought to have relied on the decision of the Hon'ble Kerala High Court in the case of M/s. BPL....
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....he Hon'ble Kolkata Tribunal in the case of Bharati Cellular Limited (2007) 108 TTJ 38 and the Kochin Tribunal in the case of Vodafone Essar Cellular Limited Vs. ACIT in ITA os. 106 to 113/Coch/2009 to hold that the discount allowed to the franchisees is in the nature of commission liable for u/s. 194H of the LT. Act. 7...... " Supporting the order passed by the learned Commissioner of Income-tax(Appeals), assessee has filed cross-objection by raising the following grounds "1. The Hon'ble Commissioner of Income Tax (Appeals) Thirupathi has correctly interpreted the law and facts involved in the case, and held that the transactions relating to Franchisee top up card sales as transfer of property in the pre-paid cards and allowed the ....
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....201(1A) get attracted. In this regard, he observed that the nomenclature adopted by the BSNL in the agreement would not decide the relationship between the BSNL and the franchisees and the nature of the transaction has to be taken into consideration. He also observed that it is not the card that is sold to the customer but the code number embedded in the recharge coupon which is sold and only when the code number gets activated, the ultimate customer is entitled for discounted talk time for spec period. He, therefore, assumed that the consideration paid by the ultimate customer is for the services rendered by the BSNL, which would make it clear that the franchisees are only the agents between the BSNL and the customers. Therefore, it is not....
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....A) examined the facts placed before him and came to the conclusion that the transaction between the parties is on principal to principal basis and therefore, the concession given to the franchisees cannot be treated as commission, but trade discount. In this regard, he observed as under- "9. The facts gathered by the ITO (TOS-2), Tirupati in his order u/s 201 (1) & 201 (1A) and the arguments relied upon by him have been carefully analyzed and compared with rival submissions, back ground, the relationship emphasized by the appellant and the case laws relied upon have been examined. The ITO (TOS-2), Tirupati has rejected the change in the method of recognizing the revenue followed by the appellant. Even though, the reasons and circumstances ....
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....scount to be given by franchiseee to subfranchisee/ Retailer will be decided." 10. As can be seen from the above, it is very clearly mentioned that the franchisee will be allowed discount on recharge coupons. It is also clear from the copy of the invoice filed and relied upon by the appellant that the franchisee has not only placed an indent for supply and delivery of the prepaid cards of different ations but he has also paid the total cost of such cards by means of an account payee demand drafts. This clearly expounds that the franchisee has made the payment for the cards he is indenting which clearly establishes that the property, risk and rewards have been transferred to the franchisee. On these two counts, the ITO loses his case and t....
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....ory in nature by the Hon'ble Punjab and Haryana High Court in the case of CIT V/s. Bharat Sanchar Nigam Ltd. (265 CTR 212). Having regard to the circumstances of the case, I notice that the assessee being public sector undertaking stands on a different footing and the view taken in the case of Idea Cellular (supra) cannot be applied, since the relationship between the BSNL and the franchisee stands on a different footing and the same was recognised by the CBDT. In fact, the decision of Hon'ble Delhi High Court and other High courts, on this point were considered by Hon'ble Karnataka High Court in the case Bharti Airtel Ltd. V/s. Dy. CIT and others (372 ITR 33) while holding that Section 194H is not applicable . Since no jurisdic....