TaxTMI 
TaxTMI 
2017 (2) TMI 275
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....s. 1,15,99,501/-) made by the AO on account of disallowance of discount and activation charges u/s 40(a) (ia ) of the Act, as it is clear from the profit and loss account that this discount/activation charges have not been given on sales but have been disbursed out of receipts received on account commission and activation charges, received from BSNL clearly covered under section 194H of the IT Act. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and facts in deleting the addition of Rs. 76,46,656/- and Rs. 39,52,845/- (totaling Rs. 1,15,99,501/-) made by the AO on account of disallowance of discount and activation charges u/s 40(a) (ia ) of the Act, as it is a case of collection of money from the customers for various services to be provided/already provided by the telecom operator and therefore, it is a clear cut case of payment of commission to an agent/ subagent for collection of money on behalf of/for telecom operator and therefore covered under the provisions of section 194H of the Act. 4. That the appellant craves for permission to add, delete or amend the ground of appeal before or at the time of hearing of appeal." 2. The Ld.AR at....
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..... 76,46,656/- in the profit and loss account respectively. In the course of assessment proceedings the assessee was time and again asked to furnish the details of name/ addresses/PANs of the retails to whom the assessee has paid activation scheme and discount amounting to Rs. 39,52,845/- and Rs. 76,46,656/- respectively. But assessee furnished the daily collection report in support of its contention. The daily collection report has been prepared by his own staff and its genuineness, as such, cannot be ascertained. Since the assessee has failed to give any reliable and sustainable evidence in support of his contention that he has actually parted with this money to this extent to various customers/retailers, the entire amount of Rs. 39,52,845/- and Rs. 76,46,656/-, totaling Rs. 1,15,99,501/- shown under the head "activation scheme and discount" respectively is added to the returned income of the assessee on account of non-production of any reliable ,a)id sustainable evidence in support of his contention." 5. The issue was carried by the assessee in appeal before the CIT(A) again placing reliance upon the aforesaid order of the ITAT. Convinced with the explanation offered on facts....
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....cepting the cash transactions as genuine could not be accepted as good and sufficient unless there was an obligation on the part of the assessee to keep a record of the addresses of the cash customers. It could not, therefore, be said that the failure on his part to maintain the addresses was a suspicious circumstance giving rise to a doubt about the genuineness of the transactions entered into by the assessee. Since, having regard to the nature of the transactions and the manner in which they had been effected, there was no necessity whatsoever for the assessee to have maintained the addresses of cash customers, the failure to maintain the same or to supply them as and when called for could not be regarded as a circumstance giving rise to a suspicion with regard to the genuineness of the transactions. The Tribunal, therefore, was not right, in setting aside the order of the AAC and restoring that of the ITO. There were no circumstances disclosed in the case nor was there any evidence or material on record which would justify the rejection of the book results. Further, it is settled law that no addition can be made on the basis of surmises, suspicious and conjectures. Reliance ....
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....uring the year, was an authorized franchisee of Bharat Sanchar Nigal Ltd. (i.e. BSNL) vide agreement dated 12.01.2007 (copy at pages 17-36 of the assessee's paper book-"APB for short)". Under the agreement, the assessee was to provide services to walk-in customers. It was to distribute all types of authorized telecom services. No dealer or sub-dealer was appointed. The discount/commission was allowed as per the agreement. This position remains undisputed. The retailers simply bought SIM cards/recharge coupons from the assessee at a discounted price. These were sold in the market with no specific obligation towards the distributor. 16. The Assessing Officer, however, concluded that the assessee was having the same relationship with the dealers/retailers, as the one of BSNL with the dealers/retailers; that it was a case of collection of money from the customers for various services to be provided/already provided by BSNL and, as such, it was in the nature of payment to an agent for collection of money on behalf of BSNL; that the assessee had shown the expense as 'commission' in its Profit & Loss Account; that therefore, even though the payments were covered u/s 194H of the IT Act, ....
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....to customers directly and to petty shopkeepers, that the SIM cards and recharge coupons were sold in cash. The customers and shopkeepers were offered discount on the face value of the SIM cards. Apropos the recharge coupons, on the other hand, a small margin was kept by the assessee out of the commission/discount offered by BSNL. Then, activation charges were given by BSNL to the assessee on new connections, and a major portion thereof was given to the customers as discount. 19. As discussed, it was on the basis of the mistaken presumption of existence of relationship of principal and agent, that the discount offered by the assessee to its customers was considered by the Assessing Officer as commission. This, however, is not so, to reiterate it was only discounts offered to the customers, on a principal to principal basis, on which, no TDS was either required to be made or was actually made. 20. In 'ITL Tours & Travels' (supra), where the assessee was taking airlines tickets, the discount given to intermediaries was held not to be commission, since it was deal on a principal to principal basis and there was no element of agency involved. No TDS was held to be done u/s 194H of t....