TaxTMI 
TaxTMI 
2017 (11) TMI 631
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....Act and deducted tax at source on the amounts paid to the distributor. However, as far as prepaid facility is concerned, assessee supplied kits/sim cards etc. through the network of distributors who, in turn, supplies it to the retailers/ultimate subscribers upon verifying the credentials of the subscribers. When the kit containing sim card, recharge coupons etc. are supplied to the distributor, assessee collects the sum in advance after deducting the commission. For example, a prepaid sim was to be sold to subscriber at Rs. 100/-, but, assessee may supply the same to the distributor at Rs. 75/- and the distributor, in turn, can supply to the retailers/subscribers, within the stipulated zone i.e., for an amount which should not exceed MRP. The difference of Rs. 25/-, in the given example, is treated as a commission paid to the distributor, on which, the TDS Officer sought to invoke the provisions of section 194H of the Act. The case of the assessee, on the other hand, was that the agreement between it and the distributor is on 'principal to principal' basis and, hence, discount given by the assessee to distributor cannot be equated to commission, so as to invoke provisions of secti....
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....he expenses, the relief sought for was not granted by the AO. 6. Aggrieved, assessee contended before the CIT(A) that the AO ought to have ascertained as to whether distributors have offered for tax the discount so availed and if it is found that they filed return of income, taxing the same income in the hands of the assessee amounts to double taxation. Reliance was placed on the decision of the Apex Court in the case of M/s Hindustan Coco Cola Beverages Pvt. Ltd.,(supra) wherein it was held that if the recipient has paid taxes, the department cannot recover shortfall of the basic tax deductible. It was also submitted that the assessee having provided PAN of the distributors, it has the machinery in place to verify the claim of the assessee rather than placing unreasonable burden on the assessee to prove that the recipients have offered the income to tax. According to the assessee, the judgment of the Apex Court has to be applied in the true spirit rather than expecting assessee to furnish, after a gap of so many years, the proceedings that took place in the hands of the distributors. 6.1 Ld. AR also relied upon the decision of Hon'ble High Court of Allahabad in the case of J....
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....05 5 2005-06 17 2006-07 52 2007-08 98 2008-09 388 2009-10 611 Verification of thousands of cases of deductees and to find out whether the payments made by appellant are offered to tax or not is almost an impossible task. It is extremely difficult for the AO to ascertain this information from different AOs having jurisdiction over the deductees spread across the state. The best course of action would have been, to deduct TDS at the time of credit/payment by appellant in the beginning itself. Such action would have prevented this voluminous task of verification, that too after lapse of several years. In this background, as per the provisions of section 201(1), the assessee shall not be deemed to be in default, if he furnishes certificate from an Accountant in a prescribed form i.e., Form No.26A in accordance with the rule 31ACB stating that the payments made by appellant are considered in arriving at profit by deductees and taxes were paid. Accordingly, the appellant is directed to furnish such certificates from the Accountant. The Assessing Officer is directed to give credit in all such cases and reduce the liability u/s.201(1) and 201....
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....he AO. Understanding the direction of the Hon'ble Supreme Court in a logical manner initial onus is upon the assessee to prove that deductees have filed returns and paid taxes on the amount which was offered as discount by the assessee to its distributors. In the instant case, assessee failed to comply with the directions given by the AO. Thus, the CIT(A) was not correct in taking cognizance of the amended provisions while giving a direction to the AO to verify as to whether amounts were paid by the deductees/distributors or not. It was also submitted that the assessee has merely furnished a soft copy of the general ledger of the distributors from which it cannot be assumed that deductees/distributors paid the taxes on this very amount. He, thus, strongly relied upon the orders passed by the AO. 11. Joining the issue, ld. Counsel for the assessee submitted that the assessee company furnished list of declarations of the distributors for the above AYs along with turnover and income tax returns filed by them on 11/01/2011, which is placed at page 80C of the paper book and, thus, the initial onus can be said to have been discharged by the assessee in the peculiar facts and circumsta....