TaxTMI 
TaxTMI 
2022 (3) TMI 34
X X X X Extracts X X X X
X X X X Extracts X X X X
.... lies with the Company. 4. The expenditure of commission is not to be booked in the Profit and Loss account of the appellant but is was booked in the hands of the Aired Cellular Services Ltd. and therefore it is erroneous to disallow. 5. The appellant was only an Agent and commission was routed through him and he has not incurred the expenditure. Therefore the Commissioner of income Tax (Appeals) is wrong in disallowing the expenditure. 6. For the foregoing reasons and for the grounds that may be raised at the time of hearing the appellant humbly prays the Hon'ble Income Tax Appellate Tribunal to delete the entire addition as unjust and thus render justice." 3. Brief facts of the case are that the assessee is engaged in the business of distributor of M/s. Aircel Cellullar Services Ltd. SIM cards & recharge coupons filed his return of income for the assessment year 2011-12 on 24.09.2011 declaring total income of Rs. 18,05,510/-, which consists of income from business and loss from house property. The assessee is a distributor of SIM cards & recharge coupons of M/s. Aircel Cellular Services Ltd. The assessee purchases SIM cards & recharge coupons from Ai....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... To examine the above issues, the relevant portions of section 194H is analysed vis a viz with that of assessee. It is reproduced for the sake of immediate reference . [Commission or brokerage-. 194H. Any person, not being an individual or a Hindu undivided family, who is responsible for paying, on or after (he 1st day of June, 2001, to a resident, any income by way of commission (not being insurance commission referred to in section l94D or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of--[ten] per cent: Provided that no deduction shall be made under this section in a case where the amount of such income or. as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year to the account of or to, the payee, does not exceed ''[five thousand rupees] : [Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts -or turnover ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ase laws where in the Hon'ble High courts held that the nature of payments made to distributors of SIMI card and recharge coupons are in the nature of commission and subject to TDS u/s.194 of the IT Act." 5. Being aggrieved by assessment order, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee contended that commission passed on to dealers is not liable for TDS u/s.194H of the Income Tax Act, 1961, because there is no principal and agent relationship between the assessee and dealers. 6. The learned CIT(A) after considering relevant submissions of the assessee and also by relied upon decision of the ITAT., Chennai in the case of M/s.Cellular Mobile Telecom Services vs. ITO in ITA No.1560 & 1561/Mds/2011 dated 30.10.2012 sustained additions made by the Assessing Officer towards disallowance of commission u/s.40(a)(ia) of the Act for non-deduction of TDS u/s.194H of the Income Tax Act, 1961. The relevant findings of the learned CIT(A) are as under:- "6. The matter is considered. The default of the appellant is apparent Out of the tot amount of Rs. 1,83,86850/- the appellant himself has deducted tax on the payment to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that because of change of policy deduction TDS was not deducted. The amount paid on selling of recharge coupons was not commission but only a discount. This argument wes considered elaborately by the Learned CIT(Appeals) by considering various decisions of the High Courts and the Tribunal. The learned CIT(Appeals) accordingly confirmed the order passed by the Assessing Officer We are not able to agree with the submissions of the learned counsel for the assessee the amount paid to the dealers for the recharge coupons was to commission but only discount. It was not explained how the same payment in earlier year is commission and subsequent year it is discount. Further we are unable to agree with the submission of the learned counsel for the assessee that no income has been accrued to the assessee at the time of purchase of recharge coupons. Under very similar set of facts the Hon'bie Dcliii High; Cool lies considered the issue in the case of CIT Vs Idea Cellular Limited [2010] 325 ITR 148 and heId in the head note as under: "TDS - Under section 194H - Commission or discount to distruibutors of SIM cards/ recharge coupons - assessee a cellular operator provides prepaid connec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....shable in light of certain subsequent judgements of various courts and tribunals, including decision of the ITAT., Delhi in the case of Rakesh Kumar Vs CIT in ITA No.3386/Del/2014, where it was held that when the assessee has distributed SIM cards and recharge coupons to dealers on behalf of telecom service providers, then it cannot be said that there is agency relationship between the assessee and sub-dealers. Therefore, she argued that the assessee is not liable to deduct TDS u/s.194H of the Income Tax Act, 1961, and thus, expenses cannot be disallowed u/s.40(a)(ia) of the Income Tax Act, 1961. 8. The learned DR, on the other hand, submitted that the issue had been considered by the co-ordinate Bench of the ITAT., Chennai in the case of M/s.Cellular Mobile Telecom Services Vs. ITO (supra), where the issue had been considered and held that when the assessee offered discount to dealers for selling SIM cards and recharge coupons, which is in the nature of commission and it is subjected to TDS u/s.194H of the Income Tax Act, 1961. The learned CIT(A), after considering relevant facts has rightly confirmed additions made by the Assessing Officer and his order should be upheld. 9.....