AI Drafter 
TaxTMI 
TaxTMI 
2023 (5) TMI 1397
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....ing the action of the learned Assessing Officer. 1.1. The learned AO has erred both on facts and in law in treating the business relationship between the company and the distributor as principal to agent as against the actual relationship of principal to principal. The learned Commissioner of Income Tax (Appeals) has further erred both on facts and in law in upholding the action of the learned Assessing Officer. 1.2) The learned AO has erred both on facts and in law in passing an order u/s 201(1) and holding the assessee company to be in default in respect of non- deduction of tax amounting to Rs. 52,778,043/- u/s 194H on the difference between the distributor's price and sale price of the prepaid card alleging the difference to be in the nature of commission. The learned Commissioner of Income Tax (Appeals) has further erred both on facts and in law in upholding the action of the learned AO. 1.3) The learned CIT(A) has further erred both on facts and in law in following the decision of his predecessor while passing the order which was passed based upon reliance placed on Delhi High Court ruling in case of Idea Cellular Limited and Kerala High Court r....
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....accordingly, issued show cause notice to the assessee to explain as to why the assessee should not treat as assessee in default u/s 201(1) and 201(1A) of the Act due to the default of the assessee in deducting tax at source in respect of the said commission paid/allowed to the distributors/dealers. The assessee contested the said show cause notice issued by the AO and explained that the transactions of allowing the discount by the assessee to the dealers/distributors is between principal to principal and not between principal to agent. The AO did not accept this explanation and contention of the assessee and by following the judgments of Hon'ble Delhi High Court in case of CIT vs. Idea Cellular Ltd. 325 ITR 148 as well as other decisions of this tribunal held that the assessee was under the liability to deduct tax at source u/s 194H of the Act and accordingly assessee is liable to pay the tax u/s 201(1) as well as interest u/s 201(1A) of the Act being assessee in default. The assessee challenged this order passed by the AO u/s 201(1)/201(1A) of the Act before the ld. CIT(A) and submitted that the payments allowed by the assessee to the distributors/dealers is discount and not commi....
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....s issue by various High Courts therefore, the SLP's have been filed by the telecom services providers as well as by the department before the Hon'ble Supreme Court which are pending adjudication. He has given details of SLP's now pending before Hon'ble Supreme Court and submitted that the Hon'ble Supreme Court has stayed recovery of demand in respect of those cases where the SLP's are pending before the Hon'ble Supreme Court. 4. The Ld. Counsel for the assessee has also filed ledger copy of the distributors in the books of the assessee and submitted that the transaction is recorded in the books of account of the assessee as discount allowed and not as commission paid to the distributors. He has submitted that though in case of M/s Idea Cellular Ltd. Vs. ITO the coordinate Bench of this Tribunal has decided this issue against the assessee however at that point of time when the said order was passed in the year 2014 only Delhi High Court judgment was available as a precedence whereas subsequently, there are three High Courts judgments in favour of the assessee/telecom service providers were passed wherein the issue has been decided in favour of the assessee by holding that the pay....
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....igh Courts. The Tribunal is bound by the judgment of jurisdictional High Court being binding precedents and therefore, in view of divergent views of different High Courts it is bound to be divergent view of the different benches of the Tribunal functioning under the different High Courts. In the absence of any judgment of the jurisdictional High Court, (Madhya Pradesh) this Bench has to take an independent view concurring with one of the two divergent views already taken by various Benches of this Tribunal as well as by the Hon'ble High Courts. It is also matter of record that the dispute is finally taken to the Hon'ble Supreme Court and various SLP's are pending for adjudication before the Hon'ble Supreme Court the details which are as under: i. VODAFONE ESSAR CELLULAR LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX, COCHIN Civil Appeal 40677/2010 ii. COMMISSIOENR OF INCOME TAX (TDS) VS. M/S BHARTI HEXACOM LTD. Civil Appeal Number 13836/2018. iii. COMMISSIONER OF INCOME TAX (TDS) JAIPUR vs. M/S BHARTI HEXACOM LTD. Civil Appeal Number 15192/2018 iv. COMMISSIONER OF INCOME TAX (TDS) JAIPUR vs. M/S IDEA CELLULAR LIMITED Civil Appeal Number 25484/2018....
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....uant to the judgment of Hon'ble Delhi High Court only precedent at that point of time therefore, Ld. CIT(A) has not considered the contrary view taken by other High Courts while the passing the impugned order. In fact the terms and conditions of the agreement between the assessee and distributors/dealers as well as treatment of the transactions in the books of the assessee are essential consideration for determining the nature of transaction have not been taken into account either by the AO or by the Ld. CIT(A). Hence in the facts and circumstances of the case as discussed above and in the interest of justice, we are of the considered view that matter requires a proper verification/ examined and fresh adjudication at the level of the AO after considering terms and conditions of the agreement between assessee and distributors/dealers as well as the treatment of these transactions in the books of the assessee. Accordingly the impugned order is set aside and the matter is remanded to the record of the AO for fresh adjudication after proper verification and examination of the agreement between the assessee and distributors/dealers as well as entries in the books of account reflecting t....