Harshit Sharma | Amity Law School, Madhya Pradesh | 14th February 2020
Commissioner of Income Tax (TDS), Pune V/s. M/s. Vodafone Cellular Limited ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1152 OF 2017
FACTS OF THE CASE
- In the present case, the Respondent Company sold the SIM cards / recharge coupons at the discounted rate to the distributors, which was termed by the Income Tax Department as Commission under the head of Section 194H of the Income Tax Act, 1961 and thus, the Petitioner contended the factum that Respondent company is thereby liable to TDS.
- Whether on the facts and in the circumstances of the case and in law, Hon’ble ITAT was justified in holding that TDS provisions under section 194H of the Income Tax Act, 1961 are not attracted on discounts given by the Assessee to the distributors of prepaid SIM cards?
RULING OF THE COURT/THE COURT HELD THAT
While dismissing the present appeals preferred by the Petitioner and finding no error and infirmity in the view taken by the Tribunal, the Hon’ble Bombay High Court observed the following:
- Relying on the decision in the case of Pr. Commissioner of Income Tax-8, Mumbai v/s. M/s. Reliance Communications Infrastructure Ltd. this Court held that when transaction is between two persons on principal to principal basis, deduction of tax at source as per Section 194H of the Act would not be made since the payment was not for commission or for brokerage, which quoted as follows- “Having heard the learned Counsel for the parties and having perused the documents on record, we do not find any error in the view of the Tribunal. The Tribunal, as noted, besides holding that the Commissioner’s order setting aside the order passed u/s 201 was not carried in appeal, had also independently examined the nature of the transaction and come to the conclusion that when the transaction was between two persons on principal to principal basis, deduction of tax at source as per section 194H of the Act, would not be made since the payment was not for commission or brokerage.”
- Adverting to the facts of the present case, Tribunal held as under: “36. In view of our discussion in the preceding paragraphs we hold that the sale of SIM cards / recharge coupons at discounted rate to distributors is not commission and therefore not liable to TDS u/s. 194H of the I.T.Act. However, we have restored the issue to the file of the Assessing Officer for necessary verification in the light of the decision of Hon’ble Karnataka High Court (supra). Therefore, the grounds for the other years on the issue of liability u/s. 194H are allowed for statistical purposes. We hold and direct accordingly.”
- “In view of the above and following the earlier decision of this Court in M/s. Reliance Communications Infrastructure Ltd. (supra), we are of the view that the Tribunal was justified in holding that the provisions of Section 194H of the Act was not applicable on discounts given by the Assessee to the distributors of prepaid SIM cards.”