Case Law Details
Vodafone Idea Ltd. Vs ITO (ITAT Delhi)
Conclusion: Discount offered on some of the prepaid mobile services did not partake the character of commission under Section 194H and hence there was no obligation to withhold tax on such discounts on prepaid services.
Held: Assessee-company did deduct tax at source on discount extended to its pre-paid distributors on distribution of pre-paid services. As per TDS officer the relationship between assessee and the pre-paid distributors was not that of ‘Principal to Principal’ and the discount allowed to them was in nature of commission liable for tax deduction at source as envisaged under section 194H. Following the decision in case of Tata Teleservices Ltd. Vs. ACIT (ITA 2043/Mum/2014 – decision dated 27.5.2016) and ACIT Vs. Reliance Communications Infrastructure Ltd. (ITA 4677/Mum/2012 – decision dated 23.3.2016) it was held that the discount offered on some of the prepaid services did not partake the character of commission under Section 194H and hence there was no obligation to withhold tax on such discounts on pre-paid services.
FULL TEXT OF THE ORDER OF ITAT DELHI
The aforesaid appeals have been filed by the assessee company M/s Vodafone Idea Limited as a successor of M/s Vodafone Digilink Limited (which got merged with M/s Vodafone Mobile Services Limited which again got subsequently merged with M/s Idea Cellular Limited and now known as Vodafone Idea Limited) (hereinafter referred to as ‘Assessee’) against the consolidated Order dated 23.10.2018, passed by the Commissioner of Income Tax (Appeals) for Assessment Years (‘AY’) 2007-08, 2008-09 and 2009-10 and the order dated 21.01.2019 for assessment years 2010-11 and 2011-12. Since the issue involved in all the appeals are by and large common arising out of identical set of facts, therefore, were heard together and being disposed of by way of this consolidated order. For the sake of reference, the main issues raised in all the appeals by the assessee are reproduced as under:
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