Case Law Details
Nokia India Sales Pvt. Ltd Vs Addl. CIT (ITAT Delhi)
Conclusion: In present facts of the case, the Hon’ble Tribunal held that creating a demand for non-deduction of tax while the recipient has paid taxes on the same amount would result in recovery of taxes on the same amount twice and on the issue of providing handsets to the dealers, it was held that the same would be treated as business expenditure.
Facts: The present appeal has been filed by the assessee against the order dated 31.10.2017 passed by the AO u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961. In present facts of the case, Nokia India Sales Pvt. Ltd. (NISPL) was incorporated as Nokia Sales Services Pvt. Ltd. in December 2008 and is engaged in the business of marketing, distribution and sales of mobile phones including accessories and services. The Assessing Officer resorted to disallowance of Rs.155.05 Crores and Rs.58.31 Crores u/s 40(a)(ia) of the Income Tax Act, 1961 on account of non-withholding of taxes u/s 194H of the Act on the discount extended to HCL Infosystems Ltd. The assessee entered into an agreement with HCL for obtaining the following services:
Purchase and sale of mobile phones from the assesse, Promotions and Advertisement of products using the assessee’s trademark “Nokia”, Discussion on market trends, Discussion on activities of assessee’s competitors, After sales matters discussion, Marketing plan discussion, Assistance in obtaining the type approval and Performing warranty and/or after warranty services and repairs of the products for end-user customers.
On going through the various clauses of the agreement, the AO held that the payment made by the way of debit notes to HCL are not trade discounts but were payments for specific services which varied from consultancy to technical services in nature. Being consultancy and technical services in nature, the Assessing Officer held that the provision pertaining to TDS are attracted.
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