Case Law Details
Bharti Airtel Ltd. Vs ITO (Gujarat High Court)
In the case of Bharti Airtel Ltd – Through Its Constituted Attorney Vs ITO (Gujarat High Court), the issue revolved around whether Bharti Airtel Ltd (hereinafter referred to as “the appellant”) was obligated to deduct tax at source (TDS) under Section 194H of the Income Tax Act, 1961, on discounts provided to its distributors. The matter was adjudicated upon by the Gujarat High Court, with the following key points emerging from the judgment:
Background and Arguments
Appellant’s Position: Bharti Airtel Ltd is a cellular mobile telephone service provider operating under the brand name ‘Airtel’. It argued that the discounts offered to its distributors on prepaid SIM cards and recharge coupons did not constitute commission but were part of genuine business transactions. Therefore, TDS under Section 194H was not applicable.
Revenue’s Argument: The Income Tax Department contended that the relationship between Bharti Airtel and its distributors should be viewed as that of principal and agent. Hence, the discounts were akin to commission and subjected to TDS under Section 194H.
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