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Case Law Details

Case Name : Idea Cellular Ltd. (Delhi High Court)
Appeal Number : 2010-TIOL-139-HC-DEL-IT
Date of Judgement/Order :
Related Assessment Year :
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Delhi High Court (HC) [2010-TIOL-139-HC-DEL-IT] in the case of Idea Cellular Ltd. (Taxpayer) on the issue whether the discount retained by Prepaid Market Associates (PMAs) on sale of Subscriber Identification Module (SIM) cards or recharge coupons belonging to the Taxpayer is liable for withholding tax, under the provisions of Indian Tax Law (ITL) held that the transaction between them is a service transaction and not in the nature of sale and purchase of goods.

The HC, based on the terms of agreement between the Taxpayer and the PMAs concluded that the relationship between them is in the nature of principal and agent and, hence, the discount retained by the PMAs is in the nature of commission or brokerage under the ITL, liable for withholding by the Taxpayer.

Background and facts of the case

  • Under the ITL, payment of income in the nature of commission or brokerage attracts withholding for the payer. The term ‘commission or brokerage’ is defined, inter alia, to include any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services).
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0 Comments

  1. Bharat Vachhani says:

    what if in the case of a person has taken an agency say of Peter England than will he be liable to pay Service tax or not ?

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