Case Law Details
Tata Sky Limited Vs ACIT (ITAT Mumbai)
Conclusion: TDS under section 194H was not required to be deducted on discount allowed to distributors on sale of Set Top Box and hardware, recharge coupons vouchers because transaction between assessee company and distributor was on principal-to-principal basis and all the risk, loss, damages were transferred to distributor on delivery and it was a sale but not service to come within the ambit of definition of commission as defined under section 194H.
Held: Assessee had given discount on the sale of Set-top Boxes and Recharge Coupon Vouchers, which was referred to as a primary discount. As a part of its sale promotion, assessee also provided additional discounts like a festival discount, quantity discount, etc. to the distributors to encourage them to purchase and in turn sell higher quantities of products. The additional/secondary discounts were recognized by assessee as sale promotion expense or distribution channel support expenses. AO during assessment of TDS had passed the order under sections 201 and 201(1A) wherein the primary discount and secondary discount were held to be subject to provisions of section 194H. It was held that this issue was squarely covered by Tribunal’s decision in assessee’s own case, wherein Tribunal had categorically observed that assessee was not required to deduct TDS on the amounts of discount on sale of Set-top box and hardware, discount on sale of recharge coupon and vouchers, bonus or credit provided by assessee to subscribers, sales promotion expenses and distribution channel support expenses. Further, the transaction between the company and distributor was on principal to principal basis and all the risk, loss, damages were transferred to distributor on delivery. Further, distributors were free to sale at any price below maximum retail price. Assessee had filed the sample copy of invoices for sale of Set Top Box (STB) and other recharge coupons to prove that it was a sale but not services to come within the ambit of the definition of commission as defined under section 194H. Therefore, assessee was not required to deduct TDS on discount allowed on sale of Set Top Box and hardware, recharge coupons vouchers and disallowance of bonus or credit provided to subscribers including sales promotion expenses.
FULL TEXT OF THE ITAT JUDGEMENT
These cross appeals, by the assessee and by revenue, are arising out of the orders of Commissioner of Income Tax (Appeals)-13, Mumbai [in short CIT(A)], in appeal Nos. CIT(A)-13/Rg.7(3)/AP-269/11-12 and 127/12-13 dated 03.03.2014. The Assessments were framed by the Asst. Commissioner of Income Tax & Dy. Commissioner of Income Tax, Circle-7(3), Mumbai (in short ‘ACIT/DCIT/ AO) for the AY 2009-10 and 201011 vide different orders dated 31.12.2011 and 06.02.2013 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
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