Case Law Details
Amit Kumar Shivhare Vs ITO (ITAT Raipur)
ITAT held that tax withholding provisions under section 194H would not be applicable to discounts extended to pre-paid SIM distributors on transfer of pre-paid SIM cards/talk time.
On a perusal of the invoices which were issued by M/s. Idea Cellular Ltd. to the assessee, a distributor of Idea recharge coupons, we find that the assessee was in receipt of two facet discounts on the recharge coupons from M/s. Idea Cellular Ltd., viz. (i) discount to distributor @1.47% on the MRP; and (ii) discount to retailers @3% on the MRP. The aforesaid discounts were credited by the assessee company in the “discount received A/c”. Out of the aforesaid discounts, the retailer discount that was received by the assessee from the company, i.e, M/s Idea Cellular Ltd. was passed over by it to the retailers by debiting the same under the head “recharge commission expenses a/c”. Although, the assessee’s claim for deduction of recharge commission, at the first blush, as per its nomenclature appeared to be in the nature of a “commission expense” which would call for deduction of tax at source u/s. 194H of the Act, but as stated by the Ld. AR, and rightly so, the same was in sum and substance a discount which was received by the assesee from M/s. Idea Cellular Ltd. for passing over on a back to back basis to the retailers. In order to dispel any doubt as regards the aforesaid factual position, the assessee had placed on record an “affidavit” wherein he had categorically deposed that the discounts that were passed over to the retailers were wrongly shown by him in the ‘profit and loss a/c’ as “recharge commission”. Backed by the aforesaid factual position, we are of the considered view, that as the assessee had merely facilitated the passing over the retailers discounts that were received by him from the company, i.e, M/s Idea Cellular Ltd. to the retailers, therefore, the same, though wrongly categorized by him under the head “recharge commission” were not liable for deduction of tax at source u/s. 194H of the Act. Our aforesaid conviction is duly supported by the judgments of the Hon’ble High Court of Bombay in the case of CIT (TDS) Vs. Vodafone Cellular Ltd. (2021) 131 taxmann.com 191 (Bombay) and that of the Hon’ble High Court of Karnataka in the case of Bharati Airtel Ltd. Vs. DCIT (2014) 52 taxmann.com 31 (Karnataka). Also, a coordinate Bench of the Tribunal, i.e, ITAT, Chandigarh-B Bench in the case of Vodafone Idea Ltd. Vs. Assistant Commissioner of Income Tax (TDS), Chandigarh (2019) 179 ITD 207 (Chandigarh), had taken a similar view that tax withholding provisions under section 194H would not be applicable to discounts extended to pre-paid SIM distributors on transfer of pre-paid SIM cards/talk time.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The present appeal filed by the assessee is directed against the order passed by the CIT(Appeal), Bilaspur dated 29.03.2017, which in turn arises from the order passed by the A.O under Sec. 143(3) r.w.s. 263(1) of the Income Tax Act, 1961 (for short ‘the Act’) dated 25.03.2014 for assessment year 2008-09. Before us the assessee has assailed the impugned order on the following solitary ground of appeal:
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