Case Law Details
ITO (TDS) Vs Tata Teleservices Limited (ITAT Delhi)
ITAT held that the sale of recharge voucher coupons and starter kits and the discount offered to the distributors would not attract TDS provisions u/s 194H of the Act and as such no default U/s 201(1) of the Act can be attributed to the assessee.
Sole issue for our consideration is the applicability of provisions of section 194H of the Act on the discount allowed to distributors/channel partners on the sale of recharge coupon vouchers and the starter kits for telecommunication services. In this context, it is seen that the order U/s 201(1) of the Act has been passed by ITO (TDS), Meerut and, further the registered address of the assessee as appearing in the order U/s 201(1) of the Act, in the impugned order and in Form No.36 is that of Meerut. Therefore, we agree with the contention of the Ld. AR that the jurisdiction of the assessee falls under the jurisdiction of the Hon’ble Allahabad High Court. Therefore, we are respectfully of the considered opinion that the judgment of the Hon’ble Delhi High Court in the case of Idea Cellular (supra) and the Hon’ble Kerala High Court in the case of Vodafone Essar Cellular (supra) cannot be considered as binding for the assessee on the issue. We also note that the Hon’ble Karnataka High Court in the case of Bharti Airtel Ltd. vs. CIT & Anr (supra) has decided the issue in favour of the assessee by holding that tax was not deductable on discount allowed to distributors. In this judgment, the Hon’ble Karnataka High Court in the cases of three assessees i.e., Bharti Airtel Ltd., Vodafone Essar Ltd. and another group company of the assessee Tata Tele Service Ltd. identical issue was considered and the issue was settled in favour of the assessee. Similarly, the Jaipur Bench of the Tribunal in the case of TTSL vs. ITO, Jaipur (supra) followed the judgment of the Hon’ble Karnataka High Court in the case of Bharti Airtel vs. DCIT (supra) and held that the discount on sale of recharge vouchers and SIM cards by telecommunication company to its distributors did not amount to commission in terms of section 194H of the Act. We also note that the Hon’ble Rajasthan High Court in the case of Tata Tele Services Ltd. reported in 402 ITR 439 (Rajsthan) and the Hon’ble Bombay High Court in the case of CIT vs. Vodafone Cellular Ltd in Income Tax Appeal No.1152 of 2017 vide order dated 27.01.2020 have also decided the issue in favour of the assessee by holding that the provisions of section 194H were not applicable to the transaction of sale of starter kits and pre-paid SIMs to distributors on principal to principal basis. Under such circumstances and taking guidance from the judgment of the Hon’ble Apex Court in the case of Vegetable Products (supra), we hold that the view favouring the assessee needs to be taken.
FULL TEXT OF THE ORDER OF ITAT DELHI
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