Case Law Details
Vodafone Idea Ltd Vs DCIT (ITAT Mumbai)
Conclusion: ITAT held that the sale of SIM cards/recharge coupons at discounted rate to the distributors was not commission and therefore not liable to deduct the TDS under Section 194H.
Facts: In present case, the cross appeals for A.Y.2008-09 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-4, Mumbai in appeal No.CIT(A) No.4/IT-239/ITO.3(2)(4)/2011-12 dated 10/01/2014 against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 dated 27/12/2010 by the ld. Dy. Commissioner of Income Tax-3(2), Mumbai.
The ground No. II raised by the assessee wherein the disallowance of discount amounting to Rs.320,00,00,000/- given to prepaid distributors u/s.40(a)(ia) of the Act for non-deduction of tax at source u/s.194H of the Act was challenged. The ground No.I raised by the assessee is with regard to non-adjudication of additional evidences filed before the ld. CIT(A) is interconnected with ground No.II.
Assessee was in the business of providing cellular services. During the course of assessment proceedings, the assessee was asked to submit details of commission and discount given to dealers and tax deducted on the same. On perusal of the details furnished by the assessee, the ld. AO observed that assessee had deducted tax at source for the commission payments made but had not deducted tax for the discount allowed to the distributors. The ld. AO concluded that the discount given to the dealers / distributors is in the nature of commission on which tax was deductible u/s 194H of the Act which has not been done by the assessee and consequently the same would be liable for disallowance u/s.40(a)(ia) of the Act. The action of the ld. AO was upheld by the ld. CIT(A).
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