Idea Cellular Limited V. The Commissioner of Income Tax (TDS) and Income Tax Towers A.C. Guards Masab Tank Hyderabad and four others

WP/27818/2013

AI Insights

The case involves M/s. Idea Cellular Limited, which challenged an order by the Commissioner of Income Tax (TDS) under Section 221 of the Income Tax Act, 1961, treating the petitioner as 'Assessee in default' for non-deduction of TDS on discounts allowed to prepaid distributors for the assessment years 2004-05 to 2010-11. The petitioner sought a stay on the demand and collection of tax, which was partially granted. However, the petitioner contested the demand related to non-deduction of TDS on Roaming Charges under Section 194J, arguing that the section was inapplicable and that the order was passed without a personal hearing, violating principles of natural justice.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 815893 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 30-09-2013
• Assessment Year: misc
• Other Referred Cases: Hindustan Coca Cola Beverage Pvt. Ltd. Vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: S R ASHOK
• Assessee Lawyers: R RAGHUNANDAN
• Keywords: Assessee in default; Natural Justice; Roaming charges; Stay of demand; TDS
• Section: 194J; 194H; 220(6); 221

Judgement Text

"THE HONOURABLE Ms. JUSTICE G. ROHINI AND THE HONOURABLE SRI JUSTICE A.RAMALINGESWARA RAO WRIT PETITION No.27818 OF 2013 Date: 30.09.2013 Between: M/s. Idea Cellular Limited KLK Estate, Fateh Maidan Road Hyderabad Rep. by its Authorized Signatory Mr. Arun Madhav Bhagavathula …Petitioner And The Commissioner of Income Tax (TDS) Income Tax Towers A.C. Guards Masab Tank Hyderabad, and four others …Respondents THE HONOURABLE Ms. JUSTICE G. ROHINI AND THE HONOURABLE SRI JUSTICE A.RAMALINGESWARA RAO WRIT PETITION No.27818 OF 2013 ORDER: (Per Hon’ble Ms. Justice G.Rohini) Aggrieved by the orders made under Section 221 of the Income Tax Act, 1961 (for short, “the Act”) treating the petitioner as “Assessee in default” for the Assessment Years 2004-05 to 2010-11 on the ground of non- deduction of TDS on discount allowed to the prepaid distributors, the petitioner preferred separate appeals before the respondent No.2. Pending the said appeals, the petitioner made an application before the 1st respondent as provided under Section 220(6) of the Act for grant of stay of demand and collection of tax till the appeal is decided by the 2nd respondent. The said application for stay was disposed of by the 1st respondent by order dated 26.08.2013 which reads as under: “With reference to your application for stay of demand for the A.Ys. 2004-05 to 2010-11 referred to above, it is seen that your appeal with respect to the issue of non-deduction of TDS u/s. 194H has been dismissed by the CIT(A)-II, Hyderabad. You will also appreciate that this issue has been decided against the assessee by the Hon’ble Delhi Bench of ITAT also. Therefore, on consideration of facts, I am of the view that no further stay can be granted for the demand of Rs.5,42,73,150/- pertaining to this issue, and accordingly, you are requested to pay all of such demand before 31.08.2013. As regards the demand of Rs.12,48,86,448/- pertaining to the issue of non-deduction of TDS u/s. 194J on Roaming Charges paid to other Telecom Operators for various years, the said demand may be paid in instalment of Rs.2 crores per month starting from the month of September, 2013 to February, 2014, so as to clear the entire demand before February, 2014 or the disposal of appeal, whichever is earlier.” The said order dated 26.08.2013 is under challenge in this writ petition. We have heard Sri R. Raghunandan, learned counsel for the petitioner and Sri S.R. Ashok, learned Standing Counsel for Income Tax appearing for the respondents. The impugned order is assailed before us in this writ petition only to the extent of the demand on the ground of non-deduction of TDS under Section 194J on Roaming Charges paid to the Telecom Operators for various years. The specific case of the petitioner is that Section 194J is wholly inapplicable to the transactions in question and therefore the petitioner is not liable to deduct TDS while making the payment. In support of the said plea, the petitioner relied upon the decision of the Supreme Court in Hindustan Coca Cola Beverage Pvt. Ltd. Vs. CIT[1]. The further contention is that the impugned order came to be passed without affording an opportunity of personal hearing to the petitioner and without assigning any reasons and thus the same being in violation of the principles of natural justice, is liable to be set aside on that ground alone. Since the main appeal is still pending before the respondent No.2, we are not inclined to go into merits of the case and express any opinion on the petitioner’s contention that Section 194J is not applicable. However, it is observed that no reasons were assigned by the 1st respondent in the impugned order while directing the petitioner to pay the disputed amount in six instalments. That apart, the petitioner was not given an opportunity of being heard before passing the said order. Therefore, it appears to us that the matter requires reconsideration. Under the circumstances, without expressing any opinion on merits of the case, the impugned order to the extent of the demand pertaining to non-deduction of TDS under Section 194J is hereby set aside and there shall be a direction to the 1st respondent to pass appropriate order afresh after giving an opportunity of being heard to the petitioner. The learned counsel for the petitioner undertakes that the petitioner would appear before the 1st respondent on 04.10.2013. Recording the undertaking, the Writ Petition is disposed of leaving it open to the 1st respondent to hear the petitioner on 04.10.2013 or any other convenient date thereafter and pass appropriate order in the light of the observations made above. No costs. Consequently the miscellaneous petitions, if any, pending in this Writ Petition shall stand closed. ____________ G.ROHINI, J ______________________________ A.RAMALINGESWARA RAO, J Date: 30.09.2013 Note:- CC by tomorrow. (B/O) Mva [1] 293 ITR 226 "