M/s Vodafone Essar Cellular Ltd., Cochin V. ACIT (TDS), Cochin

ITA 111/COCH/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0887 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-11-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 27-02-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T J VINCENT
• Assessee Lawyers: RONAK G DOSHI
• Keywords: Recovery proceedings
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM I.T.A. NOS. 108,110,111 & 113/COCH/2 009 ASSESSMENT YEAR : 2005-06, 2006-07, 2007-08 & 2008 -09 VODAFONE ESSAR CELLULAR LTD., XL/5115, ASHIS BUILDING, SECOND FLOOR, SHANMUGHAM ROAD, ERNAKULAM. [PAN:CHNB 00637A] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, TDS, KOCHI. (ASSESSEE -APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI RONAK G. DOSHI, CA REVENUE BY SHRI T.J.VINCENT, DR O R D E R PER SANJAY ARORA, AM: THESE ARE A SET OF FOUR APPEALS BY THE ASSESSEE FO R ASSESSMENT YEARS (AYS) 2005- 06 TO 2008-09. THE APPEALS BY THE ASSESSEE FOR THE SAID YEARS, CONTESTING THE SEPARATE ORDERS, I.E., U/S. 201 AND 201(1A) OF THE INCOME-TA X ACT, 1961 ('THE ACT', HEREINAFTER) IN IT CASE, STOOD DECIDED BY THE TRIBUNAL IN THE FIRST IN STANCE PER ITS ORDER DATED 30.4.2009. THE ASSESSEE SUBSEQUENTLY MOVED MISCELLANEOUS PETIT IONS (MPS) FOR ALL THE YEARS SEPARATELY QUA THE ORDERS U/SS. 201 AND 201(1A), WHICH STOOD DISP OSED OF BY THE TRIBUNAL VIDE ITS ORDER DATED 12/3/2010. 2.1 IT WAS, WHILE HEARING THE MPS, INTER ALIA , CONTENDED BY THE ASSESSEE THAT ITS GROUND NO. 5 III (2) IN RESPECT OF SECTION 201 ORDE R STOOD NOT ADJUDICATED BY THE TRIBUNAL. THE TRIBUNAL, PER ITS S. 254(2)/12.3.2010 ORDER, WH ILE DISMISSING THE ASSESSEES MPS AFORE-MENTIONED ON ALL OTHER GROUNDS, CONCURRED WIT H THE ASSESSEES CONTENTION IN RESPECT OF ITS THIS CLAIM VIDE PARA 5.7 OF THE SAID ORDER. THE CORRESPONDING APPEALS WERE, THEREFORE, RESTORED QUA THE SAID GROUND. IT IS THIS GROUND WHICH IS THE S UBJECT MATTER OF THE PRESENT HEARING. VIDE THE SAME, THE ASSESSEE A GITATES THE RECOVERY OF TAX DEDUCTIBLE AT ITA.NOS. 108,110,111 & 113/COCH./2009 2 SOURCE, WHICH IT CLAIMS THE REVENUE CANNOT, HAVING REGARD TO THE FACT THAT THE TAX ON THE CORRESPONDING INCOME STANDS ALREADY PAID BY ITS DIS TRIBUTORS, I.E., THE RECIPIENTS OF THE INCOME, SO THAT IT IS ABSOLVED OF ITS LIABILITY TO PAY THE DEMAND U/S. 201(1) OF THE ACT. 2.2 BEFORE WE PROCEED FURTHER, IT WOULD BE PERT INENT TO ENLIST THE OBJECTION RAISED BY THE REVENUE DURING THE HEARING TO THE MAINTENANCE O F THE PRESENT APPEALS, ALONG WITH OUR REASONS FOR FINDING THE SAME UNACCEPTABLE. IT WAS S UBMITTED BY THE LD. DR THAT THE ASSESSEES APPEALS, ARISE AS THEY DO DUE TO THE PAR T-ACCEPTANCE OF ITS MISCELLANEOUS PETITIONS, ARE NOT MAINTAINABLE AS IT HAD PREFERRED AN APPEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT AGAINST THE ORDER OF THE TRIBUNAL, AND WHICH HAS SINCE CONFIRMED THE SAME (VIDE VODAFONE ESSAR CELLULAR LIMITED V. CIT (ASSTT.) IN ITA NO. 1742 OF 2009 DATED 17/8/2010), HOLDING THE PROVISION OF ACCESS T O ITS NETWORK BY THE ASSESSEE-SERVICE PROVIDER TO ITS CUSTOMERS THROUGH THE NETWORK OF DI STRIBUTORS (WHETHER UNDER THE PREPAID OR POST-PAID CATEGORY) AS ONLY A SERVICE, OF WHICH THE DISTRIBUTORS, THUS, ARE AN INTEGRAL PART. THE SUPPLY OF SIM CARDS (I.E., THE DEVICE THR OUGH WHICH THE SAID ACCESS IS PROVIDED) AT A DISCOUNT TO THE DISTRIBUTORS FOR ONWARD SUPPLY TO THE USERS, AT THE FULL, STIPULATED RATE, IS ONLY A MANNER OF REMUNERATING THE DISTRIBUTOR FO R HIS SERVICES, EVEN AS HELD BY THE TRIBUNAL AND, THEREFORE, BY DEFINITION, `COMMISSION . ACCORDINGLY, THE PROVISION FOR TAX DEDUCTION AT SOURCE WOULD APPLY. IN VIEW OF THE SAM E, IT WAS CONTENDED, THERE IS NO SCOPE FOR EVEN A PART ALLOWANCE OF THE ASSESSEES MISCELL ANEOUS APPLICATIONS; THE HONBLE HIGH COURT HAVING UPHELD THE ORDER OF THE TRIBUNAL, AND WHICH, IN ANY CASE, STANDS MERGED WITH THE ORDER BY THE HONBLE COURT, PLACING A COPY OF T HE SAME ON RECORD. WE CANNOT AGREE. AND FOR THE SIMPLE REASO N THAT PER ITS INSTANT APPEALS THE ASSESSEE HAD RAISED AN ALTERNATE CONTENTION, AND WHICH REMAI NED UNDECIDED BY THE TRIBUNAL. IT IS ONLY TOWARD THE SAME THAT THE APPEALS UNDER REFEREN CE ARE, AS AFORE-STATED, RECALLED, AND NO FURTHER. IT IS ONLY ON THE REJECTION OF ITS CLAI MS, AND THE CONCOMITANT FINDING OF THE TDS PROVISION AS BEING ATTRACTED, THAT THE QUESTION OF RECOVERY OF THE TAX DEDUCTIBLE OR THE ENFORCEMENT OF THE DEMAND RAISED WHICH THE AS SESSEE SEEKS TO RESTRAIN - ARISES. THAT THE ASSESSEE HAD APPROACHED THE HONBLE HIGH UNDER THE APPELLATE PROCEDURE, WAS NOT LOST SIGHT OF BY THE TRIBUNAL WHILE DECIDING ITS MISCELL ANEOUS PETITIONS, AND IS OF NO CONSEQUENCE. THIS IS AS THE ASSESSEE STOOD AGGRIEVE D BY AND CHALLENGED BEFORE THE ITA.NOS. 108,110,111 & 113/COCH./2009 3 HONBLE COURT WHAT STOOD DECIDED, AND NOT THAT WAS OMITTED TO BE DECIDED, BY THE TRIBUNAL. OF COURSE, IT WOULD HAVE BEEN A DIFFERENT MATTER IF THE ASSESSEE HAD SUCCEEDED IN APPEAL, SO THAT ITS ALTERNATE GROUND WOULD NOT HAVE SURVIVE D, OR AT LEAST BEFORE THE TRIBUNAL. THE HONBLE COURT HAS, WE MAY CLARIFY, NOT EXPRESSED AN Y OPINION QUA THE ASSESSEES ALTERNATE GROUND BEFORE THE TRIBUNAL, BEING NOT AN ISSUE BEFO RE IT. THE REVENUES OBJECTION IS THUS OF NO MOMENT. 3.1 THE ASSESSEES CLAIM, PUT SUCCINCTLY, IS TH AT EVEN THOUGH IT MAY HAVE FAILED TO DEDUCT TDS U/S. 194H OF THE ACT IN TERMS OF SECTION 201(1) OF THE ACT, IT CANNOT BE TREATED AS IN DEFAULT, AND NO RECOVERY OF TAX IN RE SPECT OF THE IMPUGNED DEMAND COULD BE MADE THERE-FROM, INASMUCH AS TAX ON THE CORRESPONDI NG INCOME/S HAS ALREADY BEEN PAID BY ITS DISTRIBUTOR/S. THIS IS THE SETTLED LEGAL PO SITION, PER, AS FOR EXAMPLE, THE DECISION IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES (P.) LTD. V. CIT (2007) 293 ITR 226 (SC); THE APPELLANT ALSO PLACING ON RECORD THE DECISION I N THE CASE OF CIT V. DEWAN CHAND , 178 TAXMAN 173 (DEL.), HOLDING LIKE-WISE. THIS IS FOR THE SIMPLE REASON THAT TAX DEDUCTION AT SOURCE ADMITTEDLY REPRESENTS ONE OF THE MODES OF RE COVERY OF TAX, AND THERE COULD POSSIBLY BE NO DOUBLE RECOVERY. AS SUCH, ONCE THE P AYEE HAS PAID TAX ON THE INCOME ON WHICH TAX AT SOURCE IS DEDUCTIBLE, NO FURTHER LIABI LITY OR OBLIGATION IS CAST ON THE PAYER TO DEPOSIT THE SAID TAX, WHICH IS PAID ONLY FOR AND ON BEHALF OF THE DEDUCTEE. 3.2 CONTINUING FURTHER, SO HOWEVER, THE ONUS TO ESTABLISH THE SAID PAYMENT OF TAX BY THE PAYEE IS ONLY ON THE PAYEE. ALSO, THE INTEREST LIA BILITY WOULD STAND ON ACCOUNT OF THE TIMING DIFFERENCE, IF ANY, I.E., THE TIME AT WHICH THE TAX WAS TO BE DEDUCTED/DEPOSITED AS PER THE EXTANT TDS PROVISIONS, AND THE TIME WHEN IT HAS ACTUALLY BEEN. IN VIEW OF THE SAME, THE ASSESSEE WAS CALLED UPON BY THE BENCH TO ESTABLISH ITS CLAIM, AT LEAST ON A SAMPLE BASIS. TOWARD THIS, THE ASSESSEE HAS FILED CERTIFICATES FROM THE CONCERNED DISTRIBUTORS, STATING THAT THE INCOME ARISING FROM THE DISTRIBUTION OF THE PRE-PAID TALK TIME CARDS, SECURED BY THEM AT DISCOUNTED PRICES, STANDS DULY OFFERED BY THEM TO TAX PER THEIR RETURNS OF INCOME FOR THE RELEVANT YEARS. COPIES OF THE ACKNOWLEDGMENTS OF SOME RETURNS HAVE ALSO BEEN PLACED ON RECORD IN SUPPORT. THE LD . AR WAS QUESTIONED BY THE BENCH AS TO HOW IT WOULD BE APPARENT FROM THE SAID ACKNOWLED GMENTS THAT THE ENTIRE AMOUNT OF ITA.NOS. 108,110,111 & 113/COCH./2009 4 COMMISSION ALLOWED TO THE DISTRIBUTORS STOOD DULY R ETURNED BY THEM. THIS IS MORE SO AS THE CERTIFICATES/DECLARATIONS ISSUED ARE WITHOUT AN Y REFERENCE TO THE AMOUNT OF THE COMMISSION INCOME, WHICH IS THE SUBJECT MATTER OF T DS AND, THUS, BEING RETURNED TO THE REVENUE. IN THIS REGARD, IN RESPONSE, IT WAS SUBMI TTED BY HIM THAT THE ASSESSEE COULD DEMONSTRATE THE SAME BEFORE THE ASSESSING OFFICER ( AO), AND WHICH WE CONSIDER AS ONLY REASONABLE IN VIEW OF THE VOLUMINOUS DATA INVOLVED; OUR OBJECTIVE IN THE MATTER BEING LIMITED TO EXAMINING IF THE ASSESSEE HAD A PRIMA FACIE CASE, AND WHICH WE FIND IT AS SO. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT, SO HOWEVE R, THE MATTER, IN VIEW OF THE `MANNER OF THE PAYMENT, PRESENTED A PECULIAR PROBLEM. THERE HAS BEEN, IT MAY BE APPRECIATED, NO DIRECT PAYMENT BY THE APPELLANT TO ITS DISTRIBUTORS . THE DELIVERY OF THE PRE-PAID TALK TIME THERE-TO IS AT A DISCOUNTED RATE, AND WHICH STANDS SOLD BY THEM ONLY IN DUE COURSE OF TIME. AS THEY MAINTAIN A REASONABLE STOCK, IT IS NOT UNLI KELY THAT THE SOME OF THE TALK-TIME WOULD BE HELD IN STOCK AS AT THE YEAREND, AND SOLD ONLY IN THE FOLLOWING YEAR, EVEN AS THE RECEIPT FOR THE CURRENT YEAR WOULD INCLUDE THAT QUA THE STOCK HELD AS AT THE BEGINNING OF THE YEAR. EVEN AS OBSERVED BY THE BENCH, IN RESPON SE THERE-TO, THE ASSESSEE, THEREBY, IN EFFECT, REBUTS ITS CASE TO SOME EXTENT. THIS IS AS THE INCOME CORRESPONDING TO THE TALKTIME NOT SOLD DURING THE YEAR/S OF ITS ACQUISITION/PURCH ASE BY THE DISTRIBUTORS, STANDS ADMITTEDLY NOT RETURNED BY THEM TO THE REVENUE. 3.3 THE PRE-PAID TALK TIME HAVING BEEN ISSUED BY THE ASSESSEE TO ITS DISTRIBUTORS AT A DISCOUNTED PRICE, AND THE DIFFERENCE BETWEEN THE SA ME AND THE MRP THEREOF, HAVING BEEN HELD AS ONLY COMMISSION ALLOWED THERE-TO BY THE ASS ESSEE; TOWARD THE SERVICES RENDERED BY IT THERE-FOR, THERE IS A DEEMED PAYMENT OR ALLOW ANCE OF THE SAID COMMISSION IN THE YEAR IN WHICH PREPAID TALK TIME STANDS SECURED BY T HE DISTRIBUTORS FROM THE ASSESSEE AT THE DISCOUNTED PRICE. NOTHING FURTHER IS TO BE PAID BY THE SERVICE PROVIDER TO THE DISTRIBUTOR FOR HIS SERVICES. THE DEDUCTION OF TAX AT SOURCE HA S TO BE AT THE TIME OF PAYMENT OR CREDIT, WHICHEVER IS EARLIER. AS SUCH, WHILE TAX BECOMES DE DUCTIBLE ON THE DELIVERY OF THE TALK TIME TO THE DISTRIBUTOR AT THE DISCOUNTED RATE, THE SAME IS IMBEDDED IN THE COST OF GOODS AND WOULD BE REALIZED AS AND WHEN THE SAME ARE SOLD /DISTRIBUTED IN THE REGULAR COURSE OF HIS BUSINESS. WHILE THE TALK TIME SOLD DURING THE Y EAR WOULD ONLY LEAD TO A INCONSEQUENTIAL TIMING DIFFERENCE; THE INCOME ON TH E SAME BEING GENERATED AND, ITA.NOS. 108,110,111 & 113/COCH./2009 5 CONSEQUENTLY, RETURNED TO THE REVENUE, RESULTING ON LY IN AT BEST A LIABILITY QUA INTEREST U/S. 201(1A), TO THE EXTENT NOT SOLD, IT CANNOT BE STATE D, AS CONTENDED BEFORE US ON THE ASSESSEES BEHALF, THAT THE RELEVANT `INCOME STAND S DULY RETURNED BY THE DISTRIBUTORS TO THE REVENUE FOR THE RELEVANT YEAR/S. 3.4 THE ISSUE, IT NEEDS TO BE APPRECIATED, ARISES, AS I NCOME ON WHICH THE TAX IS TO BE DEDUCTED, I.E., IS DEDUCTIBLE, NEED NOT NECESSARILY CONSTITUTE THE `INCOME OF THE PAYEE/BENEFICIARY FOR THE YEAR IN WHICH THE SAME IS ALLOWED OR PAID TO IT. THIS COULD HAPPEN FOR ANY REASON; THE MOST LIKELY BEING THE DI FFERENCE IN THE METHOD OF ACCOUNTING, I.E., QUA THE TRANSACTION UNDER REFERENCE, BETWEEN THE PAYER AND THE PAYEE, BOTH OF WHOM ARE ENTITLED TO FOLLOW CONSISTENTLY ITS ADOPTED MET HOD OF ACCOUNTING, I.E., SO LONG IT IS ACCEPTABLE, IN TERMS OF IT LEADING TO DETERMINATION OF CORRECT PROFITS. THAT, HOWEVER, WOULD NOT IMPEDE OR CONSTRAIN THE APPLICATION OF TH E PROVISION QUA DEDUCTION OF TAX, THE OBLIGATION FOR WHICH IS NOT CONDITIONAL OR IN ANY M ANNER REQUIRED TO MATCH - IN TERMS OF TIME OR EVEN OTHERWISE - THE REVENUE RECOGNITION BY THE PAYEE, I.E., IS INDEPENDENT OF IT. THE MATTER IS ESSENTIALLY A TIMING ISSUE, THOUGH TH E OBLIGATION TO DEDUCT TAX TO THE EXTENT OF NON-REVENUE RECOGNITION BY THE PAYEE OBTAINS IN ANY CASE. IT MAY BE ARGUED THAT IT IS NEITHER PRACTICAL NOR FEASIBLE TO ANTICIPATE OR PRE DICATE THE EXTENT TO WHICH THE SIM CARDS WOULD REMAIN UNSOLD WITH THE DISTRIBUTORS AS AT THE YEAR/S-END, FOR THE ASSESSEE TO DEDUCT TAX THEREON. THE ARGUMENT IS MISCONCEIVED. WE ARE N OT IN ANY MANNER SUGGESTING THAT THE TDS PROVISION IS APPLICABLE ONLY TO THAT EXTENT, BU T ONLY THAT THE ULTIMATE LIABILITY IN RESPECT OF THE TAX NOT DEDUCTED WOULD OBTAIN ONLY QUA SUCH UNSOLD STOCK. IT IS TO BE BORNE IN MIND THAT IT IS ONLY THE QUESTION OF RECOVERY OF THE TAX NOT DEDUCTED OR DEPOSITED, OR THE EXTENT TO WHICH THE DEMAND RAISED ON IT COULD BE EN FORCED BY TREATING THE ASSESSEE AS AN ASSESSEE IN DEFAULT, WHICH IS BEING DECIDED. THE FO LLOWING EXTRACT FROM A RECENT ORDER BY THE TRIBUNAL (IN THE CASE OF ITO V. SHRI ANUPALLAVI FINANCE & INVESTMENTS IN ITA 1828/MDS./2009 DATED 10/12/2010) WOULD BE ILLUSTRAT IVE: 4.1 . PUT DIFFERENTLY, THE DEDUCTION OF TAX AT SOURCE DOE S NOT NECESSARILY, OR IS NOT REQUIRED TO, MARCH ALONGSIDE THE CORRESPONDING INCO ME, RECOGNITION OF WHICH BY THE RECIPIENT COULD BE EITHER ON ACCRUAL OR ON RECEIPT BASIS. THE ACCRUAL OF THE TAX LIABILITY ON INCOME WOULD ARISE ONLY ON THE SAME BEING/BECOMING ASSESSABLE. THERE IS THUS AN INHERENT MISMATCH, IN TERMS OF TIME, BETWEEN THE PA YMENT OF TAX (PER TDS) AND THE ITA.NOS. 108,110,111 & 113/COCH./2009 6 ACCRUAL OF TAX LIABILITY AGAINST THE CORRESPONDING INCOME, I.E., GIVEN THE FACT OF ADMISSION OF INCOME AS PER THE RELEVANT PROVISIONS OF LAW. I T IS IN VIEW OF AND TO ADDRESS THIS MISMATCH IN TIME, SO THAT THE TAX STANDS DEDUCTED W HILE THE CORRESPONDING INCOME, THOUGH ACCRUED HAS YET TO BE RECEIVED, OR THOUGH RE CEIVED, AS BY WAY OF AN ADVANCE, IS YET TO ACCRUE, THAT THE LAW [PER SECTION 199 R/W SS . 190 & 191] CLARIFIES THAT THE CREDIT FOR THE TDS SHALL BE AVAILABLE FOR THE YEAR FOR WHICH T HE CORRESPONDING INCOME IS ASSESSABLE. IT, I.E., THE LAW AS PROVIDED BY THE STATUTE, TO OU R MIND, COULD NOT GET CLEARER THAN THIS . 3.5 THE CREDIT FOR TDS, WHICH THE PAYER IS OBLIGED TO D EDUCT, WOULD INURE TO THE PAYEE ONLY FOR THE YEAR/S FOR WHICH THE CORRESPONDING INC OME IS DISCLOSED TO THE REVENUE. THE MATTER, THOUGH GOVERNED BY THE EXPLICIT AND UNAMBIG UOUS LANGUAGE OF THE STATUTE (S. 199 R/W SS. 190 & 191), HAS WITNESSED AN ALMOST UNA NIMOUS VIEW BY THE TRIBUNAL, EVEN AS THE MATTER HAS ATTAINED FINALITY AT ITS END WITH TH E DECISION IN THE CASE OF PRADEEP KUMAR DHIR V. CIT (ASSTT.) , 107 ITD 118 (CHD.). FURTHER STILL, THE CONCLUSION PART OF THE ORDER IN THE CASE OF ITO V. SHRI ANUPALLAVI FINANCE & INVESTMENTS (SUPRA) WOULD BE RELEVANT: 5. CONCLUSION THE ISSUE ARISING FOR OUR ADJUDICATION, I.E., THE Y EAR OF ALLOWANCE OF CREDIT FOR TDS STANDS ADDRESSED BY THE CLEAR LANGUAGE OF THE PROVISIONS I TSELF, WHICH MAKE IT ABUNDANTLY CLEAR THAT THE TDS IS QUA INCOME, AND THE CREDIT THEREOF, ACCORDINGLY, IS FO R THE YEAR/S OF ITS ASSESSMENT. THE SAME, RATHER, PRESENTS AN IDEAL SI TUATION WHERE THE COURSE YIELDED BY PLAIN COMMON SENSE MATCHES WITH THAT STATUTORILY PR OVIDED, I.E., ALLOW CREDIT FOR TDS AGAINST THE CORRESPONDING INCOME ON ITS ASSESSMENT, SO THAT EVEN THE ABSENCE OF SECTION 199 WOULD YIELD THE SAID COURSE IN VIEW OF THE DICT UM BY THE HON'BLE APEX COURT THAT TAX LAWS SHOULD BE APPLIED, AS FAR AS CIRCUMSTANCES MAY ADMIT, IN AN EQUITABLE MANNER [REFER: CIT V. GHOTLA J.H. (1985) 156 ITR 323 (SC)] . IN FACT, IN ALL THE DECISIONS CITED BY THE REVENUE IN ITS FAVOUR, I.E., EXCEPT FOR THE THI RD MEMBER DECISION, THE TRIBUNALS VERDICT ARISES FOLLOWING THIS APPROACH, AND IS WITH OUT REFERENCE TO SECTION 199 OF THE ACT. RULE 37BA FURTHER VALIDATES THE REVENUES STAND. TH E SAME STANDS BROUGHT ON THE STATUTE WITH EFFECT FROM A LATER DATE, TO PROVIDE FOR A COM PREHENSIVE GUIDELINE FOR ALL MATTERS RELATING TO THE ALLOWANCE OF CREDIT FOR TDS IN THE VARIETY OF SITUATIONS THAT GENERALLY OBTAIN. THE ARGUMENT OF NON-RETROSPECTIVITY OF THE SAID RULE - WHICH HAS NOT BEEN APPLIED BY THE REVENUE - BY THE LD. A.R., IS BOTH MISCONCEI VED AND SPECIOUS. CONCLUSION 4. THE DIFFERENCE BETWEEN THE NORMATIVE RATES AND THE DISCOUNTED RATE, IRRESPECTIVE OF WHETHER THE RELEVANT (PRE-PAID) TALK-TIME STANDS SO LD OUT BY THE CONCERNED DEALER/DISTRIBUTOR OR NOT, BEING ONLY IN THE NATURE OF A COMMISSION AGAINST SERVICES ITA.NOS. 108,110,111 & 113/COCH./2009 7 RENDERED, STANDS PAID/ALLOWED ON THE DELIVERY OF TH E SAME (IN THE FORM OF THE ACCESS DEVICE) AND, THUS, LIABLE FOR TAX DEDUCTION AT SOUR CE. TO THE EXTENT NOT SOLD, SO THAT THE COMMISSION TO THAT EXTENT HAS NOT BEEN REALISED BY THE DISTRIBUTOR/S, THE ASSESSEE COULD NOT VALIDLY PLEAD FOR THE ENTIRE COMMISSION ALLOWED TO THE DISTRIBUTORS AS BEING TAX-PAID - WHICH IS EVEN OTHERWISE A MATTER OF VERIFICATION - SO THAT NO RECOVERY TOWARD THE NON DEDUCTION OF TDS COULD BE MADE. IN VIEW OF THE FORE GOING, WE ONLY CONSIDER IT FIT AND PROPER UNDER THE CIRCUMSTANCES, THAT THE MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO ENABLE THE ASSESSEE A REASONAB LE OPPORTUNITY TO PRESENT ITS CASE BEFORE HIM IN RESPECT OF THE EXTENT TO WHICH THE LI ABILITY TO TDS COULD BE CONSIDERED AS SATISFIED FOR THE REASON OF THE CORRESPONDING INCOM E HAVING BEEN DISCLOSED BY THE PAYEE TO THE REVENUE, AND TAX THEREON PAID, AND WHO SHALL DO SO PER A SPEAKING ORDER, IN ACCORDANCE WITH LAW, KEEPING IN VIEW THE OBSERVATIO NS BY THE HONBLE JURISDICTIONAL HIGH COURT IN ITS CASE, AS WELL AS BY US AFORESAID. WE D ECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEALS ARE A LLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 25TH JANUARY, 2011 GJ COPY TO: 1. VODAFONE ESSAR CELLULAR LTD., XL/5115, ASHIS BUI LDING, SECOND FLOOR, SHANMUGHAM ROAD, ERNAKULAM. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, TDS, KOCH I. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-III, KO CHI 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTR AR)