Vodafone Idea Limited (formerly Idea Cellular Limited), Kolkata V. Addl. C.I.T.-TDS,Range-2, Kolkata

ITA 1269/KOL/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9837 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-07-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 27-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RANAK DASHI
• Keywords: Application of stay; TDS
• Section: 201(1); 254(2); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENCH KOLKATA BEFORE SHRI S. S. GODARA, JM & DR. A.L. SAINI, AM S.A NO.52 & 53/KOL/2019 (A/O ITA NO.1269 & 1270/KOL/2019) ( [ [ / ASSESSMENT YEAR:2012-13 & 2013-14) VODAFONE IDEAL LIMITED (FORMERLY IDEA CELLULAR LIMITED) 7 TH FLOOR, DN 52, SECTOR-5, SRIJAN TECH PARK, SALT LAKE, NORTH 24- PARGANAS, KOLKATA 700091. VS. ADDL. CIT-TDS, RANGE-2, KOLKATA ./ ./PAN/GIR NO.: AAACB2100P (APPELLANT) .. (RESPONDENT) & ITA NO.1269 & 1270/KOL/2019 ( [ [ / ASSESSMENT YEAR:2012-13 & 2013-14) VODAFONE IDEAL LIMITED (FORMERLY IDEA CELLULAR LIMITED) 7 TH FLOOR, DN 52, SECTOR-5, SRIJAN TECH PARK, SALT LAKE, NORTH 24- PARGANAS, KOLKATA 700091. VS. ADDL. CIT-TDS, RANGE-2, KOLKATA ./ ./PAN/GIR NO.: AAACB2100P (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI RANAK DASHI, FCA RESPONDENT BY : SHRI ABANI KANTA NAYAK, CIT-DR / DATE OF HEARING : 24/07/2019 /DATE OF PRONOUNCEMENT : 20/09/2019 / O R D E R PER SHRI S. S. GODARA: THESE TWO ASSESSEES STAY APPLICATIONS FILED U/S 254(2) OF THE ACT SEEKS TO RESTRAIN THE DEPARTMENT FROM AFFECTING RECOVERY OF THE IMPUGNED PENALTIES AMOUNTING TO RS.4,40,32,755/- AND 3,79,49,725/- IN RELATION TO ASSESSMENT YEARS 2012-13 & 2013-14; RESPECTIVELY. 2. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL CONTENTIONS AGAINST AND IN SUPPORT OF CORRECTNESS OF BOTH THE LOWER AUTHORITIES IDENTICAL ACTION IMPOSING S.A NO.52 & 53/KOL/2019 &ITA NO.1269 & 1270/KOL/2019 VODAFONE IDEAL LIMITED (FORMERLY IDEA CELLULAR LIMITED) ASSESSMENT YEAR:2012-13 & 2013-14 PAGE | 2 SECTION 271C PENALTIES IN ISSUE. WITH THE CONSENT OF BOTH THE PARTIES, WE TAKE UP THE MAIN APPEALS FOR ADJUDICATION. 3. COMING TO THE BASIC RELEVANT FACTS, WE FIND THAT THE ONLY ISSUE IN BOTH THESE TWO APPEALS IS THAT OF ASSESSEES LIABILITY TO DEDUCT TDS ON THE PRE-PAID MOBILE RECHARGE COUPONS/VOUCHERS ISSUED TO ITS DISTRIBUTORS IN CELLULAR SERVICES OPERATIONS BUSINESS. THE ASSESSEE HAD ADMITTEDLY NOT DEDUCTED TDS ON THE SAID PREPAID MOBILE RECHARGE COUPON/VOUCHERS ON THE GROUND THAT THE SAME NOWHERE INVOLVED ANY COMMISSION COMPONENT SINCE IT WAS A CASE OF PRINCIPAL TO PRINCIPAL ONLY. BOTH THE ASSESSING OFFICER AS WELL AS CIT(A) REJECTED ITS EXPLANATION TO THIS EFFECT AND TREATED IT AS AN ASSESSEE IN DEFAULT U/S 201(1) AND 201(1A) PROCEEDINGS. THEY FURTHER INITIATED THE IMPUGNED PENAL ACTION U/S 271C OF THE ACT ON ACCOUNT OF ASSESSEES FAILURE IN DEDUCTING THE ABOVE-STATED TDS. CASE FILES SUGGEST THAT THE SAID QUANTUM ACTION STANDS UPHELD IN THIS TRIBUNALS ORDER DATED 31.05.2018. IT IS IN VIEW OF THESE FACTS THAT THE LOWER AUTHORITIES HAVE IMPOSED PENALTIES ON THE ASSESSEE IN BOTH THESE ASSESSMENT YEARS FOR HAVING NOT DEDUCTED TDS IN CASE OF THE PREPAID MOBILE RECHARGE COUPONS/VOUCHERS ISSUED/SOLD TO THE DEALERS. 4. LEARNED AUTHORIZED REPRESENTATIVE VEHEMENTLY SUBMITS DURING THE COURSE OF HEARING THAT THE ASSESSING OFFICER AS WELL AS CIT(A) HAVE ERRED IN LAW AS WELL AS ON FACTS IN IMPOSING THE IMPUGNED PENALTIES ALLEGING NON-DEDUCTION OF TDS ON THE ABOVE SAID PREPAID MOBILE RECHARGE COUPON/VOUCHERS. HE REFERS TO THE RELEVANT DISTRIBUTION AGREEMENT EXECUTED BETWEEN ASSESSEE AND ONE OF ITS DEALERS M/S SHIVAM TELESERVICES THAT THE LATTER HAD NOWHERE ACTED AS ITS COMMISSION AGENT. IT IS CLARIFIED THAT THE FACTUAL POSITION IS NO DIFFERENT IN ALL OTHER CASES AS WELL. THE REVENUES CASE ON THE OTHER HAND IS THAT THE ASSESSEE HAS NOT COMPLIED WITH THE RELEVANT TDS DEDUCTION CONDITION IN RESPECT OF THE PREPAID MOBILE COMMISSION VOUCHERS ISSUED TO THE DEALERS AND THEREFORE, IMPUGNED PENALTY ARE LIABLE TO BE UPHELD. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE RIVAL CONTENTIONS. THE ABOVE NARRATED FACTS AND CIRCUMSTANCES SUFFICIENTLY INDICATES THAT THE IMPUGNED PENALTIES HAVE BEEN IMPOSED BY BOTH THE LOWER AUTHORITIES AFTER HOLDING THAT THE S.A NO.52 & 53/KOL/2019 &ITA NO.1269 & 1270/KOL/2019 VODAFONE IDEAL LIMITED (FORMERLY IDEA CELLULAR LIMITED) ASSESSMENT YEAR:2012-13 & 2013-14 PAGE | 3 ASSESSEES PREPAID MOBILE RECHARGE COUPONS ISSUED TO ITS DISTRIBUTORS INVOLVED COMMISSION INCOME ELEMENT INVITING TDS DEDUCTION. WE FIND THAT THE INSTANT ISSUE INVOLVES VARYING JUDICIAL OPINIONS FROM HONBLE HIGH COURTS AGAINST AND ASSESSEES FAVOUR. HONBLE JURISDICTIONAL HIGH COURT HAS DECIDED THE ISSUE AGAINST THE ASSESSEE IN BHARTI CELLULAR LTD. VS. ACIT [2013] 354 ITR 507 (CAL) WHEREAS HONBLE HIGH COURT OF RAJASTHAN IN ASSESSEES CASE ITSELF ITA NO.90-92/2018 DATED 12.04.18, HONBLE KARNATAKA HIGH COURT IN BHARTI AIRTEL VS. DCIT 372 ITR 33 AS WELL AS VARIOUS NON-JUDICIAL TRIBUNALS ORDERS HAVE HELD IN ITS FAVOUR ON QUANTUM AS WELL AS PENALTY ISSUE PERTAINING TO TDS DEDUCTION ON THE VERY KIND OF PREPAID MOBILE RECHARGE COUPONS. ALL THIS SUFFICIENTLY INDICATES THAT WE ARE DEALING WITH A HIGHLY DEBATABLE QUANTUM ISSUE WHEREIN THE RELEVANT LIS IS PENDING BEFORE HONBLE APEX COURT. THEIR LORDSHIPS LANDMARK DECISION IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158(SC) SETTLED THE LAW LONG BACK THAT EACH AND EVERY QUANTUM DISALLOWANCE/ADDITION DOES NOT ATTRACT THE CONSEQUENTIAL PENAL ACTION SINCE THE TWO PROCEEDINGS ARE DISTINCT IN NATURE. KEEPING IN MIND THE SAID FINE DISTINCTION, WE SOUGHT REVENUES ASSISTANCE TO PINPOINT ANY COMMISSION ELEMENT INVOLVED IN ASSESSEES AGREEMENT (SUPRA) WITH ITS DISTRIBUTOR FOR THE LIMITED PURPOSE OF THE IMPUGNED PENALTY. IT HAS FAILED TO POINT OUT ANY SUCH COMMISSION ELEMENT THEREIN. WE HOLD IN THESE PECULIAR FACTS THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN IMPOSING SECTION 271C PENALTIES TO RS.4,40,32,755/- AND 3,79,49,725/-. THE SAME ARE ORDERED TO BE DELETED. THE ASSESSEE SUCCEEDS IN ITS TWO MAIN APPEAL IN ITA NO.1296/KOL/2019 & 1270/KOL/2019. 6. TO SUM UP, THE ASSESSEES S.A NO.52 &53/KOL/2019 ARE DISMISSED AS NOT PRESSED AND MAIN APPEALS ITA NO.1269&1270/KOL/2019 ARE ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 20.09.2019. SD/- ( A. L. SAINI ) SD/- (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER /KOLKATA; / DATE:20/09/2019 (RS, SR.PS) S.A NO.52 & 53/KOL/2019 &ITA NO.1269 & 1270/KOL/2019 VODAFONE IDEAL LIMITED (FORMERLY IDEA CELLULAR LIMITED) ASSESSMENT YEAR:2012-13 & 2013-14 PAGE | 4 / COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER ASSISTANT REGISTRAR, I.T.A.T, KOLKATA BENCHES, KOLKATA . 1. THE APPELLANT - VODAFONE IDEAL LIMITED (FORMERLY IDEA CELLULAR LIMITED) 2. THE RESPONDENT- ADDL. CIT-TDS, RANGE-2, KOLKATA 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, 6. [ / GUARD FILE.