Vodafone South Ltd., Kolkata V. DCIT, (TDS) CIR-59 (TDS), KOLKATA, Kolkata

ITA 1502/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1119 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 17-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANASVINI B
• Assessee Lawyers: T VARKEY JUDIC IA L M EMBER
• Keywords: Initiation of penalty proceedings; Capital receipt
• Section: 201(1)

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI ABY.T VARKEY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1499 - 1502 / KOL / 2015 ASSESSMENT YEARS :2010-11 & 2011-12 VODAFONE EAST LTD. (NOW AMALGAMATED WITH VODAFOND MOBILE SERVICES LTD .), 11, DR. U.N. BRAHMACHARI STREET, KOLKATA-17 [ PAN NO.CALUO 1146 F & CALHO 2158 C ] V/S . DCIT, (TDS), CIRCLE-59 (TDS), KOLKATA /APPELLANT .. / RESPONDENT ITA NO.136 - 137/KOL/2016 ASSESSMENT YEAR: 2012-13 VODAFONE MOBILE SERVICES LTD.(FORMERLY KNOWN AS VODAFONE SOUTH LTD, WHICH NOW STANDS MERGED WITH VODAFONE MOBILE SERVICES LTD .), 11, DR. U.N. BRAHMACHARI STREET, KOLKATA-17 [ PAN NO.CALHO 2158 C & CALUO 1146 F ] V/S . ACIT, (TDS), CIRCLE-59 (TDS), KOLKATA /APPELLANT .. / RESPONDENT ITA NO.1537 - 1540/KOL/2015 ASSESSMENT YEARS: 2010-11 & 2011-12 ACIT, CRICLE-3(TDS) 10-B,, MIDDLETON ROW, 7 TH FLOOR, KOLKATA-71 V/S . VODAFONE EAST LTD. 11, DR. U.N. BRAHMACHARI STREET, KOLKATA-17 [ PAN NO. AAAC 3796 J TAN NO.CALUO 1146 F ] ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 2 /APPELLANT .. / RESPONDENT ITA NO.232 - 233/KOL/2016 ASSESSMENT YEAR: 2012-13 ACIT, CRICLE-3(TDS) 10-B,, MIDDLETON ROW, 7 TH FLOOR, KOLKATA-71 ACIT, CIRCLE-3(TDS), 10-B, MIDDLETON ROW, 7 TH FLOOR, KOLKATA-71 V/S . V/S . VODAFONE MOBILE SERVICES LTD. (FORMERLY KNOWN AS VODAFONE EAST LTD.)11, DR. U.N. BRAHMACHARI STREET, KOLKATA-17 [ TAN NO.CALUO 1146 F ] VODAFONE MOBILE SERVIES LTD. (FORMERLY KNOWN AS VODAFONE SOUTH LTD.), 11, DR. U.N. BRAHMACHARI STREET, KOLKATA-17 [ TAN NO. CALHO 2158 C ] /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI DEEPAK CHOPRA, ADVOCATE & SHRI MANASVINI BAJPAI, ADVOCATE /BY RESPONDENT MD. USMAN, CIT-DR /DATE OF HEARING 04-10-2017 /DATE OF PRONOUNCEMENT 26-10-2017 / O R D E R PER BENCH:- OUT OF 12 APPEALS SIX EACH BY THE ASSESSEE AS WE LL AS REVENUE ARE DIRECTED AGAINST THE DIFFERENT ORDERS OF COMMISSION ER OF INCOME TAX (APPEALS)-24, KOLKATA DATED 23.09.2015 & 26.11.2015 . ASSESSMENTS WERE FRAMED BY ACIT/DCIT(TDS), CIRCLE-3/CIRCLE-59 KOLKAT A U/S 201(1)/201(1A) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) VIDE THEIR ORDERS DATED 28.01.2013, 28.03.2013 & 30.03..2014 FOR ASSE SSMENT YEARS 2010-11 TO 2012-13 RESPECTIVELY. ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 3 SHRI DEPAK CHOPRA AND SHRI MANSVINI BAJPAAI, LD. AD VOCATE APPEARED ON BEHALF OF ASSESSEE AND MD. USMAN LD. DEPARTMENTAL R EPRESENTATIVE APPEARED ON BEHALF OF REVENUE. 2. AT THE OUTSET IT WAS OBSERVED THE ISSUES IN ALL THE APPEALS ARE COMMON EXCEPT THE AMOUNT INVOLVED. THEREFORE, WE HEARD THE M TOGETHER AND DEEM IT APPROPRIATE TO DISPOSE OF THEM BY WAY OF THIS COMMO N ORDER FOR THE SAKE OF CONVENIENCE BY TAKING THE ITA 1501/KOL/2015 (A.Y. 2010-11) AS LEAD CASE. FIRST WE TAKE UP ITA NO.1501/KOL/2015 RELATING TO A .Y. 2010-11. 3. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL FILED BY ASSESSEE:- THE APPELLANT RESPECTFULLY SUBMITS THAT: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED COMMISSIONER OF INCOME TAX APPEALS - 24, KOLKATA [' LEARNED CIT(A)'] HAS ERRED IN PASSING THE ORDER UNDER SECTION 250 OF THE INCOME TAX ACT, 1961 ('ACT'), PARTIALLY CONFIRMING THE ALLEGAT IONS OF THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-59 (TDS) KOLKATA (TEAMED TDS OFFICER') IN RELATION TO REQUIREMENT OF TDS ON DISC OUNT EXTENDED TO PRE- PAID DISTRIBUTORS BY THE APPELLANT. EACH OF THE GROUND IS REFERRED TO SEPARATELY, WHICH MAY KINDLY BE CONSIDERED INDEPENDENT OF EACH OTHER. 1. GROUND NO. 1 - THE ORDER PASSED BY THE LEARNED I NCOME TAX OFFICER ('TDS OFFICER') IS BAD IN LAW 1.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT ADJUDICATING THE GR OUND OF APPEAL THAT THE APPELLANT CANNOT BE HELD AS AN ' ASSESSEE IN DEFAULT ' IN VIEW OF THE PROVISIONS OF SECTION 201(1) READ WITH SECTION 191 OF THE ACT AND THE JUDGMENT OF JAGRAN PRAKASHAN LIMITED VS DCIT (TDS) (21 TAXMANN.COM 489) (ALL HC), AS THERE IS NO FINDING B Y THE LEARNED TDS OFFICER WITH RESPECT TO THE FAILURE OF THE PRE-PAID DISTRIBUTORS TO PAY TAX DIRECTLY, WHICH IS A JURISDICTIONAL PRE-REQUISITE. 2. GROUND NO. 2 - WITHOUT PREJUDICE TO GROUND 1, TH E APPELLANT IS NOT LIABLE TO DEDUCT TAX ON DISCOUNT EXTENDED TO ITS PR E-PAID DISTRIBUTORS ON TRANSFER OF RIGHT TO PRE-PAID SERVICE 2.1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE CONTENTION OF THE LEARNED TDS OFFICER THAT THE APPELLANT IS TO BE TREATED AS AN ' ASSESSEE IN DEFAULT ' FOR NON- DEDUCTION OF TAX AT SOURCE UNDER SECTION 194H OF TH E ACT ON DISCOUNT ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 4 EXTENDED BY THE APPELLANT TO ITS PRE-PAID DISTRIBUT ORS ON TRANSFER OF RIGHT TO PRE-PAID SERVICE DURING THE SUBJECT FINANCIAL YE AR. 2.2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE CONTENTION OF TH E LEARNED TDS OFFICER THAT THE RELATIONSHIP BETWEEN THE APPELLANT AND ITS PRE- PAID DISTRIBUTORS IS NOT THAT OF' PRINCIPAL TO PRINCIPAL ' AND THE DISCOUNT EXTENDED BY THE APPELLANT TO THEM IS IN THE NATURE OF COMMISSION LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER SECTION 194H O F THE ACT. 2.3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE CONTENTION OF THE LEARNED TDS OFFICER IN APPLYING THE PROVISIONS OF SECTION 194H OF THE A CT TO THE CASE OF THE APPELLANT, WITHOUT TAKING COGNIZANCE OF THE FACT TH AT THE APPELLANT IS NOT RESPONSIBLE TO MAKE ANY PAYMENT/CREDIT TO THE PREPA ID DISTRIBUTORS TOWARDS THE DISCOUNT EXTENDED TO THEM AND RESPONSIB ILITY/OBLIGATION TO MAKE PAYMENT/CREDIT IS A CONDITION PRECEDENT FOR AP PLICATION OF SECTION 194H OF THE ACT WHICH IS ABSENT IN THE PRESENT CASE . 2.4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THAT DISCOUNT ALLOWED BY THE APPELLANT IS NOT INCOME IN THE HANDS OF ITS PRE-PAI D DISTRIBUTORS AND THAT INCOME, IF ANY, ARISES ONLY WHEN THE RIGHT TO PRE-P AID SERVICE IS FURTHER DISTRIBUTED/TRANSFERRED. BY THE DISTRIBUTORS. 2.5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THERE IS NO FLOW OF MONIES FROM THE APPELLANT TO ITS PRE-PAID DISTRIBUT OR BUT RATHER FROM THE DISTRIBUTOR TO THE APPELLANT, AND HENCE, THE PROVIS IONS OF SECTION 194H OF THE ACT FAIL TO APPLY. 2.6. (A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FA CTS OF THE CASE AND THE SUBMISSIONS MADE BY THE APPELLANT DISTINGUISHIN G ITS FACTS WITH THOSE CONSIDERED BY THE CALCUTTA HIGH COURT IN THE CASE OF BHARTI CELLULAR LTD VS ACIT AND THE KERALA HIGH COURT IN T HE CASE OF VODAFONE CELLULAR LIMITED. (B) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS FAILED TO CONSIDER THE RECENT JUDICIAL P RECEDENTS IN THE CASE OF VODAFONE SOUTH LIMITED REPORTED AS BHARTI AIRTEL LIMITED VS. DCIT (373 ITR 33 (KARNATAKA HIGH COURT) THEREAFTER FOLLO WED IN THE CASES OF TATA TELESERVICES [2013 (29 TAXMANN.CORN 261) (BANG ALORE IT AT), BHARTI HEXACOM LTD [2013] (33 TAXMANN.CO N 210) (DE LHI IT A T) AND IDEA CELLULAR LIMITED (ITA NOS. 356, 357, 358, 359/ JP/2012, 326, 327,328 & 329/JP/2012) (JAIPUR ITAT), WHERE ON SIMI LAR FACTS THE ISSUE OF NON-APPLICABILITY OF WITHHOLDING TAX PROVISIONS UNDER SECTION 194H OF THE ACT ON DISCOUNT EXTENDED TO PRE-PAID DISTRIBUTO RS HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT. ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 5 HEREINAFTER ALL THE GROUNDS ARE WITHOUT PREJUDICE T O GROUNDS 1 AND 2. 3. GROUND NO. 3 - NO INTEREST UNDER SECTION 201(LA) OF THE ACT CAN BE CHARGED 3.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING INTEREST UNDER SECTIO N 201(1)(1A) OF THE ACT FOR QUARTERS I, 2 AND 3 OF THE SUBJECT YEAR EVE N THOUGH THE TAX DEMAND UNDER SECTION 201(I) OF THE ACT FOR THESE QU ARTERS HAS BEEN DELETED BY HIM ON THE BASIS THAT THE SAME IS TIME B ARRED AND HENCE THE APPELLANT IS NOT AN ASSESSEE IN DEFAULT IN RESPECT OF THESE QUARTERS. 3.2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING LEVY OF INTEREST UNDE R SECTION 201(1A) OF THE ACT. 4. GROUND NO. 4 - LEVY OF PENALTY UNDER SECTION 221 OF THE ACT 4.1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C1T(A) HAS ERRED IN REJECTING THE GROUND OF APPEAL OF THE APPELLANT WITH RESPECT TO INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 221 OF THE ACT AGAINST THE APPELLANT. THE APPELLANT PRAYS THAT APPROPRIATE RELIEF BE GRAN TED BASED ON THE SAID GROUNDS OF APPEAL AND THE ACTS AND CIRCUMSTANCES OF THE CASE. 4. FIRST INTER-CONNECTED ISSUE RAISED BY ASSESSEE I N THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING O FFICER BY HOLDING THE DISCOUNT AS COMMISSION AND THEREFORE IT IS SUBJECT TO THE PROVISION OF SEC. 194H OF THE ACT. 5. BRIEFLY, THE FACTS ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A LIMITED COMPANY AND ENGAGED IN BUSINESS OF PROVIDING CELLUL AR MOBILE TELEPHONY SERVICES TO ITS CUSTOMERS. THE SERVICES ARE RENDERE D BY THE ASSESSEE THROUGH THE MEDIUM OF PRE-PAID & POST MOBILE CONNECTIONS. I N THE CASE ON HAND THERE IS NO DISPUTE WITH REGARD TO THE SERVICES RENDERED UNDER THE POST PAID SCHEME BY THE ASSESSEE. UNDER THE PREPAID SCHEME THE ASSESSEE SALES THE SIM / STARTER PACK AND PREPAID TALK TIME TO THE SUBSCRIBER OF PRE PAID CON NECTIONS. THE SUBSCRIBERS CAN ACQUIRE THE SIM / STARTER PACK AND PRE PAID TAL K TIME BY WAY OF RECHARGE COUPONS, ELECTRONIC TOP UP, INTERNET OR ANY OTHER M ODE. THUS, THE ASSESSEE FOR THE PURPOSE OF PROVIDING THE SIM / STARTER PACK AND PRE PAID TALK TIME TO ITS ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 6 SUBSCRIBERS HAS CREATED A DISTRIBUTION NETWORK BY A PPOINTING THE DISTRIBUTORS EXCLUSIVELY FOR ITS PRE-PAID CONNECTIONS. IN THE C ASE ON HAND THE DISPUTES RELATES TO DISCOUNT PROVIDED BY THE ASSESSEE ON THE SALE OF PRE-PAID TALK TIME. THE ASSESSEE WAS SELLING THE RECHARGE COUPON / VOUC HERS AND STARTER PACK TO THE CUSTOMERS THROUGH THE NET OF DISTRIBUTORS. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT ASSESSEE W AS PROVIDING DISCOUNT TO ITS DISTRIBUTORS FROM THE MAXIMUM RETAIL PRICE ( MRP FOR SHORT) ON THE SALE OF PREPAID TALK TIME THROUGH THEM WHICH WAS IN NATURE OF COMMISSION. THEREFORE, ASSESSEE WAS LIABLE FOR DEDUCTION OF TAX DEDUCTED A T SOURCE (TDS) U/S. 194H OF THE ACT ON THE DISCOUNT OFFERED TO ITS DISTRIBUT ORS. THE AO FURTHER OBSERVED THAT ASSESSEE WAS DEDUCTING TDS ON THE COMMISSION PAID TO ITS DISTRIBUTORS UNDER THE SCHEM E OF POST-PAID CONNECTIONS. BUT THE ASSESSEE FAILED TO DEDUCT TDS ON THE DISCOU NT OFFERED TO ITS DISTRIBUTORS ON THE SALE OF RECHARGE COUPON FOR PRE -PAID CONNECTIONS. 5.1 IN THIS REGARD THE ASSESSEE TOOK THE STAND THAT THE ACT OF SELLING THE RECHARGE COUPON TO THE SUBSCRIBERS IS A TRANSACTION OF SALE. SUCH TRANSACTION BETWEEN THE ASSESSEE AND THE DISTRIBUTORS WAS ON PR INCIPAL TO PRINCIPAL BASIS. THE DISTRIBUTOR WAS AUTHORIZED TO SALE THE RECHARGE COUPON TO ITS RETAILERS AT ANY PRICE NOT EXCEEDING THE MRP. SIMILARLY, THE RET AILERS WERE AUTHORIZED TO SALE THE RECHARGE COUPONS AT ANY PRICE BUT NOT EXCE EDING THE MRP AS EVIDENT FROM CLAUSE 7 OF THE AGREEMENT BETWEEN THE ASSESSEE AND DISTRIBUTORS. THEREFORE, THE TRANSACTION OF SALE OF THE RECHARGE COUPONS THROUGH THE DISTRIBUTION NETWORK WAS OUTSIDE PURVIEW OF TDS PRO VISION. IT IS BECAUSE THE ACT OF SELLING THE COUPONS THROUGH THE DISTRIBUTORS IS MERELY A CONTRACT OF SALE. HOWEVER, AO FURTHER OBSERVED CERTAIN FACTS AS ENUME RATED BELOW : 1. THE DEFINITION OF COMMISSION PROVIDED U/S 194H O F THE ACT IS INCLUSIVE WHICH MAY BE RECEIVED DIRECTLY OR INDIREC TLY. THUS IN THE PRESENT CASE THE DISTRIBUTORS ON THE PURCHASE OF PR EPAID TALK TIME IMMEDIATELY GETS THE DISCOUNT FROM THE MRP AMOUNT W HICH IS NOTHING BUT COMMISSION. THE DISTRIBUTOR ON FURTHER SALE OF THE RECHARGE COUPONS REALIZES THE AMOUNT OF COMMISSION. ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 7 2. THE ESSENCE OF TRANSACTION FOR THE SALE OF TALK TIME IS SAME UNDER BOTH THE MODELS I.E. PREPAID & POST PAID CONNECTION S. THE ASSESSEE IS DEDUCTING THE TDS UNDER SECTION 194H ON THE PAYM ENT MADE TO THE DISTRIBUTORS OF POST PAID CONNECTIONS BUT THE S AME IS NOT BEING DONE IN THE CASE OF PREPAID DISTRIBUTORS. 3. THE RELATIONSHIP BETWEEN THE ASSESSEE AND DISTRI BUTORS OF PREPAID CONNECTIONS IS NOT ON PRINCIPAL TO PRINCIPAL BASIS ESSENTIALLY BUT THERE EXISTS AN AGENCY AGREEMENT BETWEEN THEM AS EVIDENT FROM THE SEVERAL CLAUSES OF AGREEMENT WHICH READS AS UNDER: VESL IS CURRENTLY ENGAGED IN THE BUSINESS OF PROVID ING CELLULAR MOBILE TELEPHONE SERVICES OF ITS CUSTOMERS THROUGHO UT BENGAL SERVICE AREA AND WISHES TO ESTABLISH DISTRIBUTORS T O DISTRIBUTE ITS SERVICE TICKETS. VESL HEREBY APPOINT THE DISTRIBUTOR, AND THE DISTRI BUTOR HEREBY AGREES TO OPERATE AS DISTRIBUTOR IN ACCORDANCE WITH THE TERMS AND CONDITIONS CONTAINED HEREIN[CLAUSE 2 OF THE AGREEM ENT] THE DISTRIBUTOR SHALL BE RESPONSIBLE FOR THE SALE O F THE SERVICE TICKETS EXCLUSIVELY FOR VESL AS SET OUT HEREUNDER. THE DISTRIBUTOR HEREBY AGREES, CONFIRMS AND UNDERTAKES; (III) TO CARRY OUT ITS RESPONSIBILITIES WITH REGARD TO E TOPUP AS DETAILED IN THE ANNEXURE-II; (IV) TO STRICTLY ADHERE TO AND COMPLY WITH THE BRAN D-IMAGE GUIDELINES SET OUT IN THE ANNEXURE-III; [CLAUSE 7 OF THE AGREEMENT] THE PARTIES AGREE THAT UPON TERMINATION OF THIS AGR EEMENT FOR ANY REASON THE DISTRIBUTOR WILL RETURN ALL EQUIPMENT AND FURNITURE SUPPLIED BY VESL FORTHWITH UPON REQUEST AND REMOVE ALL VESL SIGNAGE AND ALL OTHER ITEMS INDICATING THAT THE PRE MISES WERE OPERATED AS AN VESL DISTRIBUTOR. THE DISTRIBUTOR HE REBY AGREES TO GRANT AN IRRECOVERABLE LICENSE TO VESL AND ITS D ESIGNATED EMPLOYEES TO ENTER THE PREMISES AND REMOVE ALL VESL SIGNAGE IF THE DISTRIBUTOR HAS NOT DONE SO ITSELF TO THE SATIS FACTION OF VESL WITHIN 7 DAYS OF TERMINATION OF THE AGREEMENT. [CLA USE 10.1 OF THE AGREEMENT]. THE DISTRIBUTOR SHALL NOT BE ENTITLED TO ANY COMPEN SATION OR INDEMNITY (WHETHER FOR LOSS OF DISTRIBUTION RIGHTS, GOODWILL OR OTHERWISE) AS A RESULT OF THE TERMINATION OF THIS A GREEMENT IN ACCORDANCE WITH ITS TERMS. [CLAUSE 10.2 OF THE AGRE EMENT] VESL SHALL NOT BE RESPONSIBLE FOR ANY POST DELIVER Y DEFECT IN THE SERVICE TICKETS. HOWEVER, VESL MAY AT ITS SOLE DISCRETION AND AFTER MAKING VERIFICATION AS IT MAY DEEM FIT, REPLACE ANY UNUSED ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 8 NON-WORKING REFILL SLIPS (PHYSICAL OR ELECTRONIC STOCK). [CLAUSE E TO ANNEXURE I] PROMPTLY INFORM THE COMPANY OF ANY FACTS OR OPINIONS OF WHICH THE DISTRIBUTOR BECOMES AWARE LIKELY TO BE RELEVANT IN RELATION TO THE COMMERCIAL EXPLOITATION OF THE SERVICE TICKETS AND WHICH ARE ADVANTAGEOUS OR DISADVANTAGEOUS TO THE INTERESTS OF VESL . [CLAUSE I )F) TO ANNEXURE III] NOT DURING THE CONTINUANCE OF THIS AGREEMENT [AND F OR THE PERIOD OF 1 YEAR AFTER ITS TERMINATION] (WHETHER ALONE OR JOINTLY AND WHETHER DIRECTLY OR INDIRECTLY) BE CONCERNED OR INTERESTED IN MARKETING, DISTRIBUTION OR SALE OF ANY PRODUCTS WHI CH ARE SIMILAR TO OR COMPETITIVE WITH ANY OF THE SERVICE TICKET OR W HICH PERFORM THE SAME OR SIMILAR FUNCTIONS; [CLAUSE 1 (I ) TO ANNEXURE III] USE VESLS TRADEMARKS AND TRADE NAMES RELATING THE SERVICE TICKETS ONLY IN THE REGISTERED OR AGREED STYLE IN C ONNECTION WITH THE MARKETING AND SALE OF THE SERVICE TICKETS AND SHALL NOT USE SUCH TRADEMARKS OR TRADE NAMES IN CONNECTION WITH A NY OTHER PRODUCTS OR SERVICES OR AS PART OF THE CORPORATE OR ANY TRADE NAME OF THE DISTRIBUTOR. [CLAUSE 1(N) ANNEXUR E III] NOT ALTER, OBSCURE, REMOVE, INTERFERE WITH OR ADD TO ANY OF THE TRADEMARKS, TRADE NAMES, MARKINGS OR NOTICES AFFIXE D TO OR CONTAINED IN THE SERVICE TICKETS OR THE SERVICE TIC KETS DOCUMENTATION AT THE TIME WHEN THEY ARE DELIVERED T O THE DISTRIBUTOR. [CLAUSE 1 (O) TO ANNEXURE III] KEEP SUFFICIENT STOCKS OF THE SERVICE TICKETS TO SATISFY CUSTOMER DEMAND. [CLAUSE 1 (Q) TO ANNEXURE III] PROVIDE VESL WITH QUARTERLY STOCK REPORTS SHOWING T HE DISTRIBUTORS STOCK OF EACH OF THE SERVICE TICKETS AT THE BEGINNING AND END OF EACH QUARTER AND THE MOVEMENT OF STOCKS DURING THE QUARTER. [CLAUSE 1(W) TO ANNEXURE III] PERMIT VESL AND ITS AUTHORIZED AGENTS AT ALL REASONABLE TIMES TO ENTER ANY OF THE DISTRIBUTORS PREMISES FOR THE PURPOSE OF ASCERTAINING THAT THE DISTRIBUTOR IS COMPLYING WITH ITS OBLIGATIONS UNDER THIS AGREEMENT [CLAUSE 1(Y) TO ANNEXURE III] COMPLETION OF ALL DOCUMENTATION AND FORMALITIES IN RESPECT OF SALES OF THE SERVICE TICKETS, INCLUDING. (III) PROPER VERIFICATION OF THE IDENTITY OF THE CUSTOMER S IN RESPECT OF THE SALE OF PREPAID CARDS AND PROPER DOCUMENTATION THEREOF A PER GUIDELINES OF CONCERNED AUTHORITIES; AND (IV) ENSURING COMPLETE AND PROPER DOCUMENTARY COMPLIANCE BY THE CUSTOMER INCLUDING PROPERLY COMPLETED CUSTOM ER AGREEMENT FORM/S, ENROLLMENT FORM/S [CLAUSE II(A) T O ANNEXURE III] BILL COLLECTION AND ACCEPTANCE OF PAYMENTS ON BEHAL F OF VESL FOR BILLS FOR CHARGES IN RESPECT OF CELLULAR SERVICES A ND THE SERVICE TICKETS ON THE FOLLOWING BASIS: ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 9 ANY PAYMENTS BY CHEQUE WILL BE PAYABLE TO VESL AND HELD FOR DAILY COLLECTION BY VESL. [CLAUSE II(D) TO ANNEXU RE III] DEMONSTRATION AND SALES OF VALUE-ADDED SERVICE OF V ESL. [CLAUSE II(F) TO ANNEXURE III] MAINTAIN SUCH RECORDS AND PROVIDE VESL WITH SUCH REPORTS AS MAY BE REQUIRED FOR EVALUATION OF PERFORMANCE FROM TIME TO TIME. [CLAUSE III(B) TO ANNEXURE III]] 4. THE TRANSACTION BETWEEN THE ASSESSEE AND DISTRIB UTOR IN RELATION TO SIM/ STARTER PACK AND RECHARGE COUPON IS NOT SALE & PURCHASE TRANSACTION BUT ACTUALLY IT REPRESENTS SERVICES PRO VIDED BY THE DISTRIBUTORS. SUCH SERVICES CAN NEITHER BE SOLD NOR PURCHASED BUT THESE CAN ONLY BE RENDERED. 5. THE ASSESSEE IS ALWAYS REMAINS THE OWNER OF THE SIM WHICH IS DEVICE USED TO ACCESS THE MOBILE NETWORK. THUS, THE AO IN VIEW OF ABOVE HELD THAT DISCOUNT OF FERED BY THE ASSESSEE IS NOTHING BUT THE COMMISSION IN TERMS OF PROVISION OF SEC. 194H OF THE ACT. ACCORDINGLY, THE AO TREATED THE ASSESSEE AS DEFAULT ER FOR NOT DEDUCTING TDS FOR AN AMOUNT OF RS.5,79,82,781.00 BEING 10% OF RS. 57,98,27,810.00 U/S 194H OF THE ACT. 6. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHEREAS ASSESSEE SUBMITTED THAT THE RELATIONSHIP BETWEEN AS SESSEE AND ITS DISTRIBUTORS ARE BASED ON PRINCIPLE-TO-PRINCIPLE BA SIS AND BUT THERE WAS NO PAYMENT MADE BY ASSESSEE TO ITS DISTRIBUTORS IN THE NAME OF COMMISSION RATHER, THE DISTRIBUTORS WERE MAKING PAYMENT TO ASS ESSEE FOR THE PURCHASE OF PREPAID TALK TIME COUPONS. AS SUCH, THERE WAS NO EL EMENT IN THE IMPUGNED TRANSACTION ATTRACTING THE PROVISION OF SEC. 194H O F THE ACT. THE IMPUGNED TRANSACTION BETWEEN ASSESSEE AND ITS DISTRIBUTORS W ERE IN THE NATURE OF SALE OF GOODS. THE DISTRIBUTORS WERE NOT AGENT OF ASSESSEE. HOWEVER, LD. CIT(A) DISREGARDED THE CLAIM OF ASSESSEE AFTER HAVING RELI ANCE ON THE JUDGMENT HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BHARATI CELLULAR LIMITED VS ACIT REPORTED IN 354 ITR 507 (CAL) BY OBSERVING AS UNDE R:- 6.2 IN MY VIEW THE DECISION OF HON'BLE HIGH COURT OF CALCUTTA IN THE CASE OF BHARATI CELLULAR LTD. IS APPLICABLE IN THE APPELLANT CASE. IN EFFECT ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 10 THE DISTRIBUTORS OR THE FRANCHISES HAVE BEEN MADE L IABLE AS AGENT AND THERE IS INDIRECT PAYMENT BY THE ASSESSEE TO THE FR ANCHISEES OF THE COMMISSION FOR THE SERVICE RENDERED WHATEVER THE TE RMS OF THE AGREEMENT, THE APPELLANT IS A PRINCIPAL EXERCISING OVERALL CONTROL ON THE BUSINESS, VARIOUS SCHEMES AND PRODUCT AND SERVICES, REDUCING THE DISTRIBUTORS OR FRANCHISEES TO AGENT. I, THEREFORE, AGREE WITH THE AOS VIEW THAT THE DISCOUNTS ARE COMMISSION U/S. 194H AN D THIS LIABLE TO THE PROVISION OF TDS. THIS GROUND IS, THEREFORE, NOT AL LOWED. 7. AGGRIEVED BY THIS, THE ASSESSEE HAS COME UP IN A PPEAL BEFORE US. 8. BEFORE US LD. AR FOR THE ASSESSEE FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 517 AND SUBMITTED THAT THE FACTS OF THE CASE I.E. BHARATI CELLULAR LIMITED (SUPRA) , WHICH RELIED BY THE LD. CIT(A) IS ARE ALTOGETHER DIFFERENT. THEREFORE THE PRINCIPLES LAID DOWN BY THE HONBLE J URISDICTIONAL HIGH COURT IN THE CASE OF BHARATI CELLULAR LIMITED (SUPRA) CANNOT BE APPLIED TO THE INSTANT CASE. THE RELEVANT EXTRACT OF THE JUDGMENT IS REPRO DUCED BELOW:- IN THIS CASE, READING ONE OF THE STANDARD AGREEMENT S IT DOES NOT APPEAR THAT THE SAME INTENDS TO CREATE RELATIONSHIP IN THE NATU RE OF PRINCIPAL TO PRINCIPAL. FROM CLS. 16, 16.1, 16.2 AND 16.3 OF AGREEMENT, IT EMERGES THOUGH NOMENCLATURE HAS BEEN USED FRANCHISEE THE AGREEMENT IS ESSENTIALLY THAT OF THE PRINCIPAL AND AGENT ALBEIT THE STIPULATION IN C L. 16.2. IN REAL SENSE THE FRANCHISEE ACTS ON BEHALF OF THE ASSESSEE FOR SELLI NG START UP PACK, PREPAID RECHARGE COUPONS TO THE CUSTOMERS OF ASSESSEE AND I T WILL BE CLEAR FROM CLS. 4.1, 4.3, 4.4 & 8.1 OF THE AGREEMENT. (PARAS 12 & 21) IT APPEARS FROM THE RECORDS IN THIS CASE THAT THE T RANSACTION IN CASE OF PREPAID SIM CARDS, AND RECHARGEABLE COUPONS, SUFFICIENT STO CKS ARE TO BE KEPT BY FRANCHISEE, AND THEN THE SAME ARE TO BE SOLD TO THE RETAILERS AT A RATE STIPULATED BY THE ASSESSEE, SAY AT RS. 324 AND THE RETAILER IS ALLOWED TO SELL IT TO THE ULTIMATE CUSTOMER AT THE MAXIMUM PRICE AGAIN FIXED BY THE ASSESSEE, SAY AT RS. 330. THE ASSESSEE IS TO REALIZE LESSER R ATE SAY AT RS. 317 PER SIM CARD FROM FRANCHISEE. THUS DISCOUNT OF RS. 7 IS GIV EN. THEREFORE AFTER SELLING ALL THE SIM CARDS AND PREPAID COUPONS TO THE RETAIL ERS THE FRANCHISEE IS TO MAKE PAYMENT OF SALE PROCEEDS TO THE ASSESSEE AFTER DEDUCTING A DISCOUNT OF RS. 7 PER SIM CARD. THUS THIS RECEIPT OF DISCOUNT @ RS. 7 IS IN REAL SENSE COMMISSION PAID TO THE FRANCHISEES. HENCE ALL THE T RAPPINGS OF LIABILITY AS AGENT, OF THE FRANCHISEE TOWARDS ASSESSEE SUBSISTS. THERE HAS BEEN INDIRECT PAYMENT BY THE ASSESSEE TO THE FRANCHISEE OF THE CO MMISSION AND THE SAME IS ATTRACTABLE UNDER S. 194H.CIT VS. IDEA CELLULAR LTD. (2010) 230 CTR (DEL) 43 : (2010) 35 DTR (DEL) 219 : (2010) 325 ITR 148 ( DEL) AND VODAFONE ESSAR CELLULAR LTD. VS. ASSTT. CIT (2010) 235 CTR (KER) 3 93 : (2010) 45 DTR (KER) 217 : (2010) 194 TAXMAN 518 (KER) CONCURRED WITH; AHMEDABAD STAMP ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 11 VENDOR ASSOCIATION VS. UNION OF INDIA (2002) 176 CT R (GUJ) 193 : (2002) 257 ITR 202 (GUJ) DISTINGUISHED. (PARAS 25 & 26) THE LD. AR FURTHER FAIRLY AGREED THAT THE HONBLE J URISDICTIONAL HIGH COURT IN THE CASE OF HUTCHISON TELECOM EAST LIMITED VS. CIT REPORTED IN 375 ITR 0566 (CAL) HAS DECIDED THE ISSUE AGAINST THE ASSESSEE BY OBSERVING AS UNDER:- THE TERMS AND CONDITIONS NOTICED ABOVE LEAVE NO MAN NER OF DOUBT THAT THE RELATIONSHIP BETWEEN PODDAR COMMUNICATIONS AND THE ASSESSEE APPEARING FROM THE AGREEMENT RELIED UPON BY MR. KHAITAN IS TH AT OF AN AGENT AND PRINCIPAL. PODDAR COMMUNICATIONS APPEARS TO HAVE BE EN EMPLOYED TO ACT ON BEHALF OF THE ASSESSEE FOR THE PURPOSE OF FEEDING T HE RETAILERS AND THROUGH THEM TO SELL THE SERVICES TO THE CONSUMERS. THE LD. AR FURTHER SUBMITTED THAT THE ABOVE JUDGMEN TS WERE RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT PERTAINING TO THE AYS 2003-04 & 2004-05 WHEN THE COMPANY WAS NOT OWNED BY THE PRESENT ASSES SEE I.E. VODAFONE. IN FACT DURING THE AYS 2004-05 THE COMPANY WAS OWNED B Y HUTCHISON TELECOM EAST LIMITED. THE AGREEMENT REFERRED BY THE HONBLE COURT I.E. PODDAR COMMUNICATION WAS THE OLD BUSINESS MODEL WHICH WAS CARRIED ON BY ERSTWHILE ASSESSEE I.E. HUTCHISON TELECOM EAST LIMITED. HOWEV ER, THE PRESENT ASSESSEE SUBSEQUENT TO THE ACQUISITION OF THE BUSIN ESS FROM HUTCHISON TELECOM EAST LIMITED HAS CHANGED THE BUSINESS MODEL . THE RELEVANT CLAUSE OF THE AGREEMENT REFERRED BY TH E BY THE HONBLE COURT I.E. PODDAR COMMUNICATION ARE REPRODUCED BELOW:- 5) SERVICE PROVIDERS DUTITIES IN ORDER TO PROVIDE THE SERVICES IN THE MANNER SPEC IFIED BY HTEL, THE SERVICE PROVIDER AGREES TO: (A) COMMIT MINIMUM MANPOWER AS UNDER AND COMPLY WIT H ALL STATUTORY REQUIREMENTS WITH REGARDS TO WAGS AND SERVICE CONDI TIONS OR ANY OTHER REGULATIONS CONCERNING SUCH EMPLOYEES; (B) ENSURE THAT ALL PAYMENTS TO THE DUE UNDER THIS AGRE EMENT ARE TENDERED IN A TIMELY MANNER; (C) COMPLY WITH IN REASONABLE TIME FRAMES AS DETERMINED BY HTEL FOR COMPLETION OF ANY OF ITS OBLIGATIONS HEREUNDER; (D) IMMEDIATELY ADVISE HTEL AS SOON AS IT COMES TO KNOW THAT ANY PERSON IS INFRINGING OR VIOLATING OR IS ATTEMPTING OR PLANNING TO INFRINGE OR VIOLATE ANY INTELLECTUAL PROPERTY RIGHT S OWNED OR USED BY ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 12 HTEL AND ITS SERVICES AND, IF REQUESTED, FORWARD PR OMPTLY, A WRITTEN REPORT SETTING FORTH ALL THE RELEVANT INFORMATION I N ITS KNOWLEDGE. (E) COMPLY WITH ALL OF HTELS REQUIREMENTS IN RESPE CT OF INVOICING AND ACCOUNTS; (F) UNLESS OTHERWISE AGREED IN WRITING, BE SOLELY R ESPONSIBLE FOR ALL COSTS AND EXPENSES FOR ALL OPERATING EXPENSES INCUR RED IN CONNECTION THEREWITH; (G) MAINTAIN HTELS BRAND IMAGE AND COMPLY WITH ALL DIRECTIONS AND GUIDELINES ISSUED IN RESPECT OF THE BRAND AND NOT D O ANYTHING TO TARNISH, SPOIL OR REDUCE THE VALUE OF THE SAME; (H) PROVIDE REPORTS ON CUSTOMERS, EXPENSES, PURCHAS ES, INVENTORY, COMPLIANCE AND ANY OTHER RELEVANT DETAILS IN THE FO RMAT AND AS REQUIRED BY HTEL; (I) MAKE PAYMENT TO HTEL FOR ANY AMOUNTS DUE UNDER THIS AGREEMENT BY WAY OF ACCOUNT PAYEE CHEQUE OR BANKERS DRAFT OR IN SUCH OTHER MANNER AS HTEL MAY AGREE; (J) PAY ALL LICENSE FEES, TAXES, DUTIES, SERVICE TA X AND ANY OTHER CHARGES, ASSESSMENTS OR PENALTIES WHETHER STATUTORY OR OTHERWISE LEVIED BY ANY AUTHORITY IN CONNECTION WITH PROVIDIN G THE SERVICES; (K) PAY THE SERVICE TAX TO HTEL AS MAY BE ASSESSED AND LEVIED FROM TIME TO TIME. (L) WHILE THIS AGREEMENT IS IN FORCE, NOT ENTER INT O AGREEMENT WITH ANY OTHER PARTY WHERE SUCH PARTY COULD BE CONSIDERED TO BE A COMPETITOR TO THE BUSINESS; (M) ENSURE THAT ALL ITS STAFF DEAL WITH THE CUSTOME RS IN A FRIENDLY AND COURTEOUS MANNER AND COMPLY WITH ALL GUIDELINES ISS UED BY THE SERVICE PROVIDER OR HTEL; AND (N) COMPLY WITH ALL OTHER INSTRUCTIONS AND DIRECTIO NS TO BE ISSUED BY HTEL FROM TIME TO TIME AS CONSIDERED NECESSARY TO F URTHER THE SPRIT AND OBJECTS OF THIS AGREEMENT. (O) COMPLY WITH REQUIREMENT OF THE LAW, IN FORCES A T THE RELEVANT TIME INCLUDING BUT NOT LIMITED TO CONSUMER PROTECTION LE GISLATION SUCH AS THE MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT, 1969; THE CONSUMER PROTECTION ACT, 1986 AND OTHER RELEVANT LA WS; (P) COVENANTS THAT THE PERSONNEL EMPLOYED BY IT IN ITS BUSINESS SHALL NOT BE TREATED AS THE EMPLOYEE OF HTEL; AN IT ALONE SHALL BE FULLY RESPONSIBLE FOR COMPLIANCE WITH PROVISIONS OF LAW, AND FOR ALL COMPENSATION, COMMISSION AND BENEFITS ARISING OUT O F THEIR EMPLOYMENT / AGREEMENT AND WILL ASSUME FULL RESPONS IBILITY FOR THEIR ACTS. (Q) IN CASE ANY SUBSCRIBER IS INTRODUCED BY SERVICE PROVIDER WITH AN INTENT TO COMMIT A FRAUD OR CAUSE ANY LOSS TO HTEL THEN SERVICE PROVIDER SHALL BE SOLELY RESPONSIBLE TO MAKE GOOD T HE LOSS/DAMAGES, CAUSED BY SUCH SUBSCRIBER TO HTEL AND IN SUCH CASE THE AGREEMENT SHALL BE TERMINATED FORTHWITH. ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 13 (R) HTEL IS SOLELY ENTITLED WITH THE SERVICE PROCES S SHALL BE ISSUED BY HTEL; AND THE SERVICE PROVIDER SHALL BE BOUND BY TH E SAME AS IN FORCE FROM TIME TO TIME. HTEL MAKES NO WARRANTY EIT HER EXPRESS OR IMPLIED CONCERNING HHTEL;S SERVICES FOR A PARTICULA R USE OR PURPOSE. (S) THE SERVICE PROVIDER SHALL NOT TRANSFER, ASSIGN , SUB-LICENCE, ENCUMBER OR IN ANY OTHER WAY DEAL WITH ANY OF ITS R IGHTS OR OBLIGATIONS UNDER THIS AGREEMENT WITHOUT THE PRIOR WRITTEN CONSENT OF HTEL SUCH RIGHTS AND OBLIGATIONS BEING PERSONAL TO THE SERVICE PROVIDER. 6) HTELS DUTIES HTEL AGREES TO; (A) PROVIDE ITS EXPERTISE AND TO GUIDE AND ASSIST T HE SERVICE PROVIDER IN THE VARIOUS ACTIVITIES PERTAINING TO THE SETTING UP AND OPERATION OF THE SERVICES AND TO PROVIDE CONTINUING ASSISTANCE IN PR OVIDING THE SERVICES USING THE LATEST TECHNIQUES AND SKILLS AVA ILABLE TO HTEL; (B) PROVIDE ASSISTANCE (ON REQUEST FORM THE SERVICE PROVIDER) TO ITS STAFF ON SERVICE KNOWLEDGE AND UPDATES; (C) PROVIDE AND MAINTAIN AN UP-TO-DATE LIST OF SERV ICES AND/OR SUPPLIERS FORM WHICH THE SERVICE PROVIDER MAY PURCHASE STOCK SERVICES OR ACCESSORIES; (D) ENSURE THAT ALL PAYMENTS DUE TO THE SERVICE PRO VIDER IN ACCORDANCE WITH THIS AGREEMENT ARE PAID WITHIN THE AGREED PERI OD. 7) PAYMENT IN CONSIDERATION OF THE SERVICE PROVIDER FULFILLING ITS OBLIGATIONS HEREIN HTEL WILL PAY THE SERVICE PROVIDER THE FOLLOWING: COMMISSION AT THE RATES AS PER HTELS POLICY FROM T IME TO TIME AND SUBJECT TO APPLICABLE TAXES AND LAWS AS MAY BE IN F ORCE AT THE RELEVANT TIME AND ON PAYMENT TERMS AS MAY BE COMMUNICATED TO THE SERVICE PROVIDER BY HTEL FORM TIME TO TIME. THE ABOVE AGREEMENT CLEARLY SHOWS THAT THERE WAS AN AGENCY AGREEMENT BETWEEN THE ERSTWHILE ASSESSEE AND ITS DISTRIBUTOR. THEREFORE THERE WAS NO AMBIGUITY TO THE APPLICABILITY OF THE PROVISIONS OF TDS UNDER SECTION 194H OF THE ACT. 8.2 HOWEVER THE PRESENT ASSESSEE HAS MODIFIED THE A GREEMENT WITH ITS DISTRIBUTORS AND ITS RELEVANT CLAUSES OF THE AGREEM ENT WITH M/S RAJSIKHA COMMUNICATION, ONE OF THE DISTRIBUTORS, FOR PREPAID BUSINESS MODEL W.E.F. 21 ST APRIL 2009 ON SAMPLE BASIS ARE REPRODUCED BELOW:- 2. APPOINTMENT ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 14 VESL HEREBY APPOINTS THE DISTRIBUTOR, AND THE DIS TRIBUTOR HEREBY AGREES TO OPERATE AS DISTRIBUTOR IN ACCORDANCE WITH THE TERMS AND CONDITIONS CONTAINED HEREIN. THE PARTIES ACKNOWLEDG E THAT SUCH APPOINTMENT IS NON-EXCLUSIVE AND THAT VESL MAY, IN ITS SOLE DISCRETION, ESTABLISH OTHER DISTRIBUTOR/ASSOCIATES AN APPOINT S UCH OTHER PERSONS IN THIS BEHALF. 3.SALE AND PURCHASE OF THE SERVICE TICKETS 3.1 THE SALE AND PURCHASE OF THE SERVICE TICKETS A BETWEEN VESL AND THE DISTRIBUTOR SHALL BE GOVERNED BY VESLS STANDAR D TERMS AND CONDITIONS OF SALE AS SET OUT IN THE ANNEXURE-I (IN CLUDING ANY MODIFICATION THEREOF BY VESL FROM TIME TO TIME). 3.2 THE DISTRIBUTOR AGREES TO DEPOSIT WITH VESL AS SECURITY DEPOSIT A SUM AS MENTIONED IN PART II OF THE SCHEDULE I AND K EEP DEPOSITED WITH VESL AT ALL TIMES DURING THE SUBSISTENCE OF THIS AG REEMENT, SUCH SUM OF MONEY AS MAY BE DECIDED BY VESL FROM TIME TO TIM E. THE AMOUNT OF DEPOSIT WILL BE REFUNDED ON TERMINATION OF THIS AGR EEMENT AFTER DEDUCTING THERE FROM ALL AMOUNTS OUTSTANDING, IF AN Y, AGAINST THE DISTRIBUTOR. 4. OBLIGATIONS OF THEE DISTRIBUTOR THE DISTRIBUTOR SHALL BE RESPONSIBLE FOR THE SALE O F THE SERVICE TICKETS EXCLUSIVELY FOR VESL AS SET OUT HEREUNDER. THE DIST RIBUTOR HEREBY AGREES, CONFIRMS AND UNDERTAKES; (I) TO CARRY OUT ITS RESPONSIBILITIES WITH REGARD T O E TOPUP AS DETAILED IN THE ANNEXURE-II ; (II) TO STRICTLY ADHERE TO AND COMPLY WITH THE BRAN D-IMAGE GUIDELINES SET OUT IN THE ANNEXURE-III ; AND (III) TO FURNISH AN UNDERTAKING TO VESL IN SUCH FOR MAT AND MANNER AS VESL MAY PRESCRIBE FORM TIME TO TIME WITH REGARD TO DUE COMPLIANCE WITH THE RULES, REGULATIONS AND DIRECTIO NS OF DEPARTMENT OF TELECOMMUNICATIONS (DOT) AND/OR ANY O THER AUTHORITY (CENTRAL/STATE/LOCAL) IN RESPECT OF VERIF ICATION OF IDENTIT9Y OF CUSTOMERS (END USERS OF THE PREPAID CARDS). 5.VESLS OBLIGATONS VESL SHALL; (A) PROVIDE THE DISTRIBUTOR WITH SUCH MARKETING AND TECHNICAL ASSISTANCE AS VESL MAY IN ITS DISCRETION CONSIDER NECESSARY TO ASSIST THE DISTRIBUTOR FOR THE PROMOTION OF THE SERVICE TICKET S; (B) ENDEAVOUR TO ANSWER AS SOON AS POSSIBLE ALL TEC HNICAL QUERIES RAISED BY THE DISTRIBUTOR OR ITS CUSTOMERS CONCERNI NG THE USE OR APPLICATION OF THE SERVICE TICKETS; (C) PROVIDE THE DISTRIBUTOR WITH ADEQUATE QUANTITIE S OF INSTRUCTION MANUALS, TECHNICAL AND PROMOTIONAL LITERATURE AND O THER INFORMATION RELATING TO THE SERVICE TICKETS; (D) PROVIDE THE DISTRIBUTOR WITH ALL INFORMATION AN D ASSISTANCE NECESSARY TO ENABLE THE DISTRIBUTOR TO PERFORM ITS OBLIGATION S HEREUNDER IN RESPECT OF ANY MODIFIED OR ENHANCED VERSIONS OF THE SERVICE TICKETS. ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 15 (E) PROVIDE IT EXPERTISE AND TO GUIDE AND ASSIST TH E DISTRIBUTOR IN THE VARIOUS ACTIVITIES PERTAINING TO THE SERVICE TICKET S USING THE LATEST TECHNIQUES AND SKILLS AVAILABLE TO VESL; (F) PROVIDE ASSISTANCE (ON REQUEST FROM THE DISTRIB UTOR) TO ITS STAFF ON SERVICE KNOWLEDGE AND UPDATES. (G) PROVIDE AND MAINTAIN AN UP-TO-DATE LIST OF THE SERVICE TICKETS AND/OR SUPPLIERS FROM WHICH THE DISTRIBUTOR MAY PURCHASE S TOCK AND/OR ACCESSORIES; 6.TRAINING 6.1 VESL SHALL PROVIDE TRAINING IN THE USE, INSTALL ATION AND RENDERING OF AFTER-SALE-SERVICES IN RESPECT OF THE SERVICE TICKE TS TO THE DISTRIBUTOR AND ITS PERSONNEL, WHEREVER REQUIRED. 6.2 ANY ADDITIONAL TRAINING REQUIRED BY THE DISTRIB UTOR SHALL BE PROVIDED BY VESL IN ACCORDANCE WITH IS STANDARD SCALE OF CHA RGES IN FORCE FROM TIME TO TIME. 6.3 THE DISTRIBUTOR SHALL OFFER TRAINING IN THE USE OF THE SERVICE TICKETS TO ALL ITS CUSTOMERS ON COMMERCIALLY REASONABLE TER MS. 7. CONSIDERATION 7.1 IN CONSIDERATION OF THE DISTRIBUTOR FULFILLING ITS OBLIGATIONS CONTEMPLATED UNDER THIS AGREEMENT, VESL SHALL SELL TO THE DISTRIBUTOR, THE SERVICE TICKETS AT RATE ( DISTRIBUTOR PRICE ) AS MAY BE COMMUNICATED TO THE DISTRIBUTOR BY VESL FROM TIME T O TIME. DISTRIBUTOR PRICE HERE MEANS THE PRICE OF THE SERVI CE TICKETS OFFERED BY VSL TO THE DISTRIBUTOR, FROM, TIME TO TIME. 7.2 VESL SHALL, FROM TIME TO TIME, DECLARE THE MAX IMUM RETAIL PRICE OF THE SERVICE TICKETS. THE PHRASE MAXIMUM RETAIL PRICE OR THE ABBREVIATION MRP IN THE AGREEMENT SHALL MEAN THE DISTRIBUTOR SHALL BE AT LIBERTY TO SELL THE SERVICE TICKETS AT THE SAID MAXIMUM RETAIL PRICE OR AT SUCH A PRICE BELOW THE SAID MAXIMUM RETAIL PRICE . 8. TERM 8.1 THIS AGREEMENT SHALL BE FOR A TERM OF ONE YEAR EFFECTIVE FORM 21.04.2001 AND EXPIRING ON 20.04.2010 UNLESS TERMINATED BY VESL AS PER CLAUSE 8.2 8.2 NOTWITHSTANDING THE PROVISIONS OF CLAUSE 8.1 VE SL MAY, AT ANY TIME, TERMINATE THIS AGREEMENT BY GIVING 30 DAYS WR ITTEN NOTICE TO THE DISTRIBUTOR WITHOUT ASSIGNING ANY REASON WHATSOEVER . ANNEXURE-I SECURITY DEPOSIT VESL SHALL SELL THE SERVICE TICKETS TO THE DISTRIBU TOR SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS: (A) PURCHASE ORDER: ALL SALES SHALL BE AS PER VALID PURCHASE ORDER MADE BY THE DISTRIBUTOR; (B) PAYMENT: ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 16 (I) THE DISTRIBUTOR SHALL MAKE ALL PAYMENTS IN RESP ECT OF PURCHASE ORDER IN ADVANCE BY WAY OF AN ACCOUNT PAYEE CROSSED BANK DRAFT/CHEQUE FAVOURING VODAFONE ESSAR SOUTH LIMITED OR IN CASH . (II) DELIVERY OF THE SERVICE TICKETS SHALL BE ONLY AFTER RECEIPT/REALIZATION OF FULL PAYMENT IN RESPECT OF EACH PURCHASE ORDER, VESL SHALL NOT BE LIABLE FOR TRANSPORTATION OR ANY OTHER ARRANGEMENT FOR SELLING THE SERVICE TICKETS. (III) ALL CHARGES IN RESPECT OF TRANSPORTATION FROM THE PLACE OF DELIVERY TO ITS DESTINATION INCLUDING ANY HANDLING CHARGES O R OTHER LEVIES SHALL BE BORNE BY THE DISTRIBUTOR. (C) PLACE OF DELIVERY: (I) IN CASE OF PHYSICAL STOCK - AT THE PLACE DESI GNATED BY VESL IN THIS BEHALF. (II) IN CASE OF E TOPUP - ELECTRONIC TRAN SFER OF REFILL/RECHARGE VALUE BY VESL TO THE DISTRIBUTOR. (D) TIME OF DELIVERY: ALL DELIVERIES WILL BE MADE ONLY DURING WORKING DAY S (MONDAY TO FRIDAY EXCEPT PUBLIC HOLIDAYS) DURING THE WORKING H OURS (I.E 10.00 A.M. TO 5.00 P.M.) SUBJECT TO AVAILABILITY OF THE S TOCK. (E) RETURN & REPLACEMENT: VESL SHALL NOT BE RESPONSIBLE FOR ANY POST DELIVERY DEFECT IN THE SERVICE TICKETS. HOWEVER, VESL MAY, AT ITS SOLE DIS CRETION AND AFTER MAKING VERIFICATION AS IT MAY DEEM FIT, REPLACE ANY UNUSED NON- WORKING REFILL SLIPS (PHYSICAL OR ELECTRONIC STOCK) NO REQUEST OF REFUND OF ANY MONEY SHALL BE ENTERTAI NED BY VESL IN ANY CIRCUMSTANCE. (F) WARRANTY/ GUARANTEE: VESL DOES NOT GIVE ANY WARRANTY OR GUARANTEE (EXPRE SS OR IMPLIED) IN RESPECT OF ANY OF THE SERVICE TICKETS UNLESS OTH ERWISE EXPRESSLY MENTIONED ON THE SERVICE TICKETS. ANNEXURE-II RESPONSIBILITIES OF THE DISTRIBUTOR IN RESPECT OF E-STOCK: THE DISTRIBUTOR HEREBY AGREES AND CONFIRMS AS FOLL OWS: (I) THE E-STOCK SHALL BE PURCHASED BY THE DISTRIBUT OR FORM VDSL AS PER THE STANDARD TERMS AND CONDITIONS OF SALE OF VESL A S SET OUT IN THE ANNEXURE-I . (II) VESL SHALL, ON RECEIPT OF A VALID PURSE ORDER ACCOMPANIED WITH THE PAYMENT IN FULL FOR SUCH ORDER, TRANSFER THE E-STOC K TO THE DISTRIBUTORS ACCOUNT, OF SUCH DENOMINATIONS AND SUCH QUANTITY A S SPECIFIED BY THE DISTRIBUTOR IN THE PURCHASE ORDER. (III)THE DISTRIBUTOR SHALL CONFIRM THE RECEIPT OF T HE E-STOCK AND VERIFY THE SPECIFICATIONS OF DENOMINATIONS AND QUANTITY OF E-S TOCK. IN CASE OF ANY VARIATION IN THE E-STOCK AND IN THE SPECIFICATIONS OF THE PURCHASE ORDER, ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 17 THE DISTRIBUTOR SHALL FORTHWITH INFORM VESL IN WRIT ING BY FACSIMILE ABOUT SUCH VARIATIONS. (IV) ONCE VESL RECEIVES CONFIRMATION FROM THE DISTR IBUTOR ACKNOWLEDGING RECEIPT OF THEE-STOCK TO ITS ACCOUNT AS PER THE PURCHASE ORDER OF THE DISTRIBUTOR, VESL SHALL NOT BE LIABLE, IN ANY MANNER, FOR ANY LOSS, DAMAGE OR DESTRUCTION OF THE E-STOCK CAUSED I N ANY MANNER WHATSOEVER. (V) THE DISTRIBUTOR SHALL APPOINT AT ITS OWN IN CON SULTATION WITH VESL, RETAILERS FOR THE E-STOCK TO SUCH MERCHANTS WHO SHA LL OBTAIN A VALID ACCESS CARD FROM THE DISTRIBUTOR AFTER AUTHENTICATI ON FROM VDSL. HOWEVER, VESL SHALL NOT BE LIABLE FOR ANY ACT OR OM ISSION OF MERCHANT OR THE DISTRIBUTOR. 8.3 THUS THE LD. AR SUBMITTED THAT AS PER THE AGREE MENT ONCE THE SALE OF RECHARGE COUPON HAS TAKEN PLACE THEN ALL THE RISK A ND REWARDS ATTACHED WITH THE PRODUCTS GET TRANSFERRED TO ITS DISTRIBUTORS. T HE ASSESSEE WAS NOWHERE LIABLE FOR ANY LOSS, DAMAGE OR DESTRUCTION OF THE S TOCK IN ANY MANNER. IN THIS CONNECTION, LD AR DREW OUR ATTENTION ON AGREEMENT E NTERED WITH DISTRIBUTORS WHICH IS PLACED ON PAGES 22 TO 32 OF THE PAPER BOOK AND THE RELEVANT CLAUSE HAVE ALREADY BEEN DISCUSSED IN PRECEDING PARAGRAPHS . LD. AR FURTHER ALSO DREW OUR ATTENTION ON CLAUSE NO.17.2 OF THE AGREEME NT WHICH SHOWS THAT THE RELATIONSHIP BETWEEN THE ASSESSEE AND ITS DISTRIBUT ORS ARE ON PRINCIPLE-TO- PRINCIPLE BASIS WHICH READS AS UNDER:- 17. NO CREATION OF THIRD PARTY OBLIGATIONS 17.1 NOTWITHSTANDING ANYTHING CONTRARY CONTAINED HE REIN, THE DISTRIBUTOR SHALL NOT, WITHOUT VESLS PRIOR SPECIFIC APPROVAL/C ONSENT IN WRITING, ASSUME OR CREATE ANY OBLIGATIONS ON VESLS BEHALF O R INCUR ANY LIABILITY ON BEHALF OF VESL OR IN ANY WAY PLEDGE OR PURPORT T O PLEDGE VESLS CREDIT OR ACCEPT ANY CONTRACT BINDING UPON VESL. 17.2 THE RELATIONSHIP OF THE PARTIES IS THAT OF SEL LER AND BUYER AND IT IS HEREBY EXPRESSLY AGREED AND CLARIFIED THAT THIS AGR EEMENT BETWEEN VESL AND THE DISTRIBUTOR IS ON PRINCIPAL TO PRINCIP AL BASIS AND NEITHER PARTY IS, NOR SHALL BE DEEMED TO BE, AN AGENT / PAR TNER OF THE OTHER. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED TO REN DER THE DISTRIBUTOR A PARTNER OR AGENT OF VDSL. IN VIEW OF ABOVE THE LD. AR SUBMITTED THAT THE CASE LAW I.E. BHARATI CELLULAR LIMITED (SUPRA) RELIED BY THE LD. CIT(A) ARE BASED ON DISTINGUISHAB LE FACTS AND THEREFORE THE SAME CANNOT BE APPLIED IN THE INSTANT FACTS OF THE CASE. THE ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 18 JUDGMENT WAS BASED ON THE OLD BUSINESS MODEL OF THE ASSESSEE FOR ITS PREPAID RECHARGE COUPONS. THE EARLIER AGREEMENT IS ON THE B ASIS OF WHICH THE ERSTWHILE ASSESSEE I.E. HUTCHISON TELECOM EAST LIMI TED CARRIED ON THE BUSINESS AND WHICH WAS CONSIDERED BY THE HONBLE HI GH COURT IS PLACED ON PAGES 1 TO 13 OF THE PAPER BOOK. THE RELEVANT CLAU SES OF THE AGREEMENT HAVE ALREADY BEEN DISCUSSED IN THE PRECEDING PARAGRAPHS AND THE SAME ARE NOT REPRODUCED HEREWITH FOR THE SAKE OF BREVITY. 8.4 FURTHER, LD. AR SUBMITTED THAT THE HONBLE KARN ATAKA HIGH COURT IN THE CASE OF BHARATI AIRTEL LIMITED VS. CIT & ANR REPORT ED IN 372 ITR 0033 FOR THE AYS 2005-06 TO 2008-09 WHERE THE VODAFONE ESSAR SOU TH LIMITED WAS ALSO A PARTY TO THE JUDGMENT HAS DECIDED THE ISSUE IN FAVO UR OF ASSESSEE AFTER CONSIDERING THE NEW AGREEMENT AS DISCUSSED ABOVE BY OBSERVING AS UNDER:- ASSESSEE SELL PREPAID CARDS/VOUCHERS TO THE DISTRIB UTORS. AT THE TIME OF THE ASSESSEE SELLING THESE PRE-PAID CARDS FOR A CONSIDE RATION TO THE DISTRIBUTOR, THE DISTRIBUTOR DOES NOT EARN ANY INCOME. IN FACT, RATH ER THAN EARNING INCOME, DISTRIBUTORS INCUR EXPENDITURE FOR THE PURCHASE OF PREPAID CARDS . ONLY AFTER THE RESALE OF THOSE PREPAID CARDS, DISTRIBUTORS WOULD DERIVE INCOME. AT THE TIME OF THE ASSESSEE SELLING THESE PRE-PAID CARDS, HE WAS NOT IN POSSESSION OF A NY INCOME BELONGING TO THE DISTRIBUTOR. THEREFORE, THE QUESTION OF ANY INCOME ACCRUING OR ARISING TO THE DISTRIBUTOR AT THE POINT OF TIME OF SALE OF PREPAID CARD BY THE ASSESSEE TO THE DISTRIBUTOR DOES NOT ARISE. THE CONDITION PRECEDENT FOR ATTRACTING SECTI ON 194H OF THE ACT WAS THAT THERE SHOULD BE AN INCOME PAYABLE BY THE ASSESSEE TO THE DISTRIBUTOR. IN OTHER WORDS THE INCOME ACCRUED OR BELONGING TO THE DISTRIBUTOR SHOU LD BE IN THE HANDS OF THE ASSESSES. THEN OUT OF THAT INCOME, THE ASSESSEE HAD TO DEDUCT INCOME TAX THEREON AT THE RATE OF 10% AND THEN PAY THE REMAINING PORTI ON OF THE INCOME TO THE DISTRIBUTOR. IN THIS CONTEXT IT WAS PERTINENT TO MENTION THAT TH E ASSESSEE SELLS SIM CARDS TO THE DISTRIBUTOR AND ALLOWS A DISCOUNT OF RS.20/-, THAT RS.20/- DOES NOT REPRESENT THE INCOME AT THE HANDS OF THE DISTRIBUTOR BECAUSE THE DISTRIBUTOR IN TURN MAY SELL THE SIM CARDS TO A SUB-DISTRIBUTOR WHO IN TURN MAY SELL THE SIM CARDS TO THE RETAILER AND IT WAS THE RETAILER WHO SELLS IT TO THE CUSTOMER. THE PROF IT EARNED BY THE DISTRIBUTOR, SUB- DISTRIBUTOR AND THE RETAILER WOULD BE DEPENDANT ON THE AGREEMENT BETWEEN THEM AND ALL OF THEM HAVE TO SHARE RS.20/- WHICH WAS ALLOWED AS DISCOUNT BY THE ASSESSEE TO THE DISTRIBUTOR. THERE WAS NO RELATIONSHIP BETWEEN THE ASSESSEE AND THE SUB- DISTRIBUTOR AS WELL AS THE RETAILER. (PARA 62) HOWEVER, UNDER THE TERMS OF THE AGREEMENT, SEVERAL OBLIGATIONS FLOW IN SO FAR AS THE SERVICES TO BE RENDERED BY THE ASSESSEE TO THE CUST OMER WAS CONCERNED AND, THEREFORE, IT CANNOT BE SAID THAT THERE EXISTS A RE LATIONSHIP OF PRINCIPAL AND AGENT. IN THE FACTS OF THE CASE, HIGH COURT WAS SATISFIED THA T IT WAS A SALE OF RIGHT TO SERVICE. THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE DISTR IBUTOR WAS THAT OF PRINCIPAL TO PRINCIPAL AND, THEREFORE, WHEN THE ASSESSEE SELLS T HE SIM CARDS TO THE DISTRIBUTOR, HE WAS NOT PAYING ANY COMMISSION; BY SUCH SALE NO INCO ME ACCRUES IN THE HANDS OF THE DISTRIBUTOR AND HE WAS NOT UNDER ANY OBLIGATION TO PAY ANY TAX AS NO INCOME IS ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 19 GENERATED IN HIS HANDS. THE DEDUCTION OF INCOME TAX AT SOURCE BEING A VICARIOUS RESPONSIBILITY, WHEN THERE WAS NO PRIMARY RESPONSIB ILITY, THE ASSESSEE HAD NO OBLIGATION TO DEDUCT TDS. ONCE IT WAS HELD THAT THE RIGHT TO SERVICE CAN BE SOLD THEN THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE DISTR IBUTOR WOULD BE THAT OF PRINCIPAL AND PRINCIPAL AND NOT PRINCIPAL AND AGENT. THE TERM S OF THE AGREEMENT SET OUT SUPRA IN UNMISTAKABLE TERMS DEMONSTRATE THAT THE RELATION SHIP BETWEEN THE ASSESSEE AND THE DISTRIBUTOR IS NOT THAT OF PRINCIPAL AND AGENT BUT IT WAS THAT OF PRINCIPAL TO PRINCIPAL. THE LD. AR ALSO DREW ATTENTION BY SUBMITTING THAT T HE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF VARIOUS ASSESSEES WHERE THE A SSESSEE WAS ALSO A PARTY HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE ON THE IDENTICAL FACTS & CIRCUMSTANCES IN ITA NO. 1/2014 & ITA NO. 4/2014 VI DE ORDER 11/07/2017. THE HONBLE COURT ALSO CONSIDERED THE JUDGMENT IN THE C ASE OF HUTCHISON TELECOM EAST LIMITED (SUPRA). THE RELEVANT EXTRACT IS REPRODUCED BELOW:- 42. HE HAS ALSO RELIED UPON THE DECISION OF CALCUT TA HIGH COURT IN THE CASE OF HUTCHISON TELECOM EAST LTD. VS. COMMISSIONE R OF INCOME-TAX- (2015) 375 ITR 566 (CAL) 2. IN CONSIDERATION OF THE SERVICE TO BE RENDERED BY HIM, HE SHALL GET A COMMISSION AT THE RATES AS PER THE POLICY TO BE ADOPTED BY THE ASSESSEE FROM TIME TO TIME. 13. THE TERMS AND CONDITIONS NOTICED ABOVE LEAVE NO MANNER OF DOUBT THAT THE RELATIONSHIP BETWEEN PODDAR COMMUNIC ATIONS AND THE ASSESSEE APPEARING FROM THE AGREEMENT RELIED UP ON BY MR. KHAITAN IS THAT OF AN AGENT AND PRINCIPAL. PODDAR C OMMUNICATIONS APPEARS TO HAVE BEEN EMPLOYED TO ACT ON BEHALF OF T HE ASSESSEE FOR THE PURPOSE OF FEEDING THE RETAILERS AND THROUG H THEM TO SELL THE SERVICES TO THE CONSUMERS. 14. THE JUDGMENTS CITED BY MR. KHAITAN DO NOT REALL Y PROVIDE ANY ASSISTANCE TO HIM IN DECIDING THE MATTER IN ONE WAY OR THE OTHER. IN THE CASE OF DARUVALA BROS.(P) LTD. (SUPRA), TH Q UESTION FOR CONSIDERATION WAS WHETHER THE COMPENSATION RECEIVED BY THE ASSESSEE WAS A REVENUE RECEIPT OR A CAPITAL RECEIPT . THE CONTENTION WAS THAT THE COMPENSATION HAD BEEN RECEI VED BY THE ASSESSEE BECAUSE THE AGENCY WAS SURRENDERED FOR SOM E OF THE TERRITORIES. IN LIEU OF SUCH SURRENDER, THE COMPENS ATION WAS PAID BY THE PRINCIPAL. IT IS IN THAT CONTEXT, THE QUESTI ON WAS CONSIDERED AND IT WAS HELD THAT THE SUM PAID TO THE ASSESSEE D ID NOT PARTAKE THE CHARACTER OF COMPENSATION AT ALL. WE DO NOT FIN D ANY APPLICABILITY OF THIS JUDGMENT TO THE ISSUE BEFORE US. 43. WE HAVE HEARD LEARNED COUNSEL FOR THE PARTIES. 44. NOW, THE FIRST QUESTION WHICH HAS COME UP FOR O UR CONSIDERATION IS, WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED TRIBUNAL ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 20 WAS RIGHT AND JUSTIFIED IN HOLDING THAT ASSESSEE WA S LIABLE TO WITHHOLD TAX AT SOURCE UNDER S. 194H OF THE INCOME TAX ACT, 1961 AMOUNTING TO RS.19,74,842/- (INCLUDING INTEREST) IN RESPECT OF S ALES TO ITS DISTRIBUTORS, WHICH ARE ON PRINCIPAL TO PRINCIPAL BASIS AND WHERE IN PROPERTY IN THE GOODS IS TRANSFERRED TO THE DISTRIBUTOR 45. TAKING INTO ACCOUNT THE PROVISIONS OF SECTION 1 82 OF THE CONTRACT ACT AND THE ARRANGEMENT WHICH HAS BEEN ENTERED INTO BETWEEN THE COMPANY AND THE DISTRIBUTOR AND TAKING INTO ACCOUNT THE PROVISIONS OF SECTION 194H, THE TRIBUNAL WHILE CONSIDERING THE EV IDENCE ON RECORD, IN OUR CONSIDERED OPINION, HAS MISDIRECTED THEM IN CON SIDERING THE CASE FROM AN ANGLE OTHER THAN THE ANGLE WHICH WAS REQUIR ED TO BE CONSIDERED BY THE TRIBUNAL UNDER THE INCOME TAX ACT. THE TRIBU NAL HAS TRAVELLED BEYOND THE PROVISIONS OF SECTION 194H WHERE THE CON DITION PRECEDENT IS THAT THE PAYMENT IS TO BE MADE BY THE ASSESSEE AND THEREAFTER HE IS TO MAKE PAYMENT. IN SPITE OF OUR SPECIFIC QUERY TO THE COUNSEL FOR THE DEPARTMENT, IT WAS NOT POINTED OUT THAT ANY AMOUNT WAS PAID BY THE ASSESSEE COMPANY. IT WAS ONLY THE ARRANGEMENT BY WH ICH THE AMOUNT WHICH WAS TO BE RECEIVED WAS REDUCED AND NO AMOUNT WAS PAID AS COMMISSION. 46. IN THAT VIEW OF THE MATTER, IF WE LOOK AT THE P ROVISIONS OF SECTION 194H AND EVEN IF EXPLANATION IS TAKEN INTO CONSIDER ATION, THERE IS NO OCCASION OF INVOKING PROVISIONS OF SECTION 194H, SI NCE THE AMOUNT IS NOT PAID BY THE ASSESSEE. 47. TAKING INTO ACCOUNT THE CONCLUSION WHICH HAS BE EN ARRIVED AT BY THE TRIBUNAL IS MISDIRECTED IN VIEW OF THE ARRANGEMENT WHICH HAS BEEN ARRIVED AT BETWEEN THE COMPANY AND THE DISTRIBUTOR. ASSUMING WITHOUT ADMITTING, IF THE CONTENTION WHICH HAS BEEN RAISED BEFORE THE TRIBUNAL IS ACCEPTED, THE SAME CAN BE AT THE MOST EXPENSES WHIC H ARE NOT ALLOWABLE UNDER THE INCOME TAX ACT, IF AT ALL CLAIM ED WITHOUT PROPER BASIS BUT TO CONCLUDE THAT THEY ARE COVERED UNDER S ECTION 194H AND THE INCOME TAX OR THE TDS IS REQUIRED TO BE DEDUCTED IS NOT CORRECT AND ACCORDINGLY DISALLOWANCE ON THAT BASIS IS NOT CORRE CT IN OUR CONSIDERED OPINION, FROM WHICH AMOUNT OF TAX IS TO BE DEDUCTED IS A DOUBTFUL PROPOSITION INASMUCH A THE MANAGEMENT INFORMATION S CHEME WHICH HAS BEEN SOUGHT TO BE RELIED UPON FOR ALLEGING THAT EXPENDITURE HAS BEEN CLAIMED COULD NOT HAVE BEEN RELIED UPON BY THE TRIBUNAL OR THE AUTHORITIES UNDER THE INCOME TAX ACT. (I) THE FINDINGS WHICH ARE GIVEN BY THE TRIBUNAL RE GARDING DISTRIBUTOR BEING AGENT IN VIEW OF THE DISCUSSION M ADE HERE-IN- ABOVE, THE ARRANGEMENT WHICH HAS BEEN MADE BETWEEN THE COMPANY AND THE DISTRIBUTOR IS ON PRINCIPAL TO PRIN CIPAL BASIS AND THE RESPONSIBILITY IS N THE BASIS OF AGREEMENT ENTE RED INTO BETWEEN THE PARTIES. (II) REGARDING MRP, THE FINDINGS WHICH ARE ARRIVED AT IS A PRICE WHICH HAS BEEN FIXED BY THE ASSESSEE COMPANY AND OT HER ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 21 EXPENSES, NAMELY; COMMISSION GIVEN TO THE RETAILER AND EVERYTHING IS TOO BE MANAGED BY THE DISTRIBUTOR. IN THAT VIEW OF THE MATTER, THE RESTRICTIONS WHICH ARE PUT FORWARD WILL NOT DECIDE THE RELATION-SHIP OF PRINCIPAL AND AGENT. (III) THE DISTRIBUTOR HAS ALL RIGHTS TO REDUCE HIS MARGIN. HE CAN INCREASE THE MARGIN OF RETAILER AND WILL REDUCE THE MARGIN FROM 10% TO ANYTHING BETWEEN 1% TO 10%. THERE IS NO REST RICTION BY THE ASSESSEE TO GIVE COMMISSION AMOUNT TO THE RETAI LER. (IV) REGARDING AREA OF OPERATION, IT IS THE BUSINES S POLICY OF THE ASSESSEE TO GIVE DISTRIBUTOR-SIP FOR A PARTICULAR A REA. ONLY ON THAT BASIS, IT WILL BE ERRONEOUS TO HOLD THAT IT IS ON P RINCIPAL TO PRINCIPAL BASIS. FOR DECIDING THE RELATION-SHIP ON PRINCIPAL TO PRINCIPAL BASIS, THE CRITERIA WILL NOT BE OF AREA OF OPERATIO N BUT AGREEMENT ENTERED INTO BETWEEN THE PARTIES. (V) REGARDING THE CHANGE IN PRICE IT IS ALWAYS BETW EEN THE ASSESSEE OR THE COMPANY AND THE DISTRIBUTOR TO DECI DE WHO WILL ABSORB THE LOSS. IN THAT VIEW OF THE MATTE, THE FINDINGS ARRIVED AT BY THE TRIBUNAL IS ERRONEOUS. (VI) REGARDING THE RETURN OF GOODS AFTER EXPIRY DAT E, IT IS ALWAYS THE UNDERSTANDING BETWEEN THE MANUFACTURER AND COMP ANY THAT THE PRODUCT IS NOT FOR PREPARATION OR CONSUMED BEFO RE EXPIRY DATE, THE CONSUMED ITEMS CANNOT BE ALLOWED OTHERWISE MANU FACTURER WILL INVITE CRIMINAL LIABILITY. TO AVOID ANY CRIMIN AL LIABILITY OR ANY CRIMINAL ACT IS DONE FOR TAKING BACK THE GOODS, WIL L NOT DETER THE RELATION-SHIP TO PRINCIPAL TO PRINCIPAL BASIS. (VII) REGARDING SUPERVISION, S ALWAYS FOR THE MANUF ACTURER AND THE COMPANY TO LOOK INTO THE MATTER THAT HIS DISTRIBUTO R OR SUB- DISTRIBUTOR OR RETAILER WILL NOT INDUCT IN MAL PRAC TICE. (VIII) REGARDING GOODS SOLD TO THE DISTRIBUTOR, IT IS ALWAYS A MATTER OF CONTRACT HOW FURTHER GOODS WILL BE DISTRIBUTED. RESTRICTION ON SUB-DISTRIBUTOR WILL NOT CHANGE THE TRANSACTION FRO M PRINCIPAL TO PRINCIPAL. (IX) REGARDING EXPENSES WHICH ARE DESCRIBED BY THE TRIBUNAL AND ONE OF THE REASON IS THAT IT IS ALWAYS FOR THE SE T O ALLOW ANY SPECIAL ALLOWANCE OR EXPENSES TO PROMOTE THE SALE. IN A ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 22 COMPETITIVE WORLD TO PROMOTE THE SALE, IF THE DISTR IBUTOR IS NOT GIVEN ANY ENCOURAGEMENT, THE BUSINESS WILL NOT GROW . IN THAT VIEW OF THE MATE, IN VIEW OF THE OBSERVATIO NS OF THE SUPREME COURT, THE INCOME TAX OFFICER CANNOT ENTER INTO THE SHOES OF THE ASSESSEE. (S.A. BUILDER VS. COMMISSION ER OF INCOME TAX- (2007) 288 ITR 1 (SC) (X) REGARDING PROVIDING A VEHICLE IT WAS VERY CLEAR THAT BY PROVIDING VEHICLE AND GETTING LIST OF EXPENSES WILL NOT DECIDE THE RELATION-SHIP OF PRINCIPAL AND AGENT. 48. IN OUR CONSIDERED OPINION, SECTION 194H PRE-SU PPOSES THE PAYMENT TO BE MADE TO THE THIRD PARTY NAMELY, DISTRIBUTOR O R THE AGENCY AND IF ON A CLOSE SCRUTINY OF SECTION 182, DISTRIBUTOR IS NOT AN AGENT, THEREFORE IN OUR CONSIDERED OPINION, THE PROVISIONS OF SECTION 1 94H HAVE WRONGLY BEEN INVOKED, AND THEREFORE, THE FIRST ISSUE IS ANS WERED IN FAVOUR OF ASSESSEE AND AGAINST THE DEPARTMENT. IN VIEW OF ABOVE THE LD. AR PRAYED THAT THE PROVISI ONS OF SECTION 194H ARE NOT APPLICABLE TO THE PRESENT CASE AND THEREFORE THERE IS NO DEFAULT COMMITTED BY THE ASSESSEE FOR NON DEDUCTION OF TDS. THE LD. AR P RAYED TO DECIDE THE MATTER ON MERIT. ON THE OTHER HAND, LD. DR VEHEMENTLY RELIED ON THE ORDER OF AUTHORITIES BELOW AND LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. 9. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUD ING THE JUDICIAL PRONOUNCEMENTS CITED AND PLACED RELIANCE UPON. FROM THE FOREGOING DISCUSSION, WE FIND THAT THE AO HAS TREATED THE DIS COUNT GIVEN BY THE ASSESSEE TO ITS DISTRIBUTORS ON THE SALE OF RECHARG E COUPONS/ STARTER PACK AS COMMISSION EXPENSES. THEREFORE THE AO WAS OF THE VI EW THAT THE ASSESSEE WAS LIABLE TO DEDUCT THE TDS UNDER SECTION 194H OF THE ACT. ON THE CONTRARY THE ASSESSEE TREATED THE AFORESAID TRANSACTION AS S ALE AT A PRICE NET OF DISCOUNT IN THE BOOKS OF ACCOUNTS. THE LD. CIT(A) A LSO CONFIRMED THE ORDER OF AO AFTER HAVING RELIANCE IN THE CASE OF BHARATI CEL LULAR LIMITED (SUPRA). ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 23 9.1 NOW THE ISSUE BEFORE US ARISES FOR OUR ADJUDICA TION SO AS TO WHETHER THE DISCOUNT GIVEN BY THE ASSESSEE IS IN THE NATURE OF COMMISSION IN THE GIVEN FACTS & CIRCUMSTANCES. FROM THE SUBMISSION OF THE L D. AR FOR THE ASSESSEE, WE FIND THAT THE TRANSACTION OF RECHARGE COUPONS WA S TREATED AS SALE IN THE BOOKS OF ACCOUNTS WHICH WAS SHOWN NET OF DISCOUNTS IN THE BOOKS OF ACCOUNTS. IN THIS CONNECTION WE FIND THAT THE AGREE MENT MADE BETWEEN THE ASSESSEE AND THE DISTRIBUTOR WAS FOR THE SALE OF RE CHARGE COUPONS AND NOT THE AGREEMENT FOR THE COMMISSION. THE RELEVANT PORTION OF AGREEMENT HAS ALREADY BEEN DISCUSSED IN THE PRECEDING PARAGRAPH AND THE S AME IS NOT REPRODUCED HERE FOR THE SAKE OF BREVITY. ON PERUSAL OF THE AGREEMENT IT CAN BE INFERRED THAT THE TRANSACTION BETWEEN THE ASSESSEE AND THE DISTRIBUTOR WAS BASED ON PRINC IPAL TO PRINCIPAL BASIS AND WHICH IS IN THE NATURE OF PURCHASE AND SALE TRANSAC TION. THERE WAS NO CLAUSE IN THE AGREEMENT SUGGESTING THAT THE ASSESSEE IS LI ABLE FOR THE PAYMENT OF THE COMMISSION TO THE DISTRIBUTORS. THE DISTRIBUTOR WAS AUTHORIZED TO SALE THE PREPAID RECHARGE COUPONS AT A PRICE OF ITS/ HIS CHO ICE BUT NOT EXCEEDING MRP DETERMINED BY THE ASSESSEE. WE ALSO FIND THAT ALL T HE RISKS & REWARDS ATTACHED WITH THE PRODUCT WERE SHIFTED TO THE DISTRIBUTOR. T HUS WE HOLD THAT THERE WAS NO AGREEMENT BETWEEN THE ASSESSEE AND THE DISTRIBUTOR AS OF PRINCIPAL AND AGENT. 9.2 WE ALSO FIND THAT THE BUSINESS MODEL OF THE ASS ESSEE FOR THE PREPAID MOBILE CONNECTIONS AND POST PAID MOBILE CONNECTIONS ARE DIFFERENT. IN CASE OF POST PAID CONNECTIONS THE ASSESSEE IS PAYING COMMIS SION TO THE DISTRIBUTORS AGAINST CERTAIN SERVICES RENDERED BY THEM AND THERE FORE THE TDS WAS BEING DEDUCTED. THUS ACCORDING TO THE AO THE TDS PROVISIO NS SHOULD HAVE ALSO BEEN APPLIED TO THE DISCOUNT OFFERED BY THE ASSESSE E TO THE DISTRIBUTOR OF THE PREPAID CONNECTIONS WHICH IN OUR CONSIDERED VIEW WA S BASED ON WRONG ASSUMPTIONS OF FACTS. IN THIS CONNECTION, WE FIND THAT UNDER THE POST-PAI D CONNECTION THERE ARE CERTAIN SERVICES RENDERED BY THE ASSESSEE SUCH AS C OLLECTION OF DOCUMENTS FOR PROOF OF IDENTITY, DELIVERY OF SIM CARDS, COLLECTIO N OF CHARGES ETC. AGAINST THESE ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 24 SERVICES THE DISTRIBUTORS ARE PAID THE AMOUNT OF AG REED COMMISSION BY THE ASSESSEE AFTER DEDUCTING TDS U/S 194H OF THE ACT. HOWEVER, WE FIND THAT IN CASE OF PREPAID CONNECTION THE RECHARGE COUPONS ARE SOLD TO THE DISTRIBUTORS ON OUTRIGHT SALE BASIS AT A DISCOUNTED PRICE. THE AMOUNT OF DISCOUNT IS NOT RECORDED IN THE BOOKS OF ACCOUNTS. THEREFORE WE HOLD THE TRANSACTION BETWEEN THE ASSESSEE AND PREPA ID DISTRIBUTOR FOR RECHARGE COUPONS IS NATURE OF SALE & PURCHASE. THUS AMOUNT OF DISCOUNT CANNOT BE EQUATED WITH THE COMMISSION AS ENVISAGED UNDER SECTION 194H OF THE ACT. SIMILARLY WE FIND THAT THE OWNERSHIP OF THE RECHARG E COUPONS GETS TRANSFERRED TO THE DISTRIBUTOR ON THE SALE OF RECHARGE COUPONS. IN THIS CONNECTION, WE ALSO RELY IN THE CASE OF BHARTI AIRTEL LIMITED VS. CIT & ANR. REPORTED IN 372 ITR 33 (KAR) (SUPRA) WHERE THE HON BLE KARNATAKA HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. SIMILARLY HONBLE RAJASTHAN HIGH COURT IN THE CASE OF VARIOUS PARTIES WHERE THE ASSESSEE WAS ALSO A PARTY HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE ON THE IDENTICAL FACTS & CIRCUMSTANCES IN ITA NO. 1/20 14 & ITA NO. 4/2014 VIDE ORDER 11/07/2017 (SUPRA). THE LD DR HAS NOT BROUGHT ANYTHING CONTRARY TO THE ARGUMENTS OF LD AR. THEREFORE WE HAVE NO ALTERNATE EXCEPT TO FOLLOW RES PECTFULLY THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT AND RAJAST HAN HIGH COURT IN THE CASE OF BHARTI AIRTEL LIMITED VS. CIT (SUPRA) AND IN THE CASE OF VARIOUS ASSESSEES WHERE THE ASSESSEE WAS ALSO A PARTY I.E. VODAFONE MOBILE SERVICES LIMITED (SUPRA). HENCE, WE HAVE NO HESITAT ION IN REVERSING THE ORDER OF AUTHORITIES BELOW. HENCE THIS GROUND OF APPEAL O F THE ASSESSEE IS ALLOWED. 10. AS WE HAVE ALREADY HELD THAT THE PROVISIONS OF TDS UNDER SECTION 194H OF THE ACT ARE NOT ATTRACTED ON THE SALE OF RECHARG E COUPONS FOR THE PREPAID TALK TIME TO THE DISTRIBUTORS AND ACCORDINGLY THE A SSESSEE CANNOT BE TREATED AS ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 25 ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TDS U/S 20 1 OF THE ACT. THUS, OTHER GROUNDS RAISED BY THE ASSESSEE BECOME ACADEMIC IN N ATURE AND THEREFORE DO NOT REQUIRE SEPARATE ADJUDICATION. HENCE, THESE GRO UNDS BECOME INFRUCTUOUS AND ACCORDINGLY BEING DISMISSED. 11. IN THE RESULT, ASSESSEE APPEAL IS ALLOWED PARTL Y. COMING TO REMAINING APPEAL OF ASSESSEE IN ITA NO. 1499-1500, 1502/KOL/2015 (FOR A.YS. 10-11 & 11-12) AND ITA NO. 136-137/KOL/2016 (FOR A.Y 12-13) AND REVENUES APPEALS IN ITA NO.1537-1540/KOL/2015 (FOR A.YS 10-11 & 11-12) AND ITA NO. 232-233/KOL/2016 (FOR A. Y 12-13) . 12. IN THE REMAINING APPEALS, SINCE THE FACTS ARE E XACTLY IDENTICAL, BOTH THE PARTIES AGREED WHATEVER VIEW TAKEN IN THE ABOVE APP EAL ( ITA NO.1501/KOL/2015 ) FOR THE ASSESSEE MAY BE TAKEN IN THESE APPEALS AL SO, WE HOLD ACCORDINGLY. 13. AS WE HAVE ALREADY HELD THAT THE PROVISIONS OF TDS U/S 194H OF THE ACT ARE NOT ATTRACTED ON THE SALE OF RECHARGE COUPONS F OR THE PRE-PAID TALK TIME TO THE DISTRIBUTORS AND ACCORDINGLY THE ASSESSEE CANNO T BE TREATED AS ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TDS U/S 201 OF THE ACT. THUS, OTHER GROUNDS RAISED BY THE ASSESSEE AND REVENUE IN THEIR RESPECT IVE APPEALS BECOME ACADEMIC IN NATURE AND THEREFORE DO NOT REQUIRE SEP ARATE ADJUDICATION. HENCE, ALL THE OTHER GROUNDS OF APPEALS BECOME INFRUCTUOUS AND ACCORDINGLY ARE BEING DISMISSED AS INFRUCTUOUS. 14. IN COMBINE RESULT, ASSESSEES APPEALS ARE PARTLY AL LOWED AND THAT OF REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 26/ 10/2017 SD/- SD/- (ABY. T. VARKEY) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP &- 26 / 10 /201 7 ITA NO.1499-1502, 1537-1540/KOL/2015 & 136-137 & 23 2-233/KOL/2016 VODAFONE EAST LTD./VODAFONE MOBILE SERVICES LTD. VS . ACIT/DCIT(TDS) CIR-3/59 KOL PAGE 26 / COPY OF ORDER FORWARDED TO:- 1 . /ASSESSEE-VODAFONE EAST LTD./VODAFONE MOBILE SERVIC ES LTD. 11, DR. U.N. BRAMACHARI ST. KOL KATA-17 2. /REVENUE-ACIT(TDS), CIRCLE-3/DCIT(TDS), CIRCLE-59, 10,-B, MIDDLETON ROW, 7 TH FLOOR, KOLKAGTA-71 3. 1 2 / CONCERNED CIT KOLKATA 4. 2- / CIT (A) KOLKATA 5. 5 881, 1, / DR, ITAT, KOLKATA 6. ; / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 1,