ITO, Meerut V. M/s Tata Teleservices Ltd., Meerut

ITA 1686/DEL/2011

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5129 (ITAT-DELHI)
• Duration Of Justice: 10 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 12-07-2017
• Assessment Year: misc
• Appeal Filed On: 07-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS AASHNA PAUL
• Assessee Lawyers: SPARSH BHARGAWA
• Keywords: Additional evidence; TDS; Set aside
• Section: 201(1); 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE, SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER I.T.A NO.1685/DEL/2011 (ASSESSMENT YEAR 2008-09) I.T.A NO.1686/DEL/2011 (ASSESSMENT YEAR 2009-10) INCOME TAX OFFICER, (TDS) MEERUT. VS. M/S TATA TELESERVICES LIMITED 502, MANGAL PANDEY NAGAR, UNIVERSITY ROAD, MEERUT. PANAAACT 2438A (APPELLANT) (RESPONDENT) APPELLANT BY MRS. AASHNA PAUL, CIT-DR RESPONDENT BY SH. SPARSH BHARGAWA, ADV. DATE OF HEARING 29.06.2021 DATE OF PRONOUNCEMENT 27.09.2021 ORDER PER SUDHANSHU SRIVASTAVA, JM: BOTH THE APPEALS HAVE BEEN PREFERRED BY THE ASSESSE E. ITA NO. 1685/DEL/2011 IS AGAINST THE ORDER DATED 28 .12.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS), MEERUT {CIT(A)} FOR ASSESSMENT YEAR 2008-09 AND ITA NO.1686/DEL/2011 IS THE ASSESSEES APPEAL PERTAININ G TO 2 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED ASSESSMENT YEAR 2009-10. SINCE, BOTH THE APPEALS IN VOLVED IDENTICAL ISSUES, THEY WERE HEARD TOGETHER AND THEY ARE BEING DISPOSED OF THROUGH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASS ESSEE IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF PROVIDIN G TELECOMMUNICATION SERVICES ACROSS THE COUNTRY. IN THE COURSE OF TELECOMMUNICATION SERVICES BUSINESS, THE ASSESSEE S ELLS RECHARGE COUPON VOUCHERS (RCV) AND STARTER KITS TO ITS CHANN EL PARTNERS FOR ONWARD SALE TO THE RETAILER AND, THEREAFTER, TO THE FINAL CUSTOMERS. THE ASSESSING OFFICER (AO), WHILE PLACING RELIANCE O N THE ORDER OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S VODAFONE ESSAR CELLULAR LTD. VS. ACIT, IN ITA NOS.106-113/CO CH/2009 (COCHIN BENCH), HELD THAT THE DISCOUNT OFFERED TO T HE DISTRIBUTORS/CHANNEL PARTNERS WAS IN THE NATURE OF C OMMISSION ON WHICH THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE U/S 194H OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE A CT). ACCORDINGLY, THE ASSESSING OFFICER PROCEEDED TO RAISE A DEMAND O N ACCOUNT OF NON DEDUCTION OF TAX AT SOURCE AND ALSO LEVIED CONS EQUENTIAL INTEREST U/S 201(1A) OF THE ACT. 3 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED 2.1 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BE FORE THE LD. FIRST APPELLATE AUTHORITY, WHO SET ASIDE THE ORD ER PASSED U/S 201(1) OF THE ACT ON THE GROUND THAT THE TRANSACTIO N OF SALE OF RECHARGE COUPON VOUCHERS AND STARTER KITS WAS DONE ON PRINCIPAL TO PRINCIPAL BASIS AND, THEREFORE, THE PROVISIONS OF S ECTION 194H WERE NOT APPLICABLE. 2.2 THIS ISSUE IS COMMON IN BOTH THE YEARS IN APPEAL BEFORE US. IDENTICAL ORDERS WERE PASSED BY THE ASSESSING OFFICER FOR BOTH THE YEARS AND THE LD. CIT(A), VIDE A COMMON ORDER ( IMPUGNED ORDER), GAVE RELIEF TO THE ASSESSEE. THE RELEVANT FINDINGS OF THE LD. CIT(A) ARE BEING REPRODUCED HEREIN UNDER FOR A READ Y REFERENCE:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND THE JUDGMENTS OF DIFFERENT HIGHER JUDICIAL AUTHORITIES. IT IS IMPORTANT TO NOTE THAT THE APPELLANT IS A LIMITED COMPANY ENG AGED IN THE BUSINESS OF PROVIDING TELECOMMUNICATION SERVICES AC ROSS THE COUNTRY. SUCH SERVICES INCLUDE SALE OF PRODUCTS SUC H AS STARTER KITS AND RECHARGE COUPON VOUCHERS (RCVS.) RCVS ARE THE PREPAID VOUCHERS USED FOR SELLING VALIDITY AND TALK TIME TO PREPAID SUBSCRIBERS. THE STARTER KITS ARE NEW CONNE CTION CONTAINING REMOVABLE USER IDENTITY MODULE (RUIM) CA RDS OR SUBSCRIBER IDENTITY MODULE (SIM) CARDS FOR PROVIDIN G TELECOMMUNICATION CONNECTION. THE SOLE BASIS OF THE AO TO APPLY THE PROVISIONS OF SECTION 194H TO THE APPELLANTS C ASE IS HE JUDGMENT OF THE ITAT, COCHIN BENCH IN THE CASE OF M /S. 4 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED VODAFONE ESSAR CELLULAR LIMITED VS. THE ACIT(TDS), KOCHI, ITA NOS. 106- 113/COCH/2009 DATED 30.04.2009. IN BHARAT SANCHAR NIGAM LTD. VS. UOI (2006), 282 IT R 273 (SC), THE HONBLE APEX COURT HAS HELD THAT THE SIM CARDS ARE GOODS, SALE OF WHICH QUALIFIES AS SALES WITHIN THE MEANING OF THE SALE OF GOODS ACT, 1930 FOR THE PURPOSE OF LEVY OF SALES TAX. GOODS MAY BE TANGIBLE PROPERTY OR AN INTANGIBLE ONE. IT W OULD BECOME GOODS PROVIDED IT HAS THE ATTRIBUTES THEREOF HAVING REGARD TO (A) ITS UTILITY, (B) ITS CAPABILITY OF BEING BOUGHT AND SOLD, AND (C) ITS CAPABILITY OF BEING TRANSMITTED, TRANSFERRED, DELIV ERED STORED AND POSSESSED. THIS IS THE CORRECT APPROACH TO THE QUESTION AS TO WHAT ARE GOODS FOR THE PURPOSE OF SALE TAX. IF THE SIM CARD IS NOT SOLD TO THE SUBSCRIBERS BUT IS MERELY PART OF THE SERVICES RENDERED BY THE SERVICES PROVIDES, THE SIM CARD CANNOT BE CHARGED SEPARATELY TO SALES TAX. IF THE P ARTIES INTENDED THAT THE SIM CARD WOULD BE A SEPARATE OBJE CT OF SALE, IT WOULD BE OPEN TO THE SALES TAX AUTHORITIES TO LEVY SALES TAX THEREON. IF THE SALE OF THE SIM CARD IS MERELY INCI DENTAL TO THE SERVICES BEING PROVIDED AND FACILITATES THE IDENTIF ICATION OF THE SUBSCRIBERS, THEIR CREDIT AND OTHER DETAILS, IT WOU LD NOT BE ASSESSABLE TO SALES TAX. THE UNION OF INDIA CANNOT INCLUDE THE VALUE OF THE SIM CARDS, IF THEY ARE FOUND ULTIMATELY TO BE GOODS, IN THE COST OF THE SERVICES. IN THE LIGHT OF THE ABOVE DECISION OF THE HOBLE SU PREME COURT, I DO NOT AGREE WITH THE FOLLOWING FINDINGS IN VODAFON E ESSAR CELLULAR LTD. VS. ACIT (2010) 129 TTJ (COCH.) 222 R ELIED UPON BY THE AO: I. WHERE THE DISTRIBUTORS DO NOT HAVE ANY FREEDOM OF PRICE DUE TO PRE-STATED MRP ON THE PRODUCTS, IT CAN NOT BE A SALE TRANSACTION. 5 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED IN MU OPINION SINCE MRP IS MANDATORILY REQUIRED TO BE STATED FOR ALL CONSUMER GOODS WHICH FLOW TO THE ULT IMATE CONSUMER THROUGH A CHAIN OF MIDDLEMEN AND IF SUCH A PROPOSITION AS ABOVE WAS TO BE FOLLOWED, THEN NO SA LE OF GOODS WILL EVER TAKE PLACE. THEREFORE, THIS IS NOT A TRUE TEST FOR ESTABLISHING WHETHER THE DISTRIBUTION ENGAGED F OR SIM CARDS IS RENDERING SERVICES ON BEHALF OF THE CELLUL AR TELEPHONE SERVICE PROVIDER OF SALE OF GOODS. II) SINCE THE SIM CARD IS ONLY A DEVICE TO HAVE A CCESS TO THE MOBILE PHONE NETWORK, THERE IS NO QUESTION OF P ASSING ANY OWNERSHIP OR TITLE OF THE GOODS FROM THE ASSESS EE COMPANY TO THE DISTRIBUTOR OR FROM THE DISTRIBUTOR TO THE ULTIMATE CONSUMER. IN MU OPINION THE QUESTION OF PASSING OF OWNERSHIP OR TITLE OF GOODS NEEDS TO BE ESTABLISHED FROM THE ACTUAL FA CTS OF A TRANSACTION AND THE CONDUCT OF THE PARTIES INVOLVED AND MERELY BECAUSE SIM CARD IS A FACILITATING DEICE FOR ACCESSING THE MOBILE PHONE NETWORK IT CANNOT BE HEL D THAT NO TRANSFER OF TITLE/OWNERSHIP CAN PASS FROM THE MO BILE PHONE SERVICE PROVIDER TO THE DISTRIBUTOR. IF THIS PROPOSITION WAS TO BE HELD AS TRUE, THEN EVEN THE SALE OF MOBIL E PHONE INSTRUMENTS WOULD HAVE TO BE UNDERSTOOD AS PROVISIO N OF SERVICES SINCE MOBILE PHONE NETWORK CANNOT BE ACCES SED OTHERWISE THAN THROUGH THE SAID INSTRUMENT, WHICH S HALL LEAD TO AN ABSURD CONCLUSION. III) SINCE IT IS THE ULTIMATE CONSUMER OR THE ASSES SE- COMPANY ONLY WHO HAVE THE AUTHORITY TO UNCOVER THE SECRET NUMBER PROVIDED IN THE SIM CARD TO BRING IT INTO AC TIVATION, AND THE DISTRIBUTOR DOES NOT HAVE ANY AUTHORITY OR RIGHT TO 6 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED USE THE SIM CARD, IT DOES NOT BECOME THE ABSOLUTE P ROPERTY OF THE DISTRIBUTOR AND HENCE NO SALE TAKE PLACE. IN MU OPINION IT IS MORE A QUESTION OF MAINTAINING THE PRIVACY OF THE CONSUMER THAN PASSING OR NOT OF THE ABSOLUTE PROPERTY IN THE GOODS INVOLVED. IF THE ABO VE PROPOSITION WAS TO BE FOLLOWED IT WOULD LEAD TO AN ANOMALOUS SITUATION SINCE MOST OF THE WHITE GOODS A RE SUPPLIED THE DISTRIBUTORS BY THE MANUFACTURES IN A SEALED- PACK CONDITION AND THESE ARE FINALLY OPENED FOR USE D BY THE ULTIMATE CONSUMERS NORMALLY AND IT IS A WELL-KN OWN FACT THAT THE CONSUMERS DESIST FROM ACCEPTING ANY S UCH ITEMS WHERE THE SEALED PACKING IS AMISS. THUS, EVEN THIS IS NOT A TRUE TEST OF ESTABLISHING WHETHER SIM CARD S RECEIVED BY THE DISTRIBUTORS FROM THE CELLULAR TELE PHONE SERVICES PROVIDING COMPANIES IS UNDER CONTRACT OF S ALE OR A PART OF SERVICES. HOWEVER, I FULLY AGREE WITH THE FINDING OF THE ITAT IN THE ABOVE CASE THAT THE NATURE AND CONTENT OF THE SERVICES RE NDERED UNDER BOTH THE POST-PAID AND PREPAID METHODS IS ONE AND T HE SAME THING. THEREFORE, IF THE ASSESSEE WAS FOUND TO BE C ONSIDERING THE MARGIN OF DISTRIBUTOR AS COMMISSION AND ALSO SU BJECTING THE SAME TO TDS U/S. 194H IN THE CASE OF POST-PAID SIM CARDS, THEN THE SAME TREATMENT SHALL HAVE TO BE GIVEN IN THE CA SE PREPAID SIM CARDS AS WELL. MOREOVER, IN THE ABOVE CASE THE HONBLE TRIBUNAL HAD ALSO FOUND THAT THE ASSESSEE WAS DEBIT ING THE MARGIN GIVEN TO THE DISTRIBUTORS UNDER THE HEAD CO MMISSION PAID TO DISTRIBUTORS, LEADING TO THEIR CONCLUSION THAT IT WAS A ADMITTANCE ON THE PART OF THAT ASSESSEE THAT THE TR ANSFER OF THE SIM CARDS FROM THE ASSESSEE COMPANY TO ITS DISTRIBU TORS WAS ON COMMISSION BASIS ON WHICH TDS WAS DEFINITELY REQUIR ED TO BE DEDUCTED. 7 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED THEREFORE, IN MY OPINION, DRAWING SUPPORT FROM THE DECISION OF THE HONBLE SUPREME COURT IN BHARAT SANCHAR NIGAM L TD. VS.UOI (SUPRA), THE SAID TRANSACTION BETWEEN THE AP PELLANT COMPANY AND ITS DISTRIBUTORS MUST BE VIEWED FROM TH E ACTUAL CONDUCT OF THE PARTIES INVOLVED AND NOT IN A GENERI C MANNER. IN THE INSTANT CASE OF THE APPELLANT, THE APPELLANT COMPANY HAS FURNISHED ENOUGH DOCUMENTARY EVIDENCES TO SHOW THAT THE TRANSACTION BETWEEN IT AND THE DISTRIBUTORS IN RESP ECT OF THE SIM CARDS IS ONE OF SALE OF GOODS ON PRINCIPAL TO PRINC IPAL BASIS AND THERE IS NO PRINCIPAL-AGENT RELATIONSHIP INVOLVED W HICH IS A SINE QUA NON FOR ATTRACTING THE PROVISIONS OF SECTION 19 4H. THE FACTS OF THE APPELLANT ARE QUITE SIMILAR TO THE FACTS IN THE CASE OF ACIT VS. IDEA CELLULAR LTD. (2009) 125 TTJ (HYD.) 663, W HERE THE ASSESSEE WAS NOT HELD AS A DEFAULTER U/S. 201(1) AN D 201(1 A) FOR NOT DEDUCTING TDS U/S. 194H ON MARGIN ALLOWED T O THE DISTRIBUTORS ON BULK SALES OF PREPAID CARDS/ RECHAR GE COUPONS. THE AOS ORDERS, THEREFORE, CANNOT BE UPHELD. THE A PPEALS ARE ALLOW3ED. IN RESPECT OF F.Y. 2009-10, A COPY OF THE LETTER DATED 09.11.2010 OF THE DCIT, CIRCLE-59, KOLKATA HAS BEEN FILED WHICH SHOWS THAT ENQUIRY ON THE SAME ISSUE WAS MADE AT KO LKATA. IN THAT LIGHT THE ARS SUBMISSION IS CORRECT. THE AO A T MEERUT HAD NO JURISDICTION OVER THE APPELLANT FOR THE YEAR. TH E ORDER UNDER APPEAL FOR F.Y. 2009-10 IS, THEREFORE, VOID ON THIS ACCOUNT. 2.3 NOW, THE DEPARTMENT HAS APPROACHED THIS TRIBUNA L ASSAILING THE ORDER OF THE LD. CIT(A) AND THE GROUN DS RAISED BY THE DEPARTMENT IN ASSESSMENT YEARS 2008-09 AND 2009-10 ARE RESPECTIVELY AS UNDER:- 8 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED ITA NO.1685/DEL/2011 FOR ASSESSMENT YEAR 2008-09: 1.1 THE CIT (A) HAS ERRED ON FACTS AND IN LAW, I N CANCELLING THE ORDER DATED 01.02.2010 PASSED BY THE ITO(TDS) M EERUT AND IN DIRECTING THAT PROVISIONS CONTAINED IN SECTION 1 94H OF THE I.T.ACT,1961 IS NOT APPLICABLE ON THE AMOUNT OF DISCOUNT/COMMISSION ALLOWED ON RECHARGE COUPONS (PR EPAID) SIM CARDS TO FRANCHISEES BY THE ASSESSEE, IGNORING THE FACT OF THE CASE THAT THE DEDUCTOR COMPANY IS LIABLE TO DED UCT THE TAX U/S 194H AT THE RATE OF 10% ON THE AMOUNT OF DISCOUNT/COMMISSION. 1.2 IN DIRECTING SO, CIT(A) HAS FAILED TO APPREC IATE THE FOLLOWING (I) THE LD. CIT(A) HAS ERRED TO ADMIT THE ADDITIONAL EV IDENCE PRODUCED BY THE ASSESSEE BEFORE HIM IN CONTRAVENTIO N OF RULE 46A(3) OF THE INCOME TAX RULES, 1962, IN AS MUCH AS NO OPPORTUNITY WAS GIVEN TO THE A.O TO EXAMINE THE COR RECTNESS OF THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE BE FORE THE C.I.T(APPEALS). (II) THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE TRANSA CTIONS BETWEEN THE ASSESSEE AND THE DISTRIBUTOR IP RESPECT OF THE SIM CARDS IS ONE OF THE SALE OF GOODS ON PRINCIPAL TO P RINCIPAL BASIS AND THERE IS NO PRINCIPAL- AGENT RELATIONSHIP INVOL VED. THE INFERENCE DERIVED BY THE CIT(A) IS NO ACCEPTABLE IN VIEW OF THE REASONS AS UNDER:- A) THE ASSESSEE COMPANY, BEING OWNER OF SIM CARDS AND RECHARGE COUPONS, IS OPERATING UNDER THE RIGHT OF T HE LICENSE AGREEMENT ENTERED INTO WITH THE GOVERNMENT OF INDIA AND THEREFORE THE RIGHT TO OPERATE AS CELLULAR SERVICE PROVIDER CANNOT BE TRANSFERRED TO ANY OTHER PERSON. SINCE SIM CARDS IS ONLY A DEVICE TO HAVE ACCESS TO MOBILE PHONE NETWORK, THER E IS NO QUESTION OF PASSING OF ANY OWNERSHIP OR TITLE OF GO ODS FROM THE 9 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED ASSESSEE COMPANY TO THE DISTRIBUTOR. THEREFORE THE DISTRIBUTORS ARE ACTING ONLY AS A SERVICE PROVIDER BETWEEN THE A SSESSEE COMPANY AND THE CONSUMER. B) THE RIGHT TO USE SIM CARDS TO GET ACCESS TO THE NET WORK OF THE ASSESSEE COMPANY IS GIVEN ONLY TO THE CONSUMER WHO ACTIVATES THE CONNECTION BY USING THE SECRET NUMBER PROVIDED IN THE SIM CARDS. THEREFORE, THE SIM CARDS DO NOT BECO ME THE ABSOLUTE PROPERTY OF THE DISTRIBUTOR. (C) THE ESSENCE OF SERVICE RENDERED BY THE FRANCHIS EE TO THE PREPAID AND POST-PAID CONSUMERS ARE SAME AND THE DI FFERENCE EXIST ONLY IN THE BILLING SYSTEM. THEREFORE, THE NA TURE OF TRANSACTION BETWEEN THE ASSESSEE COMPANY AND THE FR ANCHISEE FOR SALE OF PREPAID RECHARGE COUPON CANNOT BE DISTI NGUISHED FROM THE SALE OF POST-PAID RECHARGE COUPONS. THEREF ORE, IF THE ASSESSEE WAS FOUND LIABLE FOR DEDUCTING TDS U/S 194 H ON POST- PAID SIM CARDS, THEN THE SAME TREATMENT SHALL HAVE TO BE GIVEN IN CASE OF PREPAID SIM CARDS AS WELL. D) THE FRANCHISEES ARE PROVIDING ESSENTIAL SERVICES TO THE ASSESSEE COMPANY HAVING A HUGE OPERATIONAL NETWORK AND THEREFORE THE RELATION OF ASSESSEE AND DISTRIBUTOR IS NOT OF PRINCIPAL TO PRINCIPAL BASIS, BUT IN FACT, IS PRINC IPAL TO AGENT BASIS, IRRESPECTIVE OF THE TERMS OF AGREEMENT BETWE EN THE ASSESSEE AND THE FRANCHISEES. E) THE ORDER OF LD. C.I.T((A) IS IN CONTRAVENTION OF R ATIO OF JUDGEMENT GIVEN BY HONBLE HIGH COURTS IN CASES AS UNDER:- I) CIT VS. IDEA CELLULAR LTD., APPEAL NO.ITA NO.146 OF 2009 WITH ITA NO.784 OF 2009 DECIDED ON 19.02.2010 BY HONBLEL DELHI HIGH COURT. II) VODAFONE ESSAR CELLULAR LIMITED VS. ASSISTANT COMMISSIONER INCOME TAX, IN ITA NOS.1742, 1759, 176 1, 1762, 1763, 1764, 1773 & 1780 OF 2009 ORDER DATED 17.08.2010 BY HONBLE KERALA HIGH COURT. 10 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED ITA NO.1686/DEL/2011 FOR ASSESSMENT YEAR 2009-10: 1.2 THE CIT (A) HAS ERRED ON FACTS AND IN L AW, IN CANCELLING THE ORDER DATED 01.02.2010 PASSED BY THE ITO(TDS) M EERUT AND IN DIRECTING THAT PROVISIONS CONTAINED IN SECTION 1 94H OF THE I.T.ACT,1961 IS NOT APPLICABLE ON THE AMOUNT OF DISCOUNT/COMMISSION ALLOWED ON RECHARGE COUPONS (PR EPAID) SIM CARDS TO FRANCHISEES BY THE ASSESSEE, IGNORING THE FACT OF THE CASE THAT THE DEDUCTOR COMPANY IS LIABLE TO DED UCT THE TAX U/S 194H AT THE RATE OF 10% ON THE AMOUNT OF DISCOUNT/COMMISSION. 1.2 IN DIRECTING SO, CIT(A) HAS FAILED TO APPRE CIATE THE FOLLOWING (I) THE LD. CIT(A) HAS ERRED TO ADMIT THE ADDITIONAL EV IDENCE PRODUCED BY THE ASSESSEE BEFORE HIM IN CONTRAVENTIO N OF RULE 46A(3) OF THE INCOME TAX RULES, 1962, IN AS MU CH AS NO OPPORTUNITY WAS GIVEN TO THE A.O TO EXAMINE THE CORRECTNESS OF THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE BEFORE THE C.I.T(APPEALS). (II) THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE TRANSAC TIONS BETWEEN THE ASSESSEE AND THE DISTRIBUTOR IN RESPECT OF THE SIM CARDS IS ONE OF THE SALE OF GOODS ON PRINCIPAL TO PRINCIPAL BASIS AND THERE IS NO PRINCIPAL- AGENT RELATIONSHIP INVOLVED. THE INFERENCE DERIVED BY THE CIT(A) IS NO ACCEPTABLE IN VIEW OF THE REASONS AS UNDER:- A) THE ASSESSEE COMPANY, BEING OWNER OF SIM CARDS AND RECHARGE COUPONS, IS OPERATING UNDER THE RIGHT OF THE LICENSE AGREEMENT ENTERED INTO WITH THE GOVERNMENT OF INDIA AND THEREFORE THE RIGHT TO OPERATE AS CELLULA R SERVICE PROVIDER CANNOT BE TRANSFERRED TO ANY OTHER PERSON. SINCE SIM CARDS IS ONLY A DEVICE TO HAVE ACCESS TO MOBILE PHONE NETWORK, THERE IS NO QUESTION OF PASSING OF ANY OWN ERSHIP OR TITLE OF GOODS FROM THE ASSESSEE COMPANY TO THE 11 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED DISTRIBUTOR. THEREFORE THE DISTRIBUTORS ARE ACTING ONLY AS A SERVICE PROVIDER BETWEEN THE ASSESSEE COMPANY AND T HE CONSUMER. B) THE RIGHT TO USE SIM CARDS TO GET ACCESS TO THE NETWORK OF THE ASSESSEE COMPANY IS GIVEN ONLY TO TH E CONSUMER WHO ACTIVATES THE CONNECTION BY USING THE SECRET NUMBER PROVIDED IN THE SIM CARDS. THEREFORE, THE SI M CARDS DO NOT BECOME THE ABSOLUTE PROPERTY OF THE DISTRIBUTOR. C) THE ESSENCE OF SERVICE RENDERED BY THE FRANCHISEE TO THE PREPAID AND POST-PAID CONSUMERS ARE SAM< AND THE DIFFERENCE EXIST ONLY IN THE BILLING SYSTEM. THEREF ORE, THE NATURE OF TRANSACTION BETWEEN THE ASSESSEE COMPANY AND THE FRANCHISEE FOR SALE OF PREPAID RECHARGE COUPON CONNOT BE DISTINGUISHED FROM THE SALE OF POST-PAID RECHARG E COUPONS. THEREFORE, IF THE ASSESSEE WAS FOUND LIABL E FOR DEDUCTING TDS U/S 194H ON POST-PAID SIM CARDS, THEN THE SAME TREATMENT SHALL HAVE TO BE GIVEN I CASE OF PRE PAID SIM CARDS AS WELL. D) THE FRANCHISEES ARE PROVIDING ESSENTI AL SERVICES TO THE ASSESSEE COMPANY HAVING A HUGE OPERATIONAL NETWORK AND THEREFORE THE RELATION OF ASSESSEE AND DISTRIBUTOR IS NOT OF PRINCIPAL TO PRINCIPAL BASIS, BUT IN FACT, IT IS PRINCIPAL TO AGENT BASIS, IRRESPECTIVE OF THE TERMS OF AGREEMENT BETWEEN THE ASSESSEE AND THE FRANCHISEES. E) THE ORDER OF LD. C.I.T((A) IS IN CONTRAV ENTION OF RATIO OF JUDGEMENT GIVEN BY HONBLE HIGH CO IN CASES AS UNDER:- I) CIT VS. IDEA CELLULAR LTD., APPEAL NO.ITA NO. 146 O F 2009 WITH ITA NO.784 OF 2009 DECIDED 19.02.2010 BY HONBLE DELHI HIGH COURT. II) VODAFONE ESSAR CELLULAR LIMITED VS. ASSISTANT COMMISSIONER OF INCOME TAX, IN ITA NOS.1742, 1759, 12 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED 1761, 1762, 1763, 1773 & 1780 OF 2009 DATED 17.08.2010 BY HONBLE KERALA HIGH COURT. 3.0 THE LD. CIT-DR SUPPORTED THE ACTION OF THE ASS ESSING OFFICER AND ARGUED THAT IN LIGHT OF THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. IDEA CELLULAR LTD . IN APPEAL NOS.146/2009 AND 784/2009 AND ANOTHER JUDGMENT OF T HE HONBLE KERALA HIGH COURT IN THE CASE OF VODAFONE ESSAR CEL LULAR LTD. VS. ACIT [2011] 332 ITR 255 (KER.), IN ITA NO.1742/2009 , THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE U/S 194H OF THE A CT ON DISCOUNT OFFERED TO THE DISTRIBUTORS OF THE RECHARGE COUPON VOUCHERS AND STARTER KITS. THE LD. CIT-DR ALSO ARGUED THAT THE L D. CIT(A) WAS NOT JUSTIFIED IN ACCEPTING SOME ADDITIONAL EVIDENCES WIT HOUT GIVING PROPER OPPORTUNITY TO THE ASSESSING OFFICER TO COMM ENT ON THE SAME AND, THUS, IT WAS IN CLEAR VIOLATION OF RULE 46 A. 4.0 PER CONTRA, THE LD. AUTHORIZED REPRESEN TATIVE (AR) REFERRING TO THE PAPER BOOK FILED BY THE ASSESSEE S UBMITTED THAT THIS VERY ISSUE HAS BEEN DECIDED BY THE HONBLE HIGH COU RTS AND CO- ORDINATE BENCHES OF THE ITAT INCLUDING THE JUDGMENT OF THE HONBLE 13 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED KARNATAKA HIGH COURT IN THE CASE OF BHARTI AIRTEL L TD. VS. CIT & ANR. [2015] 372 ITR 33 (KARN). THE LD. AUTHORIZED R EPRESENTATIVE ALSO REFERRED TO AN ORDER OF JAIPUR BENCH OF TRIBUN AL IN A RELATED COMPANY OF THE ASSESSEE IN THE CASE OF TTSL VS. ITO , JAIPUR REPORTED IN [2016] 71 TAXMAN.COM 285 (JAIPUR). THE LD. AR FURTHER SUBMITTED THAT IN THE CASE OF DCIT VS. IDEA CELLULA R IN ITA NO.852/DEL/2015, VIDE ORDER DATED 01.05.2018, THE C O-ORDINATE BENCH OF ITAT DELHI HAD DECIDED THE ISSUE OF APPLIC ABILITY OF SECTION 194H OF THE ACT VIS--VIS DISCOUNT ON PRE-PAID CARD S IN FAVOUR OF THE ASSESSEE DESPITE THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF THAT VERY ASSESSEE. IT WAS FURTHER ARGU ED BY THE LD. AR THAT THE ADVERSE JUDGMENT OF THE HONBLE DELHI HIGH COURT AND THE HONBLE KERALA HIGH COURT WERE NOT APPLICABLE IN THE CASE OF THE ASSESSEE, AS THE CASE OF THE ASSESSEE FELL UNDER TH E JURISDICTION OF THE HONBLE ALLAHABAD HIGH COURT AND THAT THERE WAS NO JUDGMENT EITHER FAVOURABLE OR UNFAVOURABLE BY THE HONBLE AL LAHABAD HIGH COURT ON THE ISSUE. THE LD. AR PLEADED THAT A VIEW F AVOURING THE ASSESSEE MAY BE TAKEN IN LIGHT OF THE JUDGMENT OF T HE HONBLE APEX 14 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS REP ORTED IN [1973] 1SCC 442. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAV E ALSO GONE THROUGH THE RECORDS. AS FAR AS THE DEPARTMENTS GRO UND REGARDING VIOLATION OF RULE 46A OF THE INCOME TAX RULES IS CO NCERNED, A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT THE ASSESSE E HAD RAISED THE GROUND OF VIOLATION OF PRINCIPLES OF NATURAL JU STICE BEFORE THE LD. FIRST APPELLATE AUTHORITY AS IS EVIDENT FROM PAGE 1 0 OF THE IMPUGNED ORDER READ ALONG WITH THE TWO PAGE ORDER PAS SED BY THE ASSESSING OFFICER. IT IS VERY MUCH CLEAR THAT NO PR OPER OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO JUSTIFY ITS CASE OF NON DEDUCTION OF TAX AT SOURCE. FURTHER, IT IS ALSO SEEN THAT THERE IS N O REFERENCE TO ANY APPLICATION MADE BY THE ASSESSEE FOR ADMITTING ADDI TIONAL EVIDENCES BEFORE THE LD. CIT(A). THUS, THE LD. CIT(A) EXAMINE D THE VARIOUS DOCUMENTS IN EXERCISE OF HIS POWERS U/S 250(4) OF TH E ACT AND UNDER SUCH CIRCUMSTANCES, WE ARE OF THE CONSIDERED O PINION THAT WHEN THE ASSESSING OFFICER HAD FAILED TO PROVIDE PRO PER OPPORTUNITY TO THE ASSESSEE, THE LD. CIT(A) HAD ACTED WELL WITHI N HIS POWER TO ADJUDICATE THE ISSUES AFTER CALLING FOR NECESSARY INFORMATION AND 15 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED DETAILS AND IT CANNOT BE SAID THAT THERE WAS ANY VIO LATION OF RULE 46A OF THE INCOME TAX RULES. IT IS TRITE THAT THE F IRST APPELLATE AUTHORITY HAS POWERS WHICH ARE CO-TERMINUS WITH THE PO WERS OF THE ASSESSING OFFICER AND THAT HE IS EMPOWERED TO CALL FOR ANY DETAILS OR DOCUMENTS WHICH HE DEEMS IT NECESSARY FOR THE PROPER ADJUDICATION OF THE ISSUE AND THERE IS NO REQUIREMENT UNDER THE LAW FOR GRANTING ANY FURTHER OPPORTUNITY TO THE ASSESSING OFFICER IN TERMS OF SECTION 250(4) OF THE ACT IN SUCH CASES. ACCORDINGLY, FINDI NG NO STRENGTH IN THE ARGUMENTS OF THE LD. CIT-DR ON THIS ISSUE AND L OOKING INTO THE FACTUAL MATRIX OF THE CASE, WE DISMISS THE GROUND N O.1.2(I) OF THE DEPARTMENTS APPEAL. 5.1 COMING TO THE MERITS OF THE CASE, THE SOLE ISSUE FOR OUR CONSIDERATION IS THE APPLICABILITY OF PROVISIONS OF SECTION 194H OF THE ACT ON THE DISCOUNT ALLOWED TO DISTRIBUTORS/CHA NNEL PARTNERS ON THE SALE OF RECHARGE COUPON VOUCHERS AND THE STARTE R KITS FOR TELECOMMUNICATION SERVICES. IN THIS CONTEXT, IT IS SEEN THAT THE ORDER U/S 201(1) OF THE ACT HAS BEEN PASSED BY ITO (TDS), MEERUT AND, FURTHER THE REGISTERED ADDRESS OF THE ASSESSEE AS A PPEARING IN THE 16 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED ORDER U/S 201(1) OF THE ACT, IN THE IMPUGNED ORDER AND IN FORM NO.36 IS THAT OF MEERUT. THEREFORE, WE AGREE WITH TH E CONTENTION OF THE LD. AR THAT THE JURISDICTION OF THE ASSESSEE FA LLS UNDER THE JURISDICTION OF THE HONBLE ALLAHABAD HIGH COURT. T HEREFORE, WE ARE RESPECTFULLY OF THE CONSIDERED OPINION THAT THE JUD GMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF IDEA CELLUL AR (SUPRA) AND THE HONBLE KERALA HIGH COURT IN THE CASE OF VODAFO NE ESSAR CELLULAR (SUPRA) CANNOT BE CONSIDERED AS BINDING FO R THE ASSESSEE ON THE ISSUE. WE ALSO NOTE THAT THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF BHARTI AIRTEL LTD. VS. CIT & ANR (SUPRA ) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT TAX WAS NOT DEDUCTABLE ON DISCOUNT ALLOWED TO DISTRIBUTORS. IN THIS JUDGMENT, THE HONBLE KARNATAKA HIGH COURT IN THE CASES OF TH REE ASSESSEES I.E., BHARTI AIRTEL LTD., VODAFONE ESSAR LTD. AND A NOTHER GROUP COMPANY OF THE ASSESSEE TATA TELE SERVICE LTD. IDEN TICAL ISSUE WAS CONSIDERED AND THE ISSUE WAS SETTLED IN FAVOUR OF T HE ASSESSEE. SIMILARLY, THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF TTSL VS. ITO, JAIPUR (SUPRA) FOLLOWED THE JUDGMENT OF THE HO NBLE KARNATAKA HIGH COURT IN THE CASE OF BHARTI AIRTEL VS. DCIT (S UPRA) AND HELD 17 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED THAT THE DISCOUNT ON SALE OF RECHARGE VOUCHERS AND SIM CARDS BY TELECOMMUNICATION COMPANY TO ITS DISTRIBUTORS DID N OT AMOUNT TO COMMISSION IN TERMS OF SECTION 194H OF THE ACT. WE ALSO NOTE THAT THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF TAT A TELE SERVICES LTD. REPORTED IN 402 ITR 439 (RAJSTHAN) AND THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. VODAFONE CELLULAR LTD IN INCOME TAX APPEAL NO.1152 OF 2017 VIDE ORDER DATED 27.01.2 020 HAVE ALSO DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLD ING THAT THE PROVISIONS OF SECTION 194H WERE NOT APPLICABLE TO T HE TRANSACTION OF SALE OF STARTER KITS AND PRE-PAID SIMS TO DISTRIBUT ORS ON PRINCIPAL TO PRINCIPAL BASIS. UNDER SUCH CIRCUMSTANCES AND TAKIN G GUIDANCE FROM THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF VEGETABLE PRODUCTS (SUPRA), WE HOLD THAT THE VIEW FA VOURING THE ASSESSEE NEEDS TO BE TAKEN. 5.2 WE ALSO NOTE THAT THE ASSESSING OFFICER HAS RELIED UPON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF IDEA CELLULAR (SUPRA). HOWEVER, IT WILL BE APPROPRIATE TO REFER TO FINDINGS RECORDED BY A CO-ORDINATE BENCH OF THIS TRIBUNAL IN SUBSEQUENT ORDER PASSED IN THE CASE OF DCIT VS. IDEA CELLULAR IN ITA 18 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED NO.852/DEL/2015 VIDE ORDER DATED 01.05.2018 WHEREIN DESPITE THE ADVERSE JUDGMENT OF THE HONBLE DELHI HIGH COURT, T HE CO-ORDINATE BENCH DECIDED THE ISSUE OF APPLICABILITY OF THE PRO VISIONS OF SECTION 194H OF THE ACT IN FAVOUR OF THE ASSESSEE. WE WOULD ALSO LIKE TO REFER TO THE OBSERVATIONS OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL, JAIPUR BENCH IN THE CASE OF TETA TELE SERVICES LTD. VS. ITO, JAIPUR (SUPRA) WHEREIN VIEW FAVOURABLE TO THE ASSESSEE WAS TA KEN. THE RELEVANT OBSERVATIONS AND FINDINGS OF THE CO-ORDINA TE BENCH OF THIS TRIBUNAL ARE BEING REPRODUCED HEREIN UNDER FOR A RE ADY REFERENCE:- 2.22 WE HAVE HEARD THE RIVAL CONTENTIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. FOLLOWING OBSERVATION S EMERGE FROM THE RECORD:- I ASSESSEE HAS CLAIMED THAT AS PER ITS BUSINESS AGREEMENT TERMS THE SALE PRICE IS COLLECTED IN ADVA NCE FROM DISTRIBUTOR. THE SALE PRICE IS RECEIVED MINUS DISCO UNT, WHAT IS ACCOUNTED FOR IN ITS BOOKS IS NET SALE PRICE AND NOT THE COMMISSION. ASSESSEE HAS DEMONSTRATED IT FROM ITS PLEADING BEFORE LOWER AUTHORITIES IN THIS BEHALF AN D ITS WRITTEN SUBMISSIONS FILED BEFORE US. THEY ARE NEITH ER CONTROVERTED BY THE AUTHORITIES BELOW NOR BY THE ID . DR. CONSEQUENTLY THE ASSESSEE S CASE FALLS IN PARA 61 O F THE HONBLE KAMATAK HIGH COURT JUDGMENT AND NOT IN PARA 60 AS PROPOSED BY ID. DR. II WHEN ASSESSEE IS NOT HOLDING ANY INCOME PAYABLE TO DISTRIBUTORS THE QUESTION OF DEDUCTING TDS U/S. 194 H DOES 19 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED NOT ARISE. THEREFORE THE FACTS, CIRCUMSTANCES, ACCO UNTING TREATMENT AND NATURE OF RELATIONSHIP BETWEEN ASSESS EE AND ITS DISTRIBUTORS QUA THE IMPUGNED SALES FALL WI THIN THE AMBIT AND OBSERVATIONS AT PARA 61 OF THE ORDER. IN VIEW OF THE FOREGOINGS WE HAVE NO HESITATION TO HOLD THAT: III WHAT IS SOLD BY THE ASSESSEE SERVICE PROV IDER TO THE DISTRIBUTOR IS THE RIGHT TO SERVICE. ONCE THE DISTR IBUTOR PAYS FOR THE SERVICE, AND THE SERVICE PROVIDER, DELIVERS THE SIM CARD OR RECHARGE COUPONS, THE DISTRIBUTOR ACQUIRES A RIGHT TO DEMAND SERVICE. ONCE SUCH A RIGHT IS ACQUIRED TH E DISTRIBUTOR MAY USE IT BY HIMSELF. IV. DISTRIBUTOR MAY ALSO SELL THE RIGHT TO SUB- DISTRIBUTORS WHO IN TURN MAY SELL IT TO RETAILERS, THUS THE PROP ERTY IN GOODS IS TRANSFERRED IN FAVOUR OF THE DISTRIBUTOR. IT IS A WELL-SETTLED PROPOSITION THAT IF THE PROPERTY IN TH E GOODS IS TRANSFERRED AND GETS VESTED IN THE DISTRIBUTOR AT T HE TIME OF THE DELIVERY THEN HE IS THEREAFTER LIABLE FOR THE S AME AND WOULD BE DEALING WITH THEM IN HIS OWN RIGHT AS A PR INCIPAL AND NOT AS AN AGENT. V. THE ASSESSEE MAY HAVE FIXED THE MRP AND THE PRICE AT WHICH THEY SELL THE PRODUCTS TO THE DISTRIBUTORS BUT THE PRODUCTS ARE SOLD AND OWNERSHIP VESTS AND IS TRANSF ERRED TO THE DISTRIBUTORS. THE DISCOUNTED INCOME ACCRUES TO DISTRIBUTOR ONLY WHEN THEY SELL THIS RIGHT TO SERVI CE AND NOT WHEN THEY PURCHASE THIS RIGHT TO SERVICE FROM ASSES SEE. VI. AS AT THE TIME OF SALE OF PREPAID CARD BY THE ASSESSEE TO THE DISTRIBUTOR, INCOME HAS NOT ACCRUED OR ARISEN TO THE DISTRIBUTOR, THERE IS NO PRIMARY LIAB ILITY TO TAX ON THE DISTRIBUTOR. IN THE ABSENCE OF PRIMARY LIABI LITY ON 20 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED THE DISTRIBUTOR AT SUCH POINT OF TIME, THERE IS NO LIABILITY ON THE ASSESSEE TO DEDUCT TAX AT SOURCE. THE DIFFERENC E BETWEEN THE SALE PRICE TO RETAILER AND THE PRICE WH ICH THE DISTRIBUTOR PAYS TO THE ASSESSEE IS HIS INCOME FROM BUSINESS. IT CANNOT BE CATEGORIZED AS COMMISSION. M ERELY BECAUSE SALE IS SUBJECT TO AGREED CONDITIONS AND STIPULATIONS CANNOT CONVERT THE RELATIONSHIP OF PRI NCIPAL TO PRINCIPAL INTO THAT OF PRINCIPAL AND AGENT RELATION SHIP. 2.23 WE FIND MERIT IN THE CONTENTION OF ID. CO UNSEL THAT THERE IS NO JURISDICTIONAL HIGH COURT JUDGMENT ON THIS IS SUE. HON'BLE KARNATAKA HIGH COURT JUDGMENT IS ELABORATE, DETAILE D, CONSIDERS THE PREVIOUS DELHI AND KERALA HIGH COURT JUDGMENT AGAINST THE ASSESSEE AND IS LATEST COMPREHENSIVE AD JUDICATION ON THE ISSUE. EVEN IF IT IS HELD THAT THERE EXIST D IVERGENCE OF JUDICIAL OPINION A VIEW FAVOURABLE TO THE ASSESSEE IS TO BE ADOPTED AS HELD BY HON'BLE SUPREME COURT IN VEGETAB LE PRODUCTS LTD. AND VATIKA TOWNSHIP (P.) LTD.'S CASE (SUPRA). FROM THIS ANGLE ALSO IN THESE FACTS AND CIRCUMSTANCES HO N'BLE KARNATAKA HIGH COURT JUDGMENT IS APPLICABLE TO THE ASSESSEE'S CASE. RESPECTFULLY FOLLOWING THE SAME WE HOLD THAT: A. THE RELATIONSHIP BETWEEN ASSESSEE AND ITS DISTRIBUTORS QUA THE SALE OF IMPUGNED PRODUCTS IS O N PRINCIPAL TO PRINCIPAL BASIS; THE CONSIDERATION REC EIVED BY ASSESSEE IS SALE PRICE SIMPLICITOR. B. THERE IS NO RELATIONSHIP OF PRINCIPAL AND AGEN T BETWEEN ASSESSEE AND DISTRIBUTORS AS HELD BY AUTHORITIES BE LOW THERE ORDERS ARE REVERSED. 21 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED C. LOOKING AT THE TRANSACTION BEING OF SALE/LHI RCHASE AND RELATIONSHIP BEING OF PRINCIPAL TO PRINCIPAL TH E DISCOUNT DOES NOT AMOUNT TO COMMISSION IN TERMS OF SEC. 194H , THE SAME IS NOT APPLICABLE TO THESE TRANSACTIONS. THERE FORE, ASSESSEE'S CANNOT BE HELD IN DEFAULT; IMPUGNED DEMA ND RAISED APPLYING SEC. 194H IS QUASHED. ASSESSEE'S GR OUNDS ARE ALLOWED. 2.24 APROPOS THE REVENUE APPEAL SINCE WE HAVE HELD THAT SEC. 194H IS NOT APPLICABLE, THERE REMAINS NO SUBST ANCE IN REVENUE APPEALS. IN ANY CASE THERE IS NO INFIRMITY IN THE ORDER OF LD. CIT(A) IN ADMITTING THE ADDITIONAL EVIDENCE IN THE LIGHT OF HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF HINDU STAN COCA- COLA BEVERAGES (P.) LTD.(SUPRA) AND FOLLOWING HIS P AST ORDERS. REVENUE GROUNDS ARE DISMISSED. 5.3 THEREFORE, IN LIGHT OF THE DISCUSSION IN THE ABOVE PARAS AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS REFER RED TO ABOVE, WE HOLD THAT THE SALE OF RECHARGE VOUCHER COUPONS AND STARTER KITS AND THE DISCOUNT OFFERED TO THE DISTRIBUTORS WOULD NOT ATTRACT TDS PROVISIONS U/S 194H OF THE ACT AND AS SUCH NO DEFAU LT U/S 201(1) OF THE ACT CAN BE ATTRIBUTED TO THE ASSESSEE. ACCO RDINGLY, THE ORDER OF THE LD. CIT(A), ALLOWING RELIEF TO THE ASSESSEE, IS UPHELD AND THE GROUNDS RAISED BY THE DEPARTMENT ARE DISMISSED. THE ORDERS OF THE LD. CIT(A) FOR BOTH THE ASSESSMENT YEARS IN APPEAL ARE, THUS, UPHELD. 22 ITA NOS.1685 & 1686 /DEL/2011 ITO VS. M/S TATA TELES ERVICES LIMITED 6.0 IN THE FINAL RESULT, BOTH THE APPEALS OF T HE DEPARTMENT ARE DISMISSED. ORDER PRONOUNCED ON 27 TH SEPTEMBER, 2021. SD/- SD/- (N. K. BILLAIYA) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27/09/2021 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT DEHRADUN