The Assistant Commissioner of Income Tax, Circle-1 (1), Panaji., Panaji V. M/s Herald Publications Pvt. Ltd., Panaji

ITA 172/PAN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1211 (ITAT-PANAJI)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-11-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 31-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIRAJ Y V
• Assessee Lawyers: D E ROBINSON

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER & SHRI RAMIT KOCHAR HONBLE ACCOUNTANT MEMBER ITA NO. 172 /P A N/201 6 (ASST. YEAR : 20 11 - 1 2 ) ACIT, CIRCLE - 1(1), PANJIM GOA. VS. M/S. HERALD PUBLICATIONS PVT. LTD. , RUA - DE - OUREM, ST. TOME STREET, BEHIND G.P.O., PANAJI GOA. PAN NO. AAACH 4580 K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D.E. ROBINSON ADV. DEPARTMENT BY : SHRI RAVIRAJ Y.V. - DR DATE OF HEARING : 2 8 / 11 /201 6 . DATE OF PRONOUNCEMENT : 28 / 11 /201 6 . O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) , PANAJI - 1 IN APPEAL NO. 82/PNJ - 1/14 - 15 , DATED 22 /0 6 /201 6 FOR THE ASSESSMENT YEAR 2011 - 12 . 2. SHRI RAVIRAJ Y.V., DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF THE REVENUE AND SHRI D. E. ROBINSON , ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE. 3 . IT WAS SUBMITTED BY THE DEPARTMENTAL REPRESENTATIVE THAT IN THE REVENUES APPEAL, THE REVENUE HAS CHALLENGED THE ACTION OF THE COMMISSIONER OF INCOME TAX (APPEALS) I N DELETING THE ADDITION MADE BY THE ASSESSING OFFICER BY APPLYING THE PROVISIONS OF SECTION 40(A)(IA) IN 2 ITA NO. 172/PAN/2016 RESPECT OF THE AMOUNTS CLAIMED AS DISCOUNTS IN RESPECT OF SALES OF THE NEWSPAPERS GIVEN TO THE AGENTS AND IN RESPECT OF ADVERTISEMENTS . IT WAS THE SUB MISSION THAT THE ASSESSING OFFICER HAD D I S ALLOWED THE DISCOUNT TO THE ADVERTISEMENT AND CIRCULATION AGENTS OF 4,37,96,691/ - BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ON ACCOUNT OF NON - DEDUCTION OF TDS UNDER SECTION 194H OF THE ACT. IT WAS THE SUBMISSION THAT COMMISSIONER OF INCOME TAX (APPEALS) HAD DELETED THE ADDITION BY FOLLOWING THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF JAGRAN PRAKASHAN VS. DCIT (345 ITR 28 8) , AS ALSO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF INTERVET INDIA (364 ITR 238) . IT WAS THE SUBMISSION THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WAS LIABLE TO BE REVERSED. 4 . IN REPLY, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF INTERVET INDI A (SUPRA). IT WAS ALSO THE SUBMISSION THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. DEMPO INDUSTRIES PVT. LTD. IN ITA NOS. 58 & 59/PNJ/2015, DATED 07/10/2015 WHEREIN IT HAS BEEN HELD AS FOLLOWS: - 12. THE DEPARTMENTAL REPRESENTATIVE HAS RELIED ON THE ORDER OF THE ASSESSING OFFICER. HE COULD NOT POINT OUT ANY SPECIFIC MISTAKE IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). FURTHER, WE FIND THAT THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF BHARTI AIRTEL LTD. VS. DCIT (2015) 372 ITR 33 (KAR.) HELD AS UNDER: - (I) SIM CARDS HAD NO INTRINSIC SALE VALUE AND WERE SUPPLIED TO CUSTOMERS FOR PROVIDING MOBILE SERVICES TO THEM. THERE WAS NO RELATIONSHIP OF PRINCIPAL AND AGENCY. ON THE CONTRARY, IT WA S EXPRESSLY STATED THAT THE RELATIONSHIP WAS THAT OF PRINCIPAL TO PRINCIPAL. SECONDLY, THE DISTRIBUTOR OR CHANNEL PARTNER HAD TO PAY CONSIDERATION FOR THE PRODUCT SUPPLIED AND IT WAS TREATED AS SALE CONSIDERATION. THERE WAS A CLAUSE, WHICH SPECIFICALLY STA TED THAT AFTER SUCH SALE OF PRODUCTS, THE DISTRIBUTOR OR CHANNEL PARTNER COULD NOT RETURN THE GOODS TO THE ASSESSEE FOR WHATEVER REASON. WHAT WAS GIVEN BY THE ASSESSEE TO ITS DISTRIBUTOR OR CHANNEL PARTNER WAS A TRADE DISCOUNT. IT WAS NOT COMMISSION. 3 ITA NO. 172/PAN/2016 (II) THAT THE ASSESSEE SOLD PRE - PAID CARDS AND VOUCHERS TO THE DISTRIBUTORS. AT THE TIME OF THE ASSESSEE SELLING THESE PRE - PAID CARDS FOR A CONSIDERATION TO THE DISTRIBUTOR, THE DISTRIBUTOR DID NOT EARN ANY INCOME. IN FACT, RATHER THAN EARNING INCOME, THE DIST RIBUTORS INCURRED EXPENDITURE FOR THE PURCHASE OF PRE - PAID CARDS. ONLY AFTER THE RESALE OF THOSE PRE - PAID CARDS, WOULD THE DISTRIBUTORS DERIVE INCOME. AT THE TIME OF THE ASSESSEE SELLING THESE PRE - PAID CARDS, IT WAS NOT IN POSSESSION OF ANY INCOME BELONGI NG TO THE DISTRIBUTOR. THEREFORE, THE QUESTION OF ANY INCOME ACCRUING OR ARISING TO THE DISTRIBUTOR AT THE POINT OF TIME OF SALE OF PRE - PAID CARDS BY THE ASSESSEE TO THE DISTRIBUTOR DID NOT ARISE. SEC. 194H WAS NOT APPLICABLE. 13. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT THERE IS NO ERROR IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE DISALLOWANCE OF 1,36,43,978/ - ON ACCOUNT OF COMMISSION PAID TO THE NEWSPAPER VENDORS AND 2,76,00,979/ - TOWARDS PAYMENTS OF COMMISSION TO ADVERTISING AGENTS UNDER SEC. 40(A)(IA) OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FOLLOWED JUDICIAL DIS CI PLINE IN FOLLOWING THE PRINCIPLES LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE O F INTERVET INDIA (SUPRA) , AS ALSO IT IS NOTICED THAT THE ISSUE IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. DEMPO INDUSTRIES PVT. LTD. (SUPRA) , THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE STANDS CONFIRMED. 6 . IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF NOVEMBER , 201 6 . S D / - S D / - ( RAMIT KOCHAR ) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH NOVEMBER , 201 6 . VR/ - 4 ITA NO. 172/PAN/2016 COPY TO: 1 . THE ASSESSEE. M/S. HERALD PUBLICATIONS PVT. LTD., RUA - DE - OUREM, ST. TOME STREET, BEHIND G.P.O., PANAJI GOA. 2 . THE REVENUE. ACIT, CIRCLE - 1(1), PANJIM GOA. 3 . THE PR. CIT, PANAJI. 4 . THE CIT(A) , PANAJI - 1, GOA. 5 . THE D.R . 6 . GUARD FILE. BY ORDER SR. PRIVATE SECRETARY I.T.A.T., PANAJI