M/s Bharti Airtel Limited Circle Office, Bhubaneswar V. ACIT, Bhubaneswar

ITA 175/CTK/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52410 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 19-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 22-04-2009
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: J B SAHOO
• Section: 201(1)

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 175/CTK/2009 (ASSESSMENT YEAR 2007 - 08) BHARATI AIRTEL LTD., CIRCLE OFFICE, C/653, EPARI PLAZA, 3 RD FLOOR, JANPATH, KHARVELA NAGAR, UNIT III BHUBANESWAR 751 001 PAN: AAACB 2894 G VERSUS ASST.COMMISSIONER OF INCOME - TAX , HQRS (TDS)(,BHUBANESWAR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI J.B.SAHOO, AR FOR THE RESPONDENT SHRI PARAMITA TRIPATHY, DR DATE OF HEARING : 19.09.2011 DATE OF PRONOUNCEMENT : 23.09.2011 ORDER SHRI K.S.S.PRASAD RAO, JM : THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DT.2.2.2009 FOR THE ASSESSMENT YEA R 2007 - 08 IN THE CASE OF THE ASSESSEE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES IN THE GROUNDS OF APPEAL. 1) THE LEARNED ASSTT. COMMISSIONER OF INCOME TAX (TDS) (AO) HAS ERRED BOTH ON FACTS AND IN LAW IN APPLYING THE PROVISIONS OF SECTION 194H OF THE INCOME TAX ACT TO THE TRANSACTION OF TELEPHONY CONDUCTED THROUGH PREPAID VOUCHERS. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFICER. 2) THE LEARNED AS STT. COMMISSIONER OF INCOME TAX (TDS) (AO) HAS ERRED BOTH ON FACTS AND IN LAW IN PASSING AN ORDER U/S 20 1(1) AND HOLDING THE ASSESSEE COMPANY TO BE IN DEFAULT IN RESPECT OF NON - DEDUCTION OF TAX AMOUNTING TO 97, 41,180 U/S 194H ON THE DIFFERENCE BETWEEN THE COST PRICE AND SALE PRICE OF THE PREPAID CARD ALLEGING THE DIFFERENCE TO BE PAYMENT OF COMMISSION. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFICER. 3) THE LEARNED ASSTT. COMMISSIONER OF INCOME TAX (TDS) (AO) HAS ERRED BOTH ON FACTS AND IN LAW IN CHARGING INTEREST ITA NO.175/CTK/2009 2 OF 17,62,267 U/S 201(1 A) OF THE ACT. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFICER. 4) THE LEARNED APPELLANT IS AGGRIEVED BY THE ORDER OF THE REVENUE TO RECOVER THE TAX OF 97,41,180 INSPITE OF THE FACT THAT SUCH TAX HAVE BEEN PAID BY THE D ISTRIBUTOR ON THE CORRESPONDING INCOME DECLARED BY HIM. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED BY THE ASSESSEE AND THEIR LEGAL IMPLICATIONS. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL IN THE LIGHT OF TH E SUBMISSIONS OF BOTH THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT THERE WAS A SURVEY U/S.133A CONDUCTED ON 17.1.2008 IN THE PREMISES OF THE DEDUCTOR COMPANY FOR THE PURPOSE OF TDS VERIFICATION. DURING THE COURSE OF SURVEY, MR.HARJEET SINGH, SENIOR MANAGER FINANCE MADE A STATEMENT ON OATH U/S.133A AS MENTIONED BELOW. Q.NO.9 WHETHER ARE YOU DEDUCTING TAX U/S.194H ON THE DIFFERENCE OF AMOUNT OF DEALER PRICE & MRP OF THE PREPAID VOUCHERS, START - UP PACK & OTHER VOUCHERS WHICH CUSTOMERS AC QUIRING BY PAYING AFTERWARD. ANS. THE DIFF. IN DEALER PRICE & MRP IS TREATED AS TRADE MARGIN. Q.NO.10. WHAT IS THE AVG. DIFFERENCE BETWEEN THE MRP & DEALER PRICE? ANS. THE NORMAL RATE IS 4.45% BUT THERE ARE CATEGORIES FOR WHICH THIS RATE VARIES. I WILL SUBMIT THE CATEGORY WISE DETAILS FOR F.Y. 2006 - 07 & 2007 - 08 (TILL DATE) ON 29.01.2008. LATER ON 20.2.2006, A LETTER WAS SENT TO THE DEDUCTOR TO SUBMIT THE DETAILS OF THE COMMISSION PAID TO THE DISTRIBUTOR/FRANCHISEE ALONG WITH THE SALES FOR THE F.Y. 200 6 - 07. IN THE REPLY OF MR.HARJEET SINGH, SENIOR MANAGER FINANCE COUPLED WITH LETTER DT.22.6.2008 IT WAS MADE OUT THAT NO TDS U/S.194H FROM THE DISCOUNT OR COMMISSION PAID TO THE DISTRIBUTOR/FRANCHISEE ON THE SALE OF PRE - PAID VOUCHERS AND/OR START - UP PACK BY THE ASSESSEE. THEREFORE, SHOW CAUSE NOTICE WAS SERVED ON THE ASSESSEE ON 14.03.2008 AS DETAILED HERE UNDER : ITA NO.175/CTK/2009 3 AS PER YOUR SUBMISSION DATED 03.03.2008 IT APPEARS THAT YOU PAID COMMISSION TO THE DISTRIBUTORS DURING F.Y. 2006 - 07 ON THE RCV AS MENTIONED BELOW . YEAR MONTH PRICE AT WHICH TRANSFERRED TO DISTRIBUTOR MSC PRINTED COMMISSION PAID 2006 APRIL 142463383 153975161 11571778.00 2006 MAY 167483977 181140270 13656293.00 2006 JUNE 169688685 183462956 13774271.00 2006 JULY 173273219 187995432 14722213.00 2006 AUGUST 195292774 211253797 15961023.00 2006 SEPTEMBER 180326087 191546342 14220255.00 2006 OCTOBER 190794282 205182559 14388277.00 2006 NOVEMBER 205013811 220616335 15602521.00 2006 DECEMBER 227580713 244834432 17253719.00 2007 JANUARY 245915441 264428710 18613269.00 2007 FEBRUARY 252450256 271060557 18610301.00 2007 MARCH 295979877 313152245 17172368.00 2,446,102,508 2,631,648,796 185,546,288.00 BUT IT APPEARS FROM RECORDS NO TDS U/S.194H WAS DEDUCTED FROM THE COMMISSION PAYMENT TO THE DI STRIBUTOR. THOUGH AS PER ITAT, KOLKATA BENCH ORDER 294 ITR 283, THE DIFFERENCE OF THE RECHARGE VOUCHERS SOLD BY THE RETAILERS MUST BE TREATED AS COMMISSION AND TDS U/S.194H. SO YOU ARE ASKED TO EXPLAIN WHY TDS WAS NOT DEDUCTED FROM THE COMMISSION PAID TO THE DISTRIBUTOR ON THE SALE OF RECHARGE VOUCHER AND STARTUP PACK DURING FY 2006 - 07. YOU ARE ALSO ASKED TO SUBMIT NAME, ADDRESS OF THE DISTRIBUTORS ALONG WITH THE DETAILS OF THE COMMISSION PAID DURING F.Y. 2006 - 07. THE ASSESSEE HAS SENT REPLY DT.25.2.2008 AS DETAILED HERE UNDER : AS INFORMED TO YOU N OUR PREVIOUS SUBMISSIONS, WE REITERATE THAT OUR COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDING CELLULAR MOBILE TELEPHONE SERVICES IN ORISSA UNDER THE BRANCH NAME AIRTEL. THE COMPANY TRANSFERS THE PRODUCT T O THE DISTRIBUTOR, WHO IN TURN TRANSFERS TO THE CUSTOMERS/RETAILERS. IN THIS REGARD IT IS RESPECTFULLY SUBMITTED THAT EVEN IF THE MAXIMUM SERVICE CHARGE (MSC) OF THE PRODUCT HAS BEEN FIXED BY THE COMPANY AND DULY PRINTED ON THE PRODUCT, THE DISTRIBUTOR IS UNDER NO LEGAL OBLIGATION TO SELL THE PRODUCT AT THE MSC I.E., THE DISTRIBUTOR CAN SELL THE PRODUCT AT ANY PRICE BELOW THE MSC. THE RELATIONSHIP BETWEEN THE COMPANY AND THE DISTRIBUTOR IS OF A PRINCIPAL TO PRINCIPAL BASIS, THAT IS, THE COMPANY SELLS ITS PRODUCT TO THE ITA NO.175/CTK/2009 4 DISTRIBUTOR THE PROPERTY AND THE TITLE IN THE PRODUCT GETS TRANSFERRED TO THE DISTRIBUTOR. DISTRIBUTOR IS SOLELY RESPONSIBLE FOR SALE OF THE PRODUCT WHICH REMAINS UNSOLD WITH THE DISTRIBUTOR AND THE COMPANY HAS NO LIABILITY WITH REGARD TO S UCH UNSOLD STOCK OF THE PRODUCT. ONCE THE PRODUCT IS PURCHASED BY THE DISTRIBUTOR FROM THE COMPANY, THE PROPERTY/TITLE IN THE PRODUCT BELONGS TO THE DISTRIBUTOR, THUS THE DISTRIBUTOR IS ENGAGED IN SELLING HIS OWN PRODUCT. IN THIS REGARD YOUR HONOUR WILL A LSO APPRECIATE THAT IT IS RESPONSIBILITY OF THE DISTRIBUTOR TO INSURE AND TO KEEP INSURED THE PRODUCTS AT THE WAREHOUSE OF THE DISTRIBUTOR .. THE ASSESSING OFFICER FOUND THAT SIMILAR SUCH ISSUE WAS ALREADY ADJUDICATED BY THE ITAT, KOLKATA BENC HES IN THEIR ORDER DT.7.4.2006 IN THE CASE OF BHARTI CELLULAR LTD V. ACIT , REPORTED IN 294 ITR 283. THE RELEVANT PORTION OF THE SAID ORDER IS AS FOLLOWS : 10. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS MADE BEFORE US AND HAVE PERUSED THE ORDERS OF THE TAX AUTHORITIES. WE HAVE ALSO CONSIDERED THE PAPER BOOKS FILED BY THE ASSESSEE AND THE CASE LAW RELIED ON BY BOTH THE PARTIES. THE ASSESSING OFFICER IN THIS CASE HAS CONSIDERED THE DIFFERENCE BETWEEN THE LISTED PRICE OF COUPONS AND THE S ALE PRICE BY THE ASSESSEE TO ITS FRANCHISEES AS COMMISSION PAYMENT BY THE ASSESSEE ALONG WITH THE COMMISSION ON NEW CONNECTIONS FOR WHICH THE ASSESSEE IS LIABLE TO DEDUCT TAX AT SOURCE UNDER SECTION 194H OF THE ACT. THE ASSESSEE, HOWEVER, HAS CLAIMED THA T SINCE THE FRANCHISEES WERE MAKING PAYMENT S AFTER DEDUCT ING THE DISCOUNT OFFERED TO THEM, THE SAME WILL BE DISCOUNT IN NATURE WHICH IS OUTSIDE THE PURVIEW OF SECTION 194H. THE ASSESSEE HAS FURTHER CONTENDED THAT SINCE THE LIABILITY OF THE FRANCHISEES TO P AY THE PRICE TO THE ASSESSEE IS NOT DEPENDENT UPON OR CONTINGENT TO THE SALE OF RECHARGE COUPONS AND BOTH THE ASSESSEE AND THE FRANCHISEES ARE HAVING INDEPENDENT ENTITIES. THERE CANNOT BE ANY RELATION OF PRINCIPAL AND AGENT BETWEEN THESE TWO PARTIES AND T HEREFORE, NO QUESTION ARISES OF TREATING SUCH PAYMENTS AS COMMISSION IN NATURE. 11. WE HAVE ALSO CONSIDERED THE FACT THAT IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS ITSELF DEDUCTED TAX AT SOURCE ON SUCH PAYMENTS IN EARLIER YEARS AND EVEN FOR A PART OF THE FINANCIAL YEAR 2002 - 03 WHICH IS BEFORE US AND THE ASSESSEE FROM AUGUST, 2002, ONWARDS HAS TREATED SUCH PAYMENT AS DISCOUNT IN NATURE. SINCE THE ASSESSEE HAS CLAIMED THAT IT WAS OFFERING DISCOUNT TO ITS FRANCHISEE AND THE ASSESSING OFFICER IS OF THE OPINION THAT SUCH PAYMENT TO FRANCHISEE IS IN THE NATURE OF COMMISSION, WE ARE OF ITA NO.175/CTK/2009 5 THE VIEW THAT THE NATURE OF PAYMENT CAN WELL BE EXAMINED WITH HELP OF THE AGREEMENT BETWEEN THE ASSESSEE AND THE FRANCHISEE. 12. WE FIND FROM THE PERUSAL OF THE AGREEMENT BETWEEN THE ASSESSEE AND THE FRANCHISEES, THAT THE FRANCHISEES WERE WORKING FOR THE ASSESSEE IN A CAPACITY OF AGENTS. WHILE FORMING SUCH OPINION WE GET SUPPORT FROM THE FOLLOWING PARAGRAPHS OF AGREEMENT ENTERED INTO BY THE ASSESSEE WITH ONE OF THE FRANCHIS EES SHRI ASHOKE KUMAR SINGH WHICH IS ALSO AVAILABLE AT PAGE 22 ONWARDS IN THE PAPER BOOK. SOME OF THE RELEVANT PARAGRAPHS OF THE AGREEMENT READS AS UNDER : 4.1 THE FRANCHISEE SHALL MAINTAIN A SUITABLE ESTABLISHMENT FOR THE CONDUCT OF ITS BUSINESS AND TH E PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT. THE FRANCHISEE SHALL USE ITS BEST EFFORTS TO ACTIVELY PROVIDE EFFECTIVE WAYS TO MARKET AND PROMOTE THE PRE - PAID SERVICES AND SHALL ALWAYS ACT IN THE INTEREST OF BOTH BML AND THE SUB - SCRIBERS TO THE SER VICES OF BML. 4.8 THE FRANCHISEE SHALL USE ITS BEST EFFORTS AND ENDEAVORS TO MARKET AND PROMOTE THE PRE - PAID SERVICES TO MEET THE GROWING DEMANDS OF THE SUBSCRIBERS. AT NO POINT OF TIME SHALL ANY RIGHT, TITLE OR INTEREST PASS TO THE FRANCHISEE IN RESPECT OF THE PRE - PAID CARDS FOR THE PRE - PAID SERVICES GIVEN TO THE SUBSCRIBERS FOR CONNECTION TO THE SERVICE AND ALL RIGHT, TITLE OWNERSHIP AND PROPERTY RIGHTS IN SUCH CARDS SHALL AT ALL TIMES VEST WITH BML. 4.9 THE FRANCHISEE SHALL SEEK PRIOR WRITTEN APPROVA L FROM BML FOR ITS PROMOTIONAL LITERATURE CAMPAIGN (INCLUDING PROMOTIONAL MATERIAL WHICH BEARS THE TRADEMARKS, LOGOS AND TRADE NAMES OF BML) FOR THE PRE - PAID SERVICES. BML WILL NOT SHARE THE EXPENDITURE INCURRED BY THE FRANCHISEE FOR SUCH ADVERTISING AND P UBLICITY OF THE SERVICES UNLESS AGREED TO EARLIER IN WRITING. ANY SHARE OF THE EXPENDITURE STATED ABOVE AND THE RATIO FOR THE SAME SHALL BE DECIDED BY BML FROM TIME TO TIME AT ITS SOLE DISCRETION. 4.14 THE FRANCHISEE SHALL, BE RESPONSIBLE FOR COLLECTION OF ALL NECESSARY AGREEMENT/CONTRACT FORMS AND OTHER RELATED FORMS, AND FOR OBTAINING THE SIGNATURE OF THE CUSTOMERS ON THESE FORMS. THE FRANCHISEE SHALL FORWARD ALL SUCH FORMS, DULY COMPLETED IN ALL RESPECTS AND SIGNED BY CUSTOMERS, TO BML FOR ITS VERIFICA TION AND RECORDS. 5.1 FROM TIME TO TIME, BML WILL REVIEW WITH THE FRANCHISEE MINIMUM SUBSCRIPTION TARGETS FOR THE PRE - PAID SERVICES, TAKING INTO ACCOUNT THE MARKET DEVELOPMENT AND MARKET POTENTIAL AND OTHER RELEVANT FACTORS. THE ACHIEVEMENTS OF THESE P RESCRIBED TARGETS BY THE FRANCHISEE IS A MATERIAL OBLIGATION OF THE FRANCHISEE ITA NO.175/CTK/2009 6 UNDER THIS AGREEMENT. 6.3 BML RESERVES THE RIGHT TO INSPECT AND AUDIT AT ANY TIME THE RELATED QUALITY STANDARDS OBSERVED BY THE FRANCHISEE AND HIS EMPLOYEES AND THE FRANCHISEE WILL ENSURE THAT BOTH HE AND HIS EMPLOYEES FULLY CO - OPERATE WITH SUCH INSPECTION AND AUDIT, BML WILL COMMUNICATE THE RESULT OF SUCH INSPECTION AND AUDIT TO THE FRANCHISEE, WHO SHALL TAKE REMEDIAL MEASURES IF SO ADVISED BY BML. 7. OPERATING PROCEDURES THE FRANCHISEE IN ITS BUSINESS OPERATIONS SHALL ENSURE IMPLEMENTATION THE OPERATING PROCEDURES SPECIFIED BY BML FROM TIME TO TIME AND OBSERVE SUCH OTHER OPERATING CRITERIA AS MAY BE CONTAINED IN ANY MEMORANDUM OR DIRECTIVE ISSUED BY BML TO THE FRANCHISEE G ENERALLY OR SPECIFICALLY TO THE FRANCHISEE. OPERATING PROCEDURES FOR THE PURPOSE OF THIS CLAUSE SHALL INCLUDE THE OPERATING PROCEDURE TO BE IMPLEMENTED BY THE FRANCHISEE AS SPECIFIED BY BML TO THE FRANCHISEE IN THE FORM OF MANUALS, BULLETINS, CIRCULARS OR LETTERS ISSUED, AMENDED AND/OR UPDATED BY BML FROM TIME TO TIME. THE FRANCHISEE SHALL ENSURE THE AVAILABILITY TO SUBSCRIBERS OF THE PRE - PAID SERVICES, A LEVEL OF SERVICE STANDARDS STRICTLY IN ACCORDANCE WITH BMLS STANDARDS AND SPECIFICATIONS. THE FRANCH ISEE ACKNOWLEDGES THAT THE PROVIDING OF SATISFACTORY SERVICES IN TERMS HERE ABOVE IS A MATERIAL OBLIGATION UNDER THIS AGREEMENT. 13. FROM THE PERUSAL OF THE ABOVE CLAUSES OF THE AGREEMENT BETWEEN THE ASSESSEE AND THE FRANCHISEES, IT IS EVIDENT THAT THES E FRANCHISEES ARE COMMISSION AGENTS ACTING ON FIXED MARGINS AND FIXED RESPONSIBILITIES, AS EVIDENT FROM PARAGRAPH 4.8 OF THE AGREEMENT WHICH IS AGAIN REPRODUCED FOR THE SAKE OF CLARITY : 4.8 THE FRANCHISEE SHALL USE ITS BEST EFFORTS AND ENDEAVORS TO MAR KET AND PROMOTE THE PRE - PAID SERVICES TO MEET THE GROWING DEMANDS OF THE SUBSCRIBERS. AT NO POINT OF TIME SHALL ANY RIGHT, TITLE OR INTEREST PASS TO THE FRANCHISEE IN RESPECT OF THE PRE - PAID CARDS FOR THE PRE - PAID SERVICES GIVEN TO THE SUBSCRIBERS FOR CONN ECTION TO THE SERVICE AND ALL RIGHT, TITLE OWNERSHIP AND PROPERTY RIGHTS IN THE SUCH CARDS SHALL AT ALL TIMES VEST WITH BML. 14. ON A PLAIN READING OF THE ABOVE PARAGRAPH, IT IS APPARENT THAT THE RIGHTS WITH THE PRE - PAID CARDS AT ALL TIMES VESTS IN THE ASSESSEE - COMPANY BEFORE IT IS FINALLY SOLD TO THE CUSTOMER. THE ABOVE AGREEMENT BETWEEN THE ASSESSEE AND THE FRANCHISEES ALSO SUGGEST THAT THEY HAVE A RELATION OF PRINCIPAL AND AGENT BECAUSE IN PRINCIPAL TO PRINCIPAL RELATIONSHIP THE FRANCHISEES/DISTRIBUT ORS ENJOY FULL INDEPENDENCE AND ONCE THE GOODS ARE SOLD THERE CANNOT ITA NO.175/CTK/2009 7 BE ANY RESTRICTIONS BY THE PRINCIPAL AND THE FRANCHISEES ENJOY ALL FREEDOM TO SELL SUCH GOODS AS PER ITS OWN CONVENIENCE. WE HAVE ALSO CONSIDERED THE FACT THAT IN THE PRESENT CASE ALSO TH E FRANCHISEE HAS TO COMPLY WITH ALL THE FORMALITIES TO BE FIXED BY THE ASSESSEE BEFORE SELLING THE NEW CONNECTIONS OR THE PRE - PAID CARDS TO THE CUSTOMERS. APART FROM THE FACT THAT IT HAS ALSO TO CHARGE FROM THE CUSTOMERS AT THE RATE PRESCRIBED BY THE ASSES SEE FROM TIME TO TIME AND SERVICES BY THE ASSESSEE ON SUCH CARDS IS SUBJECT TO VARIATION FROM TIME TO TIME. 15. WE HAVE ALSO CONSIDERED THE FACT THAT THE MODUS OPERANDI OF SALE OF SUCH CARD IS ALSO DECIDED BY THE ASSESSEE APART FROM THE FACT THAT THE ASS ES - SEE HAS GOT FULL RIGHT TO INSPECT SUCH GOODS WHILE INSPECTION KNOWLEDGE AS MENTIONED IN PARAGRAPH 6.3 OF THE AGREEMENT ALONG WITH OTHER CHARACTERISTIC OF THE PREMISES OF THE FRANCHISEE. 16. IT IS, THEREFORE, EVIDENT THAT THE ASSESSEE CANNOT DO ANYTHIN G APART FROM THE POWER AND RIGHT DELEGATED TO IT WHICH FOLLOWS THE LAW OF MAXIM THAT DELEGATA POTESTAS NON POTEST DELEGARI WHICH MEANS THAT AN AGENT CANNOT DELEGATE HIS POWER OR DUTIES TO ANOTHER WITHOUT THE EXPRESSED AUTHORITY OF THE PRINCIPAL. IN THIS CA SE ALSO THE ASSESSEE CAN USE ONLY THOSE POWERS WHICH HAS BEEN DELE - GATED TO IT BY THE ASSESSEE, WHICH IS CONFINED TO PROMOTING AND MARKETING OF PRE - PAID CARDS SOLD BY THE ASSESSEE THROUGH FRANCHISEE AND THOUGH THE FRANCHISEE IS MAKING PAYMENT ON BEHALF OF SUCH PRE - PAID CARDS SUPPLIED BY THE ASSESSEE AFTER DEDUCTING COMMISSION, AT THE SAME TIME ALL RIGHTS, TITLE, OWNERSHIP AND PROPERTY RIGHTS IN SUCH CARDS SHALL AT ALL TIMES VESTS IN THE ASSESSEE AS MENTIONED IN PARAGRAPH 4.8 OF THE AGREEMENT. 17. WE HAVE ALSO CONSIDERED THE FACT THAT THE FRANCHISEE WHILE SELLING SUCH CARDS IS BOUND TO ENSURE IMPLEMENTATION OF THE OPERATING PROCEDURES SPECIFIED BY THE ASSESSEE FROM TIME TO TIME AND HAS TO OBSERVE SUCH OTHER OPERATING CRITERIA AS MAY BE CONTAINED IN ANY MEMO RANDUM OR DIRECTIVE ISSUED BY THE ASSESSEE TO THE FRANCHISEE GENERALLY OR SPECIFICALLY. 18. APART FROM THE ABOVE FACT, WE HAVE ALSO TAKEN INTO CONSIDERATION THE FACT THAT THE FRANCHISEES PRICE AND PAYMENT FOR SERVICES IS BEING DECIDED FROM TIME TO TIME BY THE ASSESSEE ITSELF WHICH CLEARLY SUGGESTS THAT THESE ARE COMMISSION IN NATURE AND NOT DISCOUNT AS CONTEMPLATED BY THE ASSESSEE AND IS ALSO EVIDENT FROM CLAUSE NO. 8.1 OF THE AGREEMENT BETWEEN THE ASSESSEE AND THE FRANCHISEE WHICH IS BEING REPRODUCED HE REIN UNDER FOR THE SAKE OF CLARITY : 8.1 THE FRANCHISEES PRICE AND PAYMENT FOR SERVICES WILL BE SPECIFIED BY BML FROM TIME TO TIME. THE RATES ARE SUBJECT TO VARIATION DURING THE TERM OF THIS AGREEMENT AT THE SOLE DISCRETION OF BML AND SHALL BE INTIMATE D TO THE DISTRIBUTOR FROM TIME TO TIME. ITA NO.175/CTK/2009 8 THE ASSESSEE HAS RELIED ON HEAVILY ON PARAGRAPH 16.1 AND 16.2 IN SUPPORT OF ITS CLAIM THAT BOTH THE ASSESSEE AND THE FRANCHISEES ARE INDEPENDENT BUSINESS ENTITY AND IS SOLELY PRINCIPAL TO PRINCIPAL BASIS. THE RELE VANT PARAGRAPH READS AS UNDER : 16.1 THE FRANCHISEE UNDERSTANDS THAT IT IS AN INDEPENDENTLY OWNED BUSINESS ENTITY AND THIS AGREEMENT DOES NOT MAKE THE FRAN - CHISEE, ITS EMPLOYEES, ASSOCIATES OR AGENTS AS EMPLOYEES, AGENTS OR LEGAL REPRESENTATIVES OF BML FOR ANY PURPOSE WHATSOEVER. THE FRAN - CHISEE HAS NO EXPRESS OR IMPLIED RIGHT OR AUTHORITY TO ASSUME OR TO UNDERTAKE ANY OBLIGATION IN RESPECT OF OR ON BEHALF OF OR IN THE NAME OF BML OR TO BIND BML IN ANY MANNER. IN CASE, THE FRANCHISEE, ITS EMPLOYEES, ASSO CIATES OR AGENTS HOLD OUT AS EMPLOYEES, AGENTS, OR LEGAL REPRESENTATIVES OF BML, THE FRANCHISEE SHALL FORTHWITH UPON DEMAND MAKE GOOD ANY/ALL LOSS, COST, DAMAGES INCLUDING CONSEQUENTIAL LOSS, SUFFERED BY BML ON THIS ACCOUNT. 16.2 IT IS UNDERSTOOD THAT TH E RELATIONSHIP BETWEEN THE PARTIES IS SOLELY ON PRINCIPAL - TO - PRINCIPAL BASIS. THE FRANCHISEE SHALL NOT ACQUIRE, BY VIRTUE OF ANY PROVISION OF THIS AGREEMENT OR OTHERWISE, ANY RIGHT, POWER OR CAPACITY TO ACT AS AN AGENT OR COMMERCIAL REPRESENTATIVE OF BML F OR ANY PURPOSE WHATSOEVER. NOTHING CONTAINED IN THE CONTRACT SHALL BE DEEMED OR CONSTRUED AS CREATING A JOINT VENTURE RELATIONSHIP OR LEGAL PARTNERSHIP, ETC., BETWEEN BML AND THE FRAN - CHISEE. 19. HOWEVER, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE AS SESSEE ONLY ON THE BASIS OF THE ABOVE TWO CLAUSES JUST BY CHANGING THE NOMENCLATURE OF THE PAYMENT MADE BY THE ASSESSEE TO THE FRANCHISEE. AS FROM THE PERUSAL OF DIFFERENT CLAUSES OF THE AGREEMENT BETWEEN THE ASSESSEE AND THE FRANCHISEE WHICH HAVE BEEN REP RODUCED ABOVE ELSEWHERE AS IN THIS ORDER, IT IS EVIDENT THAT THE FRANCHISEE IN THIS CASE, ARE SELLING NEW CONNECTIONS AND PRE - PAID CARDS ON BEHALF OF THE ASSESSEE FOR WHICH THEY ARE GETTING FIXED COMMISSION AS DECIDED BY THE ASSESSEE AND THE ENTIRE OWNERSH IP RELATING TO SUCH NEW SIMCARDS AND PRE - PAID CARDS ALWAYS VEST IN THE ASSESSEE AS EVIDENT FROM DIFFERENT CLAUSES OF SUCH AGREEMENT WHICH IS ALSO PLACED ON RECORD IN THE FORM OF PAPER BOOK. 20. THE ASSESSEE IN ITS WRITTEN SUBMISSION HAS ALSO CLAIMED THAT IF SUCH TRANSACTIONS ARE SUBJECT TO COMMISSION THEN ALL THE TRANSACTIONS OF SALE FROM MANUFACTURER TO A WHOLESALER AND WHOLESALER TO A RETAILER WOULD BE COVERED BY SECTION 194H. HOWEVER, SUCH CONTENTION OF THE ASSESSEE HAS TO BE ADJUDICATED KEEPING IN VIE W THE FACT INVOLVED IN THIS CASE AND FOR DRAWING A CONCLUSION THAT WHETHER IT IS A SALE ON DISCOUNT OR SALE WITH A COMPONENT OR COMMISSION INVOLVED, WE HAVE TO SEE WHETHER THE ASSESSEE IS HAVING PRINCIPAL - TO - PRINCIPAL RELATIONSHIP WITH ITS FRANCHISEE OR RE LATIONSHIP OF PRINCIPAL AND AGENT. WE FIND THAT IN ITA NO.175/CTK/2009 9 THE CASE OF PRINCIPAL - TO - PRINCIPAL RELATIONSHIP WITHIN THE RESTRICTION OF MAXIMUM RETAIL PRICE, A PRINCIPAL ENJOY FULL FREEDOM OF FIXING THE SALE PRICE AND ALSO BECOMES OWNER OF THE GOODS PURCHASED BY IT F ROM ANOTHER BUSINESSMAN. HOWEVER, IN THIS PRESENT CASE FRANCHISEES/DISTRIBUTORS DO NOT HAVE ANY INDEPENDENCE WHATSOEVER TO DO SO BY REDUCING THEIR MARGINS. 21. APART FROM THE ABOVE, IN CASE OF SALE ON DISCOUNT, ONCE THE GOODS ARE SOLD THERE CANNOT BE ANY RESTRICTION IMPOSED BY ONE PRINCIPAL ON THE OTHER PRINCIPAL IN REGARD TO THE MANNER AND THE AREA OF SALES OF SUCH GOODS SOLD. THERE CAN ALSO NOT BE ANY RESTRICTION ON THE MANNER IN WHICH THE STOCK PURCHASED BY ONE PRINCIPAL HAS TO BE KEPT BY IT IN CASE OF PURCHASE ON DISCOUNT. WHEREAS IN THE PRESENT CASE THE ASSESSEE - COMPANY HAS GOT ALL RIGHT TO REGULARLY MONITOR OPERATION OF FRANCHISEE/MONITOR OR INVESTIGATE THE MANNER IN WHICH BUSINESS OPERATIONS ARE CARRIED ON BY SUCH FRANCHISEES WHICH IS NOT POSSIBLE I N CASE OF SALE ON DISCOUNT. IN THE PRESENT CASE BEFORE US THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH DISTRIBUTORS/FRANCHISEES ALLOWING LATER TO SELL THE PRODUCT WITHIN ITS SPECIFIED GEOGRAPHICAL AREA AND DIRECTING THE FRANCHISEES THE MANNER IN WHICH S UCH PRODUCT WILL BE SOLD IN THE MARKET. WE HAVE ALSO NOTICED THE FACT THAT THIS KIND OF AGREEMENT FALLS UNDER THE AGENCY - FRANCHISEE WHEREIN A MANUFACTURER, I.E., FRANCHISER ENTERED INTO AN AGREEMENT WITH A DISTRIBUTOR TO SELL THE PRODUCT WITHIN ITS SPECIFI ED GEOGRAPHICAL AREA. 22. EVEN OTHERWISE THE PROVISION AS CONTAINED IN THE RELEVANT SECTION 194H CLEARLY HOLDS THE ASSESSEE RESPONSIBLE FOR DEDUCTING TAX AT SOURCE AS SUCH COMMISSION. THE PROVISION OF SECTION 194H IS BEING REPRODUCED HEREUNDER FOR THE FA CILITY OF REFERENCE : 194H. ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING, ON OR AFTER THE 1ST DAY OF JUNE, 2001, TO A RESIDENT, ANY INCOME BY WAY OF COMMISSION (NOT BEING INSURANCE COMMISSION REFERRED TO IN SECTION 194D) OR BROKERAGE, SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT OF SUCH INCOME IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT INCOME - TAX THE REON AT THE RATE OF FIVE PER CENT. : PROVIDED THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION IN A CASE WHERE THE AMOUNT OF SUCH INCOME OR, AS THE CASE MAY BE, THE AGGREGATE OF THE AMOUNTS OF SUCH INCOME CREDITED OR PAID OR LIKELY TO BE CREDITED OR PA ID DURING THE FINANCIAL YEAR TO THE ACCOUNT OF, OR TO, THE PAYEE, DOES NOT EXCEED TWO THOUSAND FIVE HUNDRED RUPEES : PROVIDED FURTHER THAT AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHOSE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PROFE SSION CARRIED ON BY HIM EXCEED THE MONETARY LIMITS SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY ITA NO.175/CTK/2009 10 PRECEDING THE FINANCIAL YEAR IN WHICH SUCH COMMISSION OR BROKERAGE IS CREDITED OR PAID, SHALL BE LIABLE TO DED UCT INCOME - TAX UNDER THIS SECTION. EXPLANATION. FOR THE PURPOSES OF THIS SECTION, (I) COMMISSION OR BROKERAGE INCLUDES ANY PAYMENT RECEIVED OR RECEIVABLE, DIRECTLY OR INDIRECTLY, BY A PERSON ACTING ON BEHALF OF ANOTHER PERSON FOR SERVICES RENDERED ( NOT BEING PROFESSIONAL SERVICES) OR FOR ANY SERVICES IN THE COURSE OF BUYING OR SELLING OF GOODS OR IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET, VALUABLE ARTICLE OR THING, NOT BEING SECURITIES ; (II) THE EXPRESSION PROFESSIONAL SERVICES MEANS SERVICES RENDERED BY A PERSON IN THE COURSE OF CARRYING ON A LEGAL, MEDICAL, ENGINEERING OR ARCHITECTURAL PROFESSION OR THE PROFESSION OF ACCOUNTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DECORATION OR SUCH OTHER PROFESSION AS IS NOTIFIED BY THE BOARD FOR T HE PURPOSES OF SECTION 44AA. (III) THE EXPRESSION SECURITIES SHALL HAVE THE MEANING ASSIGNED TO IT, IN CLAUSE (H) OF SECTION 2 OF THE SECURITIES CONTRACTS (REGULATION) ACT, 1956 (42 OF 1956) ; (IV) WHERE ANY INCOME IS CREDITED TO ANY ACCOUNT, WHETHER CALLED SUSPENSE ACCOUNT OR BY ANY OTHER NAME, IN THE BOOKS OF ACCOUNT OF THE PERSON LIABLE TO PAY SUCH INCOME, SUCH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE AND THE PRO - VISIONS OF THIS SECTION SHALL APPLY ACCORDI NGLY. FROM THE PERUSAL OF EXPLANATION (I) TO SECTION 194H, IT IS WELL APPARENT THAT THE FRANCHISEE APPOINTED BY THE ASSESSEE ARE ONLY BUYING AND SELLING PRE - PAID AND SIMCARDS ON BEHALF OF THE ASSESSEE. IT IS ALSO WORTHWHILE TO NOTE THAT SERVICE CONDITIO N ON SUCH PRE - PAID AND SIMCARD PURCHASED BY THE ULTIMATE CUSTOMERS IS ALWAYS DECIDED BY THE ASSESSEE AND IS SUBJECT TO VARIATION FROM TIME TO TIME AS PER THE POLICY OF THE ASSESSEE - COMPANY AND THE FRANCHISEE HAS NO ROLE EXCEPT TO PLAY A ROLE OF MIDDLEMAN BETWEEN THE ASSESSEE AND THE ULTIMATE CUSTOMERS FOR WHICH HE GETS COMMISSION. 23. IT IS, THEREFORE, EVIDENT FROM THE ABOVE DISCUSSION THAT PRICE DIFFERENCE IN THIS CASE IS CERTAINLY CARRIES NOMENCLATURE OF THE COMMISSION AND NOT AS DISCOUNT AS CLAIMED BY THE ASSESSEE . SINCE APART FROM THE RIGHT OF OWNER - SHIP OF SUCH PRE - PAID CARDS, THE ASSESSEE COMPANY IS STRICTLY REGULATING AS TO THE MANNER OF BUSINESS OPERATION BY THE FRANCHISEES WHILE SELLING SUCH CARDS FROM TIME TO TIME VIDE INVESTIGATION, CHECKING BY THE AUDITORS APPOINTED BY THE COMPANY AND INSPECTION OF RECORD. THE ASSESSEE ONLY PAYS COMMISSION TO THE FRANCHISEE FOR THE SERVICES RENDERED BY THEM AS EVIDENT FROM PARAGRAPH 8.1 OF THE AGREEMENT, THEREFORE, IN OUR CONSIDERED OPINION SUCH PRICE DIFFERENC E IS ITA NO.175/CTK/2009 11 NOTHING BUT A PAYMENT OF COMMISSION BY THE ASSESSEE TO ITS FRANCHISEES. AFTER CONSIDERING THE OBSERVATIONS OF THE ITAT, KOLKATA BENCHES IN THE ABOVE CASE, THE ASSESSING OFFICER HAS CONCLUDED THAT THE TRADE MARGIN OR THE DIFFERENCE OF PRICE BETWEEN M EXIMUM SERVICE CHARGES (MSC) AND AMOUNT RECOVERED FROM DISTRIBUTOR/FRANCHISEES IS NOTHING BUT COMMISSION IN NATURE. DURING THE PERIOD UNDER CONSIDERATION, IT WAS FURTHER FOUND THAT THE ASSESSEE HAS PAID COMMISSION OF 18,55,46,288 TO THE DISTRIBUTORS/FRANC HISEES ON SALE OF START - UP PACK AND RECHARGE VOUCHERS BUT THE ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE AS STIPULATED U/S.194H OF THE I.T.ACT. THUS OBSERVING, THE ASSESSING OFFICER HAS FOUND THAT THE ASSESSEE HAS BECOME DEEMED DEFAULTER IN RESPECT OF NON - DEDUCTION OF TAX U/S.194H ON THE AMOUNT PAID TO THE DISTRIBUTOR/FRANCHISEES. HE PASSED THE ORDER DT.31.3.2008 RAISING TOTAL DEMAND OF 1,15,08,447 U/S.201(1) AND 201(1A). AGGRIEVED BY THIS ORDER, THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT(A) AN D IS UNSUCCESSFUL AND HENCE, THE PRESENT APPEAL IS FILED BEFORE THE TRIBUNAL. 5. DURING THE COURSE OF HEARING, THE LEARNED AR OF THE ASSESSEE VEHEMENTLY ARGUED ASSAILING THE ORDERS OF THE LOWER AUTHORITIES CONTENDING INTER ALIA THAT THE PROVISIONS CONTAINE D IN SECTION 194H SAYS ABOUT ANY PAYMENT MADE TOWARDS COMMISSION TO THE AGENT AND THEN ONLY PROVISIONS OF SECTION 194H WILL COME INTO PLAY. BUT IN THE CASE IN HAND, AS THE DISTRIBUTOR OR FRANCHISEES WERE NOT THE AGENT OF THE ASSESSEE THEY SIMPLY PU RCHASED START - UP PACKS AND PRE PAID RECHARGE VOUCHERS FROM THE ASSESSEE AND THE PRICE AT WHICH THEY WERE SOLD IS ONLY COLLECTED BY THE ASSESSEE AND ENTERED IN THE BOOKS OF THE ASSESSEE. AS PER THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE DISTRIBUTORS/FRANCHI SEES THEY ARE ENTITLED TO SALE OUT MSC WHICH IS NATURALLY BEEN THE PRICE AT WHICH THEY WERE SOLD TO THE DISTRIBUTOR/FRANCHISEES. SO, THERE IS NO PAYMENT OF AMOUNT INVOLVED IN THIS ITA NO.175/CTK/2009 12 TRANSACTION BY THE ASSESSEE TO THE DISTRIBUTOR/FRANCHISEES TO BE TERMED AS C OMMISSION. HENCE, THE PROVISIONS OF SECTION 194H ARE NOT APPLICABLE TO THE FACTS OF THE CASE. THEREFORE, THE ACTION OF THE DEPARTMENTAL AUTHORITIES IN TERMING THE ASSESSEE AS ASSESSEE IN DEFAULT AND MAKING A DEMAND AGAINST THE ASSESSEE U/SS.201(1) AND 2 01(1A) OF THE I.T.ACT IS NOTHING BUT ONLY MISAPPLICATION OF THE PROVISIONS CONTAINED IN SECTION 194H TO THE UNDISPUTED FACTS STATED SUPRA. HE FURTHER SUBMITTED THAT THOUGH THE ITAT, KOLKATA BENCHES HAS DECIDED SIMILAR SUCH ISSUE IN THE CASE OF BHARTI CELLU AR LTD., V. ASST.COMMISSIONER OF INCOME - TAX, REPORTED IN [294 ITR 283 (AT)] AND ULTIMATELY CONFIRMED BY THE HONBLE KOLKATA HIGH COURT, THE ASSESSEE HAS SOUGHT PERMISSION FOR SLP TO GO TO HONBLE SUPREME COURT AND THE MATTER IS ACCORDINGLY SUBJUDICE BEFORE THE HONBLE SUPREME COURT BY WAY OF SLP FILED BEFORE THE SUPREME COURT. IN THIS VIEW OF THE MATER, HE SUBMITTED THAT AS THE ISSUE IS SUBJUDICE BEFORE THE HONBLE SUPREME COURT, THE APPEAL MAY BE POSTPONED FOR ADJUDICATION TILL HONBLE SUPREME COURT DISPOS E OF THE SLP FILED BY THE ASSESSEE BEFORE IT AGAINST THE DECISION OF HONBLE KOLKATA HIGH COURT. ON THE OTHER HAND, HE SUBMITTED THAT AS THE LINE OF ARGUMENT BEFORE THE ITAT,KOLKATA BENCH AS WELL AS HONBLE KOLKATA HIGH COURT IS NOT IN THE WAY AS NOW ARGU ED BEFORE THE TRIBUNAL, IT CANNOT BE SAID THAT THE ISSUE IS COVERED BY THE ORDER OF THE ITAT,KOLKATA BENCH AS WELL AS HONBLE KOLKATA HIGH COURT. THUS CONTENDING, HE STATED THAT IF THE ISSUES PLEADED BEFORE THIS TRIBUNAL ARE CONSIDERED IN THE LIGHT OF THE APPROACH OF THE ASSESSEE BEFORE THIS BEN CH, CERTAIN LY THE ASSESSEE IS NOT LIABLE TO PAY ANYTHING AS IT IS NOT LIABLE TO COLLECT ANY TDS U/S.194H AS THE ASSESSEE IS NOT PAYING ANY COMMISSION TO THE DISTRIBUTORS/FRANCHISEES AND IT IS SELLING ON A RATE MUTUAL LY AGREED UPON BY THE DISTRIBUTORS/FRANCHISEES. BUT HOWEVER, THE DISTRIBUTORS/FRANCHISEES ARE EMPOWERED TO SELL THE STARTUP PACKS AS WELL AS THE PREPAID RECHARGE COUPON ITA NO.175/CTK/2009 13 AT THE MAXIMUM SERVICE CHARGES AMOUNT MENTIONED IN THE SAID STARTUP PACKS AND RECHARGE VOUCHERS. THEREFORE, HE SUBMITTED THAT THE APPROACH TAKEN BY THE DEPARTMENTAL AUTHORITIES IS ENTIRELY MISCONCEIVED AND APPLICATION OF PROVISIONS OF SECTION 194H AND 201(1) AND 201(1A) AGAINST THE ASSESSEE ARE NOT SUSTAINABLE FOR LEGAL SCRUTINY. 6. THE LEAR NED DR HAS VEHEMENTLY ARGUED SUPPORTING THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES AND CLAIMED THE SUPPORT OF THE ORDER OF THEITAT, KOLKATA BENCH WHICH HAS BEEN CONFIRMED BY HONBLE KOLKATA HIGH COURT AND SOUGHT FOR DISMISSAL OF THE APPEAL OF THE AS SESSEE BY FINDING IT DEVOID OF MERITS. 7. ON CAREFUL ANALYSIS OF THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF THE SUBMISSIONS OF THE RIVAL PARTIES AS WELL AS THE ORDERS OF THE ITAT,KOLKATA BENCH AND ALSO THE DECISION OF HONBLE KOLKATA HIG H COURT (SUPRA) , IT IS FOUND THAT THERE IS NO DIFFERENCE ON THE FACTUAL ASPECTS BEFORE THE KOLKATA BENCH OF ITAT AS WELL AS BEFORE US. THEREFORE, THE STAND TAKEN BY THE LEARNED AR OF THE ASSESSEE THAT THERE IS FACTUAL DIFFERENCE IS NOTHING BUT AN ILLUSION OF THE ASSESSEE AND THEREFORE, IT HAS NO LEGS TO STAND ON. THEREFORE, THE CONTENTION OF THE ASSESSEE IS HEREBY NEGATIVE D . HONBLE KOLKATA HIGH COURT WHILE DECIDING THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE ITAT,KOLKATA BENCHES HAS CATEGORIC ALLY OBSERVED THAT DISCOUNT OFFERED BY THE CELLULAR COMPANY TO ITS DISTRIBUTORS ON SIM CARDS AND RECHARGE COUPON S IS IN THE NATURE OF COMMISSION ON WHICH TAX IS REQUIRED TO BE DEDUCTED UNDER THE PROVISIONS OF SECTION 194H FOR ONWARD REMISSION TO THE GOV ERNMENT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUES RAISED BY THE ASSESSEE BEFORE US ARE SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISION OF ITAT,KOLKATA BENCHES AND HONBLE KOLKATA HIGH COURT CONFIRMING THE ORDER OF THE ITAT,KOLKATA BEN CHES AND HENCE, IT CAN BE HELD ITA NO.175/CTK/2009 14 THAT THE ISSUES ARE COVERED ACCORDINGLY AGAINST THE ASSESSEE HAVING FOUND NO DIFFERENT IN THE FACTUAL ASPECTS BEFORE US AND BEFORE THE ITAT, KOLKATA BENCHES. MERELY BECAUSE THE ASSESSEE HAS FILED SLP BEFOR E HONBLE SUPREME COURT AGAINST THE ORDER OF HONBLE KOLKATA HIGH COURT CONFIRMING THE ORDER OF THE ITAT,KOLKATA CANNOT IPSO FACTO BE MEAN AS A STAY OF THE ORDER OF THE HONBLE KOLKATA HIGH COURT. THE ASSESSEE IS NOT ABLE TO OBTAIN ANY ORDER OF STAY OF OP ERATION EITHER OF ITAT,KOLKATA BENCHES OR THE DECISION OF HONBLE KOLKATA HIGH COURT. UNDER THESE CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ORDER PASSED BY THE DEPARTMENTAL AUTHORITIES ARE IN THE RIGHT DIRECTION AND HENCE, WE UPHOL D THE SAME AND DISMISS THE APPEAL OF THE ASSESSEE FINDING THE SAME AS DEVOID OF MERITS. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. SD/ - SD/ - (K.K.GUPTA) ACCOUNTANT MEMBER ( K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 23 RD SEPTEMBER, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: BHARATI AIRTEL LTD., CIRCLE OFFICE, C/653, EPARI PLAZA, 3 RD FLOOR, JANPATH, KHARVELA NAGAR, UNIT III BHUBANESWAR 751 001 2. THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX , HQRS (TDS)(,BHUBANESWAR. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.