MANOJ KUMAR JAIN, Jaipur V. ITO, TONK

ITA 238/JPR/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6284 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 22-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 11-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P P MEENA
• Keywords: Non-deduction of tax; Revised return
• Section: 244A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK L NL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NO. 238/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2011-12 SHRI MANOJ KUMAR JAIN PROP. MAHAVEER & CO. NAZAR BAGH ROAD, TONK CUKE VS. THE ITO, WARD, TONK. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AFEPJ 4688 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MANISH AGARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI P.P. MEENA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 17/07/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 19/07/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 28.12.2015 OF CIT (A), JAIPUR FOR THE ASSESSMENT YE AR 2011-12. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING THE DISALLOWANCE OF RS. 28,22,036/- MADE BY LD. AO U/S 40(A)(IA) OF THE INC OME TAX ACT, ITA NO. 238/JP/2016 SHRI MANOJ KUMAR JAIN VS. ITO 2 1961 BY ALLEGING NON-DEDUCTION OF TAX AT SOURCE U/S 194H ON THE COMMISSION PAYMENT MADE BY ASSESSEE AS WHOLESALER O F SIM CARDS / MOBILE PHONES ETC TO RETAILERS / SUB-DEALER S THEREOF WITHOUT APPRECIATING THE NATURE OF PAYMENT EXPLAINE D DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THUS, THE ADDITIO N OF RS. 28,22,036/- DESERVES TO BE DELETED. 1.1 THAT, THE LD. AO HAS FURTHER ERRED IN IGNORING THE FACT THAT PART OF THE COMMISSION PAYMENT RECEIVED BY THE SUB- DEALERS / RETAILERS WAS MADE DIRECTLY BY THE MOBILE COMPANIES TO THEM THROUGH THE ASSESSEE, AND THE COMPANIES ISSUED DEBI T/CREDIT NOTE TO ASSESSEE IN RESPECT THEREOF AND ACCORDINGLY, THE ASSESSEE PASSED ENTRIES IN ITS BOOKS OF ACCOUNT. THUS, THERE WAS NO PAYMENT ON PART OF ASSESSEE AND PROVISIONS OF SECTI ON 194H ARE NOT APPLICABLE TO MERE ENTRIES OF NEUTRAL EFFECT RE CORDED IN THE BOOKS OF ACCOUNT, WITHOUT THERE BEING ANY ACTUAL PA YMENT. THUS, THE IMPUGNED ADDITION DESERVES TO BE DELETED. 1.2 THAT, THE LD. AO HAS FURTHER ERRED IN IGNORING THE FACT THAT ANY COMMISSION OTHER THAN REFERRED TO IN GROUND OF APPEAL NO. 1.1 ABOVE, WAS MERELY FORWARDED BY ASSESSEE OUT OF THE COMMISSION RECEIVED BY HIM FROM THE MOBILE COMPANIE S ON WHICH TDS ALREADY STOOD MADE BY THE MOBILE COMPANIES AND NO FURTHER TDS COULD BE MADE ON THE SAME AMOUNT. THUS, THE IMP UGNED ADDITION DESERVES TO BE DELETED. 1.3 THAT, THE LD. CIT(A) AS WELL AS THE LD. AO HAS FAILED TO CONSIDER THE FACT THAT THE ENTIRE AMOUNT STOOD PAID DURING THE YEAR ITSELF AND NO AMOUNT REMAINED PAYABLE AS ON TH E END OF THE YEAR. THEREFORE, AS PER THE SETTLED LAW, PROVISIONS OF SECTION 40(A)(IA) DO NOT APPLY TO THE PRESENT CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING THE ADDITION OF RS. 10,27,298/- MADE ON THE ALLEGED GROUND OF UNDER REP ORTING OF ITA NO. 238/JP/2016 SHRI MANOJ KUMAR JAIN VS. ITO 3 COMMISSION INCOME BY THE SAID AMOUNT BY COMPLETELY IGNORING THE FACT THAT THE SAID AMOUNT INCLUDED THE AMOUNT D IRECTLY PAID BY MOBILE COMPANIES TO SUB-DEALERS AND WAS ALSO INC LUSIVE OF SERVICE TAX REFUND AND OTHER AMOUNTS. THUS, THE AMO UNTS NOT BEING THE NATURE OF COMMISSION COULD NOT BE TREATED AS INCOME OF ASSESSEE. THUS, THE ADDITION OF RS. 10,27,298/-D ESERVES TO BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS. 2,234/- BEING THE DIFFERENCE OF INTEREST ON INCOME TAX REFUND BY COMPLETELY IGNORING THAT THE ACTUAL INTEREST REC EIVED U/S 244A IS OF RS. 7,200/- ONLY WHEREAS, THE LD. AO HAS HELD THE SAME TO BE RS. 9,434/- WITHOUT ANY BASIS. THUS, THE ADDITION OF RS. 2,234/- DESERVES TO BE DELETED. 4. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELE TE, AMEND OR ABANDON ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF APPEAL. 2. THE ASSESSEE IS AN INDIVIDUAL AND WHOLESALE DEAL ER OF M/S SISTEMA SHYAM TELESERVICES PVT. LTD. AND IDEA CELLULAR LTD. THE ASSESSEE IS ENGAGED IN PURCHASE AND SALE OF MOBILE & ACCESSORIE S, SIM CARDS, RECHARGE COUPONS ETC. DURING THE COURSE OF ASSESSME NT PROCEEDING THE AO NOTED THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE ON THE COMMISSION PAID TO THE RETAILER/SUB-DEALER TO THE T UNE OF RS. 28,00,946/-. IN RESPONSE THE ASSESSEE SUBMITTED THA T THE MOBILE SERVICE PROVIDER COMPANIES HAVE ALREADY DEDUCTED TD S AS PER THE ITA NO. 238/JP/2016 SHRI MANOJ KUMAR JAIN VS. ITO 4 PROVISIONS OF SECTION 194H ON BEHALF OF THE ASSESSE E ON COMMISSION PAID TO THE RETAILER. THE ASSESSEE HAS EXPLAINED BE FORE THE AO THAT THE COMMISSION WAS DIRECTLY PAID TO THE RETAILER/SUB-DE ALER BY THE MOBILE COMPANIES THOUGH FOR ACCOUNT PURPOSE THE ASSESSEE I S SHOWING THE PAYMENT OF COMMISSION TO THE RETAILER/SUB-DEALER IN HIS BOOKS OF ACCOUNT. THE AO DID NOT ACCEPT THE CONTENTION OF TH E ASSESSEE AND MADE DISALLOWANCE U/S 40(A)(IA) FOR WANT OF DEDUCTI ON OF TDS BY THE ASSESSEE. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT(A) BUT COULD NOT SUCCEED. 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT AT THE TOP IS 'TELECOM COMPANY', WHICH APPOINTS DEALERS FOR VA RIOUS REGIONS, WHO ARE GIVEN TARGETS FOR EXPANSION OF CUS TOMER BASE THROUGH SALE OF MOBILE CONNECTION THROUGH PRE/POST PAID SIM CARDS, FOR WHICH INCENTIVE/COMMISSION IS PAYABLE TO THEM. SINCE, THE NATURE OF INDUSTRY IS SUCH THAT IT IS NOT POSSIBLE FOR A W HOLESALE DEALER TO REACH INDIVIDUAL CUSTOMERS IN ENTIRE REGION ON ONE TO ONE BASIS, THEY ARE ALLOWED TO APPOINT RETAILERS/SUB DISTRIBUTORS I N THEIR REGION AND PAYMENT TO THEM IS MADE ON THE BASIS OF TOTAL NUMBE R OF SIM CARDS/ RECHARGE COUPONS SOLD BY THEM. IT IS PERTINENT TO N OTE HERE THAT PAYMENT TO BE MADE TO RETAILERS/SUB DISTRIBUTORS IS OF THE SOLE ITA NO. 238/JP/2016 SHRI MANOJ KUMAR JAIN VS. ITO 5 DISCRETION OF TELECOM COMPANY AND WHOLESALE DEALERS LIKE APPELLANT ARE INTERMEDIARIES AND PLAY NO ROLE EXCEPT PROVIDIN G INFORMATION ABOUT THE QUANTITY SOLD THROUGH SUCH SUB-DEALER. IN FACT, DEALER SENDS A LIST OF ALL THE RETAILERS/SUB DISTRIBUTORS TO TEL ECOM COMPANIES, WHO MAKES PAYMENT TO THEM DIRECTLY. IN OTHER WORDS, APP OINTMENT OF RETAILERS/SUB DISTRIBUTORS BY DEALERS IS MERELY FOR THE SAKE OF CONVENIENCE AND COMPLETELY UPON THE TERMS AND CONDI TIONS DECIDED BY TELECOM COMPANIES AS IT IS NOT POSSIBLE FOR TELE COM COMPANIES TO APPOINT RETAILERS/SUB DISTRIBUTORS IN INTERIOR VILL AGES AND SEMI URBAN AREAS, ON A LARGE SCALE TO COVER AND PROVIDE THE TE LECOM FACILITY TO THE PEOPLE LIVING THERE. THUS, FOR ALL THE PRACTICAL PU RPOSES, THESE SUB- DEALERS ARE AGENTS OF TELECOM COMPANIES AND NOT THE WHOLESALE DEALERS LIKE ASSESSEE. THE TELECOM COMPANIES ASSIGN TARGETS FOR A PARTICULAR REGION TO THE WHOLESALE DEALER, AND SUBS TANTIAL PART OF SUCH TARGETS ARE ACHIEVED/EXECUTED THROUGH SUB DEALERS/D ISTRIBUTORS AND PAYMENTS TOWARDS SUCH SERVICES IS DIRECTLY MADE BY TELECOM COMPANIES TO THESE RETAILERS AND NET AMOUNT ONLY IS PAID TO INTERMEDIATE DEALERS LIKE ASSESSEE. IT IS PERTINENT TO NOTE HERE THAT PAYMENT TO DEALERS IS MADE BY COMPANIES AFTER DEDUC TION OF TAX AT SOURCE ON THE WHOLE AMOUNT PAYABLE TO IT WHICH IS I NCLUSIVE OF ITA NO. 238/JP/2016 SHRI MANOJ KUMAR JAIN VS. ITO 6 PAYMENT OF RETAILERS/SUB-DISTRIBUTORS OF THE REGION . HE HAS RELIED UPON THE DECISION OF THE COORDINATE BENCH OF THIS T RIBUNAL IN CASE OF 13.10.2017 IN CASE OF M/S CHOCOPACK ENTERPRISES VS. ITO IN ITA NO. 821/JP/2016 AS WELL AS DECISION DATED 24.05.201 8 IN CASE OF SHRI VIRENDRA KUMAR JAIN VS. ITO IN ITA NO. 970/JP/2017. THUS, THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL. 4. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT WHEN THE ASSES SEE IS SHOWING THE ENTRIES OF RECEIPT AND PAYMENT OF THE COMMISSIO N AMOUNT THEN IT IS OBLIGATORY ON THE ASSESSEE TO DEDUCT TDS U/S 194 H OF THE ACT FAILING WHICH THE PROVISIONS OF SECTION 40(A)(IA) O F THE ACT ARE APPLICABLE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE NOTE THAT THE COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF M/S CHOCOPACK ENTERPRIS ES VS. ITO (SUPRA) HAS DEALT WITH THIS ISSUE OF DISALLOWANCE U/S 40(A) (IA) FOR WANT OF DEDUCTION OF TDS U/S 194H IN RESPECT OF THE COMMISS ION PAID TO THE RETAILER/SUB-DEALER. THE SAID DECISION WAS SUBSEQUE NTLY FOLLOWED BY ITA NO. 238/JP/2016 SHRI MANOJ KUMAR JAIN VS. ITO 7 THE TRIBUNAL IN CASE OF SHRI VIRENDRA KUMAR JAIN VS . ITO (SUPRA) AND HELD IN PARA 4 AS UNDER:- 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS PROD UCED THE CONFIRMATION FROM M/S. VODAFONE DIGILINK LTD. TO SH OW THAT THE PAYMENT IN QUESTION WAS DIRECTLY PAID BY THE SAID C OMPANY TO THE RETAILERS. THE ASSESSEE HAS ONLY CARRIED OUT THE N ECESSARY ENTRIES IN HIS BOOKS OF ACCOUNT FOR COMPLETION OF RECORD BE ING THE DEALER AND ALL THE TRANSACTIONS ARE PASSING THROUGH THE AS SESSEE. ONCE THE PAYMENT IN QUESTION WAS NOT MADE BY THE ASSESSE E AND IT WAS DIRECTLY PAID BY THE COMPANY AND FURTHER THE QU ANTUM AND PERCENTAGE OF THE SAID COMMISSION/DISCOUNT WAS ALSO IN THE FULL CONTROL OF THE COMPANY AND NOT IN THE HANDS OF THE ASSESSEE, THEN MERELY BECAUSE THE ASSESSEE HAS PASSED THE CON TRA ENTRY OF THE SAID AMOUNT WOULD NOT BRING THE SAID TRANSACTIO N IN THE CATEGORY OF COMMISSION PAID BY THE ASSESSEE SO AS T O ATTRACT THE PROVISIONS OF SECTION 194H. THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CHOCOPACK ENTERPRISES VS. ITO (SUPRA ) HAS CONSIDERED AN IDENTICAL ISSUE IN PARA 9 AS UNDER :- 9. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE S FIRM ENGAGED IN THE BUSINESS OF DISTRIBUTORSHIP OF IDEA RECHARGE CARDS. THE ISSUE INVOLVED IN CASE OF THEASSESSEE IS IN RESPECT OF SALE OF RECHARGE COUPONS AND NOT THE SAL E OF SIM CARDS. THEREFORE TO THE EXTENT THE ISSUE OF SALE OF SIM CARDS BY THE SERVICE PROVIDER IT IS HELD BY THE HONBLE K ARNATKA HIGH COURT IN THE CASE OF BHARATI AIRTEL LTD. VS. C IT (SUPRA) THAT THE ASSESSEE IS THE SERVICE PROVIDER HAD NO OB LIGATION TO DEDUCT TDS AND ACCORDINGLY WHEN THE SERVICE PROV IDER HAS IS UNDER NO OBLIGATION TO DEDUCT TAX, THE DISTR IBUTOR WOULD ALSO NOT UNDER OBLIGATION TO DEDUCT TDS. HOWE VER, THE SAID DECISION IS ONLY ON THE ISSUE OF SALE SIM CARDS AND ITA NO. 238/JP/2016 SHRI MANOJ KUMAR JAIN VS. ITO 8 THEREFORE, WILL NOT APPLICABLE IN THE CASE OF THE A SSESSEE. THE HONBLE SUPREME COURT IN CASE OF BHARAT SANCHAR NIGAM LTD. VS. UNION OF INDIA 282 ITR 273 AS ALSO O BSERVED IN PARAS 85 AND 86 WHICH ARE REPRODUCED AS UNDER:- 85. IN THAT CASE ESCOTAL WAS ADMITTEDLY ENGAGED IN SELLING CELLULAR TELEPHONE INSTRUMENTS, SIM CARDS AND OTHER ACCESSORIES AND WAS ALSO PAYING CENTRAL SALES TAX A ND SALES TAX UNDER THE KERALA GENERAL SALES TAX ACT, 1963, A S APPLICABLE. THE QUESTION WAS ONE OF THE VALUATION O F THESE GOODS. THE STATE SALES TAX AUTHORITIES HAD SOUGHT T O INCLUDE THE ACTIVATION CHARGES IN THE COST OF THE S IM CARD. IT IS CONTENDED BY ESCOTAL THAT THE ACTIVATION WAS PART OF THE SERVICE ON WHICH SERVICE TAX WAS BEING PAID AND COULD NOT BE INCLUDED WITHIN THE PURVIEW OF THE SALE. THE KERALA HIGH COURT ALSO DEALT WITH THE CASE OF BPL, A SERVI CE PROVIDER. ACCORDING TO BPL, IT DID NOT SELL CELLULA R TELEPHONES. AS FAR AS SIM CARDS WERE CONCERNED, IT WAS SUBMITTED THAT THEY HAD NO SALE VALUE. A SIM CARD M ERELY REPRESENTED A MEANS OF THE ACCESS AND IDENTIFIED TH E SUBSCRIBERS. THIS WAS PART OF THE SERVICE OF A TELE PHONE CONNECTION. THE COURT REJECTED THIS SUBMISSION FIND ING THAT THE SIM CARD WAS GOODS WITHIN THE DEFINITION OF T HE WORD IN THE STATE SALES TAX ACT. 86. IT IS NOT POSSIBLE FOR THIS COURT TO OPINE FINA LLY ON THE ISSUE. WHAT A SIM CARD REPRESENTS IS ULTIMATELY A Q UESTION OF FACT AS HAS BEEN CORRECTLY SUBMITTED BY THE STAT ES. IN DETERMINING THE ISSUE, HOWEVER THE ASSESSING AUTHOR ITIES WILL HAVE TO KEEP IN MIND THE FOLLOWING PRINCIPLES : IF THE SIM CARD IS NOT SOLD BY THE ASSESSEE TO THE SUBSCRI BERS BUT IS MERELY PART OF THE SERVICES RENDERED BY THE SERV ICE PROVIDERS, THEN A SIM CARD CANNOT BE CHARGED SEPARA TELY TO SALES TAX. IT WOULD DEPEND ULTIMATELY UPON THE INTE NTION OF THE PARTIES. IF THE PARTIES INTENDED THAT THE SIM C ARD WOULD BE A SEPARATE OBJECT OF SALE, IT WOULD BE OPEN TO T HE SALES ITA NO. 238/JP/2016 SHRI MANOJ KUMAR JAIN VS. ITO 9 TAX AUTHORITIES TO LEVY SALES TAX THEREON. THERE IS INSUFFICIENT MATERIAL ON THE BASIS OF WHICH WE CAN REACH A DECISION. HOWEVER, WE EMPHASISE THAT IF THE SALE OF A SIM CARD IS MERELY INCIDENTAL TO THE SERVICE BEING PROV IDED AND ONLY FACILITATES THE IDENTIFICATION OF THE SUBSCRIB ERS, THEIR CREDIT AND OTHER DETAILS, IT WOULD NOT BE ASSESSABL E TO SALES TAX. IN OUR OPINION THE HIGH COURT OUGHT NOT TO HAV E FINALLY DETERMINED THE ISSUE. IN ANY EVENT, THE HIGH COURT ERRED IN INCLUDING THE COST OF THE SERVICE IN THE VALUE OF T HE SIM CARD BY RELYING ON THE ASPECTS DOCTRINE. THAT DOCTR INE MERELY DEALS WITH LEGISLATIVE COMPETENCE. AS HAS BE EN SUCCINCTLY STATED IN FEDERATION OF HOTEL AND RESTAU RANT ASSOCIATION OF INDIA V. UNION OF INDIA [1989] 3 SCC 634 SUBJECTS WHICH IN ONE ASPECT AND FOR ONE PURPOSE F ALL WITHIN THE POWER OF A PARTICULAR LEGISLATURE MAY IN ANOTHER ASPECT AND FOR ANOTHER PURPOSE FALL WITHIN ANOTHER LEGISLATIVE POWER. THEY MIGHT BE OVERLAPPING ; BUT THE OVERLAPPING MUST BE IN LAW. THE SAME TRANSACTION MA Y INVOLVE TWO OR MORE TAXABLE EVENTS IN ITS DIFFERENT ASPECTS. BUT THE FACT THAT THERE IS OVERLAPPING DOES NOT DET RACT FROM THE DISTINCTIVENESS OF THE ASPECTS. NO ONE DENIES THE LEGISLATIVE COMPETENCE OF THE STATES TO LEVY SALES TAX ON SALES PROVIDED THAT THE NECESSARY CONCOMITANTS OF A SALE ARE PRESENT IN THE TRANSACTION AND THE SALE IS DIST INCTLY DISCERNIBLE IN THE TRANSACTION. THEREFORE, AS THE ISSUE OF SALE OF SIM CARDS IS CON CERNED THE HONBLE SUPREME COURT HAS CLEARLY HELD THAT THE SAL E OF SIM CARDS MERELY INCIDENTAL TO THE SERVICE BEING PROVIDED AND ONLY FACILITATES THE IDENTIFICATION OF SUBSCRIBERS THEIR CREDIT AND OTHER DETAILS IT WOULD NOT BE ASSESSABLE TO SALE TAX. AS REGARDS THE SALE OF RECHARGE COUPONS IT IS CLEARLY A TRANSACTION OF SAL E OF GOODS AS HELD BY THE HONBLE SUPREME COURT THAT THE TELEPHON E IS NOTHING BUT A SERVICE. HOWEVER, SINCE THE SERVICE IS PROVID ED BY THE COMPANY WHICH IS THE SERVICE PROVIDER AND ASSESSEE IS ONLY A ITA NO. 238/JP/2016 SHRI MANOJ KUMAR JAIN VS. ITO 10 DISTRIBUTOR AND INTERMEDIATETORY, THEREFORE, THE TA X LIABILITY FOR PAYING THE COMMISSION, IF ANY, IS ATTRACTED U/S 194 H ONLY AGAINST THE PERSON RESPONSIBLE FOR PAYING THE COMMISSION. I N CASE IN HAND THE ASSESSEE IS NOT PAYING ANY COMMISSION TO T HE RETAILERS BUT THIS COMMISSION OR SO CALLED DISCOUNT IS ALLOWE D AND PAID BY THE SERVICE PROVIDER. THE ASSESSEE IS AN INTERMEDIA TETORY AND ONLY RECORDING THIS TRANSACTION IN THE BOOKS OF ACC OUNT FOR THE PURPOSE OF COMPLETENESS. HENCE, WHEN THE ASSESSEE I S NEITHER COMPETENT NOR RESPONSIBLE NOR ACTUALLY PAYING ANY C OMMISSION TO THE RETAILER ON SALE OF RECHARGE COUPONS TO THE RET AILERS THEN THE OBLIGATION FOR DEDUCT TAX U/S 194 H IS ATTRACTED ON LY AGAINST THE SERVICE PROVIDER AND NOT AGAINST THE ASSESSEE WHO I S ONLY A DISTRIBUTOR AND RECEIVING ITS SHARE OF THE COMMISSI ON/ MARGINS PROVIDED BY THE SERVICE PROVIDER. THE DETERMINATION OF SALE PRICE OF RECHARGE COUPONS IS IN THE SOLE DOMAIN OF THE SE RVICE PROVIDER AND THE ASSESSEE IS NO ROLE IN DETERMINING THE RETA IL PRICE AT WHICH THE RETAILER IS SELLING THE RECHARGE COUPONS TO THE CUSTOMER OR END USER OF THE SERVICE. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE ASSESSEES ROLE IS ONLY AN INTERMEDIATETORY AND PASSING THE SERVICES FROM ONE HAND TO THE OTHER HAND THEN MERELY BECAUSE THE ASSESSEE IS SHOW ING AN AMOUNT OF COMMISSION/DISCOUNT IN THE BOOKS OF ACCOU NT FOR COMPLETENESS OF ACCOUNTS AND TRANSACTIONS WILL NOT IMPUTE ANY LIABILITY OF DEDUCTING TAX AT SOURCE. THE DECISIONS RELIED UPON BY THE LD. DR ARE ALSO ON THE POINT WHERE THE SERVICE PROVIDER IS ALLOWING OR PAYING THE COMMISSION TO THE DISTRIBUTO RS OR RETAILERS AND SALE OF SIM CARDS AS WELL AS RECHARGE COUPONS, THEREFORE, EVEN FOR THE SAKE OF ARGUMENTS IF IT IS ACCEPTED TH AT THE BENEFIT ALLOWED BY THE SERVICE PROVIDER TO THE DISTRIBUTORS AND RETAILERS IS COMMISSION IT IS SERVICE PROVIDER WHO IS RESPONSIBL E FOR PAYING THE SAID COMMISSION AND THEREFORE, THE PROVISIONS OF SE CTION 194H ARE NOT ATTRACTED AGAINST THE DISTRIBUTOR. ACCORDINGLY, WHEN THE ASSESSEE IS NOT DIRECTLY AND INDIRECTLY IN DECIDING THE QUANTUM OF ALLEGED COMMISSION/DISCOUNT AS WELL AS DETERMINING THE RETAIL PRICE AT WHICH THE RECHARGE COUPONS IS SOLD TO THE CUSTOMER THEN ITA NO. 238/JP/2016 SHRI MANOJ KUMAR JAIN VS. ITO 11 THE PROVISIONS OF SECTION 194H CANNOT BE APPLIED ON THE ASSESSEE. CONSEQUENTLY DISALLOWANCE MADE BY THE AO U/S 40 (A) (IA) IS DELETED. THUS THE COORDINATE BENCH HAS FOLLOWED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF BHARAT SANCHAR NIGAM L TD. VS. UNION OF INDIA, 282 ITR 273 (SC). IT IS PERTINENT TO NOTE THAT THE ISSUE IN CASE OF BHARAT SANCHAR NIGAM LTD. VS. UOI (SUPRA) AS WELL AS IN THE CASES WHICH ARE RELIED UPON BY THE L D. CIT (A) WAS REGARDING THE NATURE OF THE PAYMENT MADE BY THE OPE RATING COMPANIES WHETHER IT WAS COMMISSION OR DISCOUNT ALL OWED BY THE CELLULAR/MOBILE OPERATORS. THEREFORE, EVEN OTHERWIS E THE DECISIONS ON THOSE CASES ARE NOT DIRECTLY APPLICABL E IN THE CASE OF THE ASSESSEE WHERE THE ASSESSEE IS A DISTRIBUTOR AN D AN INTER- MEDIATORY BETWEEN THE CELLULAR/MOBILE OPERATOR AND THE RETAILERS. FOLLOWING THE DECISION OF THE COORDINATE BENCH OF T HIS TRIBUNAL, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW QU A THIS ISSUE AND DELETE THE DISALLOWANCE MADE BY THE AO UNDER SE CTION 40(A)(IA). THUS, IT IS CLEAR THAT THE TRIBUNAL HAS BEEN TAKING A CONSISTENT VIEW THAT WHEN THE ASSESSEE IS ONLY AN INTERMEDIATORY BE TWEEN THE CELLULAR/MOBILE OPERATOR AND RETAILER AND THE PAYME NT OF COMMISSION WAS DIRECTLY MADE BY THE CELLULAR/MOBILE OPERATOR C OMPANIES TO THE RETAILER/SUB-DEALER AFTER DEDUCTION OF TDS THEN, TH E ASSESSEE IS NOT REQUIRED TO DEDUCT ANY TDS ON THE SAID AMOUNT DIREC TLY PAID BY THE COMPANY AND ONLY THE ACCOUNTING ENTRIES WERE CARRIE D OUT BY THE ASSESSEE. THEREFORE, FOLLOWING THE DECISIONS OF THE COORDINATE BENCH ITA NO. 238/JP/2016 SHRI MANOJ KUMAR JAIN VS. ITO 12 OF THIS TRIBUNAL WE DELETE THE DISALLOWANCE MADE BY THE AO U/S 40(A)(IA) OF THE ACT. 6. GROUND NO. 2 IS REGARDING DISALLOWANCE MADE ON A CCOUNT OF UNDER REPORTING OF COMMISSION BY THE ASSESSEE. THE ASSESSEE HAS CREDITED COMMISSION INCOME OF RS. 45,46,072/-. THE AO CALLED THE INFORMATION FROM THE MOBILE OPERATING COMPANIES AND AS PER THE DETAILS PROVIDED BY THE COMPANIES THE AO FOUND THE TOTAL COMMISSION RECEIVED BY THE ASSESSEE DURING THE YEAR WAS RS. 55 ,73,310/-. THE AO ACCORDINGLY ASKED THE ASSESSEE TO FURNISH THE DE TAILS OF COMMISSION AND COPIES OF TDS CERTIFICATE. THE ASSES SEE FILED A REVISED RETURN SHOWING THE COMMISSION RECEIPT AT RS . 52,25,514/-, HOWEVER, THERE WAS NO CONSEQUENTIAL CHANGE IN THE T OTAL INCOME DECLARED BY THE ASSESSEE AS SOME OF THE ENTRIES WER E HAVING NEUTRAL EFFECT. THUS THE ASSESSEE EXPLAINED BEFORE THE AO T HAT THE ASSESSEE HAS SHOWN THE NET COMMISSION INCOME WITHOUT INCLUDI NG THE CONTRA ENTRIES OF RECEIPT AND PAYMENT TO THE DEALERS/SUB-R ETAILER. THE SAID PAYMENT OF COMMISSION WAS MADE BY THE COMPANIES DIR ECTLY TO THE RETAILER/SUB DEALER HOWEVER, THE AO MADE AN ADDITIO N OF THE DIFFERENTIAL AMOUNT OF COMMISSION INCOME REPORTED B Y THE ASSESSEE ITA NO. 238/JP/2016 SHRI MANOJ KUMAR JAIN VS. ITO 13 AS AGAINST THE AMOUNT SHOWN BY THE COMPANY. THE LD. CIT(A) HAS CONFIRMED THE ADDITION MADE BY THE AO. 7. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMI TTED THAT THE DIFFERENCE AMOUNT OF COMMISSION CREDITED IN THE PRO FIT AND LOSS ACCOUNT AND THE AMOUNT WHICH IS INTIMATED BY THE CO MPANY IS DUE TO THE SERVICE TAX REIMBURSEMENT OF RS. 3,73,953/- AND DIRECT PAYMENT OF COMMISSION BY THE COMPANY TO THE RETAILER OF RS. 6,60,876/-. THEREFORE, IF THESE TWO AMOUNTS ARE TAKEN INTO CONS IDERATION THEN THE DIFFERENCE IS RECONCILED, RATHER THE ASSESSEE HAS O FFERED EXCESS COMMISSION OF RS. 7,531/-. THE LD. AR HAS THUS SUBM ITTED THESE DETAILS HAVE NOT CONSIDERED BY THE AUTHORITIES BELO W AND THEREFORE, THE SAME MAY BE REMITTED TO THE RECORD OF THE AO FO R VERIFICATION OF THE RECONCILIATION OF THE DIFFERENCES. 8. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT DESPITE SUFFIC IENT OPPORTUNITIES GIVEN BY THE AO AS WELL AS LD. CIT(A) THE ASSESSEE HAS NOT RECONCILED AND EXPLAINED THE DIFFERENCE OF MORE THAN RS. 10 LA CS IN THE COMMISSION CREDITED IN THE PROFIT AND LOSS ACCOUNT AND ACTUAL AMOUNT ITA NO. 238/JP/2016 SHRI MANOJ KUMAR JAIN VS. ITO 14 RECEIVED BY THE ASSESSEE AS PER THE INFORMATION REC EIVED FROM THE MOBILE OPERATING COMPANIES. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THOUGH THERE IS A DIFFERENCE OF MORE THAN RS. 10 LACS IN THE COMMISSION RECEIPT CREDITED IN THE PROF IT AND LOSS ACCOUNT AND COMMISSION PAYMENT SHOWN BY THE MOBILE/CELLULAR OPERATING COMPANIES. AS POINTED OUT BY THE AO THE DISCREPANCY IN THE AMOUNT COULD NOT BE RECONCILED PROPERLY BY THE ASSESSEE, T HEREFORE, THE ADDITION WAS MADE BY THE AO. NOW WE FIND THAT THE A SSESSEE HAS EXPLAINED THE DIFFERENCE IN THE AMOUNT DUE TO SERVI CE TAX REIMBURSEMENT AND COMMISSION DIRECTLY PAID TO THE R ETAILER BY THE COMPANIES. THE DETAILS OF THE RECONCILIATION ARE AS UNDER:- (1) COMMISSION CREDITED IN PROFIT & LOSS A/C RS. 45 ,46,072/- (2) SERVICE TAX REIMBURSEMENT RS. 3,73,953/- (3) COMMISSION DIRECTLY PAID TO RETAILERS BY COMPANIES FOR WHICH INTIMATION RECEIVED BY US IN JUNE, 2011 RS. 6,60,876/- TOTAL RS. 55,80,901/- THE AMOUNT OF COMMISSION AS SHOWN IN SHOW NOTICE RS . 55,73,370/- EXCESS COMMISSION SHOWN BY US RS. 7,531/- ITA NO. 238/JP/2016 SHRI MANOJ KUMAR JAIN VS. ITO 15 SINCE, THESE DETAILS AND RELEVANT RECORDED HAVE NOT BEEN EXAMINED BY THE AO, THEREFORE, WE REMIT THIS ISSUE TO THE RE CORD OF THE ASSESSING OFFICER FOR VERIFICATION AND CONSIDERING THE RECONCILIATION FURNISHED BY THE ASSESSEE. THE AO THEN DECIDE THE I SSUE AFTER GIVING APPROPRIATE OPPORTUNITY OF HEARING TO THE ASSESSEE. 10. GROUND NO. 3 IS REGARDING OF ADDITION ON ACCOUN T OF INTEREST RECEIVED U/S 244A OF THE ACT. AT THE TIME HEARING, THE LEARNED COUNSEL FOR ASSESSEE STATED AT BAR THAT THE ASSESSEE DOES N OT PRESS GROUND NO. 3 AND THE SAME MAY BE DISMISSED AS NOT PRESSED. THE LD. DR HAS RAISED NO OBJECTIONS IF GROUND NO. 3 OF THE ASSESSEES APP EAL IS DISMISSED AS NOT PRESSED. ACCORDINGLY THE GROUND NO. 3 OF THE AS SESSEES APPEAL IS DISMISSED BEING NOT PRESSED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/07/2018. SD/- SD/- HKKXPAN FOT; IKY JKO (BHAGCHAND) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 19/07/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: ITA NO. 238/JP/2016 SHRI MANOJ KUMAR JAIN VS. ITO 16 1. VIHYKFKHZ@ THE APPELLANT- SHRI MANOJ KUMAR JAIN, TONK. 2. IZR;FKHZ@ THE RESPONDENT - ITO, WARD, TONK. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 238/JP/2016} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR