M/s Tata Seleservices Limited, Bhubaneswar V. ACIT(TDS), Bhubaneswar

ITA 437/CTK/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3723 (ITAT-CUTTACK)
• Duration Of Justice: 4 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-07-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 01-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: SANJAY CHOPRA
• Keywords: Additional evidence
• Section: 201(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ./ ITA NO. 437 / CTK /20 12 ( / ASSESSMENT YEAR : 2007 - 2008 ) M/S TATA TELESERVICES LIMITED, MODULE - B&C, 3 RD FLOOR, FORTUNE TOWER, CHANDRASEKHARPUR, BHUBANESWAR - 751023 VS. ACIT(TDS), BHUBANESWAR ./ ./ PAN/GIR NO. : A A A C T 2438 A ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHRI SANJAY CHOPRA, AR /REVENUE BY : SHRI D.K.PRADHAN , DR / DATE OF HEARING : 11 / 0 7 /201 7 / DATE OF PRONOUNCEMENT 14 / 0 7 /201 7 / O R D E R PER SHRI PAV AN KUMAR GADALE, JM : TH E ASSESSEE HA S FILED AN APPEAL AGAINST THE ORDER OF CIT(A) - 1 , BHUBANESWAR, PASSED IN ITA NO. 0088 / 08 - 09 , DATED 03.05.2012 , U/S. 201(1)/201(1A) OF THE INCOME TAX ACT. 2. THE ASSESSEE HAS RAISED THE GROUND S THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION HOLDING THAT PROV ISIONS OF SECTION 194H OF THE INCOME TAX ACT, 1961 ARE APPLICABLE ON THE DISCOUNT S , ON SALE OF RECHARGE VOUCHERS AND THE STARTER KITS MADE BY THE ASSESSEE AND ALSO CHALLENGED THE ACTION OF CIT(A) IN RESPECT OF BUSINESS TRANSACTION OF THE ASSESSEE BASED ON THE CONDUCT OF THE PARTIES INCLUDING THE AGREEMENT ENTERED WITH ITS DISTRIBUTORS TO BE THAT OF PRINCIPAL TO PRINCIPAL BASIS AND NOT THAT OF PRINCIPAL TO AGENT BASIS. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN T HE BUSINESS OF PROVIDING T ELECOMMUNICATION SERVICES COMPRISING BASIC ITA NO. 437 /20 12 2 TELEPHONY, ISP, NLD , BROADBAND AND CDMA MOBILE SERVICES ACROSS THE COUNTRY. A SURVEY OPERATION ON 24.1.2008 U/S.133A WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE AND THE AO FOUND THAT NO TDS HAS BEEN DEDUCTED U/ S.194H FROM THE DISTRIBUTORS FOR SELLING THE RECHARGE VOUCHER AND STARTER PACK. THE AO AFTER VERIFICATION OF FACTS FOUND THAT THERE IS A PRICE DIFFERENCE IN RESPECT OF COMMISSION AND CAME TO THE CONCLUSION THAT THE AMOUNT RECOVERED FROM THE DISTRIBUTOR FRA NCHISE IS NOTHING BUT COMMISSION, THEREFORE, TDS HAS TO BE DEDUCTED IN RESPECT OF DISTRIBUTOR FRANCHISE ON SALE OF STARTER PACK RECHARGE VOUCHERS AND INVOK ED SECTION 194H AND CALCULATED TDS LIABILITY U/S. 201(1) AND INTEREST LIABILITY U/S.201(1A) OF THE ACT AND COMPUTED TOTAL DEMAND OF RS. 14,46,864/ - AND PASSED THE ORDER U/S.201(1)/201(1A) R.W.S.1 9 4H OF THE ACT, DATED 2.6.2008. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DE ALT ON THE DISPUTED ISSUE CONSIDERING THE FINDINGS OF AO AND THE SUBMISSIONS MADE BY THE ASSESSE E ON 11.9.2009, 22.10.2010 AND 20.4.2012 WITH LEGAL OPINION AND AGREEMENTS OF FRANCHISE AT PAGE 4 TO 7 OF THE APPELLATE ORDER AND THE DECISIONS OF HONBLE HIGH COURTS AND ASSESSEES OWN CASE AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND OBSERVED AT PAGE 19 OF THE ORDER AS UNDER : - 3. THE APPELLANT IS IN DEFAULT IN DEDUCTING TAX AT SOURCE IN RESPECT OF PAYMENT MADE TO THE DISTRIBUTORS/FRANCHISEES AT THE TIME OF DELIVERY OF RECHARGE VOUCHERS/STARTER PACKS ETC. AS DISCUSSED BY THE AO. THE APPELLANT CLAIMS THAT SUCH DISTRIBUTORS HAVE FILED RETURNS AND PAID TAXES. THE AO IS THUS DIRECTED TO SATISFY HIMSELF IF THE DISTRIBUTORS/FRANCHISEES HAVE ITA NO. 437 /20 12 3 FILED RETURNS OF INCO ME AND INCLUDED THE INCOME RECEIVED FROM THE APPELLANT (PAYER), AND IF SUCH RETURN HAS INCLUDED THE AMOUNT RECEIVED FROM THE APPELLANT THEN THE APPELLANT IS NOT TO BE TREATED AS ASSESSEE IN DEFAULT IN RESPECT OF NON - DEDUCTION OR SHORT DEDUCTION OF TAX AT S OURCE. HOWEVER INTEREST U/S 201(1A) IS PAYABLE TILL THE DATE OF FILING THE RETURN BY THE DISTRIBUTOR/FRANCHISEE. THE AO IS ACCORDINGLY DIRECTED TO - SATISFY HIMSELF THAT RETURNS HAVE BEEN FILED BY THE DISTRIBUTORS/FRANCHISEES AND ACCORDINGLY DECIDE APPLICABI LITY OF PROVISIONS OF SECTION 201(1). THE AO MAY ALSO CHARGE INTEREST U/S 201(1A) AS DISCUSSED AFORESAID. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. EMPHASIZE 6. BEFORE US, LD. A R ARGUED THE GROUNDS AND REITERATED T HE SUBMISSIONS MADE BEFORE THE AO AND THE APPELLATE AUTHORITIES. THE SOLE CONTENTION OF THE ASSESSEE THAT THE PROVISIONS OF SECTION 194H OF THE ACT IS NOT APPLICABLE AND CANNOT BE APPLIED IN RESPECT OF SALE OF RECHARGE AND STARTER PACK . F URTHER , THE PROVIS IONS SHALL APPLY ONLY WHEN ACTUALLY PAYMENT IS MADE AND THE AGREEMENTS ENTERED WITH THE DISTRIBUTOR ARE ON PRINCIPAL TO PRINCIPAL BASIS. LD. AR FILED PAPER BOOKS TO SUPPORT HIS CONTENTION S AND EMPHASIZED THAT SIMILAR ISSUE IS PENDING BEFORE THE HONBLE SUP REME COURT. LD. AR OF THE ASSESSEE FILED APPLICATION UNDER RULE 46A FOR ADMISSION OF ADDITIONAL EVIDENCE. 7. CONTRA, LD. DR RELIED ON THE ORDERS OF CIT(A) AND OBJECTED TO ADDITIONAL EVIDENCE OF THE ASSESSEE. 8 . WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE M ATERIAL ON RECORD AND ALSO THE JUDICIAL DECISIONS . PRIMA FACIE , THE SOLE GROUND ARGUED B Y LD. AR ON APPLICABILITY OF PROVISIONS U/S.194H IN RESPECT OF SALE OF RECHARGE VOUCHERS AND STARTER PACK BY THE ASSESSEE, WE FIND THE ASSESSEE ITA NO. 437 /20 12 4 COMPANY FILED ADDITIONAL EVIDENCE UNDER RULE 46A OF I.T.RULES AND THIS INFORMATION HAS TO BE VERIFIED BY THE ASSESSING OFFICER AND FURTHER LD. AR SUBMITTED THAT THE SIMILAR MATTER IS PENDING BEFORE THE HON BLE SUPREME COURT. WE , CONSIDERING THE APPARENT FACTS , SUBMISSIONS AND TH E JUDICIAL DECISIONS AND THE ADDITIONAL EVIDENCE, ARE INCLINED TO SET ASIDE ORDER OF CIT(A) AND REMIT THE ENTIRE DISPUTED ISSUE TO THE FILE OF AO FOR VERIFICATION AND EXAMIN ATION OF EVIDENCE IN ACCORDANCE WITH LAW AND PASS THE ORDER S AFTER PROVIDING ADEQUA TE OPPORTUNITY OF HEARING TO THE ASSESSEE. 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 14 /07 / 201 7 . SD/ - ( N. S. SAINI ) SD/ - ( PA V AN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 14 / 0 7 /201 7 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - M/S TATA TELESERVICES LIMITED, MODULE - B&C, 3 RD FLOOR, FORTUNE TOWER, CHANDRASEKHARPUR, BHUBANESWAR - 751023 2. / THE RESPONDENT - ACIT (TDS) BHUBANESWAR 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//