The Income-tax Officer, Jammu V. Sh. Bhushan Chander Jain, Jammu

ITA 486/ASR/2015

• Counselvise Citation: 48620914 RSA 2015
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 07-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SHARDA
• Assessee Lawyers: JOGINDER SINGHCA
• Keywords: Relationship of principal and agent
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (JAMMU CAMP; JAMMU ) BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S.KAPOOR, HONBLE ACCOUNTANT MEMBER I.T.A NO. 486(ASR)/2015 ASSESSMENT YEARS: 2009-10 THE INCOME TAX OFFICER, TDS CIRCLE, AAYAKAR BHAWAN RAIL HEAD COMPLEX, JAMMU. VS. SH. BHUSHAN CHANDER JAIN, PROP. M/S MAHAVIR RADISO, RESIDENCY RD. JAMMU. PAN: AMRB0403B (APPELLANT) (RESPONDENT) APPELLANT BY: SH. R.K. SHARDA (DR. ) RESPONDENT BY: SH. JOGINDER SINGH(CA.) DATE OF HEARING: 04.12.2015 DATE OF PRONOUNCEM ENT: 31.12.2015 ORDER PER T.S.KAPOOR (A.M): THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(A), JAMMU, DATED 11.06.2015. 2. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE R EPRODUCED BELOW. 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE DEMAND CREATED U/S 201(1)/201(1A) OF THE I.T. ACT WHICH WAS RIGHTLY CREATED FOR NON-DEDU CTION OF TAX AT SOURCE U/S 194H ON PAYMENT OF COMMISSION EARNED BY ASSESSE E WHICH WAS TRANSFERRED TO THE AGENTS/RETAILERS APPOINTED BY TH E COMPANY FOR SALE OF SIM CARDS AND RECHARGE COUPONS, TOP UP ETC. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) IS JUSTIFIED IN DELETING THE DEMAND CREATED U/S 201(1) /201(1A) OF THE I.T. ACT BY THE AO WHEREAS THE ISSUE HAS BEEN UPHELD BY THE DELHI HIGH COURT IN THE CASE OF CIT-XVI VS. IDEA CELLULAR LTD. (DHL) (I TA NO. 145 OF 2009 & ITA NO. 784 OF (2009). 2. ITA NO.48 6 (ASR)/2015 ASST. YEA R 2009-10 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS JUSTIFIED IN DELETING THE DEMAND CREATED U/S 201(1) /201(1A0 OF THE I.T. ACT BY THE AO WHEREAS THE JUDGMENT ON THE SAME ISSUE IN THE CASE OF BHARTI AIRTEL LIMITED VS. DCIT AND ORS. 372 ITR 33 KARNATA KA HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND SLP HAS BEEN FILED A GAINST IT. 3. THE BRIEF FACTS AS NOTED IN THE ORDER UNDER SECT ION 201(1) AND 201(1A) ARE THAT THE ASSESSEE MOVED AN APPLICATION FOR ISSUE OF CERT IFICATE U/S 197 OF THE I.T ACT, 1961 AND ENCLOSED BALANCE SHEET AND TRADING ACCOUNT FOR THE FINANCIAL YEARS 2007-08 TO 2009-10. ON GOING THROUGH THE TRADING AND PROFIT AN D LOSS ACCOUNT, IT WAS NOTICED BY ASSESSING OFFICER THAT ASSESSEE WAS IN RECEIPT OF C OMMISSION AS FRANCHISE OF M/S BHARAT SANCHAR NIGAM LIMITED AND OUT OF ABOVE COMMI SSION THE ASSESSEE HAD ALLOWED COMMISSION TO HIS SUB FRANCHISES APPOINTED UNDER HI S JURISDICTION AND HAD DEBITED THE SAME IN THE PROFIT & LOSS ACCOUNT UNDER THE HEA D DISCOUNT. THEREFORE, THE ASSESSEE WAS ASKED TO FILE CERTAIN DETAILS. FROM TH E DETAILS FILED BY ASSESSEE THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD NOT DE DUCTED TAX U/S 194H IN CERTAIN CASES. THE ASSESSEE CLAIMED THAT RETAIL SALES MADE BY HIM WERE NOT LIABLE FOR TAX DEDUCTION U/S 194 H. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE REPLY AND AFTER RECORDING HIS OBSERVATIONS TREATED THE AMOUNT OF DI SCOUNT RECORDED BY ASSESSEE AS COMMISSION AND RAISED DEMAND FOR SHORT DEDUCTION OF TAX AND ALSO RAISED DEMAND FOR INTEREST THEREON. 4. AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFOR E LEARNED CIT(A) AND SUBMITTED DETAILED SUBMISSIONS. THE LEARNED CIT(A) DECIDED TH E ISSUE IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER: 4.1. THE ISSUE BEFORE ME IS TO ASCERTAIN WHETHER T HE APPELLANT WAS LIABLE TO DEDUCT TDS ON THE PROFIT MARGINS OF THE RETAILERS T O WHOM THE RECHARGE COUPONS/ SIM CARDS/ TOP UPS ARE SOLD. THE AO HAS HELD THAT T HE APPELLANT HAS FORWARDED THE COMMISSION ON SALE OF RECHARGE COUPONS AND SIM CARDS TO RETAILERS WITHOUT DEDUCTING TDS U/S 194H OF THE ACT. THE APPELLANT HA S ARGUED THAT HE HAS PURCHASED THE SIM CARDS AND RECHARGE COUPONS FROM A IRTEL AT A DISCOUNT AND SOLD THE SAME TO THE RETAILERS AT A DISCOUNT. NO COMMISS ION IS EITHER RECEIVED/PAID 3. ITA NO.48 6 (ASR)/2015 ASST. YEA R 2009-10 FROM THE SUPPLIER OR FORWARDED TO THE RETAILER. THE RE IS NO RELATIONSHIP OF PRINCIPAL AND AGENT BETWEEN THE APPELLANT AND THE RETAILER AN D GOODS SOLD TO THE RETAILER CAN BE RESOLD BY HIM EITHER AT PROFIT OR LOSS AT TH E WILL OF THE RETAILER SUBJECT TO MAXIMUM RETAIL PRICE. THE APPELLANT HAS PLACED RELIANCE ON THE JUDGMENT O F JURISDICTIONAL ITAT BENCH, AMRITSAR IN THE CASE OF GURPREET SINGH SETHI (2014) 40CCH 243 ASR (TRIB) IN WHICH THE HON'BLE BENCH HAS OBSERVED THAT THE RECHA RGE COUPONS, TOP UPS ETC PURCHASED BY THE SUB DISTRIBUTOR BECOMES THE PROPER TY OF THE SAID SUB DISTRIBUTOR AND THE SAID DISTRIBUTOR IS FREE TO SELL THE SAME A T A PRICE AS HE DEEMS FIT THOUGH THE MAXIMUM PRICE HAS BEEN FIXED BY THE SUPPLIER WI TH REGARD TO THE MARKET CONDITION. THERE IS NO PARTNERSHIP, JOINT VENTURE, EMPLOYMENT OR RELATIONSHIP OF PRINCIPAL AND AGENT BETWEEN PARTIES. THE HON'BLE TR IBUNAL HAS ACCEPTED THE PLEA OF THE ASSESSEE IN DISTINGUISHING THE DECISIONS IN THE CASES OF BHARTI CELLULAR LTD, BPL MOBILE CELLULAR LTD, IDEAL CELLULAR LTD AND VOD AFONE ESSAR CELLULAR LTD ARGUING THAT IN THE SAID CASES, THE ENTITIES ARE TH EMSELVES CELLULAR OPERATORS AND SERVICES PROVIDERS AND IN TERMS OF THE AGREEMENT BE TWEEN THESE SERVICE PROVIDERS AND FRANCHISEES, THE HON'BLE COURT HAS HELD THE MAR GIN PROVIDED IS IN THE NATURE OF COMMISSION. THESE CASES ARE NOT APPLICABLE IN TH E PRESENT CASE SINCE THE ASSESSEE IS NOT A SERVICE PROVIDER I.E. BSNL AND NO T PROVIDING SERVICE TO SUBSCRIBER. THE ASSESSEE SELLS RECHARGES TO SUB DIS TRIBUTORS, WHICH IS ON PRINCIPAL TO PRINCIPAL BASIS AND THERE IS NO RELATION OF PRIN CIPAL AND AGENT. THERE IS NO WRITTEN AGREEMENT WITH THE SUB DISTRIBUTOR. THE BOO KS OF ACCOUNT ARE AUDITED AND TRANSACTIONS HAS BEEN SHOWN AS SALE AND PURCHASE. NONE OF THE CONDITIONS REFERRED TO IN SECTION 194H TO EXPLANATION (I) IS F ULFILLED. THE SUB DISTRIBUTOR IS NOT RECEIVING THE PAYMENT ON BEHALF OF THE ASSESSEE BUT ON HIS OWN NAME AND HE IS NOT ACCOUNTABLE TO THE ASSESSEE. ONCE THE ASSESSEE HAS SOLD THE SIM CARDS OR RECHARGE COUPONS, THE ASSESSEE HAS NO CONTROL OR LI ABILITY TOWARDS THE SUB DISTRIBUTORS. THE RELATIONSHIP OF BSNL IS DIFFERENT FROM THE RELATIONSHIPS WITH SUB FRANCHISEE BECAUSE ASSESSEE HAS NO CONTROL OVER THE SUB FRANCHISEE WHATSOEVER. THE HON'BLE BENCH , THEREFORE HELD THAT THE ASSESSE E IS A TRADER AND RELATIONSHIP IS THAT OF PRINCIPAL TO PRINCIPAL AND ACCORDINGLY T HE PROVISIONS U/S 194H ARE NOT APPLICABLE TO THE SUB DISTRIBUTOR OF THE CELLULAR C OMPANY IN RESPECT OF SALE OF RECHARGE COUPONS, TOP UPS ETC. THE RELATION BETWEEN THE APPELLANT AND THE RETAILERS IS THAT OF PRINCIPAL TO PRINCIPAL AND NOT THAT OF PRINCIPAL AND AGENT. 4.2. THE APPELLANT HAS ALSO PLACED RELIANCE ON THE JUDGMENT OF TATA TELESERVICE LTD VS ITO (2015) 43 CCH 0268 (JP) IN WHICH IT WAS HELD THAT - THE RELATIONSHIP BETWEEN ASSESSEE AND ITS DISTRIBUT ORS QUA THE SALE OF IMPUGNED PRODUCTS IS ON PRINCIPAL AND PRINCIPAL BAS IS, THE CONSIDERATION RECEIVED BY THE ASSESSEE IS SALE SIMPLICITER. - THERE IS NO RELATIONSHIP OF PRINCIPAL AND AGENT BET WEEN THE ASSESSEE AND DISTRIBUTORS AS HELD BY THE AUTHORITIES BELOW ARE R EVERSED. LOOKING AT THE TRANSACTIONS BEING SALE/PURCHASE AND RELATIONSHIP OF PRINCIPAL TO PRINCIPAL, THE DISCOUNT DOES NOT AM OUNT TO COMMISSION IN TERMS OF SECTION 194H AS THE SAME IS NOT APPLICABLE TO THIS TRANSACTION. 4. ITA NO.48 6 (ASR)/2015 ASST. YEA R 2009-10 IT IS OBSERVED THAT THE FACTS OF THE CASES REFERRED ABOVE ARE SIMILAR TO THE FACTS OF THE PRESENT CASE. IN THE PRESENT CASE, THE APPELLAN T IS A SUB DISTRIBUTOR SELLING RECHARGE COUPONS, TOP UPS AND SIM CARDS ETC TO THE RETAILERS WHICH IS ON PRINCIPAL TO PRINCIPAL BASIS AND THERE IS NO RELATIONSHIP OF PRINCIPAL AND AGENT. THERE IS NO WRITTEN AGREEMENT BETWEEN THE APPELLANT AND THE RET AILERS. THE RETAILER IS FREE TO SELL THE PRODUCTS AT A PRICE HE DEEMS FIT SUBJECT T O MRP FIXED BY THE CELLULAR COMPANY. ONCE THE COUPONS, TOP UP ETC ARE SOLD, THE APPELLANT HAS NO LIABILITY OR CONTROL OVER THE RETAILERS. THE BOOKS OF ACCOUNTS O F THE APPELLANT ARE AUDITED AND THE APPELLANT HAS REFLECTED THESE TRANSACTIONS AS S ALE AND PURCHASE OF PRODUCTS IN HIS BOOKS OF ACCOUNT AND THE SAME HAS BEEN ACCEP TED BY THE INCOME TAX AUTHORITIES. NONE OF THE CONDITIONS REFERRED TO IN SECTION 194H TO EXPLANATION (1) IS FULFILLED. THEREFORE, IN MY OPINION, THE ARGUMENTS MADE BY THE APPELLANT WHICH ARE SUPPORTED BY THE RECENT DECISION OF JURISDICTIO NAL ITAT BENCH ARE JUSTIFIED AND ACCEPTABLE. 4.3. THE APPELLANT HAS ALSO PLACED RELIANCE ON THE LATEST JUDGMENT OF HON'BLE HIGH COURT OF KARNATAKA DATED 14 TH AUGUST 2014 IN THE CASE OF M/S BHARTI AIRTEL LIMITED (2015) 114 DTR 0253, M/S VODAFONE ESSAR SOU TH LTD, M/S TATA TELESERVICES LTD VS DCIT, CIRCLE 18(1), BANGALORE I N WHICH THE HON'BLE COURT DISTINGUISHED THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF IDEA CELLULAR LIMITED'S AND HON'BLE KERALA HIGH COURT IN THE VODAFONE ESSAR CELLULAR LIMITED'S WHILE OBSERVING THAT IN THESE CASES, THE COURT PROCEEDED ON THE BASIS THAT SERVICE CANNOT BE SOLD. IT HAS TO BE RENDERED. BUT, THEY DID NOT GO INTO THE QUESTION WHETHER RIGHT TO SERVICE CAN BE SOLD. THE HON'BLE COURT FURTHER OBSERVED THAT THE TELEPHO NE SERVICE IS NOTHING BUT SERVICE. SIM CARDS, HAVE NO INTRINSIC SALE VALUE. I T IS SUPPLIED TO THE CUSTOMERS FOR PROVIDING MOBILE SERVICES TO THEM. THE SIM CARD IS IN THE NATURE OF A KEY TO THE CUSTOMER TO HAVE ACCESS TO THE TELEPHONE NETWORK ES TABLISHED AND OPERATED BY THE ASSESSEE COMPANY ON ITS OWN BEHALF. SINCE THE S IM CARD IS ONLY A DEVICE TO HAVE ACCESS TO THE MOBILE PHONE NETWORK, THERE IS N O QUESTION OF PASSING OF ANY OWNERSHIP OR TITLE OF THE GOODS FROM THE ASSESSEE C OMPANY TO THE DISTRIBUTOR OR FROM THE DISTRIBUTOR TO THE ULTIMATE CUSTOMER. THER EFORE, THE SIM CARD, ON ITS OWN BUT WITHOUT SERVICE WOULD HARDLY HAVE ANY VALUE. A CUSTOMER, WHO WANTS TO HAVE ITS SERVICE INITIALLY, HAS TO PURCHASE A SIM-CARD. WHEN HE PAYS FOR THE SIM- CARD, HE GETS THE MOBILE SERVICED ACTIVATED. SERVICE CAN ONLY BE RENDERED AND CANNOT BE SOLD. HOWEVER, RIGHT TO SERVICE CAN BE SO LD. WHAT IS SOLD BY THE SERVICE PROVIDER TO THE DISTRIBUTOR IS THE RIGHT TO SERVICE. ONCE THE DISTRIBUTOR PAYS FOR THE SERVICE AND THE SERVICE PR OVIDER, DELIVERS THE SIM CARD OR RECHARGE COUPONS, THE DISTRIBUTOR ACQUIRES A RIGHT TO DEMAND SERVICE. ONCE SUCH A RIGHT IS ACQUIRED THE DISTRIBU TOR MAY USE IT BY HIMSELF. HE MAY ALSO SELL THE RIGHT TO SUB-DISTRIBU TORS WHO IN TURN MAY SELL IT TO RETAILERS. IT IS A WELL SETTLED PROPOSIT ION THAT IF THE PROPERTY IN THE GOODS IS TRANSFERRED AND GETS VESTED IN THE DIS TRIBUTOR AT THE TIME OF THE DELIVERY, THEN HE IS THEREAFTER LIABLE FOR THE SAME AND WOULD BE DEALING WITH THEM IN HIS OWN RIGHT AS A PRINCIPAL A ND NOT AS AN AGENT. THE SELLER MAY HAVE FIXED THE MRP AND THE PRICE AT WHICH THEY SELL THE PRODUCTS TO THE DISTRIBUTORS BUT THE PRODUCTS ARE S OLD AND OWNERSHIP VESTS AND IS TRANSFERRED TO THE DISTRIBUTORS. HOWEV ER, WHOEVER ULTIMATELY SELLS THE SAID RIGHT TO CUSTOMERS IS NOT ENTITLED T O CHARGE MORE THAN THE 5. ITA NO.48 6 (ASR)/2015 ASST. YEA R 2009-10 MRP. THE INCOME OF THESE MIDDLEMEN WOULD BE THE DIF FERENCE IN THE SALE PRICE AND THE MRP, WHICH THEY HAVE TO SHARE AS PER THE AGREEMENT BETWEEN THEM. THE SAID INCOME ACCURES THEM ONLY WHE N THEY SELL THIS RIGHT TO SERVICE AND NOT WHEN THEY PURCHASE THIS RI GHT TO SERVICE. THE ASSESSEE IS NOT CONCERNED WITH QUANTUM AND TIME OF ACCRUAL OF INCOME TO THE DISTRIBUTORS BY RESELLING THE PREPAID CARDS TO THE SUB-DISTRIBUTORS/ RETAILERS. AS AT THE TIME OF SALE OF PREPAID CARD B Y THE ASSESSEE TO THE DISTRIBUTOR, THERE IS NO PRIMARY LIABILITY TO TAX O N THE DISTRIBUTOR. IN THE ABSENCE OF PRIMARY LIABILITY ON THE DISTRIBUTOR AT SUCH POINT OF TIME, THERE IS NO LIABILITY ON THE ASSESSEE TO DEDUCT TAX AT SOURCE. THE DIFFERENCE BETWEEN THE SALE PRICE TO RETAILER AND T HE PRICE WHICH THE DISTRIBUTOR PAYS TO THE ASSESSEE IS HIS INCOME FROM BUSINESS. IT CANNOT BE CATEGORIZED AS COMMISSION. THE SALE IS SUBJECT TO C ONDITIONS AND STIPULATIONS. THIS BY ITSELF DOES NOT SHOW AND ESTA BLISH PRINCIPAL AND AGENT RELATIONSHIP. 4.4.AFTER GOING THROUGH THE FACTS OF THE CASE, SUBM ISSION MADE ON BEHALF OF APPELLANT AND DECISION OF THE ABOVE REFERRED JUDGME NT IN WHICH THE EARLIER DECISIONS OF HIGH COURTS IN THE CASE OF M/S BHARTI AIRTEL LIMITED, M/S VODAFONE ESSAR SOUTH LTD, M/S TATA TELESERVICES LTD VS DCIT HAVE DULY BEEN DISTINGUISHED , I AM OF THE OPINION THAT IF THE PRO PERTY IN THE GOODS IS TRANSFERRED AND GETS VESTED IN THE RETAILER/CONSUMER AT THE TIM E OF THE DELIVERY THEN HE IS THEREAFTER LIABLE FOR THE SAME AND WOULD BE DEALING WITH THEM IN HIS OWN RIGHT AS A PRINCIPAL AND NOT AS AN AGENT. THE SUPPLIER/ DIST RIBUTOR MAY HAVE FIXED THE MRP AND THE PRICE AT WHICH THE RETAILER SELLS THE P RODUCTS TO THE CONSUMER BUT WHEN THE PRODUCTS ARE SOLD , THE OWNERSHIP VESTS AN D IS TRANSFERRED TO THE RETAILERS/ CONSUMERS . THE INCOME OF THESE RETAILER S WOULD BE THE DIFFERENCE IN THE SALE PRICE OF THE APPELLANT AND THE SALE PRICE OF T HE RETAILER WHICH MAY BE MRP OR A PRICE LESS THAN MRP. THE DIFFERENCE BETWEEN THE P RICE AT WHICH THE GOODS ARE SOLD TO THE RETAILER AND SALE PRICE OF RETAILER IS THE TRADE MARGIN OF THE RETAILER AND IT CANNOT BE CATEGORIZED AS COMMISSION. FOR SECTION 194H TO BE ATTRACTED, THE FOLLOWING THREE CONDITIONS ARE TO BE FULFILLED 1. THE ASSESSEE SHOULD BE RESPONSIBLE FOR PAYING A N INCOME BY WAY OF COMMISSION OR BROKERAGE TO THE RETAILER. 2. THERE SHOULD BE A PAYMENT EITHER BY CASH OR BY ISSUE OF CHEQUE OR DRAFT OR ANY MODE OR CREDIT OF SUCH INCOME TO THE RETAILER I N THE ACCOUNTS OF THE APPELLANT. 3. TAX IS TO BE DEDUCTED AT THE TIME OF PAYMENT OR CREDIT THEREOF, WHICHEVER IS EARLIER. IN THE PRESENT CASE, THE MARGINS OF THE RETAILER CA NNOT BE TERMED AS COMMISSION FORWARDED BY THE APPELLANT AND AS SUCH THE PROVISIO NS OF SECTION 194H ARE NOT APPLICABLE IN THE CASE OF THE APPELLANT. THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IS IN DETAIL AND THE IMPORT OF EARLIER JUDGMENTS OF CIT VS IDEA CELLULAR LTD. (201 0) 325 ITR 148 (DEL) AND KERALA HIGH COURT IN THE CASE OF VODAFONE ESSAR CEL LULAR LTD. VS. ACIT (2011) 332 (KER) ARE FULLY CONSIDERED BY THE KARNATAKA HIG H COURT. IT IS THE LATEST JUDGMENT ON THE ISSUE WHICH HOLDS THE FIELD ON MEAN ING AND SCOPE OF THE IMPUGNED TRANSACTION. 6. ITA NO.48 6 (ASR)/2015 ASST. YEA R 2009-10 4.5 IT IS ALSO ARGUED THAT IF IT IS ASSUMED THAT TH E MARGINS OF THE RETAILERS IS COMMISSION PAID BY THE APPEALLNT, IN THAT CASE ALSO THE DEDUCTION OF TDS IS PARTICALLY NOT POSSIBLE AS THE APPEOLLANT IS NOT MA KING ANY PAYMENT TO THE RETAILER FROM WHICH THE TDS IS TO BE DEDUCTED. THE APPELLANT SELLS THE PRODUCTS AND RECEIVES AMOUNT FROM THE RETAILERS AND DOES NOT MAK E ANY PAYMENTS OF HIM. SECONDLY, AT THE TIME OF SALE OF THESE PRODUCTS, TH E AMOUNT OF MARGINS ARE NOT ASCERTAINABLE AS THE MARGINS OF THE RETAILER DEPEND S ON THE HIS SALE PRICE WHICH IS NOT FIXED AS THE RETAIL IS FREE TO SELL THE PRODUCT S AT ANY PRICE SUBJECT TO MAXIMUM OF MRP. THIRDLY, EVEN AT THE TIME OF SALE OF PRODUC T BY THE RETAILER BUSINESS AND HE CANNOT ASCERTAINABLE BY THE APPELLANT AS HE HAS NO CONTROL OVER THE RETAILER BUSINESS AND HE CANNOT ACCESS THE BOOKS OF ACCOUNTS OR OTHER RECORDS OF THE RETAILER TO FIND OUT HIS ACTUAL MARGIN THUS, IT IS BEYOND THE CONTROL OF THE APPELLANT TO FIND OUT THE MARGINS OF THE RETAILER AND AS HE I S NOT MAKING ANY PAYMENT IT IS AGAIN PRACTICALLY IMPOSSIBLE FOR HIM TO DEDUCT TDS OUT OF HIS INCOME. THE ARGUMENT OF THE APPELLANT HAS A MERIT. THE CASE OF THE APPELLANT IS ALSO SUPPORTED JUDGMENT OF ITAT BENCH HYDRABAD IN THE CASE OF RAJU IVREL CONSTRUCTION JV ITA NO 1425/HYD/2010 IN WHICH THE BENCH OBSERVED THAT A LIABILITY CANNOT BE FASTENED ON THE ASSESSEE FOR A DEFAULT THAT CANNOT BE ATTRIBUTED TO THE ASSESSEE FOR NOT DISCHARGING AN OBLIGATION WHICH IS IMPOSSIB LE ON ITS PART TO PERFORM. 4.6. ON EARLIER OCCASION I HAVE HELD THE DISCOUNTS OFFERED TO SUB DISTRIBUTORS ON ACCOUNT OF DISTRIBUTION OF SIM CARDS AND RECHARGE C OUPONS, TOP UP ETC. AS COMMISSION, RELYING ON THE EARLIER DECISIONS OF HON 'BLE HIGH COURT OF DELHI IN THE CASE OF M/S IDEA CELLULAR LIMITED AND HON'BLE HIGH COURT OF KERLA IN THE CASE OF VODAFONE ESSAR CELLULAR LTD. WITH THE PASSAGE OF TI ME THE LAW EVOLVED AND IN THE LATEST JUDGMENT OF HIGH COURT OF KARNATAKA, THE HON 'BLE COURT IN THE CASE OF M/S BHARTI AIRTEL LIMITED, M/S VODAFONE ESSAR SOUTH LTD , M/S TATA TELESERVICES LTD, IT WAS HELD THAT THE APPELLANT IS NOT LIABLE TO DED UCT TDS WHILE SELLING THE RECHARGE COUPONS, SIM CARDS & TOP UPS ETC AND ACCOR DINGLY THE DEMANDS RAISED U/S 201(1) & 201(1A) OF THE ACT WERE DIRECTED TO BE DELETED. THE HON'BLE COURT HAS ALSO CONVINCINGLY DISTINGUISHED THE EARLIER JUD GMENTS WHICH WERE AGAINST THE CELLULAR COMPANIES AND ITS DISTRIBUTORS ON THE ISSU E OF DEDUCTION OF TDS ON DISCOUNTS. FURTHER THE HON'BLE JURISDICTIONAL BENCH OF ITAT, AMRITSAR IN THE CASE OF GURP.REET SINGH SETHI HAS ALSO ALLOWED THE ISSUE IN THE FAVOUR OF APPELLANT IN ITA NO. 608 AND 609 /ASR/2013 DATED 15/04/2014. WHI LE DECIDING THE HON'BLE TRIBUNAL OBSERVED THAT THE CONDITIONS OF SECTION 19 4H ARE NOT SATISFIED ON THE DISTRIBUTION OF SIM CARDS, RECHARGE COUPONS ETC AND THEREFORE THE PROVISIONS OF TDS ARE NOT APPLICABLE TO SUCH DISTRIBUTIONS. IN VI EW OF THE RECENT DETAILED JUDGMENT OF HONBLE HIGH COURT OF KARNATAKA, THE PR ESENT APPEAL IS DECIDED IN FAVOUR OF THE APPELLANT. 5. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 6. THE LEARNED DR, AT THE OUTSET, SUBMITTED THAT TH E LEARNED CIT(A) HAS WRONGLY DELETED THE DEMAND AS THE ASSESSEE WAS REQUIRED TO DEDUCT TDS AS THE ASSESSEE HAD 7. ITA NO.48 6 (ASR)/2015 ASST. YEA R 2009-10 PAID COMMISSION TO THE SUB FRANCHISE AND THEREFORE, AS PER THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF CIT-XVII VS. IDEA CELLULA R LTD. (DHL.) ITA NO. 145 OF 2009 & ITA NO. 784 OF 2009) THE ASSESSEE WAS RESPONSIBLE F OR TAX DEDUCTION AT SOURCE. 7. THE LEARNED AR, ON THE OTHER HAND, SUBMITTED THA T THE LEARNED CIT(A) HAS RIGHTLY HELD THAT THE SUB FRANCHISES WERE NOT AGENT S OF THE ASSESSEE AND THE BUSINESS DONE WITH THEM WAS ON PRINCIPAL TO PRINCIPAL BASIS. AS REGARDS THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT-XVII VS. IDEA CELLULA R LTD.(SUPRA), THE LEARNED AR SUBMITTED THAT AFTER CONSIDERING THE JUDGMENT OF DE LHI HIGH COURT IN THE CASE OF ACIT VS. BHARTI CELLULAR LTD. (2007) 294 ITR (AT) 283, 2 97 (KOLKATA), THE KOLKATA HIGH COURT IN THE CASE BHARTI AIRTEL LTD. (SUPRA) UNDER SIMILA R FACTS AND CIRCUMSTANCES HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. HE SUBMITT ED THAT THE ORDER OF LEARNED CIT(A) IS AN EXHAUSTIVE ONE AND THEREFORE, HE PLACED HIS R ELIANCE ON THE ORDER OF CIT(A). 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IN THE CASE OF IDEA CELLULAR LTD.(SUPRA), THE HONBLE DELHI HIGH COURT HAS DECIDED THE SIMILAR ISSUE IN FAVOUR OF RE VENUE, HOWEVER, AFTER THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF IDEA CELLULAR LT D. (SUPRA), THE HONBLE KOLKATA HIGH COURT IN THE CASE OF BHARTI AIRTEL LTD. HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE AFTER CONSIDERING THE JUDGMENTS OF IDEA CELLULAR LTD. WE FIND THAT THE LEARNED CIT(A) HAS EXHAUSTIVELY DEALT WITH THE ISSUE AND MOREOVER HE H AS FOLLOWED THE LATEST JUDGMENT OF BHARTI AIRTEL LTD.(SUPRA) DECIDED BY KOLKATA HIGH C OURT. THE REVENUE HAS TAKEN GROUND NO.3 BY WHICH IT SAYS THAT THE DEPARTMENT HA D NOT ACCEPTED THE JUDGMENT OF KOLKATA HIGH COURT AND SLP HAS BEEN FILED BUT TILL THE SLP IS DECIDED THE LAW LAID DOWN BY HONBLE KOLKATA HIGH COURT IN THE CASE OF B HARTI AIRTEL LTD. WILL PREVAIL. MOREOVER, IN A CASE WHERE DIFFERENT HIGH COURTS HAS GIVEN CONTRARY FINDINGS, THE 8. ITA NO.48 6 (ASR)/2015 ASST. YEA R 2009-10 ASSESSEE IS ENTITLED TO GET BENEFIT OF JUDGMENT WHI CH IS FAVORABLE TO HIM. THEREFORE, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE DO NO T SEE ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A). THEREFORE, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 9. IN NUTSHELL, THE APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DECEMBER, 2015. SD/- SD/- (A.D.JAIN) (T.S.KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31.12.2015 PK/PS COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.