ACIT, Sonepat V. Sh. Vipin Dua Prop., Sonepat

ITA 5125/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65723 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 09-10-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 17-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS SHUMANA SEN
• Assessee Lawyers: SUNIL ARORA
• Section: 11

Judgement Text

ITA NO. 5125/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H, NEW DELHI BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 5125/DEL/2011 A.Y. : 2008-09 ASSTT. COMMISSIONER OF INCOME TAX, SONEPAT CIRCLE, SONEPAT VS. SH. VIPIN DUA, PROP. M/S XCLUSIF SHOPPEE, M.C. MARKET, SONEPAT (PAN/GIR NO. : ACTPD6737E) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. SUNIL ARORA, CA DEPARTMENT BY : MRS. SHUMANA SEN, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), ROHTAK DA TED 15.9.2011 PERTAINING TO ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED READ AS UNDER:- I) THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION OF ` 9,75,119/- WHICH WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE IN STOCK SUBMITTED TO BANK AND INCOME TAX DEPARTMENT. II) THE LD. COMMISSIONER OF INCOME TAX (A) HAS ALSO ERRED IN LAW AND FACTS IN DELETING THE ADDITION OF ITA NO. 5125/DEL/2011 2 ` 2,81,453/- WHICH WAS MADE TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF FAILURE OF NON DEDUCTION OF TAX U/S. 194H IN THE LIGHT OF PROVISIONS OF SECTION 40(A)(IA) OF THE I.T. ACT. 3. APROPOS ISSUE OF ADDITION ON ACCOUNT OF STOCK IN THIS CASE THE ASSESSEE IS DOING THE BUSINESS OF TRADING IN MOBILE PHONES AND ACCESSORIES, ELECTRONICS GOODS AN D RECHARGE COUPONS OF CELLULAR PHONES ETC. ASSESSING OFFICER OBSERVED THAT ON PERUSAL OF TRADING ACCOUNT OF THE ASSESSEE, IT IS N OTICED THAT ASSESSEE HAS DECLARED CLOSING STOCK OF ` 17,67,341/- WHERE AS AS PER STOCK STATEMENT SUBMITTED WITH ANDHRA BANK STOCK WAS DECLA RED AT ` 33,15,510/-. THE ASSESSING OFFICER ASKED THE A SSESSEE TO EXPLAIN WHY THE DIFFERENCE OF ` 15,48,169/- MAY NOT BE MADE TO THE TAXABLE INCOME IN VIEW OF THE HONBLE PUNJAB AND HARYANA H IGH COURT IN THE CASE OF M/S B.T. STEEL LTD. VS. C.I.T. IN I.T.A. NO . 186 OF 2004. THE ASSESSEE RESPONDED AS UNDER:- THE ASSESSEE WHO IS PROPRIETOR OF XCLUSIF SHOPPEE AND DUA DISTRIBUTION AND THE NATURE OF BUSINESS IS SAME IN BOTH THE FIRMS. THE ASSESSEE IS AVAILING CASH CREDITS FACILITY FROM THE BANK AGAINST THE HYPOTHECATION OF STOCK NOT AGAINST THE PLEDGING OF STOCK, THUS IT IS THE REQUIREMENT TO SUBMIT STOCK STATEMENT FOR WORKING OUT DRAWING POWER AGAINST THE LIMIT SANCTIONED BY THE BANK. THE STOCK STATEMENT I S SUBMITTED ON THE ESTIMATED BASIS TO AVAIL THE MAXIMUM CREDIT FACILITY. THE STATEMENT SUBMITTED BY THE ASSESSEE IS NEVER BEEN PHYSICALLY VERIFIED B Y ITA NO. 5125/DEL/2011 3 THE BANK. IT IS PREVAILING PRACTICE IF ACTUAL STOC K IS NOT SUFFICIENT, BUT TO AVAIL THE CREDIT, THE STATEMENT IS SUBMITTED WITH THE INFLATED STOCK. NORMALLY BANK S ARE ALSO NOT VERY KEEN TO VERIFY PHYSICALLY THE STO CK AS THEIR LOAN IS SECURED BY WAY OF COLLATERAL SECURITY WITH MORTGAGING THE IMMOVABLE PROPERTY NOT LESS THAN TWICE THE AMOUNT OF LOAN. THE SUBMISSION OF STOCK STATEMENT IS CONSIDERED TO BE MERE FORMALITY. THE BANK HAS NEVER QUESTIONED THE DIFFERENCE OF VALUE O F STOCK SUBMITTED IN THE STATEMENT AND STOCK SHOWN IN THE BALANCE SHEET SUBMITTED BY THE ASSESSEE. THE JUDGEMENT IN THE CASE OF B.T. STEEL RELIED BY YOUR GOOD-SELF IS DISTINGUISHABLE ON FACT. FIRST OF ALL THE HONBLE COURT HELD THAT DIFFERENCE IN THE STATEMENT OF VALUE OF STOCK FURNISHED TO THE BANK AND ENTRIES IN THE BOOKS OF ACCOUNT, JUSTIFIES ADDITION, IS A QUESTION OF FACT IN EACH INDIVIDUAL CASE. SECOND THE ADDITION BY ASSESSING OFFICER WAS MADE ON THE BASIS THE STOCK WAS PHYSICALLY VERIFIED BY THE REGIONAL MANAGER BY VISITING THE ASSESSEE PREMISES. AS STATED ABOVE THE ASSESSEE IS PROPRIETOR OF BOTH FIRMS, XCLUSIF SHOPPEE AND DUA DISTRIBUTION AND THE NATURE OF BUSINESS OF THE FIRMS IS SAME. THE STOCK OF DUA DISTRIBUTION BELONGS TO THE ASSESSEE. THE BALANCE SHEET SUBMITTED THE RETURN OF INCOME IS CONSOLIDATED BALANCE SHEET OF BOTH THE FIRMS AND THE AMOUNT CLOSING STOCK IS ` 23,40,391/- AND THE SAME IS HYPOTHECATED BY BANK, WHEREAS IN THE NOTICE THE ITA NO. 5125/DEL/2011 4 AMOUNT IS MENTIONED ONLY ` 1767341/- WHICH IS FACTUALLY IS NOT CORRECT. ALTHOUGH, THE STOCK STATEMENT SUBMITTED TO THE BANK AS STATED ABOVE IS NEVER BEEN PREPARED PROPERLY BU T ONLY ON ESTIMATED BASIS TO AVAIL THE MAXIMUM CREDIT AND THE VALUATION IS MADE ON DEALER PRICE NOT ON TH E BASIS OF COST OR MARKET VALUE WHICH EVER IS LESS. WHEREAS, THE BASIS OF VALUATION OF STOCK AS PER ACCOUNTING PRINCIPLES FOR PREPARATION OF FINANCIA L STATEMENT, IS COST OR MARKET VALUE WHICHEVER IS LES S AS MENTIONED IN THE AUDIT REPORT. APART FROM THE QUANTITY, THE VALUATION OF STOCK SUBMITTED TO THE BA NK ON DEALER PRICE WAS INFLATED TO ` 345408, THE DETAI L OF THE SAME IS ENCLOSED ALONGWITH THE DETAIL OF SALES MADE OF HANDSET IN THE NEXT YEAR OUT OF THE REMAINING STOCK. FURTHER THERE IS PROFIT OF ` 119027/- @ 3.59% GROSS PROFIT RATIO. IT IS HEREBY AGAIN AFFIRMED T HAT WE DO NOT HAVE ANY QUANTITATIVE DETAILS OF RECHARGEABL E COUPONS AND SAME WAS SHOWN IN STOCK STATEMENT SUBMITTED WITH BANK JUST TO FILL THIS GAP FOR AVAIL MENT OF CASH CREDIT LIMIT. 3.1 CONSIDERING THE ABOVE, ASSESSING OFFICER OBSER VED THAT SUBMISSION OF THE ASSESSEE REGARDING THE VALUE OF H IS TOTAL STOCK BEING ` 23,40,391/- AND NOT ` 17,67,341/- IS ACCEPTED. ASSESSING OFFICER DID NOT AGREE WITH THE OTHER SUBMISSIONS OF THE ASSE SSEE AND HE PROCEEDED TO ADD THE DIFFERENCE IN STOCK SUBMITTED T O THE BANK AND ITA NO. 5125/DEL/2011 5 THAT SUBMITTED IN ACCOUNTS BEFORE THE INCOME TAX DEP ARTMENT AT ` 9,75,119/- AS INCOME. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (A) OBSERVED THAT THE STOCK STATEMENT FURNISHED AS PER THE BOOKS AND AS SUBMITTED TO THE BANK HAVE BEEN VERIFIED. THE QU ANTITATIVE STOCK OF THE MOBILE AND HAND SETS OF 1903 IS SAME IN BOTH THE STATEMENTS. IN RESPECT OF THE RECHARGE COUPONS, A ROUND SUM FIGURE OF ` 10,37,052/- WAS TAKEN IN THE STOCK SUBMITTED TO THE BANK AS NO P HYSICAL STOCK WAS TAKEN /PRACTICAL TO BE TAKEN. FURTHER, THE STOCK WAS VALUED AT DEALER PRICE FOR THE BANK WHEREAS IT WAS VALUED AT COST OR MARKET PRICE, WHICHEVER IS LESS, FOR THE BALANCE SHEET. THE LD. COMMISSIONER OF INCOME TAX (A) FURTHER OBSERVED THAT TAKING INTO CO NSIDERATION THE SALE PRICE, GP AND THE DEAD STOCK OF ` 3,45,408/-, THE C LOSING STOCK OF HAND SETS WAS TAKEN AS ` 18,14,023/- AS PER THE BOOKS. CONSIDERING THE ABOVE, LD. COMMISSIONER OF INCOME TAX (A) OBSERVED TH AT THE QUANTITATIVE FIGURES TALLY AND PHYSICAL STOCK WAS NEITHER TAKEN BY THE BANK NOR WAS IT PLEDGED TO THE BANK. THEREFORE, HE OPINED THAT THE DIFFERENCE IN STOCK IS BASICALLY ON ACCOUNT OF VALU ATION. IN VIEW OF THE ABOVE, LD. COMMISSIONER OF INCOME TAX (A) OBSERVED T HAT THE CASE LAW RELIED UPON BY THE ASSESSING OFFICER OF M/S BT ST EEL LTD. VS. C.I.T. (SUPRA) WAS DISTINGUISHABLE ON THE FACTS. HENCE , HE ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE AND DELETED THE ADD ITION. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. 6.1 LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT L D. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN DELETING THE ADDITION. ITA NO. 5125/DEL/2011 6 SHE CLAIMED THAT ADDITION WAS CORRECTLY MADE BY THE A SSESSING OFFICER. SHE ALSO RELIED UPON THE CASE LAW REFERRED BY THE A SSESSING OFFICER. SHE FURTHER PLACED RELIANCE UPON THE DECISION OF TH E HONBLE KARNATAKA HIGH COURT IN THE CASE OF RECON MACHINE TOOLS (P) LTD . VS. C.I.T. IN I.T.A. NO. 99 OF 2000 VIDE ORDER DATED 30.5.2006. IN THIS CASE ASSESSING OFFICER HAD MADE THE ADDITION IN LIGHT OF VARIATION IN CLOSING STOCK DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME AN D STOCK STATEMENT GIVEN TO BANK AS ON LAST DATE OF ACCOUNTING YEAR. THE LD. COMMISSIONER OF INCOME TAX (A) AND TRIBUNAL HAD UPHE LD THE ORDER OF THE ASSESSING OFFICER. IT WAS HELD BY THE HONBLE HIGH COURT THAT IN THE ABSENCE OF ACCEPTABLE EVIDENCE TO DISBELIEVE BANK STATEMENT, FINDINGS OF THE AUTHORITIES WERE TO BE SUSTAINED. 6.2 LD. COUNSEL OF THE ASSESSEE ON THE OTHER HAND S UBMITTED THAT THE STOCK AS PER THE BOOKS WAS CORRECT ONE AND SHOULD B E ACCEPTED. HE SUBMITTED THAT THE ASSESSEE IS AVAILING CASH CREDIT FACILITY FROM ANDHRA BANK FOR THE SANCTIONED LIMIT OF ` 25 LACS. THE C ASH CREDIT LIMIT HAS BEEN OBTAINED FROM BANK AGAINST HYPOTHECATION OF STO CK AND NOT PLEDGING OF STOCK. IT WAS SUBMITTED THAT THE STOCK S TATEMENT WAS SUBMITTED TO THE BANK TO AVAIL MAXIMUM CREDIT FACIL ITY. REQUIRED MARGIN OF 30% ADDED TO THE VALUE OF CLOSING IN TRADE AS PER BOOKS I.E. ` 23,40,391/-. HE FURTHER SUBMITTED THAT SUBMISSION OF THE STOCK STATEMENT IS A MERE FORMALITY AND THE DIFFERENCE IN VALUATION HAS NEITHER BEEN QUESTIONED BY BANK NOR ANY PHYSICAL VE RIFICATION OF STOCK MADE BY BANK. HE FURTHER SUBMITTED THAT THERE IS NO DIFFERENCE IN QUANTITATIVE DETAIL OF STOCK OF MOBILE HANDSETS WHIC H IS 1903 IN BOTH STATEMENTS. LD. COUNSEL OF THE ASSESSEE FURTHER PLACED RELIANCE UPON THE DECISION OF THE FOLLOWING CASE LAWS:- ITA NO. 5125/DEL/2011 7 - C.I.T. VS. PREM SINGH & CO. (1987) 163 ITR 434 (D EL.) - C.I.T. VS. SANTOSH BOX FACTORY (P) LTD. [2011] 12 TAXMANN.COM 411 (P&H). - C.I.T. VS. SIDHU RICE & GEN. MILLS. {2005] 142 TAX MAN 355 (P&H). - C.I.T. VS. N. SWAMY, (2002) 125 TAXMAN 233 (MAD. ). - C.I.T. VS. LAXMI ENGINEERING INDUSTRIES (2009) 308 ITR 279 (RAJ.), C.I.T. VS. VEERDIP ROLLERS (P) LTD. {2010} 3 23 ITR 341 (GUJ.) AND C.I.T. VS. SHEENA EXPORTS, I.T.A. NO. 382 OF 2011 (P&H). - C.I.T. VS. KHAN & SIROHI STEEL ROLLING MILLS, (20 06) 152 TAXMAN 224 (ALL.) & C.I.T. VS. ARROW EXIM PVT. LTD. ( 2010) 230 CTR 293 (GUJ.). 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT IN THIS CASE THE QUANTITATI VE DETAIL OF STOCK WAS THE SAME AS IN THE STATEMENT SUBMITTED TO THE BANK AS WELL AS THAT MAINTAINED FOR FINALIZATION OF ACCOUNTS FOR INCOME T AX PURPOSES. THE DIFFERENCE OCCURRED ONLY BECAUSE OF DIFFERENCE IN V ALUATION METHOD AND THE SAME WAS VALUED AT DEALER PRICE FOR THE BANK, W HEREAS IT WAS VALUED AT COST OR MARKET PRICE, WHICHEVER IS LESS, F OR THE BALANCE SHEET. MOREOVER, WE NOTE THAT THERE IS NO EVIDENCE THAT BA NK HAD VERIFIED THE STOCK PHYSICALLY. THIS IS A DISTINGUISHING FEATURE FROM THE CASE LAWS RELIED UPON BY THE REVENUE. WE FURTHER NOTE THAT ASSESSING OFFICER HAS NOT MADE ANY INDEPENDENT VERIFICATION OF THE BOO KS OF ACCOUNTS AND STOCK. HE HAS NOT POINTED ANY ERROR IN THE BOO KS OF ACCOUNTS AND STOCK. WE FURTHER NOTE THAT MAJORITY OF CASE LAW S WERE FOR THE ITA NO. 5125/DEL/2011 8 PROPOSITION THAT STOCK GIVEN TO THE BANK CANNOT BE GIVEN PREFERENCE OVER THE STOCK ACTUALLY MAINTAINED BY THE ASSESSEE . IT IS A SETTLED LAW THAT IF TWO VIEWS ARE POSSIBLE, THE VIEW IN FAVOUR OF THE ASSESSEE HAS TO BE ADOPTED. UNDER THE CIRCUMSTANCES, THE ADDITION BASED ON STOCK STATEMENT SUBMITTED TO BANK IS NOT SUSTAINABLE. UND ER THE CIRCUMSTANCES, IN VIEW OF THE DISCUSSIONS AND PRECE DENTS CITED ABOVE, WE ARE OF THE OPINION THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) AND ACCORDINGLY, WE U PHOLD THE SAME. 8. APROPOS ISSUE OF ADDITION ON ACCOUNT OF NON-DED UCTION OF TAX U/S. 194H ASSESSING OFFICER NOTED THAT ASSESSEE HAS DEBITED A SUM OF ` 2,81,453/- ON ACCOUNT OF DISCOUNT PAID TO THE CUST OMERS. ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY AD DITION OF ` 2,81,453/- MAY NOT BE MADE TO THE TAXABLE INCOME, IN VIEW OF THE DECISION OF THE HONBLE HIGH COURT OF KERALA IN THE CASE OF VODAFONE ESSAR CELLULAR VS. ACIT IN I.T.A. NO. 1742 DATED 1 7.8.2010. ASSESSEE SUBMITTED AS UNDER:- THE DISCOUNT OF ` 281,453/- DEBITED IN THE P&L PERTAINS ONLY TO THE SALE OF HAND SETS NOT ON THE RECHARGE COUPONS, THUS THE JUDGEMENT OF VODAFONE A S REFERRED IN THE NOTICE IS NOT APPLICABLE THOUGH SPE CIAL LEAVE PETITION HAS BEEN ADMITTED BY THE APEX COURT. THE HONBLE KERALA HIGH COURT HELD THAT DISCOUNT ON PREPAID SIM CARDS AND RECHARGE COUPONS GIVEN TO DISTRIBUTION AND ASSOCIATES IS KIND OF COMMISSION AND PROVISIONS OF SECTION 194H ARE APPLICABLE. WH EREAS ITA NO. 5125/DEL/2011 9 THE DISCOUNT GIVEN BY THE ASSESSEE IS ON THE SALE O F HAND SETS AS PER TRADE PRACTICE. 8.1 CONSIDERING THE ABOVE, THE ASSESSING OFFICER CONCLUDED AS UNDER:- IN THIS REGARD, IT MUST BE POINTED OUT THAT THE PRINCIPLE AND THE SPIRIT BEHIND THE JUDGEMENT OF HONBLE KERALA HIGH COURT IN THE CASE OF M/S VODAFON E ESSAR CELLULAR LTD. VS. ACIT 194 TAXMAN 518(KER.) AND THE DECISION OF THE HONBLE DELHI HIGH COURT IN TH E CASE OF C.I.T. VS. IDEA CELLULAR LTD. IS THAT CERTA IN INDIVIDUALS / ASSESSES WERE TRYING TO CIRCUMVENT T HE PROVISIONS OF THE LAW BY MAKING CERTAIN PAYMENTS AN D COINING IT UNDER A DIFFERENT NOMENCLATURE WHEN FOR ALL PURPOSE THE NATURE OF THE PAYMENTS CARRIED THE IDENTICAL CHARACTERISTICS. APPLYING THE AFOREMENTIO NED CASE IT IS VERY CLEAR THAT THE ASSESSEE WAS MAKING THESE PAYMENTS TO DEALERS, AS PER HIS OWN SUBMISSION , AND NOT THE ULTIMATE END USER CUSTOMER AS A PAYMENT FOR SERVICES RENDERED. IT IS ALSO A CLEAR THAT THE SE SUB DEALERS FUNCTIONED FOR ALL PURPOSES AS THE ASSESSE ES AGENT AND HAD SUCH A RELATIONSHIP WITH THE ASSESSEE . THE CONTENTION OF THE ASSESSEE THAT THE JUDGMENT AFOREMENTIONED RELATED ONLY TO RECHARGE COUPONS AND NOT SALE OF HANDSETS IS THEREFORE NOT ACCEPTABLE. AS THE ASSESSEE HAS NOT DEDUCTED TAX UNDER SECTION 194 H OF THE I.T. ACT 1961, IN LIGHT OF THE PROVISIONS OF SECTION 40(A)(IA) THE EXPENSES INCURRED ON DISCOUNT ITA NO. 5125/DEL/2011 10 AMOUNTING TO ` 2,81,453/- IS HEREBY DISALLOWED AND ADDED BACK TO THE RETURNED INCOME OF THE ASSESSEE. 9. BEFORE THE LD. COMMISSIONER OF INCOME TAX (A) ASS ESSEE SUBMITTED THAT THE DISCOUNT WAS GIVEN BY THE ASSESS EE TO THE DEALERS ON THE SALE OF MOBILE HANDSETS. IT WAS SUBMITTED THA T THE SERVICE WAS NOT PROVIDED BY THE ASSESSEE ON BEHALF OF THE SERVI CE PROVIDER BUT IT IS SALE OF HANDSETS. THEREFORE, THE PROVISIONS OF SEC TION 194H AND SECTION 40A(IA) ARE NOT APPLICABLE AND THE CASE LAW RELIED UPON BY THE ASSESSING OFFICER WAS DISTINGUISHABLE ON FACTS. CONSIDERING THE SAME, LD. COMMISSIONER OF INCOME TAX (A) OBSERVED THAT THE D ISCOUNT GIVEN BY THE ASSESSEE TO THE DEALER IS ON MOBILE HANDSETS AND NOT ON THE SIM CARDS/RECHARGE COUPONS. THEREFORE, HE HELD THAT THE CASE LAW RELIED UPON BY THE ASSESSING OFFICER WAS DISTINGUISHABLE ON FACTS. LD. COMMISSIONER OF INCOME TAX (A) CONCLUDED THAT THE DI SCOUNT GIVEN TO THE DEALERS DOES NOT AMOUNT TO COMMISSION AND THEREFOR E THE PROVISIONS OF SECTION 194H AND SECTION 40A(IA) ARE NOT ATTRACTED. 10. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEA L BEFORE US. 11. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT THE HONBLE HIGH COURT OF KERALA IN THE CASE OF M/S VODAFONE ESSAR C ELLULAR LTD. VS. ACIT 194 TAXMAN 518(KER.) HAS HELD AS UNDER:- ITA NO. 5125/DEL/2011 11 SECTION 194H OF THE INCOME TAX ACT, 1961 DEDUCTION OF TAX AT SOURCE COMMISSION OR BROKERAGE ETC. ASSESSMENT YEARS 2004-05 TO 2007-08 WHETHER DISCOUNT GIVEN BY ASSESSEE, A MOBILE CELLULAR OPERATOR, TO DISTRIBUTORS IN THE COURSE OF SELLING OF SIM CARDS AND RECHARGE COUPONS UNDER PREPAID SCHEME OF GETTING A CONNECTION, IS, IN SUBSTANCE, A PAYMENT FOR SERVICES TO BE RENDERED BY DISTRIBUTORS TO ASSESSEE AND, SO MUCH SO, IT WOULD FALL WITHIN DEFINITION OF COMMISSION OR BROKERAGE UNDER SECTION 194H HELD, YES. 11.1 WE FIND THAT IN VIEW OF THE ABOVE EXPOSITION BY THE HONBLE HIGH COURT OF KERALA, THE SUBMISSIONS OF THE ASSESSE E CANNOT BE ACCEPTED. AS EXPOUNDED BY THE HONBLE HIGH COURT, THE PAYMENTS MADE BY THE ASSESSEE WAS FOR SERVICES RENDERED TO TH E DISTRIBUTORS OF THE ASSESSEE. HENCE, THE SAME WOULD FALL UNDER THE DEFINITION COMMISSION OR BROKERAGE U/S. 194H. HENCE, PRINCI PALLY, WE ARE IN AGREEMENT WITH THE VIEW TAKEN BY THE ASSESSING OFFIC ER ON THIS ISSUE. HOWEVER, WE NOTE THAT IT IS THE SUBMISSIONS OF THE L D. COUNSEL OF THE ASSESSEE THAT THE PAYMENTS IN THIS CASE ON MANY OCCA SIONS DID NOT ITA NO. 5125/DEL/2011 12 CROSS THE THRESHOLD LIMIT FOR DEDUCTION OF TAX U/S. 194H. IN THIS REGARD, LD. COUNSEL OF THE ASSESSEE REFERRED TO THE PAGE N OS. 29 TO 58 OF THE PAPER BOOK WHEREIN LEDGER OF DISCOUNT A/C IN THE BO OKS OF ASSESSEE WAS SUBMITTED. UPON CAREFUL CONSIDERATION OF THE D OCUMENTS IN THIS REGARD, WE FIND THAT INTEREST OF JUSTICE WILL BE SER VED, IF THE ISSUE IS REMITTED TO THE FILE OF THE ASSESSING OFFICER TO AS CERTAIN THE EXACT AMOUNT OF TAX WHICH THE ASSESSEE WAS LIABLE TO DED UCT. WE HOLD AND DIRECT ACCORDINGLY. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19/10/2012. SD/- SD/- [ [[ [U.B.S. BEDI U.B.S. BEDI U.B.S. BEDI U.B.S. BEDI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 19/10/2012 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES