DISH TV INDIA LTD, MUMBAI V. ACIT 16(1), MUMBAI

ITA 6168/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0334 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 30-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S C TIWARI
• Assessee Lawyers: SNEHAL BAMNE ARS
• Keywords: Non-deduction of tax; TDS; Set aside
• Section: 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBE R ITA NOS.6168 & 6169/MUM/2018 ( ASSESSMENT YEARS :2014-15 & 2015-16 ) DISH TV INDIA LIMITED FC-19M FILM CITY SECTOR-16A, NOIDA UTTAR PRADESH-201 301 VS. ACIT,RANGE-16(1) ROOM NO.439, 4 TH FLOOR AAYKAR BHAWAN M.K.ROAD MUMBAI-400 020 PAN/GIR NO. AAA CA5478M APPELLANT ) .. RESPO NDENT ) REVENUE BY SHRI. S.C.TIWARI - CIT, DR ASSESSEE BY SHRI. NIRAJ SHETH & SNEHAL BAMNE, ARS DATE OF HEARING 02/12 /2019 DATE OF PRONOUNCEME NT 02 /12 /201 9 / O R D E R PER G.MANJUNATHA (A.M) : THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECT ED AGAINST SEPARATE, BUT IDENTICAL ORDERS OF THE COMMI SSIONER OF INCOME TAX (APPEALS)-4, MUMBAI, BOTH DATED 30/08/20 18 AND FOR THE ASSESSMENT YEARS (AY) 2014-15 & 2015-16. SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, FOR THE SAKE OF CO NVENIENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED-OFF BY THIS CONSOLIDATED ORDER. 2. THE ASSESSEE HAS, MORE OR LESS RAISED COMMON GRO UNDS OF APPEAL FOR BOTH ASSESSMENT YEARS. THEREFORE, FOR T HE SAKE OF BREVITY, GROUNDS OF APPEAL RASIED FOR AY 2014-15 AR E REPRODUCED AS UNDER:- ITA NOS.6168 & 6169/MUM/2018 DISH TV INDIA LIMITED 2 1. THE COMMISSIONER OF INCOME-TAX (APPEALS) [HERE INAFTER REFERRED TO AS 'THE CIT(A)' ERRED IN UPHOLDING THE ACTION OF THE A SSESSING OFFICER [HEREINAFTER REFERRED TO AS 'THE AO 1 '] IN DISALLOWING EXPENDITURE IN THE NATURE OF DISCOUNT AMOUNTING TO RS. 65,12,63,900/- UNDER SECTION 40(A)(IA) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT'L FOR NON-DEDUCTION OF TAX UNDER SECTION 194H OF THE ACT, THE REASONS GIVEN BY HIM FOR DOING SO ARE WRONG, CONTRARY TO TH E FACTS OF THE CASE AND AGAINST THE PROVISIONS OF LAW; 2. THE AO / CIT(A) FAILED TO APPRECIATE THAT THE EXPENDITURE OF RS. 65,1263,900/-WAS IN THE NATURE OF DISCOUNT GIVEN TO DISTRIBUTORS, WORKING ON A PRINCIPAL TO PRINCIPAL BASIS, FOR EARLY/ADVANC E PAYMENT AND NOT IN THE NATURE OF COMMISSION FOR PROVISION OF ANY SERVICE A ND THEREFORE DID NOT WARRANT TAX DEDUCTION UNDER SECTION 194H OF THE ACT ; 3 ASSUMING WITHOUT ADMITTING THE ARRANGEMENT WIT H THE DISTRIBUTOR IS IN THE NATURE OF COMMISSION, THE AO / CLT(A) FAILED TO APPRECIATE THAT THE DISTRIBUTORS HAD THE LIBERTY TO SELL THE ELECTRONIC RE-CHARGE BALANCE ON PRICE, TERMS & CONDITIONS DECIDED BY THE DISTRIBUTO R AND THEREFORE IT WAS NOT POSSIBLE TO COMPUTE THE AMOUNT IN THE NATURE OF COMMISSION LIABLE TO WITHHOLDING TAX UNDER SECTION 194H OF THE ACT IN WH ICH CASE THE PROVISIONS OF SECTION 194H WOULD FAIL AND THEREFORE COULD NOT BE APPLIED; 4. THE AO / CIT(A) ERRED IN DRAWING AN ANALOGY WI TH EXPENDITURE OF RS. 2008,27,735/-, SUO-MOTO DISALLOWED BY THE ASSESSEE FOR NON-DEDUCTION OF TAX WITHOUT APPRECIATING THAT THE SAID SUM RELATED TO COMMISSION GIVEN TO DISTRIBUTORS FOR DISTRIBUTION OF EQUIPMENTS, LIABLE TO WITHHOLDING TAX AND THEREFORE THE NATURE OF SUCH EXPENDITURE WAS COMPLE TELY DIFFERENT FROM THE EXPENDITURE IN THE NATURE OF DISCOUNT OF RS. 65 ,12,63,9007- WHICH DID NOT WARRANT ANY TAX DEDUCTION AT SOURCE; 5. THE CIT(A) ERRED IN UPHOLDING THE ACTION OF TH E AO ON THE GROUNDS OF JUDICIAL CONSISTENCY WITHOUT APPRECIATING THAT THE EARLIER ORDER OF CIT(A) ON A SIMILAR ISSUE HAD BEEN SET ASIDE BY THE HON'BL E INCOME-TAX APPELLATE TRIBUNAL TO THE FILE OF THE AO FOR FRESH ADJUDICATION; 6. THE LD. CIT(A) FAILED TO CONSIDER THE ORDER OF HON'BLE ITAT, MUMBAI IN THE CASE OF VIDEOCON D2H LIMITED (NOW MERGED WIT H DISH TV INDIA LTD.), WHEREIN ON SIMILAR ISSUES, THE HON'BLE ITAT HELD IN THE FAVOR OF APPELLANT. 7. THE ABOVE GROUNDS I SUB-GROUNDS ARE WITHOUT PR EJUDICE TO EACH OTHER 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF DIRECT TO HOME (DTH) OPERATOR, SATE LLITE TELEPHONE SERVICES ETC. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE LD. AO NOTICED THAT THE ASSESSE HAS PAID COMMISSION CHA RGES OF RS 65,12,63,900/-, BUT FAILED TO DEDUCT TDS AS APPLICA BLE UNDER ITA NOS.6168 & 6169/MUM/2018 DISH TV INDIA LIMITED 3 RESPECTIVE PROVISIONS OF THE ACT, AND HENCE, CALLED UPON THE ASSESEE TO EXPLAIN AS TO WHY COMMISSION PAYMENT SHALL NOT B E DISALLOWED U/S 40(A)(IA) OF THE I.T.ACT, 1961, FOR FAILURE TO TDS U/S 194H OF THE I.T.ACT, 1961. IN RESPONSE, THE ASSESSEE SUBMITTED THAT AS PER THE SYSTEM ADOPTED, THE DISTRIBUTOR PAYS LUMP- SUM AMOU NT IN ADVANCE, WHICH IS CREDITED TO HIS CARD OR EPRS AND ASSESSEE GETS THIS AMOUNT AS SUBSCRIPTION CHARGES. IT WAS FURTHER SUBM ITTED THAT TO INCENTIVIZE THE PAYMENT IN ADVANCE, THE ASSESSE GIV ES CASH DISCOUNT TO THE DISTRIBUTORS. THEREFORE, CASH DISCOUNTS SHOW N UNDER THE HEAD COMMISSION FOR SALES AND RELATED SERVICES TO THE DI STRIBUTOR DO NOT COME UNDER THE PURVIEW OF COMMISSION AND BROKERAGE AS DEFINED U/S 194H OF THE I.T.ACT, 1961, CONSEQUENTLY, NO REQ UIREMENT TO DEDUCT TAX AT SOURCES. THE LD. AO DID NOT CONVINCED WITH THE ARGUMENTS OF THE ASSESSEE AND PROCEED TO DISALLOW T HE PAYMENTS U/S 40(A)(IA) OF THE ACT, FOR FAILURE TO DEDUCT TAX AT SOURCES ON SUCH PAYMENT IN TERMS OF SECTION 194H OF THE I.T.ACT, 19 61. THE ASSESEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY, BUT COULD NOT SUCCEED. THE LD. CIT(A), FOR THE DETAILED REASONS RECORDED IN HIS APPELLATE ORDER, DATED 30/08/2018 DISMISSED APPEAL FILED BY THE ASSESSEE, WHEREIN HE HAS AFFIRMED THE FINDINGS OF THE LD. AO BY FOLLOWING HIS PREDECESSOR APPELLATE ORDER FOR AY 20 12-13. AGGRIEVED BY THE LD.CIT(A) ORDER, THE ASSESSEE IS IN APPEAL B EFORE US. 4. THE LD. AR FOR THE ASSESSEE, AT THE TIME OF HEAR ING SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE BY THE DECISION OF ITAT, MUMBAI D BENCH FOR AY 2011-12 A ND 2012-13, WHERE UNDER AN IDENTICAL SET OFF FACTS, THE ISSUE H AS BEEN SET ASIDE TO THE FILE OF THE LD. AO FOR RECONSIDERATION OF TH E ISSUE, IN LIGHT OF VARIOUS AVERTMENTS MADE BY THE ASSESSEE. HE, FURTH ER SUBMITTED ITA NOS.6168 & 6169/MUM/2018 DISH TV INDIA LIMITED 4 THAT FOR THE YEAR UNDER CONSIDERATION, THE LD.CIT(A ) HAS FOLLOWED THE ORDER FOR THE AY 2012-13 AND HENCE, THE APPEALS MAY BE SET ASIDE TO THE FILE OF THE LD. AO AND TO DECIDE THE ISSUE BY FOLLOWING FINDINGS OF THE TRIBUNAL FOR AY 2012-13. 5. THE LD. DR, ON THE OTHER HAND STRONGLY SUPPORTIN G ORDER OF THE LD.CIT(A) SUBMITTED THAT IN EARLIER YEARS, THE ISSU E WAS SET ASIDE TO THE FILE OF THE AO BECAUSE, THERE ARE DIVERGENCE V IEWS EXPRESSED BY THE DIFFERENT HIGH COURT ON THE ISSUE OF APPLICA BILITY OF TDS U/S 194H, IN RESPECT OF COMMISSION PAID TO DISTRIBUTOR FOR DISTRIBUTING VARIOUS PRODUCTS OF THE ASSESSEE. HE, FURTHER SUBMI TTED THAT ALTHOUGH, THE ISSUE IS NOW SETTLED BY THE DECISION OF HONBLE SUPREME COURT, BUT CONSISTENT WITH EARLIER YEAR, TH IS YEAR ALSO, THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE AO TO DEC IDE THE ISSUE IN ACCORDANCE WITH THE FINDINGS OF THE TRIBUNAL FOR EA RLIER YEARS. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE CO-ORDINATE BENCH OF ITAT, MUMBAI HAD CONSIDERED AN IDENTICAL ISSUE FOR AY 2010-11 IN ITA NO. 3739/MUM/2016 VIDE ORDER DATED 08/06/2018 AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND EVIDENCES PLACE D ON RECORD, SET ASIDE THE ISSUE TO THE FILE OF THE LD. AO WITH THE FOLLOWING OBSERVATIONS:- 12. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D MATERIALS ON RECORD. AS COULD BE SEEN, IDENTICAL ISSUE AROSE IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 201112 AND 201213. THE TRIBU NAL AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AN D THE EVIDENCES PRODUCED PASSED AN ORDER IN ITA NO.3061 3062/MUM./2 017, DATED 10.10.2017 RESTORING THE ISSUE TO THE ASSESSING OFF ICER WITH THE FOLLOWING OBSERVATIONS: ITA NOS.6168 & 6169/MUM/2018 DISH TV INDIA LIMITED 5 8. WE HAVE GONE THROUGH THE COPY OF THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE DISTRIBUTOR AVAILABLE ON P AGES 138 TO 148 AS WELL AS THE SAMPLE SUBSCRIPTION APPLICATION FORM AVAILABLE ON PAGES 149 TO 150 OF THE PAPER BOOK. ON THE BASIS OF THE DOCUMENT AND THE ISSUE INVOLVED WE ARE OF THE VIEW THAT EXAM INATION OF THESE DOCUMENTS AS A WHOLE ALONG WITH THE TERMS AND CONDITIONS OF THE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND THE DISTRIBUTOR IN RESPECT OF TALK TIME CARD IS ESSENTI AL TO DETERMINE THE TRUE NATURE OF THE TRANSACTION WHETHER THE TRANSACT ION ENTERED INTO BETWEEN THE ASSESSEE AND THE DISTRIBUTOR RELATES TO DISCOUNT OR COMMISSION. THE TDS PROVISIONS ARE APPLICABLE UNDER SECTION 194H IN CASE IT IS HELD THAT THE NATURE OF THE TRAN SACTION ENTERED INTO BETWEEN THE ASSESSEE AND THE DISTRIBUTOR IS TH AT OF COMMISSION BUT IN CASE IF IT IS DECIDED THAT THE NA TURE OF TRANSACTION IS NOT COMMISSION BUT DISCOUNT GIVEN ON SALES IT CANNOT BE REGARDED TO BE COMMISSION WHICH IS HIT BY THE PR OVISIONS OF SECTION 194H OF THE INCOME TAX ACT. WE, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES SET AS IDE THIS ISSUE AND RESTORE IT TO THE FILE OF THE AO WITH THE DIRECTION THAT THE AO SHALL RE-DECIDE THIS ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GOING THOUGH THE AGREEMENT WHICH THE ASSESSEE HAS ENTERED INTO WITH THE DISTRIBUTOR AS WELL AS THE SAMPLE SUBSCRIPTION APPLICATION FORM, WHETHER THE AMOUNT REPRESENTS THE EXPENDITURE INCUR RED BY THE ASSESSEE TOWARDS COMMISSION OR WHETHER THE 6 ITA 30 61, 3062, 3691&3602/MUM/2017 M/S. DISH TV INDIA LTD. 13. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING T HE AFORESAID DECISION OF THE COORDINATE BENCH, WE RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION KEEPING IN VIEW THE DIRECTIONS OF THE TRIBUNAL IN ASSESSMENT YEAR 201112 AND 201213. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THIS VIEW OF THE MATTER AND CONSISTENT WITH V IEW TAKEN BY THE CO-ORDINATE BENCH FOR EARLIER YEARS, WE RESTORED TH E ISSUE TO THE FILE OF THE LD.AO FOR FRESH ADJUDICATION KEEPING IN VIEW , THE DIRECTIONS OF THE TRIBUNAL FOR AY 2011-12 AND 2012-13. 8. IN THE RESULT, APPEALS FILED BY THE ASSESSEE FOR BOTH AY 2014- 15 AND 2015-16 ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY: 02/ 12/2019 ITA NOS.6168 & 6169/MUM/2018 DISH TV INDIA LIMITED 6 SD/- (SAKTIJIT DEY) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 02/12/2019 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//