ACIT, Jaipur V. BHARTI HEXACOM, Jaipur

ITA 830/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5347 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 01-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K GUPTA CIT DHK
• Keywords: Relationship of principal and agent
• Section: 201(1)

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 DQY HKKJR] U;KF;D LNL; ,OA JH VH- VKJ- EHUK] YS[ KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI T.R.MEENA, AM VK;DJ VIHY LA-@ ITA NO.830 TO 833/JP/15 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 TO 2013-14 ACIT (TDS), JAIPUR, CUKE VS. M/S BHARTI HEXACOM, K-21 MALVIYA MARG, C-SCHEME, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACH 1766P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (C.A.) JKTLO DH VKSJ LS@ REVENUE BY :S HRI B.K. GUPTA(CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 21.04.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 28 /04/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM THIS BUNCH OF FOUR APPEALS BY THE REVENUE AGAI NST THE CONSOLIDATED ORDER OF CIT(A)-III, JAIPUR DATED 16.09.2015 PERT AINING TO ASSESSMENT YEARS 2010-11, 2011-12, 2012-13 & 2013-14 RESPEPCTIVELY. THE REVENUE HAS TAKEN FOLLOWING SIMILAR GROUNDS OF APPEAL IN ALL THE FOU R YEARS : (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE WHETHER THE ASSESSEE IS LIABLE TO DEDUCT TDS U/S 194H OF THE INCOME TAX ACT , 1961 AS THE RELATION BETWEEN ASSESSEE AND DISTRIBUTOR IS THAT O F PRINCIPAL TO AGENT. (II) THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE DEM AND U/S 201(1) FOR NON-DEDUCTION OF TDS U/S 194H OF THE INCOME TAX ACT , 1961 ON THE COMMISSION PAYMENT TO VARIOUS DISTRIBUTORS. (III) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TDS U/S 194J IS APPLICABLE ON ROAMING CHARGES PAID FOR FACILITIES PROVIDED BY SERVICE PROVIDER. ITA NO.830 TO 833/JP/15 THE ACIT (TDS), JAIPUR VS. M/S BHARTI HEXACOM. JA IPUR 2 2. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE SIMILAR ISSUE CAME BEFORE THE TRIBUNAL IN ASSESSEES OWN CA SE PERTAINING TO ASSESSMENT YEARS 2004-05 TO 2008-09 IN ITA NOS. 215 1, 252, 253, 254, 255 & 256/JP/2013 AND THE HONBLE TRIBUNAL WAS PLEASED T O DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. THEREFORE, ALL THESE GROU NDS AS RAISED BY THE REVENUE DESERVES TO BE DISMISSED. 3. ON THE CONTRARY LD. CIT DR HAS SUPPORTED THE ORD ER OF ASSESSING OFFICER. HE SUBMITTED THAT THE TRANSACTION IS BETWEEN PRINCI PAL TO AGENT, THEREFORE THE PROVISIONS OF SECTION 194 H IS APPLICABLE. 4. WE HAVE HEARD THE RIVAL CONTENTION PERUSED THE M ATERIAL AVAILABLE ON RECORD. LD. COUNSEL HAS SUBMITTED THAT SIMILAR GROU NDS HAVE BEEN DECIDED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEE S OWN CASE PERTAINING TO THE ASSESSMENT YEARS 2004-05 TO 2008-09 AND THE ASSESSM ENT YEAR 2009-10. WE FIND THAT THE ISSUE RAISED IN THE PRESENT APPEALS H AVE BEEN DECIDED BY THE CO- ORDINATE BENCHES OF THIS TRIBUNAL IN ASSESSEE OWN C ASE PERTAINING TO EARLIER ASSESSMENT YEARS. APROPOS TO ISSUE RAISED VIDE GROUND NO.1 AND 2 WH ICH ARE IDENTICAL IN ALL THESE FOUR APPEALS. THE CO-ORDINATE BENCH IN ITA N O. 656/JP/2010 HAS DECIDED THE ISSUE BY OBSERVING AS UNDER: WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. RECENTLY THIS BE NCH HAS DECIDED SIMILAR ISSUE IN THE CASE OF TATA TELE SERVICES, WHICH IS I DENTICAL TO THE ASSESSEES CASE. THE FACTS OF THE CASE HAS BEEN DEMONSTRATED BY THE AR THAT THE ASSESSEE WAS ISSUING BILL ON NET AMOUNT ON MRP HAS BEEN FIXED ON PREPAID CARD SOLD. THE ASSESSEE HAS NOT TRANSFERRED ANY INCOME TO THE DISTRIBUTOR BUT THE DISTRIBUTOR WAS ALLOWED TO AVAI L THE AIRTIME TO THE EXTENT OF MRP PRICE. IN BOOKS OF ACCOUNT, THE ASSE SSEE HAD CREDITED THESE RECEIPTS ON NET BASIS. THE FINDING ON THE CA SE OF TATA TELE SERVICES IS REPRODUCED AS UNDER: 2.23 WE FIND MERIT IN THE CONTENTION OF LD. COUNS EL THAT THERE IS NO JURISDICTIONAL HIGH COURT JUDGEMENT ON THIS ISSU E. HONBLE KARNATAKA HIGH COURT JUDGEMENT IS ELABORATE, DETAIL ED , CONSIDERS THE PREVIOUS DELHI AND KERALA HIGH COURT JUDGEMENT AGAINST THE ASSESSEE AND IS LATEST COMPREHENSIVE ADJUDICATION O N THE ISSUE. EVEN IF IT IS HELD THAT THERE EXIST DIVERGENCE OF J UDICIAL OPINION A ITA NO.830 TO 833/JP/15 THE ACIT (TDS), JAIPUR VS. M/S BHARTI HEXACOM. JA IPUR 3 VIEW FAVOURABLE TO THE ASSESSEE IS TO BE ADOPTED AS HELD BY HONBLE SUPREME COURT IN VEGETABLE PRODUCTS LTD. A ND VATIKA TOWNSHIP CASE (SUPRA). FROM THIS ANGLE ALSO IN THE SE FACTS AND CIRCUMSTANCES HONBLE KARNATAKA HIGH COURT JUDGEMEN T IS APPLICABLE TO THE ASSESSEES CASE. RESPECTFULLY FO LLOWING THE SAME WE HOLD THAT: A) THE RELATIONSHIP BETWEEN ASSESSEE AND ITS DISTRIBUT ORS QUA THE SALE OF IMPUGNED PRODUCTS IS ON PRINCIPAL TO PRINCIPAL BASIS, THE CONSIDERATION RECEIVED BY ASSESSEE IS SALE PRICE SIMPLICITER. B) THERE IS NO RELATIONSHIP OF PRINCIPAL AND AGENT BET WEEN ASSESSEE AND DISTRIBUTORS AS HELD BY AUTHORITIES BELOW THEIR ORDERS ARE REVERSED. C) LOOKING AT THE TRANSACTION BEING OF SALE/PURCHASE A ND RELATIONSHIP BEING OF PRINCIPAL TO PRINCIPAL THE DISCOUNT DOES N OT AMOUNT TO COMMISSION IN TERMS OF SEC. 194H, THE SAME IS NOT A PPLICABLE TO THESE TRANSACTIONS. THEREFORE, ASSESSEE CANNOT BE HELD IN DEFAULT, IMPUGNED DEMAND RAISED APPLYING SEC, 194H IS QUASHE D. ASSESSEES GROUNDS ARE ALLOWED. BY RESPECTFULLY FOLLOWING OUR OWN DECISION ON SIMIL AR FACT, WE REVERSE THE ORDER OF THE LD. CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE ON THIS GROUND. NO CHANGE INTO FACTS AND CIRCUMSTANCES IS POINTED OUT. THE REVENUE HAS ALSO BROUGHT TO OUR NOTICE ANY CONTRAR Y JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, THEREFORE RESPEC TFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH , WE HEREBY DISMISS GROUNDS NO, 1 & 2 OF THESE APPEALS. 5. APROPOS TO GROUND NO.3 LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE PERTAINING TO EARLIER YEARS. ON THE CONTRARY LD. CIT DR SUPPORTED THE ORDER OF T HE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. THE CONTENTION OF LD. COUNSEL FOR THE A SSESSEE IS THAT THE ISSUE RAISED IN THIS GROUND IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE PERTAINING TO THE ITA NO.830 TO 833/JP/15 THE ACIT (TDS), JAIPUR VS. M/S BHARTI HEXACOM. JA IPUR 4 ASSESSMENT YEAR 2009-10 IN ITA NO. 656/JP/2010. WE FIND THAT THE CO-ORDINATE BENCH IN ITA NO.656/JP/2010 HAS HELD AS UNDER:- 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. AFTER GOING T HROUGH THE ORDER OF ASSESSING OFFICER, LD. CIT(A), SUBMISSIONS OF THE A SSESSEE AS WELL AS GOING THROUGH THE PROCESS OF PROVIDING ROAMING SERVICES, EXAMINATION OF TECHNICAL EXPERTS BY THE ACIT TDS, NEW DELHI IN THE CASE OF BHARTI CELLULAR LTD; THEREAFTER CROSS EXAMINATION MADE BY M/S BHART I CELLULAR LTD.; ALSO OPINION OF HONBLE THE THEN CHIEF JUSTICE OF INDIA MR. S.H. KAPADIA DATED 03.09.2013 AND ALSO VARIOUS JUDGEMENTS GIVEN BY THE ITAT AHMEDABAD BENCH IN THE CASE OF CANARA BANK ON MICR AND PUNE B ENCH DECISION ON DATA LINK SERVICES. WE FIND THAT FOR INSTALLATION/ SETTING UP/ REPAIRING/SERVICING/MAINTENANCE CAPACITY AUGMENTAT ION ARE REQUIRE HUMAN INTERVENTION BUT AFTER COMPLETING THIS PROCES S MERE INTERCONNECTION BETWEEN THE OPERATORS IS AUTOMATIC AND DOES NOT REQUIRE ANY HUMAN INTERVENTION. THE TERM INTER CONNECTING USER CHARGES (IUC) ALSO CONSIDERED THE HONBLE SUPREME COURT DECISION IN THE CASE OF BHARTI CELLULAR LTD. IN THE CASE OF I-GATE COMPUTER SYSTEM LTD. AND HELD THAT THE DATA LINK TRANSFER DOES NOT REQUIRE ANY HUMAN INTER VENTION AND CHARGES RECEIVED OR PAID ON ACCOUNT OF THIS IS NOT FEES FOR TECHNICAL SERVICES AS ENVISAGED IN SECTION 194J READ WITH SECTION 9(1)(V II) READ WITH EXPLANATION 2 OF THE ACT. IN CASE BEFORE US, THE A SSESSEE HAD PAID ROAMING CHARGES I.E. IUC CHARGES TO VARIOUS OPERATO RS AT RS. 10,18,92,350/-. RESPECTFULLY FOLLOWING ABOVE JUDIC IAL PRECEDENTS, WE HOLD THAT THESE CHARGES ARE NOT FEES FOR RENDERING ANY TECHNICAL SERVICES AS ENVISAGED IN SECTION 194J OF THE ACT. THEREFORE , WE REVERSE THE ORDER OF THE LD CIT(A) AND ASSESSEES APPEAL IS ALLOWED ON THIS GROUND ALSO. 7. THE REVENUE HAS NOT BROUGHT TO OUR NOTICE ANY CO NTRARY BINDING PRECEDENT. THEREFORE, RESPECTFULLY FOLLOWING THE C O-ORDINATE BENCH WE DO NOT SEE ANY REASON TO INTERFERE INTO THE FINDING OF LD. CIT(A) SAME IS HEREBY DISMISSED. THIS GROUND RAISED IN THESE APPEALS I S DISMISSED. IN THE RESULT ALL FOUR APPEALS OF REVENUE IN ITA NO . 830 TO 833/JP/2015 ARE DISMISSED. ITA NO.830 TO 833/JP/15 THE ACIT (TDS), JAIPUR VS. M/S BHARTI HEXACOM. JA IPUR 5 ORDER PRONOUNCED IN THE OPEN COURT ON 28/04 /2016. SD/- SD/- (T.R. MEENA) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER BUNCH JAIPUR DATED:- 28 / 04 /2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ACIT(TDS), JAIPUR 2. THE RESPONDENT- M/S BHARTI HEXACOM, JAIPUR 3. THE CIT(A) III, JAIPUR 4. THE CIT-III, JAIPUR 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 830 TO 833 /JP/15) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR