Seema Chatterjee, Hooghly V. JCIT, RG-1, HOOGHLY, Hooghly

ITA 92/KOL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2931 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 22-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SARBARI MUKHOPADHYAY
• Assessee Lawyers: PIYUSH BAID
• Keywords: Retrospective amendment; TDS; Set aside
• Section: 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER) I.T.A. NO. 92/KOL/2016 ASSESSMENT YEAR: 2011-12 SEEMA CHATTERJEE............................... APPELLANT [PAN : ACEPC 7775 L] VS. JOINT COMMISSIONER OF INCOME TAX, RANGE-1, HOOGHLY..................................................... RESPONDENT APPEARANCES BY: SHRI SUBASH AGARWAL, ADV. & PIYUSH BAID, FCA, APPEARED ON BEHALF OF THE ASSESSEE. SMT. SARBARI MUKHOPADHYAY, ADDL. CIT (DR), APPEARED ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JULY 30 TH , 2019 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 4 TH , 2019 ORDER PER J. SUDHAKAR REDDY, AM :- THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-6, KOLKATA [LD.CIT(A) FOR SHORT] DATED 17.11.2015 FOR ASSESSMENT YEAR (AY FOR SHORT)-2011-12. 2. THE ASSESSEE IS AN INDIVIDUAL AND SHE FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 13.09.2011 DECLARING TOTAL INCOME OF RS. 3,49,939/-. FACTS OF THE CASE ARE BROUGHT OUT IN THE ASSESSMENT ORDER AT PAGE-1 AS FOLLOWS: THE ASSESSEE IS A DISTRIBUTOR OF SYSTEMA SHYAM TELESERVICES LTD (HENCEFORTH CALLED SSTL). SSTL IS A CELLULAR MOBILE SERVICE PROVIDER UNDER THE BRAND NAME MTS. AS PER AGREEMENT WITH SSTLTHE ASSESSEE WAS ENTRUSTED WITH THE MARKETING ACTIVITY FROM UTTARPARA TO RISHRA ON SALES AND SUPPORT OF ITS SERVICES. THE DISTRIBUTOR AS PER AGREEMENT CAN APPOINT RETAILER WITH THE PRIOR WRITTEN CONSENT OF SSTL TO SERVICE AS THE RETAILER. AS PER AGREEMENT OF APPOINTMENT OF RETAILERS SL.NO. 34 THE CONSIDERATION FOR OBLIGATIONS UNDERTAKEN BY RETAILER SHALL BE PAYABLE BY THE DISTRIBUTOR IN ACCORDANCE WITH THE TERMS AS MAY BE SPECIFIED BY SSTL AND IN NO CIRCUMSTANCES SHALL SSTL BE LIABLE TO MAKE ANY PAYMENT TO THE RETAILERS OR ANY RETAILER SHALL HAVE ANY CLAIM AGAINST SSTL. HOWEVER THERE IS NO RESTRICTION ON SSTL TO PASS ON ANY ADDITIONAL BENEFIT LIKE FREE AIR TIME, E CHARGES OR ANY OTHER BENEFIT TO THE RETAILERS BEING APPOINTED BY SSTL DISTRIBUTOR AT ITS OWN DISCRETION AS PER SSTL COMPANY POLICY. DURING THE YEAR THE ASSESSEE SOLD SIMCARD/ RECHARGE VOUCHER AND HANDSETS ON BEHALF OF THE SSTL TO RETAILERS. SUCH SALE AND PURCHASE ARE RECORDED IN THE TRADING ACCOUNT OF THE ASSESSEE. 2 I.T.A. NO. 92/KOL/2016 ASSESSMENT YEAR: 2011-12 SEEMA CHATTERJEE OVER AND ABOVE THE PROFIT ON SALE OF SIMCARD, VOUCHER AND HANDSET THE ASSESSEE RECEIVED COMMISSION OF RS.68,32,380/- FROM SSTL ON WHICH TDS U/S. 194H WAS DEDUCTED BY SSTL. THE ASSESSEE CLAIMED TO HAVE PAID DISCOUNT AND REBATE OF RS.67,59,475.17 IN THE P/L ACCOUNT. IT IS CLAIMED THAT COMMISSION RECEIVED IS PASSED ON TO THE RETAILERS AS PER SCHEME OF SSTL. (EMPHASIS SUPPLIED) 3. THE ASSESSING OFFICER (AO FOR SHORT) IS OF THE VIEW THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE U/S 194H OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT) FROM THE DISCOUNTS AND REBATE PASSED ON TO RETAILERS. AS SUCH TAX WAS NOT DEDUCTED AT SOURCE FROM SUCH DISCOUNTS AND REBATES WHICH ARE IN THE NATURE OF COMMISSION PAYMENT OF RS. 67,59,475.17, AN AMOUNT OF RS. 55,09,527/- WAS DISALLOWED U/S 40(A)(IA) OF THE ACT. ONLY PAYMENTS WHICH WERE LESS THAN RS. 2,500/- WERE ALLOWED. WHILE DOING SO, THE AO RELIED ON THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF BHARTI CELLULAR LTD (NOW BHARTI AIRTEL LTD) VS ACIT (2013) (354 ITR 507) . 4. ON APPEAL, THE FIRST APPELLATE AUTHORITY CONFIRMED THE ORDER OF THE AO. AGGRIEVED, THE ASSESSEE IS BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEES ONLY SUBMISSION WAS THAT THE PROVISIONS OF SECTION 194H CANNOT BE APPLIED FOR SALE OF HANDSETS. HE SUBMITS THAT THE CONSIDERATION RELATABLE TO SALE OF HANDSETS MAY BE ELIMINATED FROM THE AMOUNT OF RS. 55,09,527/- AND THE BALANCE BE DISALLOWED U/S 40(A)(IA) OF THE ACT, AS PER THE PROVISO INTRODUCED BY THE FINANCE ACT, 2014, WHEREBY THE DISALLOWANCE IS RESTRICTED TO 30% OF THE AMOUNT. HE RELIED ON THE ORDER OF THE CO-ORDINATE BENCH OF THE ITAT IN THE CASE OF DIPAK PARUI VS JCIT ITA NO. 767/KOL/2016 ORDER DATED 20/07.2018 FOR THE PROPOSITION THAT THE PROVISION IS RETROSPECTIVE IN NATURE. 6. LD. DEPARTMENTAL REPRESENTATIVE (DR FOR SHORT) ON THE OTHER HAND, DREW THE ATTENTION OF THE BENCH FROM PAGE 6 TO PAGE 8 OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)S [CIT(A) FOR SHORT] ORDER AND SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED ANY DETAILS AS REGARDS TO THE VOLUME OF SALE OF HANDSETS AND HENCE THE ASSESSEE IS NOT ENTITLED TO ANY RELIEF. 7. AFTER HEARING RIVAL CONTENTIONS, CONSIDERING THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITY BELOW, WE HOLD AS FOLLOWS. 3 I.T.A. NO. 92/KOL/2016 ASSESSMENT YEAR: 2011-12 SEEMA CHATTERJEE 8. SECTION 194H OF THE ACT IS NOT ATTRACTED ON THE SALE VALUE OF HANDSETS. THUS, THE SALE PROCEEDS OF HANDSETS IS DIRECTED TO BE REMOVED FROM THE AMOUNT OF RS. 55,09,527/-. THE BALANCE MAY BE DISALLOWED U/S 40(A)(IA) OF THE ACT. 9. THE KOLKATA C BENCH OF THE ITAT IN ITA NO. 767/KOL/2016 IN THE CASE OF DIPAK PARUI VS JCIT DATED 20.07.2018 AT PARA 5 HELD AS FOLLOWS: 5. LATTER ISSUE BEFORE US IS THAT OF CORRECTNESS OF SECTION 40 (A)(IA) DISALLOWANCE OF RS.1.79,800/- OUT OF ASSESSEES TOTAL CLAIM OF RS.,3,05,364/-. HIS ONLY ARGUMENT BEFORE US IS THAT SECTION 40(A)(IA) AS AMENDED BY FINANCE ACT 2014 W.E.F. 01.04.2015 PRESCRIBING SUCH DISALLOWANCE TO BE RESTRICTED TO 30% ONLY THAN THE ENTIRE AMOUNT OF RS. 1,79,800/-; APPLIES WITH RETROSPECTIVE EFFECT. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY OPPOSES THIS LEGAL PLEA. HE PLEADS THAT THE SAID PROVISO DOES NOT CARRY ANY RETROSPECTIVE EFFECT. WE FIND NO FORCE IN REVENUES INSTANT ARGUMENTS AS A COORDINATE BENCH OF THIS TRIBUNAL IN SHRI RAJENDRA YADAV IN ITA NO.895/JP/2012 DECIDED ON 29.01.2016 ALREADY CONCLUDES THE ABOVE AMENDMENT W.E.F. 01.04.2015 TO BE RETROSPECTIVE EFFECT BEING CURATIVE IN NATURE. WE THEREFORE DIRECT THE ASSESSING OFFICER TO RESTRICT THE IMPUGNED DISALLOWANCE TO 30% ONLY TO BE FOLLOWED BY NECESSARY COMPUTATION AS PER LAW. THIS LATTER SUBSTANTIVE GROUND IS TREATED AS PARTLY ACCEPTED IN ABOVE TERMS. 10. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE DIRECT THE AO TO RESTRICT THE IMPUGNED DISALLOWANCE TO 30% ONLY. 11. AS NO OTHER ARGUMENT HAS BEEN ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE, WE DO NOT DEAL WITH THE OTHER GROUNDS RAISED IN THIS MATTER. 12. IN THE RESULT, THIS APPEAL IS SET ASIDE TO THE FILE OF THE AO WITH SPECIFIC DIRECTIONS AS STATED ABOVE. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. KOLKATA, THE 4 TH SEPTEMBER, 2019. SD/- SD/- [S.S. VISWANETHRA RAVI] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 04.09.2019 BIDHAN 4 I.T.A. NO. 92/KOL/2016 ASSESSMENT YEAR: 2011-12 SEEMA CHATTERJEE COPY OF THE ORDER FORWARDED TO: 1. SEEMA CHATTERJEE, 91/1, JOY KRISHNA STREET, UTTARPARA, HOOGHLY-712 258. 2. JCIT, RANGE-1, HOOGHLY. 3. CIT(A)-6, KOLKATA. (SENT THROUGH MAIL) 4. CIT- 5. CIT(DR), KOLKATA BENCHES, KOLKATA. (SENT THROUGH MAIL) TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES