SHRI VIRENDRA KUMAR JAIN, TONK V. INCOME TAX OFFICER, TONK

ITA 970/JPR/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6162 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 11-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C GUPTA JCIT DHK
• Assessee Lawyers: S L PODDAR

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 FOT; IKY JKWO] U;KF;D LNL; ,OA JH FOE FLAG ;K NO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA NO. 970/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. SHRI VIRENDRA KUMAR JAIN, PROP. M/S. VIRENDRA ENTERPRISES, BADA KUWA, TONK. CUKE VS. THE INCOME TAX OFFICER, WARD TONK. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABKPJ 0056 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. PODDAR (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI K.C. GUPTA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23.05.2018. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 24/05/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27 TH NOVEMBER, 2017 OF LD. CIT (A)-3, JAIPUR FOR THE A SSESSMENT YEAR 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF THE L EARNED ASSESSING OFFICER IN MAKING DISALLOWANCE OF RS. 16, 41,989/- U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961. 2 ITA NO. 970/JP/2017 SHRI VIRENDRA KUMAR JAIN, TONK. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 1,56,787/- ON ACCOUNT OF ALLEGED BOGUS EXPENSES ON ACCOUNT OF COM MISSION PAID BY THE ASSESSEE TO RETAILERS. 3. THE ASSESSEE CRAVES YOUR INDULGENCE TO ADD, AMEN D OR ALTER ALL OR ANY GROUNDS OF APPEAL BEFORE OR AT THE TIME OF H EARING. GROUND NO. 1 IS REGARDING DISALLOWANCE MADE UNDER S ECTION 40(A)(IA) IN RESPECT OF THE COMMISSION/DISCOUNT GIV EN TO THE RETAILERS. 2. THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF TRADING IN MOBILE AND ACCESSORIES INCLUDING SIM CARD, PRE-PAID CARD ETC. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE ASSES SEE HAS SHOWN THE PAYMENT OF COMMISSION OF RS. 16,41,989/- UNDER SECTION 40(A)(I A) OF THE ACT WITHOUT DEDUCTION OF TDS. ACCORDINGLY, THE AO DISALLOWED THE SAID AM OUNT BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA). THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) AND SUBMITTED THAT THE ALLEGED PAYMENT WAS NOT MADE BY THE ASSESSEE BUT IT WAS DIRECTLY PAID BY THE MOBILE OPERATOR TO THE RETAILERS ON THE BASIS OF SALE FIGURES SUPPLIED BY THE ASSESSEE OUT OF PURCHASE CONSIDERAT ION OF SIM CARD. HOWEVER, THE LD. CIT (A) DID NOT ACCEPT THE CONTENTION OF THE AS SESSEE AND CONFIRMED THE DISALLOWANCE MADE BY THE AO. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS REITE RATED HIS CONTENTION THAT THE ALLEGED PAYMENT OF COMMISSION WAS NOT PAID BY THE A SSESSEE TO THE RETAILERS BUT IT WAS DIRECTLY PAID BY THE MOBILE OPERATOR WHOSE SIM CARD AND PRE-PAID COUPONS WERE SOLD BY THE ASSESSEE. THEREFORE, THE ASSESSEE WAS NOT UNDER OBLIGATION TO DEDUCT TDS ON SUCH AMOUNT. HE HAS FURTHER CONTENDED THAT SINCE THE ASSESSEE IS A DEALER, 3 ITA NO. 970/JP/2017 SHRI VIRENDRA KUMAR JAIN, TONK. ONLY FOR ACCOUNTING PURPOSES THE ASSESSEE HAS MADE CONTRA ENTRIES IN RESPECT OF THE SAID AMOUNT BEING RECEIPTS AS WELL AS PAYMENTS WHER EAS THERE IS NO ACTUAL PAYMENT BY THE ASSESSEE BUT IT WAS PAID BY THE COMPANY M/S. VODAFONE DIGILINK PVT. LTD. WHO HAS ACCEPTED THE SAID PAYMENT. THE ASSESSEE FILED THE CONFIRMATION FROM THE COMPANY M/S. VODAFONE DIGILINK PVT. LTD. THAT THE C ONTROL OF PAYMENT OF THE ALLEGED AMOUNT WAS NOT IN THE HANDS OF THE ASSESSEE BUT IT WAS DIRECTLY PAID BY THE SAID COMPANY. THE ASSESSEES ROLE IS ONLY INTER-MEDIATOR Y AND PASSING THE SERVICE FROM ONE HAND TO THE OTHER HAND. HE HAS RELIED UPON THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. CHOCOPAC K ENTERPRISES VS. ITO IN ITA NO. 821/JP/2016 DATED 13.10.2017. 3.1. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON THE ORDERS AUTHORITIES BELOW AND SUBMITTED THAT THE LD. CIT (A) HAS RELIED UPON VARIOUS DECISIONS OF HONBLE HIGH COURTS INCLUDING THE DECISION OF HONBLE KERALA HIG H COURT IN CASE OF VODAFONE ESSAR CELLULAR LTD. VS. ACIT AS WELL AS DECISION OF HONB LE CALCUTTA HIGH COURT IN CASE OF HUTCHISO TELECOM EAST LTD. VS. CIT, 232 TAXMAN 665 (CAL.). HE HAS FURTHER CONTENDED THAT THE DECISION OF COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF M/S. CHOCOPACK ENTERPRISES VS. ITO (SUPRA) IS ONLY IN RE SPECT OF SALE OF SIM CARD WHEREAS THE ASSESSEE IS ALSO SELLING PRE-PAID COUPONS. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS PRODUCED THE CONFIRMATION FROM M/S. VODAFONE DIGILINK LTD. TO SHOW THAT THE PAYMENT IN QUESTION WAS DIREC TLY PAID BY THE SAID COMPANY TO THE RETAILERS. THE ASSESSEE HAS ONLY CARRIED OUT T HE NECESSARY ENTRIES IN HIS BOOKS OF ACCOUNT FOR COMPLETION OF RECORD BEING THE DEALER A ND ALL THE TRANSACTIONS ARE 4 ITA NO. 970/JP/2017 SHRI VIRENDRA KUMAR JAIN, TONK. PASSING THROUGH THE ASSESSEE. ONCE THE PAYMENT IN QUESTION WAS NOT MADE BY THE ASSESSEE AND IT WAS DIRECTLY PAID BY THE COMPANY AN D FURTHER THE QUANTUM AND PERCENTAGE OF THE SAID COMMISSION/DISCOUNT WAS ALSO IN THE FULL CONTROL OF THE COMPANY AND NOT IN THE HANDS OF THE ASSESSEE, THEN MERELY BECAUSE THE ASSESSEE HAS PASSED THE CONTRA ENTRY OF THE SAID AMOUNT WOUL D NOT BRING THE SAID TRANSACTION IN THE CATEGORY OF COMMISSION PAID BY THE ASSESSEE SO AS TO ATTRACT THE PROVISIONS OF SECTION 194H. THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CHOCOPACK ENTERPRISES VS. ITO (SUPRA) HAS CONSIDERED AN IDENT ICAL ISSUE IN PARA 9 AS UNDER :- 9. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEES FIRM E NGAGED IN THE BUSINESS OF DISTRIBUTORSHIP OF IDEA RECHARGE CARDS. THE ISSUE INVOLVED IN CASE OF THEASSESSEE IS IN RESPECT OF SA LE OF RECHARGE COUPONS AND NOT THE SALE OF SIM CARDS. THEREFORE TO THE EXTENT THE ISSUE OF SALE OF SIM CARDS BY THE SERVICE PROVIDER IT IS HELD BY THE HONBLE KARNATKA HIGH COURT IN THE CASE OF BHARATI AIRTEL LTD. VS. CIT (SUPRA) THAT THE ASSESSEE IS THE SERVICE PROVID ER HAD NO OBLIGATION TO DEDUCT TDS AND ACCORDINGLY WHEN THE S ERVICE PROVIDER HAS IS UNDER NO OBLIGATION TO DEDUCT TAX, THE DISTR IBUTOR WOULD ALSO NOT UNDER OBLIGATION TO DEDUCT TDS. HOWEVER, THE SA ID DECISION IS ONLY ON THE ISSUE OF SALE SIM CARDS AND THEREFORE, WILL NOT APPLICABLE IN THE CASE OF THE ASSESSEE. THE HONBLE SUPREME CO URT IN CASE OF BHARAT SANCHAR NIGAM LTD. VS. UNION OF INDIA 282 IT R 273 AS ALSO OBSERVED IN PARAS 85 AND 86 WHICH ARE REPRODUCED AS UNDER:- 85. IN THAT CASE ESCOTAL WAS ADMITTEDLY ENGAGED IN SELLING CELLULAR TELEPHONE INSTRUMENTS, SIM CARDS A ND OTHER ACCESSORIES AND WAS ALSO PAYING CENTRAL SALES TAX AND SALES TAX UNDER THE KERALA GENERAL SALES TAX AC T, 1963, AS APPLICABLE. THE QUESTION WAS ONE OF THE VALUATION OF THESE GOODS. THE STATE SALES TAX AUTHOR ITIES HAD SOUGHT TO INCLUDE THE ACTIVATION CHARGES IN THE COST OF THE SIM CARD. IT IS CONTENDED BY ESCOTAL THAT TH E ACTIVATION WAS PART OF THE SERVICE ON WHICH SERVICE TAX WAS BEING PAID AND COULD NOT BE INCLUDED WITHIN THE 5 ITA NO. 970/JP/2017 SHRI VIRENDRA KUMAR JAIN, TONK. PURVIEW OF THE SALE. THE KERALA HIGH COURT ALSO DEAL T WITH THE CASE OF BPL, A SERVICE PROVIDER. ACCORDING TO BPL, IT DID NOT SELL CELLULAR TELEPHONES. AS FAR AS SIM CARDS WERE CONCERNED, IT WAS SUBMITTED THAT THEY HA D NO SALE VALUE. A SIM CARD MERELY REPRESENTED A MEANS O F THE ACCESS AND IDENTIFIED THE SUBSCRIBERS. THIS WAS PART OF THE SERVICE OF A TELEPHONE CONNECTION. THE COURT REJECTED THIS SUBMISSION FINDING THAT THE SIM CARD WAS GOODS WITHIN THE DEFINITION OF THE WORD IN THE ST ATE SALES TAX ACT. 86. IT IS NOT POSSIBLE FOR THIS COURT TO OPINE FINA LLY ON THE ISSUE. WHAT A SIM CARD REPRESENTS IS ULTIMATELY A QUESTION OF FACT AS HAS BEEN CORRECTLY SUBMITTED BY THE STATES. IN DETERMINING THE ISSUE, HOWEVER THE ASSES SING AUTHORITIES WILL HAVE TO KEEP IN MIND THE FOLLOWING PRINCIPLES : IF THE SIM CARD IS NOT SOLD BY THE ASS ESSEE TO THE SUBSCRIBERS BUT IS MERELY PART OF THE SERVICES RENDERED BY THE SERVICE PROVIDERS, THEN A SIM CARD CANNOT BE CHARGED SEPARATELY TO SALES TAX. IT WOULD DEPEND ULTIMATELY UPON THE INTENTION OF THE PARTIES . IF THE PARTIES INTENDED THAT THE SIM CARD WOULD BE A SEPAR ATE OBJECT OF SALE, IT WOULD BE OPEN TO THE SALES TAX AUTHORITIES TO LEVY SALES TAX THEREON. THERE IS INSU FFICIENT MATERIAL ON THE BASIS OF WHICH WE CAN REACH A DECIS ION. HOWEVER, WE EMPHASISE THAT IF THE SALE OF A SIM CAR D IS MERELY INCIDENTAL TO THE SERVICE BEING PROVIDED AND ONLY FACILITATES THE IDENTIFICATION OF THE SUBSCRIBERS, THEIR CREDIT AND OTHER DETAILS, IT WOULD NOT BE ASSESSABLE TO SA LES TAX. IN OUR OPINION THE HIGH COURT OUGHT NOT TO HAVE FIN ALLY DETERMINED THE ISSUE. IN ANY EVENT, THE HIGH COURT ERRED IN INCLUDING THE COST OF THE SERVICE IN THE VALUE O F THE SIM CARD BY RELYING ON THE ASPECTS DOCTRINE. THAT DOCTRI NE MERELY DEALS WITH LEGISLATIVE COMPETENCE. AS HAS BE EN SUCCINCTLY STATED IN FEDERATION OF HOTEL AND RESTAUR ANT ASSOCIATION OF INDIA V. UNION OF INDIA [1989] 3 SCC 634 SUBJECTS WHICH IN ONE ASPECT AND FOR ONE PURPOSE F ALL WITHIN THE POWER OF A PARTICULAR LEGISLATURE MAY IN ANOTHER ASPECT AND FOR ANOTHER PURPOSE FALL WITHIN ANOTHER LEGISLATIVE POWER. THEY MIGHT BE OVERLAPPING ; BUT THE OVERLAPPING MUST BE IN LAW. THE SAME TRANSAC TION MAY INVOLVE TWO OR MORE TAXABLE EVENTS IN ITS DIFFE RENT 6 ITA NO. 970/JP/2017 SHRI VIRENDRA KUMAR JAIN, TONK. ASPECTS. BUT THE FACT THAT THERE IS OVERLAPPING DOE S NOT DETRACT FROM THE DISTINCTIVENESS OF THE ASPECTS. N O ONE DENIES THE LEGISLATIVE COMPETENCE OF THE STATES TO LEVY SALES TAX ON SALES PROVIDED THAT THE NECESSARY CONCOMITANTS OF A SALE ARE PRESENT IN THE TRANSACTI ON AND THE SALE IS DISTINCTLY DISCERNIBLE IN THE TRANSACTI ON. THEREFORE, AS THE ISSUE OF SALE OF SIM CARDS IS CON CERNED THE HONBLE SUPREME COURT HAS CLEARLY HELD THAT THE SAL E OF SIM CARDS MERELY INCIDENTAL TO THE SERVICE BEING PROVIDED AND ONLY FACILITATES THE IDENTIFICATION OF SUBSCRIBERS THEIR CREDIT AND OTHER DETAILS IT WOULD NOT BE ASSESSABLE TO SALE TAX. AS REGARDS THE SALE OF RECHARGE COUPONS IT IS CLEARLY A TRANSACTION OF SALE OF GOOD S AS HELD BY THE HONBLE SUPREME COURT THAT THE TELEPHONE IS NOTHING BUT A SERVICE. HOWEVER, SINCE THE SERVICE IS PROVIDED BY THE COMPA NY WHICH IS THE SERVICE PROVIDER AND ASSESSEE IS ONLY A DISTRIBUTOR AND INTERMEDIATETORY, THEREFORE, THE TAX LIABILITY FOR PAYING THE COMMISSION, IF ANY, IS ATTRACTED U/S 194H ONLY AGAI NST THE PERSON RESPONSIBLE FOR PAYING THE COMMISSION. IN CASE IN H AND THE ASSESSEE IS NOT PAYING ANY COMMISSION TO THE RETAIL ERS BUT THIS COMMISSION OR SO CALLED DISCOUNT IS ALLOWED AND PAI D BY THE SERVICE PROVIDER. THE ASSESSEE IS AN INTERMEDIATETORY AND O NLY RECORDING THIS TRANSACTION IN THE BOOKS OF ACCOUNT FOR THE PU RPOSE OF COMPLETENESS. HENCE, WHEN THE ASSESSEE IS NEITHER C OMPETENT NOR RESPONSIBLE NOR ACTUALLY PAYING ANY COMMISSION TO T HE RETAILER ON SALE OF RECHARGE COUPONS TO THE RETAILERS THEN THE OBLIGATION FOR DEDUCT TAX U/S 194 H IS ATTRACTED ONLY AGAINST THE SERVICE PROVIDER AND NOT AGAINST THE ASSESSEE WHO IS ONLY A DISTRIBU TOR AND RECEIVING ITS SHARE OF THE COMMISSION/ MARGINS PROVIDED BY TH E SERVICE PROVIDER. THE DETERMINATION OF SALE PRICE OF RECHAR GE COUPONS IS IN THE SOLE DOMAIN OF THE SERVICE PROVIDER AND THE ASS ESSEE IS NO ROLE IN DETERMINING THE RETAIL PRICE AT WHICH THE RETAIL ER IS SELLING THE RECHARGE COUPONS TO THE CUSTOMER OR END USER OF THE SERVICE. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CA SE WHEN THE ASSESSEES ROLE IS ONLY AN INTERMEDIATETORY AND PAS SING THE SERVICES FROM ONE HAND TO THE OTHER HAND THEN MERELY BECAUSE THE ASSESSEE IS SHOWING AN AMOUNT OF COMMISSION/DISCOUNT IN THE BOOKS OF ACCOUNT FOR COMPLETENESS OF ACCOUNTS AND TRANSACTIO NS WILL NOT IMPUTE ANY LIABILITY OF DEDUCTING TAX AT SOURCE. TH E DECISIONS RELIED UPON BY THE LD. DR ARE ALSO ON THE POINT WHERE THE SERVICE PROVIDER IS ALLOWING OR PAYING THE COMMISSION TO THE DISTRIB UTORS OR RETAILERS AND SALE OF SIM CARDS AS WELL AS RECHARGE COUPONS, THEREFORE, EVEN FOR THE SAKE OF ARGUMENTS IF IT IS ACCEPTED THAT TH E BENEFIT ALLOWED BY 7 ITA NO. 970/JP/2017 SHRI VIRENDRA KUMAR JAIN, TONK. THE SERVICE PROVIDER TO THE DISTRIBUTORS AND RETAIL ERS IS COMMISSION IT IS SERVICE PROVIDER WHO IS RESPONSIBLE FOR PAYING T HE SAID COMMISSION AND THEREFORE, THE PROVISIONS OF SECTION 194H ARE NOT ATTRACTED AGAINST THE DISTRIBUTOR. ACCORDINGLY, WHE N THE ASSESSEE IS NOT DIRECTLY AND INDIRECTLY IN DECIDING THE QUANTUM OF ALLEGED COMMISSION/DISCOUNT AS WELL AS DETERMINING THE RETA IL PRICE AT WHICH THE RECHARGE COUPONS IS SOLD TO THE CUSTOMER THEN T HE PROVISIONS OF SECTION 194H CANNOT BE APPLIED ON THE ASSESSEE. CON SEQUENTLY DISALLOWANCE MADE BY THE AO U/S 40 (A)(IA) IS DELET ED. THUS THE COORDINATE BENCH HAS FOLLOWED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF BHARAT SANCHAR NIGAM LTD. VS. UNION OF INDIA, 282 ITR 273 (SC). IT IS PERTINENT TO NOTE THAT THE ISSUE IN CASE OF BHARAT SANCHAR NIGAM LTD. VS. UOI (SUPRA) AS WELL AS IN THE CASES WHICH ARE RELIED UP ON BY THE LD. CIT (A) WAS REGARDING THE NATURE OF THE PAYMENT MADE BY THE OPE RATING COMPANIES WHETHER IT WAS COMMISSION OR DISCOUNT ALLOWED BY THE CELLULAR/ MOBILE OPERATORS. THEREFORE, EVEN OTHERWISE THE DECISIONS ON THOSE CASES ARE NOT DIRECTLY APPLICABLE IN THE CASE OF THE ASSESSEE WHERE THE ASSESSEE IS A DISTRIBUTOR AN D AN INTER-MEDIATORY BETWEEN THE CELLULAR/MOBILE OPERATOR AND THE RETAILERS. FOLLOW ING THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW QUA THIS ISSUE AND DELETE THE DISALLOWANCE MADE BY THE AO UN DER SECTION 40(A)(IA). GROUND NO. 2 IS REGARDING THE ADDITION OF RS. 1,56, 787/- ON ACCOUNT OF BOGUS COMMISSION EXPENSES. 5. THE AO RECEIVED THE INFORMATION/DETAILS FROM M/S . VODAFONE DIGILINK PVT. LTD. AND FOUND THAT THE SAID COMPANY HAS SHOWN A PAYMENT OF RS. 95,846/- AND RS. 39,034/- RESPECTIVELY TO THE ASSESSEE WHEREAS THE S AME WAS NOT ACCOUNTED FOR BY THE ASSESSEE IN HIS BOOKS OF ACCOUNTS. ACCORDINGLY , THE AO PROPOSED TO MAKE THE 8 ITA NO. 970/JP/2017 SHRI VIRENDRA KUMAR JAIN, TONK. ADDITION OF THE SAID AMOUNT. IN RESPONSE, THE ASSES SEE HAS EXPLAINED THAT THE SAID PAYMENT WAS NOT RECEIVED BY THE ASSESSEE BUT ONLY B OOK ENTRY WAS MADE BY THE ASSESSEE. THE ASSESSEE HAS REFERRED THE BANK ACCOUN T AND SUBMITTED THAT THERE IS NO SUCH ENTRY IN THE BANK ACCOUNT OF THE ASSESSEE R ECEIVING THE SAID AMOUNT. IT WAS FURTHER EXPLAINED THAT THE SAID AMOUNT WAS DIRECTLY PAID BY THE COMPANY TO THE RETAILERS THOUGH IN THE ACCOUNT OF THE COMPANY HAS SHOWN THE SAID PAYMENT THROUGH THE ASSESSEE. THE AO DID NOT ACCEPT THE SAID EXPLA NATION OF THE ASSESSEE AND MADE THE ADDITION. THE ASSESSEE THOUGH CHALLENGED THE AC TION OF THE AO BUT COULD NOT SUCCEED. 6. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS REITE RATED HIS CONTENTION AS RAISED BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS NEVER RECEIVED THE ALLEGED PAYMENT OF RS. 95,846/- AND RS. 39,034/- AN D, THEREFORE, THERE WAS NO ENTRY OF SUCH AMOUNT IN THE BOOKS OF ACCOUNT. HE HAS FUR THER CONTENDED THAT THIS PAYMENT WAS DIRECTLY MADE BY THE COMPANY TO THE RET AILERS. HOWEVER, IN THEIR BOOKS, THE SAID COMPANY HAS SHOWN THE SAID PAYMENT THROUGH THE ASSESSEE. FURTHER, THE AO HAS ALSO MADE AN ADDITION OF RS. 21 ,907/- WHICH WAS FOUND AS COMMISSION PAID TO THE RETAILERS AS A BOOK ENTRY ON 4 TH DECEMBER, 2009. THE LD. A/R HAS SUBMITTED THAT THE ASSESSEE HAS NOT MADE ANY PA YMENT TO THE RETAILERS BUT THE COMPANY HAS DIRECTLY PAID THE AMOUNT AND THE ASSESS EE HAS ONLY CARRIED OUT THE ENTRY AS THE ASSESSEE HAS NEITHER RECEIVED THE SAID AMOUNT NOR PAID THE SAME BUT THE CONTRA ENTRY WAS MADE IN THE BOOKS BEING RECEIP T AND PAYMENT AND, THEREFORE, IT IS REVENUE NEUTRAL. THUS THE LD. A/R HAS SUBMITTED THAT THE ADDITION MADE BY THE AO MAY BE DELETED. 9 ITA NO. 970/JP/2017 SHRI VIRENDRA KUMAR JAIN, TONK. 6.1. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT ONCE THE ENTRY IN THE BOOK S OF VODAFONE DIGILINK PVT. LTD. WAS FOUND AND IRRESPECTIVE OF THE PAYMENT TO THE AS SESSEE, THE SAID INCOME IS ASSESSABLE TO TAX IN THE HANDS OF THE ASSESSEE. AS REGARDS THE COMMISSION PAYMENT, WHEN THE ASSESSEE IS SHOWING IN THE BOOKS THE PAYMENT TO THE RETAILERS WITHOUT MAKING THE ACTUAL PAYMENT, THEN THE SAID CL AIM IS NOT ALLOWABLE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. WE NOTE THAT THE BUSINESS MODEL OF THE MOB ILE OPERATORS THROUGH DISTRIBUTOR/DEALERS/RETAILERS IS SUCH THAT THE INCO ME OF ALL THE DOWN STREAM INTER- MEDIATORY IS ONLY THE DISCOUNT/COMMISSION ALLOWED B Y THE CELLULAR OPERATORS. THERE IS NO DISPUTE THAT THE MOBILE OPERATORS ARE MAKING THE PAYMENT OF SUCH COMMISSION/DISCOUNT TO THE DISTRIBUTORS/DEALERS/RET AILERS DIRECTLY. HOWEVER, FOR ACCOUNTING PURPOSES THE PAYMENTS ARE REFLECTED THRO UGH INTER-MEDIATORY. THUS WHEN THE ACTUAL TRANSACTION OF PAYMENT IS MADE DIRECTLY BY THE MOBILE OPERATORS TO THE RETAILERS, THEN THE ASSESSEE BEING A DEALER HAS CAR RIED OUT ONLY THE ACCOUNTING ENTRIES FOR COMPLETENESS OF THE ACCOUNT. IT IS ALS O NOT IN DISPUTE THAT THESE PAYMENTS ARE DETERMINED BY THE MOBILE OPERATORS AND THE ASSESSEE IS HAVING NO DISCRETION OR ROLE IN THE QUANTUM OF THE ALLEGED DI SCOUNT/COMMISSION TO BE PAID TO THE RETAILERS. HENCE HAVING CONSIDERED THE UNDISPUT ED FACT AND BUSINESS MODEL WHERE THE PAYMENTS ARE DIRECTLY MADE BY THE COMPANY TO THE RETAILERS AND THE ASSESSEE IS ONLY SHOWING THE ENTRIES IN THE BOOKS O F ACCOUNTS FOR RECEIPTS AS WELL AS PAYMENTS WITHOUT ACTUAL RECEIPT AND PAYMENT OF THE SAID AMOUNT, THEN THE AO CANNOT MADE ADDITION BY LOOKING ONE SIDE OF THE TRA NSACTION AND OVERLOOKING THE 10 ITA NO. 970/JP/2017 SHRI VIRENDRA KUMAR JAIN, TONK. OTHER SIDE OF NO ACTUAL RECEIPT BY THE ASSESSEE. A CCORDINGLY, WE FIND THAT THE ADDITION MADE BY THE AO IS NOT JUSTIFIED, HENCE THE SAME IS DELETED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 24/05/2 018. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 24/05/2018. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI VIRENDRA KUMAR JAIN, TONK. 2. THE RESPONDENT THE ITO, TONK. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 970/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 11 ITA NO. 970/JP/2017 SHRI VIRENDRA KUMAR JAIN, TONK.