Dutta Telecom Agency, Murshidabad V. JCIT, Range-Murshidabad, Murshidabad

MA 85/KOL/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9144 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 23-07-2012
• Court: TRIBUNAL

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND ! ' ! , ) [BEFORE SHRI PRAMOD KUMAR, AM & SHRI MAHAVIR SINGH, JM] ## $ ## $ ## $ ## $ % % % % /M. A. NO. 85/KOL/2012 % % % % /IN I.T.A NO. 1477/KOL/2011 '$& '( '$& '( '$& '( '$& '(/ // / ASSESSMENT YEAR: 2008-09 DUTTA TELECOM AGENCY VS. JOINT COMMISSIONER OF INCOME-TAX, (PAN:AAFFD6936M) RANGE-MURSHIDABAD ( /APPLICANT ) (*+,/ RESPONDENT ) DATE OF HEARING: 21.09.2012 DATE OF PRONOUNCEMENT: 28.09.2012 - . /FOR THE APPLICANT: SHRI SANJAY BHATTACHARJEE *+, - . /FOR THE RESPONDENT: SHRI K. N. JANA, SR. DR / / ORDER PER MAHAVIR SINGH, JM/ ! ' ! ! ' ! ! ' ! ! ' ! , : THIS MISC. APPLICATION BY ASSESSEE IS AGAINST THE A PPELLATE ORDER OF ITAT DATED 31.05.2012 ARISING OUT OF ITA NO.1477/KOL/2011 FOR THE RELEVANT AY 2008-09. 2. THE LD. COUNSEL FOR THE ASSESSEE BEFORE US REFER RED TO PARAS 3 AND 4 OF THE APPLICATION, WHICH READS AS UNDER: 3) THAT DURING THE HEARING ON 21-03-2012 BEFORE TH E HONBLE TRIBUNA1 THE AUTHORISED REPRESENTATIVE (A/R) ON BEHALF OF THE APPLICANT/APP ELLANT HAD SUBMITTED THAT THE APPLICANT/APPELLANT HAD BEEN INCURRING EXPENSES ON BEHALF OF M/S HUTCHISON ESSAR SOUTH LTD. (HEREINAFLER REFERRED TO AS VODAFONE) AS ITS D ISTRIBUTOR FOR DISTRIBUTING THE SAID COMPANYS SERVICE TICKETS (KNOWN AS SIM CARDS) AND A LL SUCH EXPENSES WERE BEING DEBITED TO AN ACCOUNT UNDER THE HEADING CLAIMS RECE IVABLE ACCOUNT. THESE EXPENSES HAD BEEN TOWARDS SIM ACTIVATION CHARGES (SHOWN AS NOR MAL IN THE DETAILED STATEMENT FURNISHED IN THE PAPER BOOK), PAYMENTS MADE TO THE COLLECTORS OF THE NECESSARY DOCUMENTS SUCH AS IDENTIFICATIONS, ADDRESS PROOFS, ETC. OF THE BUYERS OF THE SIM CARDS (SHOWN AS RUNNERS IN THE DETAILED STATEMENT FURNISH ED IN THE PAPER BOOK), VAN HIRE CHARGES AND SALARIES PAID TO THE PILOT SALES REPRES ENTATIVES(PSR) OF VODAFONE. FURTHER, THE RELEVANT SERVICE TAXES AND THE BANK COMMISSIONS FOR REMITTING MONEYS TO VODAFONE WERE ALSO USED TO BE DEBITED TO THE ABOVE-MENTIONED ACCOUNT. VODAFONE ON THE BASIS OF THE CLAIMS SUBMITTED BY THE APPLICANT/APPELLANT, US ED TO MAKE PERIODICA1 PAYMENTS TO THE APPLICANT/APPELLANT. WHILE THE PAYMENTS TOWARDS SIM ACTIVATION CHARGES WERE PASSED ON TO VARIOUS RETAILERS WHO USED TO SELL THE SERVICE TICKETS, I.E., SIM CARDS, ALL OTHER PAYMENTS HAD ACTUALLY BEEN REIMBURSEMENTS MAD E BY VODAFONE TO THE APPLICANT/APPELLANT. AS REGARDS THE SIM ACTIVATION CHARGES, THE APPLICANT/APPELLANT USED TO JUST PASS ON THE PAYMENTS MADE BY VODAFONE TO THE RELEVANT RETAILERS WHO HAD EFFECTED THE SALES OF THE SIM CARDS OF VODAFONE. IT WAS SUBMITTED BEFORE THE HONBLE TRIBUNAL THAT THE ENTIRE TRAISACTIONS AS RECORDED U NDER THE CLAIMS RECEIVABLE ACCOUNT WERE ACTUALLY IN RELATION TO THE SALE OF THE SIM CA RDS MADE BY DIFFERENT RETAILERS ON BEHALF OF VODAFONE AND THE INCIDENTAL CHARGES MET B Y THE APPLICANT/APPELLANT IN THAT 2 MA NO. 85/K/2012 DUTTA TELECOM ZGENCY A. Y 2008-09 REGARD. IT WAS SUBRNITTED BY THE A/R BEFORE THE HON BLE TRIBUNAL THAT NEITHER THE PAYMENTS MADE BY THE APPLICANT/APPELLANT NOR THE MO NEYS RECEIVED FROM VODAFONE TOWARDS REIMBURSEMENTS, HAD ANY NEXUS WITH THE APPL ICANT/APPELLANTS BUSINESS OF PURCHASE AND SA1E OF SIM CARDS. IT WAS ALSO SUBMITT ED BY THE AUTHORISED REPRESENTATIVE BEFORE THE HONBLE TRIBUNAL THAT THOUGH VODAFONE IN ITS OWN RECORDS MIGHT HAVE SHOWN THE PAYMENTS RELEASED TO THE APPLICANT/APPELLANT AS COMNIISSION, IN FACT, THERE WAS NO QUESTION OF EARNING ANY ALLEGED COMMISSION BY THE A PPLICANT/APPELLANT FROM THE SALE OF SIM CARDS MADE THROUGH THE RETAILERS. IT WAS ALSO B ROUGHT TO THE KIND ATTENTION OF THE HONBLE TRIBUNAL THAT IN THE ACCOUNTS OF THE APPLIC ANT/APPELLANT THERE HAD NEITHER BEEN ANY COMMISSION RECEIVED NOR ANY DISCOUNT ALLOWED AS ASSUMED BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER. ON BEING ASKED BY THE HONBLE TRIBUNAL, THE A/R SUBMITTED THAT NO CLAIM FOR DEDUCTION HAD BEEN MADE BY THE APPLICANT/APPELLANT IN RELATION TO ITS PASSING OVER OF PAYMENTS RECEIVED F ROM VODAFONE TO VARIOUS RETAILERS WHICH WERE WRONGLY ASSUMED BY THE ASSESSING OFFICER AS ALLEGED COMMISSION PAYMENT MADE BY THE APPLICANT/APPELLANT. AT THAT POINT THE HONBLE MEMBERS COMMENTED AS TO HOW SECTION 40(A)(IA) COULD BE APPLIED IF NO CLAIM FOR EXPENSE HAD BEEN MADE. 4) THAT DURING THE HEARING BEFORE THE HONBLE TRIBU NAL ON 21-03-2012, THE A/R OF THE APPLICANT/APPELLANT BROUGHT TO THE KIND ATTENTION O F THE HONBLE TRIBUNAL THAT THE PARTICULAR 3(THREE) CASES, VIZ., BHARTI CELLULAR LT D. (KOLKATA ITAT), IDEA CEILULAR LTD. (DELHI HIGH COURT) AND VODAFONE ESSAR CEILULAR LTD. (KERALA HIGH COURT) WHICH HAD BEEN FOLLOWED BY THE ASSESSING OFFICER AS WELL AS L EARNED CIT(APPEALS) WERE DISTINGUISHABLE FROM THE APPLICANT/APPELLANTS CASE . IT WAS POINTED OUT THAT WHILE IN THOSE THREE REFERRED CASES THE CONCEMED TRANSACTION S HAD BEEN BETWEEN THE CELLULAR SERVICE PROVIDER AND THE DISTRIBUTOR, IN THE CASE O F THE APPLICANT/APPELLANT THE RELEVANT TRANSACTION HAD BEEN BETWEEN A DISTRIBUTOR AND VAR IOUS RETAILERS. IT WAS ALSO BROUGHT TO THE KIND NOTICE OF THE HONBLE TRIBUNAL THAT THE CO NCERNED RETAILERS HAD NOT RENDERED ANY SERVICE TO THE DISTRIBUTOR, VIZ., IHE APPLICANT /APPELLANT BUT THEIR WORKS RELATED TO THE SA1E OF SIM CARDS OF VODAFONE. 3. LD. COUNSEL FOR THE ASSESSEE STATED THAT THE AVE RMENTS MADE IN PARAGRAPH NOS. 3 AND 4 HAVE NOT BEEN DISCUSSED EITHER BY THE TRIBUNAL OR B Y THE LOWER AUTHORITIES I.E. THE AO OR THE CIT(A). IN SUCH CIRCUMSTANCES, THE ASSESSEE CONTEN DED THAT THIS ISSUE NEEDS RECONSIDERATION AT THE LEVEL OF AO AND SINCE THESE FACTS WERE NOT CONS IDERED BY THE TRIBUNAL THERE IS A MISTAKE APPARENT FROM RECORD IN THE ORDER OF THE TRIBUNAL W HICH SHOULD BE RECTIFIED. 4. WE HAVE CONSIDERED THE ABOVE SUBMISSIONS AND GON E THROUGH TRIBUNALS ORDER. WE FIND THAT THE TRIBUNAL IN PARA 4 CONSIDERED ALL THE ARGU MENTS RAISED IN MISC. APPLICATION VIDE PARAS 3 AND 4 AND FINALLY HELD AT PARA 6 AS UNDER: 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE ABOVE FACTS THAT THE I SSUE HAS NOW BEEN AGAINST THE ASSESSEE BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. IDEA CELLULAR LTD. (2010) 325 ITR 148 (DEL.) AND ALSO BY HONBLE KERALA HIGH COURT IN THE CASE OF VODAFONE ESSAR CELLULAR LTD. VS. ACIT (TDS) (2011) 332 ITR 255 (KE R). HONBLE KERALA HIGH COURT HAS DEALT WITH THE ISSUE DISCUSSING THE SCHEME OF DEDUC TION OF TAX AT SOURCE UNDER THE ACT IS TO PRESS RECIPIENTS OF INCOME AND THEIR ACCOUNTABIL ITY TO THE DEPARTMENT FOR THE PAYMENT OF TAX ON VARIOUS TRANSACTIONS. IT WAS INTERPRETED THAT WHAT IS CLEAR FROM EXPLANATION (I) OF THE DEFINITION CLAUSE IN SECTION 194H OF THE ACT IS THAT COMMISSION OR BROKERAGE INCLUDES ANY PAYMENT RECEIVED OR RECEIVABLE DIRECTL Y OR INDIRECTLY BY A PERSON ACTING ON BEHALF OF ANOTHER PERSON FOR SERVICES RENDERED. AC CORDING TO HONBLE KERALA HIGH COURT, THE TEST TO BE APPLIED TO FIND OUT WHETHER E XPLANATION (I) TO SECTION 194H OF THE ACT IS APPLICABLE OR NOT IS TO SEE WHETHER THE ASSESSEE HAS MADE PAYMENT AND IF SO, WHETHER IT 3 MA NO. 85/K/2012 DUTTA TELECOM ZGENCY A. Y 2008-09 IS FOR SERVICES RENDERED BY THE PAYEE TO THE ASSESS EE. HERE, IN THE PRESENT CASE BEFORE US, THE SERVICES RENDERED AND PAYMENTS RECEIVED AND AS CLAIMED BY ASSESSEE THAT THE SAME WERE PASSED ON, WERE ON ACCOUNT OF THE FOLLOWING: I) RUNNER CLAIM --- PAYMENTS TO SOME MESSENGERS II) SIM ACTIVATION SUPPLY CONTRACT III) VAN CLAIM PAYMENTS TO VAN DRIVERS IV) PSR SALARY ----- SALARY PAYMENT TO PILOT SALES REPRESENTATIVES REIMBURSED SUBSEQUENTLY BY VODAFONE ESSAR SOUTH LIM ITED. HERE, IN THE PRESENT CASE, THE SERVICES RENDERED I. E. THE BUYING AND SELLING OF GOODS IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET O R VALUABLE ARTICLE OR THING IS ESTABLISHED BECAUSE ADMITTED FACTS ARE THAT THE ASSESSEE WHILE COLLECTING THE INFORMATION OF THE AMOUNT PAYABLE TO THE RETAILER HAS PREFERRED CLAIM ON VODAFONE ESSAR SOUTH LTD. BY DEBITING A CLAIM OF RECEIVABLE ACCOUNTS AND THE BAL ANCE OF WHICH HAS APPEARED IN THE BALANCE SHEET. THE CLAIM OF THE ASSESSEE THAT IT H AS NOT DEBITED THE EXPENDITURE TO THE P&L ACCOUNT WILL NOT MAKE THE ASSESSEES CLAIM THAT IT IS NOT LIABLE TO TDS IN ANY WAY IN FAVOUR OF ASSESSEE. WE FIND THAT HONBLE DELHI HIG H COURT IN IDEA CELLULAR LTD. (SUPRA) HAS CONCLUDED THE ISSUE ON THE FOLLOWING GROUNDS: (1) IN THE JUDGMENT OF THE HON'BLE HIGH COURT OF K ERALA IN THE CASE OF BPL MOBILE CELLULAR LTD. V. STATE OF KERALA (W. P. NO. 29202 OF 2005) IT HAS BEEN HELD THAT IN THE SUPPLY AND DELIVERY OF SI M CARDS AND OTHER RECHARGE COUPONS, THERE IS NO SALE AND PURCHASE OF GOODS, BUT ONLY OF PROVIDING SERVICES ; (2) THE HON'BLE KERALA HIGH COURT IN THE CASE OF KE RALA STAMP VENDORS ASSOCIATION V. OFFICE OF THE ACCOUNTANT GENERAL [2006] 282 ITR 7 AN D M. S. HAMEED V. DIRECTOR OF STATE LOTTERIES [2001] 249 ITR 186 (KER) AND THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF A HMEDABAD STAMP VENDORS ASSOCIATION V. UNION OF INDIA [2002] 257 ITR 202 HAVE TREATED THE SUBJECT TRANSACTIONS AS TRANSACTION OF PURCHASE AND SALE OF GOODS ; (3) THE ASSESSEE-COMPANY AS A SERVICE PROVIDER IS A LWAYS THE OWNER OF THE ABOVE PRODUCTS WHICH IS MEANT ONLY AS DEVICES T O HAVE ACCESS TO THE MOBILE PHONE NETWORK SYSTEM MAINTAINED AND OPERATED BY THE ASSESSEE- COMPANY ; (4) THE SERVICES PROVIDED BY THE ASSESSEE-COMPANY T HROUGH VARIOUS DISTRIBUTORS IS REGULATED BY LAW. CARRYING ON THE B USINESS OF PROVIDING SERVICE IS SUBJECT TO SO MANY STATUTORY COMPLIANCE REQUIREMENTS, LIKE VERIFICATION OF THE IDENTITY OF THE CONSUMER AND TH E RELATED DOCUMENTATION, ETC. THE ASSESSEE-COMPANY IS HAVING ALL LAWFUL OBLIGATIONS TO A PRE-PAID CONSUMER, EVEN THOUGH THE DIRECT DEAL IS BETWEEN THE DISTRIBUTOR AND THE CONSUMER. THIS IS B ECAUSE THE DISTRIBUTOR DOES NOT HAVE ANYTHING TO PROVIDE 'AS SERVICE' TO T HE CONSUMER. THESE ARE ALL FEATURES OF AGENCY RELATIONSHIP. (5) OTHER MATTERS EXPLAINED BY THE ASSESSEE AS, THE RE WAS NO PAYMENT BY THE ASSESSEE IN CASH OR CHEQUE BY WAY OF COMMISSION TO THE DISTRIBUTORS OR NOT CREDITING THE ACCOUNTS OF THE DISTRIBUTORS F OR ANY COMMISSION, DELIVERING THE PRODUCTS ONLY AFTER GETTING THE PRIC E IN FULL, ARE ALL MATTERS OF ASSESSEE'S INDOOR MANAGEMENT. (6) SERVICE CANNOT BE SOLD OR PURCHASED AND IT CAN ONLY BE PROVIDED. THE OPERATIONAL FEATURES EXPLAINED BY THE ASSESSEE-COMP ANY ARE NECESSARY IN RUNNING A MAMMOTH SYSTEM OF PROVIDING MOBILE TELE PHONE SERVICES OVER 4 MA NO. 85/K/2012 DUTTA TELECOM ZGENCY A. Y 2008-09 A LARGE GEOGRAPHICAL AREA. THE DISTRIBUTORS PROVI DE ESSENTIAL SERVICES TO THE ASSESSEE-COMPANY IN RUNNING SUCH A HUGE OPERA TIONAL SYSTEM. THE DISTRIBUTORS ARE LINKING AGENTS IN THE CHAIN OF D ELIVERY OF SERVICES TO CONSUMERS. THEREFORE, THE RELATIONSHIP IS NOT OF A PRINCIPAL TO PRINCIPAL.' AS THE FACTS ARE IDENTICAL IN THE PRESENT CASE AND WHAT WAS BEFORE HONBLE DELHI HIGH COURT IN THE CASE OF IDEA CELLULAR LTD. (SUPRA) AND HONBLE KERALA HIGH COURT IN THE CASE OF VODAFONE ESSAR CELLULAR LTD. AND PRINCIPLE LAID DOWN IN THESE TWO CASE LAWS, RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORDE RS OF THE LOWER AUTHORITIES AND THE APPEAL OF ASSESSEE IS DISMISSED. WE FIND THAT IN THE PRESENT CASE, THE TRIBUNAL ALRE ADY CONSIDERED THE ISSUE OF SERVICES RENDERED I.E. BUYING AND SELLING OF GOODS IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET OR VALUABLES, ARTICLES OR THINGS. THE ASSESSEE WHILE COLLECTING THE INFORMATION OF THE AMOUNT PAYABLE TO THE RETAILER PREFERRED CLAIM ON VODAFONE BY DEBITING A CLAIM OF RECEIVABLE ACCOUNTS. THE CLAIM OF THE ASSESSEE THAT IT HAS NOT DEBITED THE EXPENDITUR E TO THE P&L ACCOUNT WILL NOT MAKE ASSESSEES CLAIM THAT IT IS NOT LIABLE TO TDS IN AN Y WAY. FOR THIS, WE HAVE PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. IDEA CELLULAR LTD. (2010) 325 ITR 148 (DEL). WE FIND THAT WE HAVE FAIRLY OPINED O N THE ISSUE AFTER CONSIDERING THE ARGUMENTS OF THE ASSESSEES COUNSEL AND IN CASE WE RECALL THE ORDER THAT WILL TANTAMOUNT TO REVIEW OF TRIBUNALS ORDER, WHICH WE HAVE NO POWER. HENCE, MI SC. APPLICATION OF ASSESSEE IS DISMISSED. 5. IN THE RESULT, THE ASSESSEES MISC. APPLICATION STANDS DISMISSED. 6. ORDER IS PRONOUNCED IN THE OPEN COURT ON 28.09.2 012 . SD/- SD/- , ! ' ! ! ' ! ! ' ! ! ' ! , (PRAMOD KUMAR) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0 0 0 0) )) ) DATED : 28TH SEPTEMBER, 2012 12 '$34 '5 JD.(SR.P.S.) / - ''# 6#'7- COPY OF THE ORDER FORWARDED TO: 1 . /APPLICANT DUTTA TELECOM AGENCY, P.O. BAGDANGA, P. S. KANDI, DIST. MURSHIDABAD, PIN-742137. 2 *+, / RESPONDENT JCIT, RANGE-MURSHIDABAD 3 . '/$ ( )/ THE CIT(A) , KOLKATA 4. '/$ /CIT, KOLKATAN 5 . >'? '$ / DR, KOLKATA BENCHES, KOLKATA *# '/ TRUE COPY, /$/ BY ORDER, ! 4 /ASSTT. REGISTRAR .