Vodafone Idea Limited V. The Deputy Commissioner of Income Tax, Circle 14(2), Hyderabad

ITTA/181/2022

AI Insights

The case involves Vodafone Idea Limited, which appealed against the order of the Income Tax Appellate Tribunal, Hyderabad, concerning the treatment of discounts offered to distributors as commission under Section 194H of the Income Tax Act, 1961. The High Court of Telangana dismissed the appeal, referencing a similar case (ITTA No.291 of 2013) where it was decided that such discounts are to be treated as commission, thus attracting tax deduction at source.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 796530 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 08-01-2024
• Assessment Year: misc
• Other Referred Cases: C.I.T. vs. Idea Cellular Ltd., Vodafone Essar Cellular Ltd. vs. ACIT, Bharti Cellular vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: M NAGA DEEPAK
• Keywords: Income Tax; Principal-Agent Relationship; Tax deduction at source; Discount as Commission
• Section: 260A; 194H

Judgement Text

"IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD NIONDAY ,THE EIGHTH DAY OF JANUARY TWO THOUSAND AND TWENTY FOUR PRESENT THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE N.TUKARAMJI INCOME TAX TRIBUNAL APPEAL NO:181 OF 2022 Appeal under Section 260A of the lncome Tax Act, '1961 against order dated 23-12-2021 in ITA No. 85lHydt202o on the file of the lncome Tax Appellate Tribunal \"8\" Bench at Hyderabad preferred against the order dated 7- 11-2019 in ITA Nos. 10601 & 10602 tClT (A) -8tHydl2014-15 on the file of the commissioner of lncome Tax ( Appeals ) 8, Hyderabad preferred against the order of the Assistant commissioner of lncome Tax, Circle 14 (2) (llc) Hyderabad dated 7-3-2014 in TAN/PAN No. HYD1009'16G Between: Vodafone ldea Limited, (Formerly ldea Cellular Limlte!! ]\"d ll-o^ol^Y11'I Towers - ll S\"grr\"p\"t Hyderzibad -'500 O16TAN. HYDl00916G PAN. AAAC82'100P ...APPELLANT AND The Deputy Commissioner of lncome Tax, Circle 14(2)' Hyderabad ...RESPONDENT Counsel for the Appellant: SRl. M. NAGA DEEPAK Counsel forthe Respondent: NONE APPEARED The Court made the following ORDER: t -t ii \"t] g J Ir: THE HON,BLE SRI JIISTICE P.SAM KOSITY AND THE HON'BLE SRI JUSTICE N.TUKARAMJI I.T.T.A.No.181 oF 2022 ORDER:per rfo n'ble Sn Justice P'SAM KosHy) Heard Sri M. Naga Deepak, learned counsel for appellant Perused the material available on record' 2. An identical issue has already been taken up by a Division Bench of this Court in I'T'T'A'No'291 of 2013 which stood decided on 17 .O7 .2013 in respect of the same assessee and the dispute in the present appeal also is the same' 3. Given the fact that identical issue already stands decided' we are of the considered opinion that the instant I'T'T'A also is squarely covered and decided in the light of the decision of the Division Bench of this Court in I'T T'A'No'2O1 of 2013' 4. Accordingly, the present appeal stands dismissed in terms of the order of this Court rn I'T'T'A'No'291of 2Ol3 dated 17'O7'2073' 5. l,earned counsel for the petitioner submitted that the order in I.T.T.A.No.291 of 2O13 d'ated' 77'O7'2O13 is challenged before the Hon'lcle Supreme Court and it is pending' Needless to say that the decision of this Court would be subject to the outcome of the order 2 ll I i, to be passed by the Hon'ble Supreme Court. No costs. Miscellaneous Petitions pending if any shall stand closed. Sd/- C.V. MALLIKARJUNA VARM JOINT REGISTR R //TRUE COPYII SECTION OFFICER To 1. The lncome Tax Appellate Tribunal \"B\" Bench at Hyderabad 2. The Commissioner of lncome Tax ( Appeals ) 8, Hyderabad 3. The Assistant Commissioner of lncome Tax, Circle 14 l2l lllcl , Hydera bad. 4. One CC to SRl. M. NAGA DEEPAK, Advocate IOPUCI 5. Two CD Copies Notc ( along with a copy of the order datcd 17 -07 -2013 in ITTA No. 291 of 2013) kul ffi .t I l 1 ,;l c { e' I i I I I 1 HIGH COURT PSKJ & NTRJ DATED:O8tO1l2O24 ORDER lTTA.No.181 of 2022 DISMISSING THE ITTA wr tHoul' cosl's f L1E 574 15: 2 2 t4AH n21 sParc eEC 4 rfi I { I ,,C .J 't; .H { . {+ # \"\"1X J { -.:rd i ,^ J ( a * * T I l s1: ,ZL THE HON'BLE THE CHIEF JUSTICE SBIKALYAN JYOTI SENGUPTA AND THE HON'BLE Ms. JUSTICE G. ROHINI LT.T.A. No.29'l o12013 DATED:17.7.2013 Between: IvUs. Vodalone Essar South Ltd-, Hyderabad. ... Appellant And The Deputy Commissioner of lncome Tax, Hyderabad. ... Respondent THE HON'BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON'BLE Ms. JUSTICE G. ROHINI JUdgment: (per the Hon'ble the Chiel Justice Sri Kalyan Jyoti Sengupta) This appeal is preferred against the judgment and order of the learned Tribunal dated 31.1.2013 in relation to the assessment year 2007-08 and is sought to be admitted on the following suggested questions of law: a) Whether on the facts and circumstances of the case, the Hon'ble Tribunal was right in upholding the orders of the authorities below in treating the discount offered by the appellant to ils distributors as commission paid by the appellant ? b) Whether on the facts and circumstances of the case, the Hon'ble Tribunal was right in confirming the orders of the lower authorities holding that lhe relationship between appellant and its distributors was not that ol a 'Principal to Principal', but only a Principal-Agent relationship ? c) Whether the Tribunal was right in confirming the orders of lhe lower authorities that the discount otlered by the appellant on sale of Prepaid SIM cards and Recharge coupons etc., would be a commission envisaged under Section 194H of the lncome Tax Act, 1961 ? d) [Ierely because the appellant is a service provider, does it necessarily mean that the relationship with its distributor would always be on'Principal to Agent'basis ? Can it be said that only in case of goods, there can either be Principal to Agent or Principal to Principal arrangement ? l.T.T.A.No.291 OF 2013 e) Whether the fact that the pre-paid distributor was required to undertake activities such as pertorming subscriber identification, doing documentation work and enrolling them as mobile subscribers would make lhe pre-paid distributor an agent of the Petitioner ? 0 Whether the fact that no such services relerred to above were rendered in relation to recharge coupons would nol imply that the relationship between the Petitioner and the pre-paid distributor is a Principal-Principal relationship as regards distribution of recharge coupons ? s) Whether the Tribunal was right in holding that the tax deduction provisions can be applied to such unascertained or indeterminable amounts keeping in view the un-workability of computation provisions in such cases ? h) Whether the Tribunal was right in holding that Section 194H will apply to such cases where a person neither makes any payment nor credits any sum to the accounl of anolher person ? After reading the suggested questions of law, we are of the view that almost all the suggested questions relate to question of fact, not law. ln any view of the matter, upon hearing the learned counsel for the appellant and after going through the impugned judgment and order ol the learned Tribunal, the only point that arises for consideration is whether allowing discount to the dealers on SIM Cards and re-charge coupons will attract the provision for tax deducted at source under the Act or not. The learned Tribunal has followed the following decisions of various High Courts, namely, C.l.T. vs. ldea Cellular Ltd., reported in 325 ITR 148 DEL; Vodafone Essar Cellular Ltd., vs. ACIT reported in 332 ITR 255 Kerala and Bharti Cellular vs. ACIT reported in 244 CTR 185 Cal. lt is recorded that the / I 4 rdcts of the case in all those reported judgments are identical to the facts of the present case. The learned Tribunal recorded that the A.R. did not bring in any arguments to distinguish the above cases in so far as similarity of facts and method of accounting are concerned. The learned Tribunal following the decisions of the other High Courts referred to above, dismissed the appeal and held that the provision of Section 194H is applicable in respect of amounts paid to the agents in connection with sale of SIM cards and other services is adaptable. Hence, we do not find any illegality or infirmity in the impugned judgment and order of the Tribunal. The appeal is accordingly dismissed. K.J. SENGUPTA, CJ G. ROHINI, J 17.O7.2013 pnb r) I "