MD. NABIRUL ISLAM,MURSHIDABAD vs. D.C.I.T., CIRCLE - 42, MURSHIDABAD, MURSHIDABAD

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ITA 43/KOL/2023Status: DisposedITAT Kolkata02 August 2023AY 2013-20144 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the discount allowed to retailers was on a principal-to-principal basis and not commission, thus not attracting TDS under Section 194H. Consequently, the disallowance made by the lower authorities was deleted.

What were the facts?

The assessee, a dealer/distributor, sold prepaid sim cards and recharge coupons to retailers at a discounted rate. The lower authorities disallowed the expenses on the grounds of non-deduction of TDS under Section 194H.

What were the issues?

Whether TDS was liable to be deducted under Section 194H on discounts given to retailers, and if the disallowance under Section 40(a)(ia) for non-deduction was justified.

Which sections of the Income-tax Act were involved?

Section 194H,Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, “C” BENCH KOLKATA

Before: Shri Sanjay Garg & Dr. Manish Borad

order : August 02, 2023 आदेश / ORDER संजय गग�, �या�यक सद�य �वारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 21.11.2022 of the National Faceless Appeal Centre (hereinafter referred to as the ‘CIT(A)’) passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).

1.

2. The sole issue involved in this appeal is as to whether Tax at Source (TDS) was liable to be deducted u/s 194 of the Income Tax Act on the discount allowed to retailers by the assessee dealer/distributors on sale of prepaid sim cards/mobile recharge cards and whether the lower authorities were justified in making disallowance u/s 40(a)(ia) of the Act Assessment year: 2013-14 Md. Nabirul Islam on account of non-deduction of TDs on such discount given by the assessee to the retailers on sale of sim card/recharge coupons.

3. The issue is squarely covered by the recent decision of the Hon’ble Bombay High Court in the case of ‘Commissioner of Income Tax (TDS), (Pune) v. Idea Cellular Ltd.’ in IT APPEAL NO. 302 OF 2019 decided on 13.01.2020, whereby, the Hon’ble Bombay High Court has observed as under:

“1. Heard learned counsel for the parties.

2.

The Appellant-Revenue challenges the order dated 14 May, 2018 passed by the Income Tax Appellate Tribunal in Income-tax Appeal No. 808/PUN/2016.

3.

This Appeal pertains to the Assessment Year is 2013-14.

4.

The Appellant-Revenue has raised the following questions as a substantial questions of law :- "(a) Whether on the facts and circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal erred in holding the discount given by the assessee to its distributors on prepaid SIM Cards does not require deduction of tax under section 194H of the Income-tax Act ? (b) Whether on the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal erred in setting aside the case to the Assessing Officer?"

5.

The Tribunal noted the observations of the Assessing Officer that the discount allowed to the distributors by the Respondent - assessee- company is on account of principal-to-principal relationship and not that of principal to agent. The Tribunal followed the decision of the Karnataka High Court in the case of Bharti Airtel Ltd. v. Dy. CIT [2014] 52 taxmann.com 31/[2015] 228 Taxman 219 (Mag.)/372 ITR 33 and held that the sale of SIM cards/recharge coupons at discounted rate to the distributors was not commission and therefore not liable for deduction of the TDS under section 194H. The Tribunal noted that there was no decision of this Court on this issue on that date.

6.

Learned counsel for the parties have tendered the copy of the order passed in subsequently in the case of Pr. CIT v. Reliance Communications Infrastructure Ltd., Income-tax Appeal No. 702 of 2017, where same issue arose for the consideration of this Court. The Division

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