THE COMMISSIONER OF INCOME TAX (TDS)-1, CHANDIGARH vs. M/S VODAFONE IDEA LIMITED

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ITA/52/2020HC Punjab & HaryanaPHHC01159021201912 September 2024Bench: MR. JUSTICE SANJEEV PRAKASH SHARMA,MR. JUSTICE SANJAY VASHISTH4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issue was no longer res integra in view of the Supreme Court judgment in Bharti Cellular Limited (Now Bharti Airtel Limited) Vs. Assistant Commissioner of Income Tax, Circle 57, Kolkata and another, dated 28.02.2024. The Supreme Court had held that assessees would not be under a legal obligation to deduct tax at source on the income/profit component in the payments received by distributors/franchisees from third parties/customers, or while selling/transferring prepaid coupons or starter-kits to distributors. Therefore, Section 194H of the Act was not applicable to the facts and circumstances of the case. The High Court upheld the ITAT's order, which had followed this principle, and consequently dismissed the appeals filed by the Revenue. The operative direction was that the appeals filed by the Revenue were dismissed.

What were the facts?

The appeals were filed by the Revenue against the orders of the Income Tax Appellate Tribunal (ITAT). The ITAT had held that the discount offered by the assessee, Vodafone South Limited, to its distributors for prepaid services was not commission or brokerage under Section 194H of the Income Tax Act, 1961. The ITAT further held that Section 194H was not applicable. The assessment years involved were 2012-13, 2013-14, 2008-09, 2011-12, 2010-11, and 2009-10. The Revenue challenged these ITAT orders.

What were the issues?

1. Whether the discount offered by the assessee to its distributors for prepaid services constitutes commission or brokerage, making Section 194H of the Income Tax Act, 1961 applicable? Assessee's Contention: The assessee argued that the discount was not commission or brokerage and Section 194H was not applicable. The assessee relied on the Supreme Court judgment in Bharti Cellular Limited (Now Bharti Airtel Limited) Vs. Assistant Commissioner of Income Tax, Circle 57, Kolkata and another, dated 28.02.2024. Revenue's Contention: The Revenue challenged the ITAT's order which was in favour of the assessee. The Revenue's specific arguments are not detailed in the judgment, but their appeal is against the ITAT's finding that Section 194H was not applicable.

Which sections of the Income-tax Act were involved?

Section 194H

AI-generated summary — verify with the full judgment below

ITA-52 of 2020

262 IN TH

The Commiss Vodafone Sou The Commiss Vodafone Sou The Commiss Vodafone Sou The Commiss Vodafone Sou The Commiss Vodafone Sou The Commiss

0 and other connected cases HE HIGH COURT OF PUNJA CHANDIGAR

sioner of Income Tax (TDS)-1, C Vs.

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uth Limited sioner of Income Tax (TDS)-1, C Vs.

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Page 1 of 4 AB AND HARYANA AT RH

ITA-52-2020(O&M) Chandigarh . . . . Appellant . . . . Respondent ITA-66-2020(O&M) Chandigarh . . . . Appellant . . . . Respondent ITA-67-2020(O&M) Chandigarh . . . . Appellant . . . . Respondent ITA-69-2020(O&M) Chandigarh . . . . Appellant . . . . Respondent ITA-70-2016(O&M) Chandigarh . . . . Appellant . . . . Respondent

ITA-73-2020(O&M) Chandigarh . . . . Appellant

t t ) t t ) t t ) t t ) t t ) t RASHMI 2024.09.16 19:14 I attest to the accuracy and integrity of this document

ITA-52 of 2020

Vodafone Sou CORAM: H

Present: M

SANJEEV P

B decided. 2.

A passed by the ITAT’), wher distributor fo envisaged und that Section 1 with regard to 2011-12, 2010

0 and other connected cases uth Limited ****

HON’BLE MR. JUSTICE SAN HON’BLE MR. JUSTICE SAN **** Mr. Yogesh Putney, Sr. Standing Mr. Vaibhav Gupta, Standing Co for the Income Tax Department/R Mr. Rohit Sud, Advocate and Mr. Sachin Jolly, Advocate (thro For the respondent(s).

**** RAKASH SHARMA, J.(Oral) By way of this common order, Appellant(s)/Revenue have filed e Income Tax Appellate Tribun reby it was held that the discoun or its prepaid services is not der Section 194 H of the Incom 194 of the Income Tax Act shall o the respondents Assessment y 0-11 and 2009-10 respectively.

Page 2 of 4 . . . . Respondent Date of Decision: 12.09.2024 NJEEV PRAKASH SHARMA NJAY VASHISTH g counsel with ounsel Revenue. ough video conferencing) ) the aforesaid appeals are being d the appeals against the order nal, Chandigarh (for short ‘the nt offered by the assessee to the commission or brokerage as me Tax Act and it was submitted be applicable. The appeals were ear 2012-13, 2013-14, 2008-09,

4 g r e e s d e , RASHMI 2024.09.16 19:14 I attest to the accuracy and integrity of this document

ITA-52 of 2020

L issue is no mo Supreme Cou Assistant Com passed in Civi The rel under: 4.

W ITAT culmin

0 and other connected cases Learned counsel for the appella ore res integra, in view of the j urt ‘ Bharti Cellular Limited (N mmissioner of Income Tax, Ci il Appeal No. 7257-2011, dated levant extract of Bharti Cellul “42. In view of the afores assessees would not be un tax at source on the in payments received by the d third parties/customers, o pre-paid coupons or st Section 194-H of the Act is circumstances of this case by the assessee-cellula challenging the judgment and Calcutta are allowed aside. The appeals filed b judgments of High Courts Bombay are dismissed. T cost. Pending Application of.” We uphold the order passed by t ated into the order passed by th

Page 3 of 4 ant(s)/revenue submits that the udgment passed by the Hon’ble Now Bharti Airtel Limited) Vs. ircle 57, Kolkata and another’ 28.02.2024. lar Limited (supra), reads as said discussion, we hold that the nder a legal obligation to deduct ncome/profit component in the distributors/franchisees from the or while selling/transferring the tarter-kits to the distributors. s not applicable to the facts and e. Accordingly, the appeals filed r mobile service providers, ts of the High Courts of Delhi d and these judgments are set by the Revenue challenging the s of Rajashtan, Karnataka and There would be no orders as to ns, if any, shall stand disposed the ITAT and as the order of the he AO, whereby the appeal was

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’ s e t e e e

d d , i t e d o d e s RASHMI 2024.09.16 19:14 I attest to the accuracy and integrity of this document

ITA-52 of 2020

allowed, there appeals are he 5.

P disposed of.

September 12 Rashmi 1. Whethe 2. Whethe

0 and other connected cases efore, no further directions are ereby dismissed. Pending miscellaneous applica

(SANJ , 2024 r speaking/reasoned?

Y r reportable?

Page 4 of 4 required to be passed and the ation(s), if any, shall stand JEEV PRAKASH SHARMA) JUDGE

(SANJAY VASHISTH) JUDGE Yes/No Yes/No

e d RASHMI 2024.09.16 19:14 I attest to the accuracy and integrity of this document

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