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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, AM:
This is an appeal filed by the assessee for the financial year 2010-11 relevant to assessment year 2011-12 against appeal order dated 28.11.2013 passed u/s 250 of the Income-tax Act, 1961 by CIT(A)-II, Indore [“CIT(A)”] which in turn arises out of order dated 31.01.2013 passed by DCIT (TDS), Indore u/s 201(1)/(1A) of the Income-tax Act, 1961.
The background facts leading to this appeal are such that the assessee-company is engaged in the business of providing telecom services
AY 2011-12 M/s Vodafone Idea Ltd. (Formerly M/s Idea Cellular Ltd.) through pre-paid and post-paid connections. In order to provide such services, the assessee allowed certain amounts to distributors/dealers of pre-paid vouchers. Further, the assessee also took services from other telecom operator (OTOs) and paid ‘roaming charges’ to those OTOs. The AO passed order dated 31.01.2013 u/s 201(1)/(1A) treating the assessee as defaulter for non-deduction of tax at source (TDS) out of (i) amounts allowed to distributors/dealers of pre-paid vouchers and (ii) roaming charges paid to OTOs. The AO created demand of tax plus interest. Aggrieved, the assessee carried the matter in first appeal to CIT(A) but could not succeed. Now, the assessee has come in next appeal before us challenging the orders of lower authorities on following grounds :-
AY 2011-12 M/s Vodafone Idea Ltd. (Formerly M/s Idea Cellular Ltd.) AY 2011-12 M/s Vodafone Idea Ltd. (Formerly M/s Idea Cellular Ltd.) AY 2011-12 M/s Vodafone Idea Ltd. (Formerly M/s Idea Cellular Ltd.) AY 2011-12 M/s Vodafone Idea Ltd. (Formerly M/s Idea Cellular Ltd.) AY 2011-12 M/s Vodafone Idea Ltd. (Formerly M/s Idea Cellular Ltd.)
We have heard learned Representatives of both sides and case-records perused.
Ground Nos. II & III relate to TDS out of the amounts allowed to distributors/dealers of pre-paid vouchers. Precisely, the revenue is treating the amounts allowed by the assessee as ‘commission’ requiring TDS u/s 194H. Ld. AR for assessee submitted that this issue has been recently settled by Hon'ble Supreme Court in Bharti Cellular Limited vs. ACIT, (2024) 160 taxmann.com 12 (S.C.) wherein the Hon'ble apex court has held that there is no ‘commission’ and section 194H is not applicable, the concluding para of order is reproduced below :-
“42. In view of the aforesaid discussion, we hold that the assessees would not be under a legal obligation to deduct tax at source on the income/profit component in the payments received by the distributors/franchisees from the third parties/customers, or while selling/transferring the pre-paid coupons or starter-kits to the distributors. Section 194H of the Act is not applicable to the facts and circumstances of this case. Accordingly, the appeals filed by the assessee-cellular mobile service providers, challenging the judgments of the High Courts of Delhi and Calcutta are allowed and these judgments are set aside. The appeals filed by the Revenue challenging the judgments of High Courts of Rajasthan, Karnataka and Bombay are dismissed. There would be no orders as to cost. Pending applications, if any, shall stand disposed of.”
Ground No. IV relates to TDS out of roaming charges paid by assessee to OTOs. This issue has also been decided by this very Bench in a consolidated order for & 265/Ind/2018 dated
AY 2011-12 M/s Vodafone Idea Ltd. (Formerly M/s Idea Cellular Ltd.)
23.04.2024 in favour of assessee. For the sake of brevity, we re-produce only concluding para of the order of ITAT:-
“15. We have considered rival submissions of both sides and perused the controversy involved in the light of provisions of law and the decisions cited before us. The precise controversy before us is whether or not the payment of roaming charges made by assessee to OTOs constituted ‘FTS’ or ‘Royalty’ so as to attract TDS u/s 194J? After a careful consideration, we find that it is vehemently held in various decisions, as narrated above, that such payment of roaming charges is neither in the nature of ‘FTS’ nor ‘Royalty’ and hence did not require TDS u/s 194J. Therefore, respectfully following the orders of different appellate forums, we are of the view that the assessee cannot be held as ‘assessee-in-default’ for non-deduction of tax at source out of payment of roaming charges. Accordingly, the grounds of assessee are allowed.”
Thus, Ld. AR contended, the Ground No. II, III & IV raised by assessee must succeed in view of above cited authority. Ld. DR for Revenue though dutifully supported the orders of lower-authorities but, however, could not rebut or controvert the submissions of Ld. AR. Respectfully following the pre-existing available authority on the issues as noted in foregoing paras, we hold that the assessee was not liable to TDS. Accordingly, ground nos. II, III & IV are allowed.
Ld. AR for assessee submitted that once ground No. II, III & IV are allowed, remaining grounds would be rendered academic requiring no adjudication. Since we have allowed ground No. II, III & IV, we are not required to adjudicate all other grounds as prayed for by Ld. AR.
AY 2011-12 M/s Vodafone Idea Ltd. (Formerly M/s Idea Cellular Ltd.)
Resultantly, this appeal is allowed.
Order pronounced in open court on 24.04.2024.