M/S DICKSON ELECTRONICS,SRINAGAR vs. INCOME TAX OFFICER WARD -3(1), SRINAGAR

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER

I.T.A. No. 33/ASR/2018 Assessment Year: 2013-14

Vs. I.T.O. Ward -3(1), M/s. Dickson Electronics, Srinagar, (J&K) M.S. Mall, Residency Road, Srinagar (J&K) [PAN: AAEFD 9191M] (Appellant) (Respondent)

Appellant by : Sh. P. N. Arora, Adv. Respondent by: Sh. Manpreet Singh Duggal, Sr DR Date of Hearing: 28.06.2022 Date of Pronouncement: 27.07.2022

ORDER Per Anikesh Banerjee, JM:

The instant appeal is directed against the order of Ld. Commissioner of Income Tax (Appeal)-2, Jalandhar, {in brevity CIT(A)} bearing appeal no. 179/16-17/CIT(A)-2/Jal date of order 15.11.2017, order passed u/s. 250(6) of

the Income Tax Act, 1961 (in brevity of the Act) for the Assessment year 2013-14. The impugned order was generated from the order of Income Tax Officer, Ward-3(1) Srinagar KMR (in brevity A.O) order passed u/s.143(3) of the Act date of order 19.03.2016.

M/s. Dickson Electronics, Srinagar ITA no. 33/ASR/2018 Asstt Year 2013-14 2. Tersely we advert the fact of the case. That assessee is a franchise of

Bharat Sachar Nigam Ltd.(in brevity BSNL). The assessee sold SIM-Card on

behalf of BSNL. Copy of agreement is annexed herewith from page no. 182 to

205 of APB. Nature of transaction is the discount on sale of Sim-card to the

parties on behalf of BSNL. The ld. AO had treated this discount as Commission.

On violation of section 194H read with section 40(a)(ia) of the Act, ld. AO

added back amount of Rs.8,60,955 as taxable income with the total income of

the assessee. In other issue the interest was added back at Rs.51861/- for the

reason that assessee declared the interest income at 5,56,386/- against the

interest income of 6,08,068/- earned in the year under consideration as per Form

No. 26AS of Income Tax Rules, 1962. The interest amount was added back

with the total income of the assessee. Aggrieved assessee filed an appeal before

the CIT(A). The ld. CIT(A) upheld the order of the ld. AO. Being aggrieved

assessee filed an appeal before us.

to 261, which is kept in the record. Copy of agreement of BSNL is annexed in

page no. from 182 to 205 of APB. Further copies of purchase bills from BSNL

are annexed from page no. 95 to 103 of APB. The BSNL sold goods by

allowing discount @5.5% on total amount, also TDS was deducted @10% from

the party. The same sim-cards were sold by the assessee to the parties and copy 2

M/s. Dickson Electronics, Srinagar ITA no. 33/ASR/2018 Asstt Year 2013-14 of sale bills are annexed in page no. 104 to 169 of APB. The assessee sold the

goods @4% deduction. The ld. Counsel of the assessee prayed for deletion of

the addition of Rs.8,60,955/-.

for sustaining the addition.

BSNL sold the goods at discount of 5.5% and deduction of TDS at 10@. The

sim-card was sold to the party @4% discount. The same amount was already deducted TDS by the BSNL. So, no need to deduction of TDS 2nd time on the

same amount. The doubled taxation in same amount is nullity. The assessee

relied on the order of Coordinate Bench in the case of Bharat Sanchar Nigam

Limited Vs. Income Tax Officer (TDS) in ITA no. 486 to 489/ASR/2014

date of pronouncement of order 12.06.2015. The respectful observations of

the above-mentioned judgment in para 2 is extracted as follows:

“2. As before the Authorities below, the assesse maintains that the PR was not liable to deduct tax at source under section 194H of the Act. The assesse has placed reliance on ‘Bharti Airtel Limited vs. DCIT’, 372 ITR 33 Karnataka, wherein, while holding that the contention precedent for deduction of tax at source concerning commission paid on sale of

M/s. Dickson Electronics, Srinagar ITA no. 33/ASR/2018 Asstt Year 2013-14 prepaid Sim Card to distributors, is that income shall have accrued and that where there is no accrual of income, tax is not taxable on discount allowed to distributor. The Ld. DR, on the other hand, has placed reliance on the decision in case of Idea Cellular Ltd. 325 ITR 148 Delhi on this issue. It is seen, that the judicial view of the various High Courts is divergent regarding the deductibility or otherwise of tax on discount allowed to distributor on sale of prepaid Sim Card. However, there is no decision by the Hon’ble Jurisdictional High Court, either way. That being so, all the cases having been taken into consideration and distinguished therein and the matter having decided in favour of assesse, respectfully following ‘Bharti Air tel Limited (supra), we hold, in accordance therewith, that no tax was liable on the discount allowed by BSNL to its distributors on sale of prepaid sim card,d and that that being so, no question of levy of any interest under section 201(1A) of the Act arises. Accordingly, the grievance of the assesse accepted and the levy of interest under section 201(1A) of the Act is cancelled.”

5.1 In this result the assessee had not violated the provisions of section 194H

of the Act, so addition amounting to Rs.8,60,955/- is deleted.

5.2 Relating to interest amount of Rs.51,682/- for mismatch in the declared

interest in books of assessee and the interest as per 26AS, the assessee was not

able to explain the difference before the Bench. So, the addition made amount

to Rs.51,682/- on account of undisclosed interest is sustained.

Rs.51,682/- is dismissed.

M/s. Dickson Electronics, Srinagar ITA no. 33/ASR/2018 Asstt Year 2013-14 7. In the result, appeal of the assessee is partly allowed.

Order pronounced in the open court on 27.07.2022

Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File True Copy By Order