SHRI AMIT KUMAR SHIVHARE,KOREA vs. INCOME TAX OFFICER 2(3), BILASPUR

आदेश/ ORDER PER RAVISH SOOD, JM:

“1. That under the facts and law the Ld. CIT(A) erred in confirming the disallowance of Rs.4,87,299/- made by the Ld. Assessing Officer u/s.40(a)(ia) for non-deduction of tax at source on commission expenses by rejecting the explanation which is unjustified.”

Assessing Officer, for the reason that the assessee had failed to deduct tax at source on the same. After disallowing the aforesaid amount, the Assessing Officer vide his order passed u/s 143(3) r.w.s. 263(1) of the Act, dated 25.03.2014 determined the income of the assessee at Rs.7,77,230/-.

failed to do so, thus, disallowed the same by triggering the provisions of Sec. 40(a)(ia) of the Act. On appeal the CIT(Appeals) rejected the manifold contentions that were advanced by the assessee and, finding no infirmity in the view taken by the Assessing Officer had upheld the aforesaid disallowance.

company, i.e, M/s Idea Cellular Ltd. was passed over by it to the retailers by debiting the same under the head “recharge commission expenses a/c”. Although, the assessee’s claim for deduction of recharge commission, at the first blush, as per its nomenclature appeared to be in the nature of a “commission expense” which would call for deduction of tax at source u/s. 194H of the Act, but as stated by the Ld. AR, and rightly so, the same was in sum and substance a discount which was received by the assesee from M/s. Idea Cellular Ltd. for passing over on a back to back basis to the retailers. In order to dispel any doubt as regards the aforesaid factual position, the assessee had placed on record an “affidavit” wherein he had categorically deposed that the discounts that were passed over to the retailers were wrongly shown by him in the ‘profit and loss a/c’ as “recharge commission”. Backed by the aforesaid factual position, we are of the considered view, that as the assessee had merely facilitated the passing over the retailers discounts that were received by him from the company, i.e, M/s Idea Cellular Ltd. to the retailers, therefore, the same, though wrongly categorized by him under the head “recharge

6 Shri Amit Kumar Shivhare Vs. ITO 2(3) commission” were not liable for deduction of tax at source u/s. 194H of the Act. Our aforesaid conviction is duly supported by the judgments of the Hon’ble High Court of Bombay in the case of CIT (TDS) Vs. Vodafone Cellular Ltd. (2021) 131 taxmann.com 191 (Bombay) and that of the Hon’ble High Court of Karnataka in the case of Bharati Airtel Ltd. Vs. DCIT (2014) 52 taxmann.com 31 (Karnataka). Also, a coordinate Bench of the Tribunal, i.e, ITAT, Chandigarh-B Bench in the case of Vodafone Idea Ltd. Vs. Assistant Commissioner of Income Tax (TDS), Chandigarh (2019) 179 ITD 207 (Chandigarh), had taken a similar view that tax withholding provisions under section 194H would not be applicable to discounts extended to pre-paid SIM distributors on transfer of pre-paid SIM cards/talk time.

disallowance u/s. 40(a)(ia) of the Act was called for in his hands. We, thus, in terms of our aforesaid observations not being able to persuade ourselves to subscribe to the view taken by the lower authorities set- aside the order passed by the CIT(Appeal) and vacate the disallowance of Rs. 4,87,299/- made by the Assessing Officer u/s. 40(a)(ia) of the Act. Thus, Ground of appeal No.1 raised by the assessee is allowed.