Itxa/1152/2017 Of The Commissioner Of Income Tax (Tds). Pune v. Vodafone Cellular Ltd

Sonali Kilaje IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1152 OF 2017 Commissioner of Income Tax(TDS) Pune ..Appellant v/s. M/s.Vodafone Cellular Ltd. ..Respondent WITH INCOME TAX APPEAL NO. 1274 OF 2017 Commissioner of Income Tax(TDS) Pune ..Appellantv/s.Vodafone Cellular Ltd...Respondent WITH INCOME TAX APPEAL NO. 1995 OF 2017 Commissioner of Income Tax(TDS) Pune ..Appellantv/s.M/s.Vodafone Cellular Ltd...Respondent WITH INCOME TAX APPEAL NO. 571 OF 2018 Commissioner of Income Tax(TDS) Pune ..Appellant v/s. Vodafone Cellular Ltd. ..Respondent WITH INCOME TAX APPEAL NO. 1266 OF 2018 Commissioner of Income Tax(TDS) Pune ..Appellant v/s. Vodafone Cellular Ltd...Respondent Mr. Sham Walve a/w. Mr.Pritesh Chatterjee for Appellant.Ms. Mrunal J. Parekh i/b. DMD Advocates for Respondent. CORAM: UJJAL BHUYAN, & MILIND N. JADHAV, JJ. P. C.:- DATE : JANUARY 27, 2020. .This order will dispose of all the above five appeals. 2.Heard Mr. Sham Walve, learned standing counsel revenue forthe appellant and Ms.Mrunal J. Parekh, learned counsel for therespondent-assessee. Heard Mr. Sham Walve, learned standing counsel revenue for 3. Without entering into the factual details, it is seen that in all these appeals, revenue has proposed the following two questions assubstantial questions of law : “a)Whether on the facts and in the circumstances of the caseand in law, Hon’ble ITAT was justified in holding that TDS provisions under section 194H of the Income Tax Act, 1961 arenot attracted on discounts given by the assessee to the distributors of prepaid SIM cards ?and in law, Hon’ble ITAT was justified in holding that TDS provisions under section 194H of the Income Tax Act, 1961 arenot attracted on discounts given by the assessee to the distributors of prepaid SIM cards ? Sonali Kilaje b)Whether on the facts and in the circumstances of the caseand in law, Hon’ble ITAT erred in setting aside the case of the AO ?” 4.From the above what is discernible is that issue raised in thesebunch of appeals is whether provisions of Section 194H of theIncome Tax Act, 1961 (briefly “the Act” hereinafter) will beapplicable in case of discounts given by the assessee to thedistributors on account of prepaid SIM cards. 5.Section 194H of the Act deals with commission or brokerage.It says that any person, not being an individual or a Hinduundivided family, who is responsible for paying, on or after the 1[st]day of June, 2001, to a resident, any income by way ofcommission(not being insurance commission referred to in section194D) or brokerage, shall, at the time of credit of such income to theaccount of the payee or at the time of payment of such income incash or by the issue of a cheque or draft or by any other mode,whichever is earlier, deduct income-tax thereon at the rate of five 11.2-ITXA-1152-17+.doc percent. 6.In Pr. Commissioner of Income Tax-8, Mumbai v/s.M/s.Reliance Communications Infrastructure Ltd. - Income TaxAppeal No. 702 of 2017 decided on 22.07.2019, this Court held thatwhen transaction is between two persons on principal to principalbasis, deduction of tax at source as per Section 194H of the Actwould not be made since the payment was not for commission or forbrokerage. It was held as under : 11.2-ITXA-1152-17+.doc percent. 6.In Pr. Commissioner of Income Tax-8, Mumbai v/s.M/s.Reliance Communications Infrastructure Ltd. - Income TaxAppeal No. 702 of 2017 decided on 22.07.2019, this Court held thatwhen transaction is between two persons on principal to principalbasis, deduction of tax at source as per Section 194H of the Actwould not be made since the payment was not for commission or forbrokerage. It was held as under : “3.Having heard the learned Counsel for the partiesand having perused the documents on record, we do notfind any error in the view of the Tribunal. The Tribunal,as noted, besides holding that the Commissioner’s ordersetting aside the order passed u/s 201 was not carried inappeal, had also independently examined the nature ofthe transaction and come to the conclusion that when thetransaction was between two persons on principal toprincipal basis, deduction of tax at source as per section194H of the Act, would not be made since the paymentwas not for commission or brokerage.” 7.The above view has been followed by this Court in Income TaxAppeal No. 1129 of 2017- Commissioner of Income Tax (TDS) PuneV/s. M/s.IDEA Cellular Ltd., decided on 13.01.2020. This Courtfollowed the earlier decision in M/s. Reliance CommunicationsInfrastructure Ltd. (supra) and held that no substantial question oflaw arose from such finding of the Tribunal. 8.Adverting to the facts of the present case, Tribunal held asunder : “36.In view of our discussion in the precedingparagraphs we hold that the sale of SIM cards / rechargecoupons at discounted rate to distributors is not commissionand therefore not liable to TDS u/s. 194H of the I.T.Act.However, we have restored the issue to the file of the AssessingOfficer for necessary verification in the light of the decision ofHon’ble Karnataka High Court (supra). Therefore, the groundsfor the other years on the issue of liability u/s. 194H areallowed for statistical purposes. We hold and directaccordingly. “ 9.In view of the above and following the earlier decision of this Court in M/s.Reliance Communications Infrastructure Ltd. (supra), we are of the view that the Tribunal was justified in holding that the provisions of Section 194H of the Act was not applicable ondiscounts given by the assessee to the distributors of prepaid SIMcards. 10.Thus upon thorough consideration of the mater, we do not findany error or infirmity in the view taken by the Tribunal. Nosubstantial question of law arises therefrom. 11.Consequently the appeals are dismissed. However there shallbe no order as to costs. (MILIND N. JADHAV, J.) (UJJAL BHUYAN,J.)