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2021 (1) TMI 881 - ITAT MUMBAITDS u/s 194H - discount extended to its pre-paid distributors on distribution of pre-paid services - as per CIT- A relationship between the Appellant and the pre-paid distributors is not that of ‘Principal to Principal’ and the discount allowed to them is in nature of commission liable for tax deduction at source as envisaged under section 194H - HELD THAT:- CIT (A)/TDS Officer have erred in not appreciating that the discount allowed by the Appellant is not income in the hands of its distributors and that income, if any, arises only when the pre-paid services are further distributed by the distributors. On the facts and circumstances of the case and in law, the learned CIT (A)/TDS Officer have erred in not appreciating the fact that there is no flow of monies from the Appellant to the distributor of pre-paid services but rather from the distributor to the Appellant, and hence, the provisions of section 194H of the Act fail to apply. On the facts and circumstances of the case and in law, the learned CIT (A)/TDS Officer has erred in placing reliance on the decision of Delhi High Court in the case of Idea Cellular [2010 (2) TMI 24 - DELHI HIGH COURT] and Kolkata Tribunal in the case of Bharti Cellular Limited [2006 (4) TMI 50 - ITAT, KOLKATA] without appreciating that the facts in those cases were different from the facts of the Appellant’s case. TDS demand raised under section 201(1) - HELD THAT:- The order of the learned TDS Officer, as upheld by learned CIT(A), is bad in law in so far as it seeks to recover tax demand under section 201 of the Act in contradiction to the settled principle that the payer cannot be held liable for payment of the tax demand in cases involving non-deduction of tax at source and only interest liability under section 201(1A) of the Act, if any, can be levied in such cases. TDS u/s 194J - non-deduction of tax at source on domestic roaming charges paid to other telecom operators - HELD THAT:- CIT(A)/TDS Officer have erred in not appreciating the fact that roaming services are standard automated services requiring no human intervention which is sine qua non for a service to qualify as a technical service for the purposes of section 194J of the Act. CIT(A) have erred in not appreciating that even as per the statement of technical experts, the carriage of calls is an automatic activity and human intervention, if any, is required only at the stage of inter-connect set-up, capacity enhancement, monitoring, maintenance, fault identification, repair, etc. CIT(A) have erred in ignoring the statement of technical experts recorded by the income-tax authorities in case of Vodafone Cellular Limited (now merged with Appellant itself), in the context of roaming services, wherein it has been clearly observed that roaming services are automated services requiring no human intervention. CIT(A)/TDS Officer has erred in not holding that characterization of a payment must be done having regard to the dominant purpose/intention of the payment. CIT(A) has erred in not following the principles laid down in judicial precedents cited by the Appellant and also ignoring the binding Apex Court judgment in the case of CIT vs. Delhi Transco Limited [2016 (4) TMI 1005 - SC ORDER] and CIT vs. Kotak Securities Limited [2016 (3) TMI 1026 - SUPREME COURT]
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