2018 (5) TMI 2104 - AT - Income Tax

Assessee in default u/s 201(1) - Assessment in the name of a non-existing company - assessee argued assessment order was passed in the name of a non-existing company i.e Vodafone South Ltd. as merged with Vodafone Mobile Services Ltd. - HELD THAT - We find that the assessee Vodafone South Ltd., had merged with Vodafone Mobile Service Ltd., and had intimated to the relevant A.O and CIT(A) about the said merger. We find that the A.O had issued the notice in the correct name, but while passing the assessment order, he has mentioned the earlier name of the assessee. Hon ble Supreme Court in a recent case of Skylight Hospitality LLP 2018 (4) TMI 529 - SC ORDER has held that the wrong name given in the notice was merely a clerical error which could be corrected u/s 292B of the IT Act. In fact, the A.O has passed a corrigendum dated 22.01.2018, correcting the name of the assessee and therefore, there is no infirmity in the assessment order. In view of the same, the additional grounds of appeal raised by the assessee is rejected. TDS u/s 194C - Liability to deduct tax at source on discount extended to its pre-paid distributors on distribution of pre-paid services - Since the issues are covered in favour of Revenue in the assessee s own case by the decisions of the jurisdictional High Court, we are bound to follow the jurisdictional High Court and therefore the grounds are rejected and the orders of the A.O and CIT(A) on this issue are confirmed. Accordingly, assessee s appeals are dismissed.

Summary

Issues:
1. Non-deduction of taxes on commissions paid to agents for prepaid SIM cards and recharge coupons.
2. Applicability of section 194H of the Income Tax Act.
3. Liability to deduct tax at source on discounts extended to prepaid distributors.
4. Validity of TDS demand under section 201(1) of the Act.
5. Charging of interest under section 201(1A) of the Act.
6. Correctness of assessment order passed in the name of a non-existing company.
7. Admissibility of additional grounds of appeal.
8. Interpretation of judgments by jurisdictional High Courts.

Detailed Analysis:
1. The case involved appeals against orders confirming the assessee as in default for not deducting taxes on commissions paid to agents for prepaid services. The Assessing Officer (A.O) held the assessee liable under section 201(1) and 201(1A) of the IT Act. The issue had been previously adjudicated by the High Court, and the A.O raised a demand based on the earlier judgment.

2. The appellant contested the applicability of section 194H of the Act regarding tax deduction on discounts extended to prepaid distributors. Various arguments were made challenging the relationship between the appellant and distributors, the nature of the discount, and the flow of monies, among others.

3. The appellant also challenged the TDS demand under section 201(1) of the Act, arguing against the recovery of tax demand in cases of non-deduction of tax at source. The issue of potential double recovery of taxes was raised concerning the income earned from further distribution of prepaid services.

4. The charging of interest under section 201(1A) of the Act was disputed by the appellant, contending that the action was not justified. The grounds for challenging the interest levy were based on the facts and circumstances of the case and legal provisions.

5. The correctness of the assessment order passed in the name of a non-existing company was deliberated. The appellant argued that the assessment should be set aside due to the incorrect company name. However, the A.O corrected the name through a corrigendum, and the Tribunal found the assessment order valid.

6. Additional grounds of appeal were raised by the appellant, which were contested by the Departmental Representative (DR). The Tribunal admitted and adjudicated on the additional ground concerning the company name issue, ultimately rejecting the appellant's argument.

7. The Tribunal upheld the orders of the A.O and CIT(A) on issues previously decided against the appellant by the jurisdictional High Court. Despite arguments based on decisions from other High Courts, the Tribunal followed the precedent set by the jurisdictional High Court, leading to the dismissal of the appeals.

8. The judgment was pronounced on 30th May 2018, confirming the dismissal of the appeals filed by the assessee for both assessment years. The Tribunal's decision was based on the legal interpretations and precedents established by the jurisdictional High Court.