2018 (1) TMI 1297 - AT - Income Tax

Addition treating income of the assessee received from Vodafone Essar South Ltd. - Held that - The full address of the retailers had been furnished before the AO. In the given circumstances we are of the view that there was no basis for the CIT(A) to conclude that the assessee has not explained as to how the sum in question is payable to the retainers. It is clear from material on record that the sum as reflected in the TDS certificate given by Vodafone was not the assessee s income or money on which the assessee had any title except to the extent of ₹ 94,381/- which was reimbursement of van charges. The sum reflected in the TDS certificate cannot therefore be treated as assessee s income. The fact that the money payable to the retailers and runners is outstanding in the balance sheet cannot be a ground to hold that the sum reflected in the TDS certificate is income of the assessee. On the question of credit for TDS the assessee has reflected a sum of ₹ 94,381/- in the total income declared for the relevant assessment year and to this extent is entitled to credit. As far as the remaining sum is concerned since the sum in question is not the income of the assessee and further it has not been offered to tax in the relevant assessment year the assessee cannot claim credit for TDS. To this extent the action of the revenue authorities have to be held as proper. Therefore delete the addition

Summary

Issues:
1. Justification of sustaining addition of income received from Vodafone.

Analysis:
The appeal concerns an individual Assessee disputing the addition of Rs. 28,66,577 to their income by the Assessing Officer (AO) regarding income received from Vodafone Essar South Ltd. The Assessee acted as a distributor of SIM cards and e-recharge vouchers for Vodafone during the relevant assessment year. The AO questioned the declaration of TDS credit of Rs. 3,16,882 by the Assessee, as per Sec.199 of the Act, linking TDS credit to the income offered for taxation. The Assessee clarified that the TDS amount was payments made by Vodafone to retailers and runners through the Assessee, not income of the Assessee. The Assessee detailed the commission payments, service tax, and van expenses reimbursed by Vodafone. The AO disregarded these explanations and added Rs. 28,66,577 to the Assessee's income.

The Assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], reiterating the explanations provided to the AO. However, the CIT(A) raised questions about the payment mechanism to retailers and runners and the absence of proof of passing on TDS credit to them. CIT(A) found the Assessee's responses unsatisfactory, lacking independent proof of payments to retailers and runners, and upheld the AO's decision. Subsequently, the Assessee appealed to the Tribunal against the CIT(A)'s order.

The Tribunal carefully reviewed the submissions and evidence. It noted that the Assessee had submitted emails from Vodafone outlining the incentive scheme for retailers, along with invoices and documents identifying the retailers and runners. The Tribunal observed that the Assessee had provided full addresses of retailers to the AO during assessment proceedings. It concluded that the sum reflected in the TDS certificate was not the Assessee's income, except for the van charges reimbursement. Therefore, the Tribunal held that the Assessee could not claim credit for TDS on the disputed sum. Consequently, the Tribunal deleted the addition of Rs. 28,66,577 to the Assessee's income, partially allowing the Assessee's appeal.

In conclusion, the Tribunal's judgment revolved around the justification of adding income received from Vodafone to the Assessee's total income. The Tribunal found that the disputed sum in the TDS certificate was not the Assessee's income and therefore, the Assessee could not claim credit for TDS on that amount. The Tribunal's decision to delete the addition was based on the lack of evidence establishing the sum as the Assessee's income, except for the van charges reimbursement.