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2020 (1) TMI 1162 - HC - Income TaxTDS u/s 194H - discounts given by the assessee to the distributors of prepaid SIM cards - HELD THAT - Following the earlier decision of this Court in M/s. Reliance Communications Infrastructure Ltd. 2019 (7) TMI 1371 - BOMBAY HIGH COURT we are of the view that the Tribunal was justified in holding that the provisions of Section 194H of the Act was not applicable on discounts given by the assessee to the distributors of prepaid SIM cards. - Decided in favour of assessee.
Issues:
Whether TDS provisions under section 194H of the Income Tax Act are attracted on discounts given by the assessee to distributors of prepaid SIM cards? Whether the ITAT erred in setting aside the case of the Assessing Officer? Analysis: The High Court of Bombay considered five appeals where the revenue proposed two substantial questions of law related to the applicability of Section 194H of the Income Tax Act, 1961 on discounts given by the assessee to distributors of prepaid SIM cards. Section 194H deals with commission or brokerage payments. The Court referred to a previous judgment where it was held that when a transaction is on a principal to principal basis, TDS under Section 194H would not apply if the payment was not for commission or brokerage. The Court further cited another case where it was concluded that no substantial question of law arose from the Tribunal's decision. The Tribunal in the present case held that the sale of SIM cards at discounted rates to distributors does not constitute commission and therefore is not liable to TDS under Section 194H. However, the issue was remanded to the Assessing Officer for verification in light of a decision by the Karnataka High Court. The High Court, following its previous decisions, upheld the Tribunal's view that Section 194H was not applicable to the discounts given by the assessee to distributors of prepaid SIM cards. The Court found no error in the Tribunal's decision and concluded that no substantial question of law arose from the matter. In conclusion, the High Court dismissed the appeals, stating that there shall be no order as to costs. The Court's decision was based on the consistent interpretation of the law regarding the applicability of TDS provisions under Section 194H to discounts given by the assessee to distributors of prepaid SIM cards.
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