2024 (11) TMI 507 - HC - Income Tax

TDS u/s 194H - discount offered by the assessee to the distributor for its prepaid services - HELD THAT - Appellant(s)/revenue submits the issue is no more res integra, in view of the judgment passed by Bharti Cellular Limited (Now Bharti Airtel Limited) 2024 (3) TMI 41 - SUPREME COURT held that the assessees would not be under a legal obligation to deduct tax at source on the income/profit component in the payments received by the distributors/franchisees from the third parties/customers, or while selling/transferring the pre-paid coupons or starter-kits to the distributors. Section 194H of the Act is not applicable to the facts and circumstances of this case. Accordingly, the appeals filed by the assessee-cellular mobile service providers, challenging the judgments of the High Courts of Delhi and Calcutta are allowed and these judgments are set aside. The appeals filed by the Revenue challenging the judgments of High Courts of Rajashtan, Karnataka and Bombay are dismissed. There would be no orders as to cost. Pending Applications, if any, shall stand disposed of. Decided in favour of assessee.

Summary

The Punjab and Haryana High Court upheld the order of the Income Tax Appellate Tribunal regarding the applicability of Section 194H of the Income Tax Act on discounts offered by the assessee to distributors. The court referred to a judgment by the Supreme Court in the case of Bharti Cellular Limited. The appeals by the Revenue were dismissed, and the order of the ITAT was upheld, resulting in the dismissal of both appeals.