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TMI Blog2013 (12) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... to deduct tax at source in respect of amounts passed on to their agents as cash discounts in respect of Sim cards and other services rendered. 3. The assessee has raised additional ground of appeal, which is common in all the three years, is as follows: "On the facts and circumstances if the case and in law, the learned TDS Officer has erred in treating VSL, as 'assessee in default' in view of the provisions of section 201(1) r.w.s. 191 of the IT Act and the judgment of Jargan Prakashan Ltd., Vs. DCIT(TDS) [21 Taxman.com 489] [All HC) relied on by the assessee as there is no finding by the learned TDS Officer as to the failure of deductees to pay the liability." 4. The assessee filed petition for admission of the said additional ground an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the distributors are supposed to identify the customers, ensure proper documentation of the connection on behalf of the assessee, attend to the complaints of the customers, account for the air time consumed by the customers and carry out the work of raising bills and collection of the proceeds. In this segment of activity carried on by the assessee company, it is paying commission to the distributors for the services rendered by them and is deducting tax at source as per the provisions of section 194H, whenever the services are remunerated either by payment or by book entry. 7. In prepaid mobile services, the assessee is delivering starter kits, starter packs, sim cards, recharge vouchers, electronical recharge, etc. of fixed denominatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to the distributors for a specified margin. For example, if the MRP is Rs. 100/-, the assessee company may deliver the same to its distributors at Rs. 80/-. This is the invoice price of the assessee company. The assessee company collects this invoice price in advance from the distributors. The distributors are permitted to deliver these products to the ultimate consumers at a price of their choice but not exceeding Rs. 100/- per unit, which is the MRP. The margin earned by the distributors being the difference between the sale price and the invoice price is the remuneration of the distributors in this chain of transactions. This remuneration is, however treated by the assessee-deductor as 'cash discount' in its books of account and no TD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ahmedabad Stamp Vendtors Association, [2012] 25 Taxman 201 (SAC). holding that amounts paid to stamp vendors in connection with sale of stamps is only a discount and not commission. The AR also relied on the decision of the ITAT Hyderabad ACIT v Idea Cellular (125 TTJ 663) wherein it has been held that amounts paid to the agents for sale of SIM cards etc constitute only a discount and does not attract provisions of 194H for deduction of tax at source. The AR also relied on the decision of Hon'ble High Court of Allahabad in the case of Jargan Prakashan Ltd. Vs. DCIT, [2012] 21 Taxman 489 (All.) The learned DR relied on the decision of CIT(A). 14. We have heard both the Parties and perused the record as well as gone through the orders of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4H is not applicable as there is no 'payment or credit' by the assessee to the distributor cannot be accepted." 16. The AR did not bring in any arguments to distinguish the above cases in so far as similarity of facts and method of accounting were concerned. The other decisions cited by the AR were not exactly on this issue. In view of the decision of the High Courts on the very same point, we are not persuaded to distinguish the same and we cannot follow the decision of the Hyderabad tribunal in Idea Cellular Ltd. on this issue. Respectfully following the decision of the three high courts referred to above, we dismiss the appeal of the Assessee in so far as the applicability of provisions of sec 194H in respect of amounts paid to the agen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Hindustan Coca Cola beverages Ltd v CIT (293 ITR 226). 20. Being so, we are inclined to restore the additional ground to the file of the Assessing Officer for adjudication. The assessee is directed to furnish the details of recipients and the particulars of payment of taxes by the respective recipients on the impugned amounts. If the assessee furnishes the details as required, the same are to be considered by the Assessing Officer and decide the issue in accordance with law. 21. Since the facts in assessments years 2008-09 and 2009-10 being ITA Nos. 1021 & 1022/Hyd/11 are mutatis-mutandis to that of AY 2007-08 being ITA No. 1020/Hyd/2011, respectfully following the conclusions drawn therein, we allow these two appeals also for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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