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TMI Blog2017 (8) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... tire sales were in cash. No commission was paid by the assessee to the customers. Then, Section 194H of the Act does not cover such discounts as under consideration herein and that being so, obviously the provisions of Section 40(a)(ia) of the Act was wrongly applied. When purchasing the SIM cards and recharge coupons from BSNL, the assessee had to deposit the money in advance. Undisputed, it is to customers directly and to petty shopkeepers, that the SIM cards and recharge coupons were sold in cash. The customers and shopkeepers were offered discount on the face value of the SIM cards. Apropos the recharge coupons, on the other hand, a small margin was kept by the assessee out of the commission/discount offered by BSNL. Then, activation ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO asked the assessee to file complete details, clearly stating the name, address, PAN of the persons to whom activation scheme amounting to ₹ 4,80,270/- and discount amounting to ₹ 75,47,717/- were paid. He also asked the assessee to explain as to why tax at source on those payments was not deducted and deposited and that as to why those amount be not added to the income u/s 40(a)(ia) of the Act. The AO did not find merit in the submissions of the assessee and made the addition of ₹ 80,27,987/- by observing in para 5 of the impugned order as under: 5. The replies filed by the assessee in the course of assessment proceedings have been considered. In the course of assessment proceedings it has been observed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 4,80,270/- and ₹ 75,47,717/-, totaling ₹ 80,27,987/- shown under the head activation scheme and discount respectively is added to the returned income of the assessee on account of nonproduction of any reliable and sustainable evidence in support of his contention. 4. Being aggrieved the assessee carried the matter to the ld. CIT(A) who deleted the addition by following the order of the ITAT dated 22.02.2013 in assessee s own case. 5. Now the department is in appeal. The ld. DR strongly supported the order of the AO and reiterated the observations made in the assessment order. 6. In his rival submissions the ld. Counsel for the assessee stated that an identical issue having similar facts has already bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... APB for short) . Under the agreement, the assessee was to provide services to walk-in customers. It was to distribute all types of authorized telecom services. No dealer or sub-dealer was appointed. The discount/commission was allowed as per the agreement. This position remains undisputed. The retailers simply bought SIM cards/recharge coupons from the assessee at a discounted price. These were sold in the market with no specific obligation towards the distributor. 16. The Assessing Officer, however, concluded that the assessee was having the same relationship with the dealers/retailers, as the one of BSNL with the dealers/retailers; that it was a case of collection of money from the customers for various services to be prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppointed by BSNL on the assessee. The assessee is allowed commission/discount as per Annexure-B and section-III of the said agreement. 18. Since no dealer or sub-dealer was appointed either by Bharat Sanchar Nigam Ltd. (BSNL) or by the assessee, for the purpose of marketing the products and/or service of the Bharat Sanchar Nigam Ltd., the entire sales were to customers, either directly or through shopkeepers, who rendered services to the customers. Moreover, the entire sales were in cash. No commission was paid by the assessee to the customers. Then, Section 194H of the Act does not cover such discounts as under consideration herein and that being so, obviously the provisions of Section 40(a)(ia) of the Act was wrongly applied. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see was taking airlines tickets, the discount given to intermediaries was held not to be commission, since it was deal on a principal to principal basis and there was no element of agency involved. No TDS was held to be done u/s 194H of the Act. 21. In Surndra Buildtech (supra), the assessee was in the real estate business. It received commission from builders for booking flats. Portion of such commission was paid to buyers of flats. It was held that this was like giving a discount to buyers and was not commission and so section 194H of the Act did not apply. 22. In Ahmedabad Stamp Vendors Association ( supra) it was held by the Hon ble Gujarat High Court that where licensed stamp vendors take delivery of sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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