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TMI Blog2018 (5) TMI 1696X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO cannot made addition by looking one side of the transaction - thus addition made by AO is not justified - Decided in favor of assessee - ITA No. 970/JP/2017 - - - Dated:- 24-5-2018 - SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri S.L. Poddar (Advocate) For The Revenue : Shri K.C. Gupta (JCIT) ORDER PER VIJAY PAL RAO, JM : This appeal by the assessee is directed against the order dated 27th November, 2017 of ld. CIT (A)-3, Jaipur for the assessment year 2010-11. The assessee has raised the following grounds :- 1. That under the facts and circumstances of the case the learned CIT (A) has erred in confirming the action of the learned Assessing Officer in making disallowance of ₹ 16,41,989/- u/s 40(a)(ia) of the Income Tax Act, 1961. 2. That under the facts and circumstances of the case the learned CIT (A) has erred in confirming the addition of ₹ 1,56,787/- on account of alleged bogus expenses on account of commission paid by the assessee to retailers. 3. The assessee craves your indulgence to add, amend or alter all or any grounds of appeal before or at the time of hearing. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odafone Essar Cellular Ltd. vs. ACIT as well as decision of Hon ble Calcutta High Court in case of Hutchiso Telecom East Ltd. vs. CIT, 232 Taxman 665 (Cal.). He has further contended that the decision of Coordinate Bench of this Tribunal in case of M/s. Chocopack Enterprises vs. ITO (supra) is only in respect of sale of SIM card whereas the assessee is also selling pre-paid coupons. 4. We have considered the rival submissions as well as the relevant material on record. The assessee has produced the confirmation from M/s. Vodafone Digilink Ltd. to show that the payment in question was directly paid by the said company to the retailers. The assessee has only carried out the necessary entries in his books of account for completion of record being the dealer and all the transactions are passing through the assessee. Once the payment in question was not made by the assessee and it was directly paid by the company and further the quantum and percentage of the said commission/discount was also in the full control of the company and not in the hands of the assessee, then merely because the assessee has passed the contra entry of the said amount would not bring the said transaction in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ately a question of fact as has been correctly submitted by the States. In determining the issue, however the assessing authorities will have to keep in mind the following principles : If the SIM card is not sold by the assessee to the subscribers but is merely part of the services rendered by the service providers, then a SIM card cannot be charged separately to sales tax. It would depend ultimately upon the intention of the parties. If the parties intended that the SIM card would be a separate object of sale, it would be open to the sales tax authorities to levy sales tax thereon. There is insufficient material on the basis of which we can reach a decision. However, we emphasise that if the sale of a SIM card is merely incidental to the service being provided and only facilitates the identification of the subscribers, their credit and other details, it would not be assessable to sales tax. In our opinion the High Court ought not to have finally determined the issue. In any event, the High Court erred in including the cost of the service in the value of the SIM card by relying on the aspects doctrine. That doctrine merely deals with legislative competence. As has been succinctly s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echarge coupons to the customer or end user of the service. Therefore, in the facts and circumstances of the case when the assessee s role is only an intermediatetory and passing the services from one hand to the other hand then merely because the assessee is showing an amount of commission/discount in the books of account for completeness of accounts and transactions will not impute any liability of deducting tax at source. The decisions relied upon by the ld. DR are also on the point where the service provider is allowing or paying the commission to the distributors or retailers and sale of sim cards as well as recharge coupons, therefore, even for the sake of arguments if it is accepted that the benefit allowed by the service provider to the distributors and retailers is commission it is service provider who is responsible for paying the said commission and therefore, the provisions of section 194H are not attracted against the distributor. Accordingly, when the assessee is not directly and indirectly in deciding the quantum of alleged commission/discount as well as determining the retail price at which the recharge coupons is sold to the customer then the provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has further contended that this payment was directly made by the company to the retailers. However, in their books, the said company has shown the said payment through the assessee. Further, the AO has also made an addition of ₹ 21,907/- which was found as commission paid to the retailers as a book entry on 4th December, 2009. The ld. A/R has submitted that the assessee has not made any payment to the retailers but the company has directly paid the amount and the assessee has only carried out the entry as the assessee has neither received the said amount nor paid the same but the contra entry was made in the books being receipt and payment and, therefore, it is revenue neutral. Thus the ld. A/R has submitted that the addition made by the AO may be deleted. 6.1. On the other hand, the ld. D/R has relied upon the orders of the authorities below and submitted that once the entry in the books of Vodafone Digilink Pvt. Ltd. was found and irrespective of the payment to the assessee, the said income is assessable to tax in the hands of the assessee. As regards the commission payment, when the assessee is showing in the books the payment to the retailers without making the actual ..... X X X X Extracts X X X X X X X X Extracts X X X X
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