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TMI Blog2018 (9) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... roneous and prejudicial to the interest of the revenue within the meaning of Section 263; secondly, Assessing Officer has adopted one course permissible in law and has taken a view, therefore, CIT cannot exercise jurisdiction u/s.263 with his own view directing the Assessing Officer to reframe fresh assessment order; and lastly, ld. CIT(A) has failed to appreciate that the payment made to various bills were less than Rs. 5,000/- per party in around 70% transactions, and therefore, there was no question of deducting any TDS u/s.194. 2. The facts in brief are that the assessee is engaged in the business of wholesale dealer of recharge vouchers/ coupons and SIM of Idea Cellular & Tata Teleservices Ltd. Original return of income was filed on 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /sub-dealers. The property of goods, i.e., SIM cards including all risks and liabilities are transferred to the dealers/sub-dealers upon the delivery of goods by the assessee and any further dealing with the goods is on the risk and at the expense of concern dealers. Thus, such transactions are not covered u/s.194H. It was further submitted that the incentive given in most of the cases was less than Rs. 5,000/-, therefore, the provisions of Section 194H was not applicable. 4. Ld. CIT after considering the entire material on record, first of all observed that in case where a distributor is transferring a goods to its dealers and sub-dealers, then undisputedly the transaction is in the nature of principal to principal basis and discount by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o exercise substantial control over its retailers. Similarly, he noted that the agreement with Tata Teleservices Ltd., wherein the channel partner was having absolute control over the detailers functioning in terms of guidelines and instruction of Tata Teleservices Ltd. Thus, there is a symbiotic relationship between service provider and the distributor. The dealers/sub-dealers and the ultimate consumer which though is forged in consequence of the sale of products but the discount offered by its assessee to his dealers and sub-dealers has to be treated in the nature of commission. Ld. CIT has also referred to the judgment of Hon'ble Delhi High Court in the case of CIT vs. Idea Cellular, reported in (2010) 325 ITR 148 and also ITAT Chenn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT-DR in her written submission has referred to various decisions about the scope and power of the ld. CIT in the revisionary jurisdiction u/s.263, which though on principle are not rebutted, because we find that it has not much relevance for the issue in hand. 7. After considering the rival submissions and on perusal of the impugned order, we find that it is not in dispute that assessee is a wholesale dealer of recharge vouchers, coupons, SIM cards for telecom entities, like, Idea Cellular Ltd. and Tata Teleservices. The assessee has debited a sum of Rs. 12,31,580/- under the head 'incentive/commission' which in the original assessment order passed u/s.143(3), Assessing Officer has made ad hoc disallowance of 10% on the ground that e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have held that the nature of transaction does not amount to sale of goods inasmuch as unsold SIM cards which is returned to the assessee, i.e., the cellular operator, who is required to make payment against them. This transaction cannot be treated as sale and therefore, the discount offered by the cellular entities/cellular operators to the distributors on the payments made for the SIM cards /recharge vouchers/ coupons which are eventually sold to the subscribers at the listed price is commission and hence it is subjected to TDS u/s.194H. The principal-agent relationship of the transaction between the cellular operator and dealers has been treated to be commission. Nowhere has it been held that similar relationship exists between the whole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p on which TDS is required to be deducted on the commission paid to the dealers is qua the cellular operator and the wholesale dealer. The same agency relationship cannot be inferred between the assessee being a wholesale dealer and sub-dealers. In the case, before the Hon'ble Delhi High Court, one important fact which weighed heavily their Lordships that in the postpaid SIMs the telecom company was deducting TDS u/s.194H and Hon'ble Court found that there is no difference in the case of prepaid SIM card also and therefore, all the essential feature of agency relationship exists between the dealer and the telecom operator. Thus, here in this case, it cannot be held that similar relationship exists between the assessee and his sub-de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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