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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 ..... evenue. Since one of the limb of exercising jurisdiction u/s.263 is missing, i.e., it is not prejudicial to the interest of the revenue; therefore, such a revisionary jurisdiction u/s.263 cannot be sustained. Hence, the order of the ld. CIT is set aside and the grounds raised by the assessee are allowed. - I.T.A. No.3386/DEL/2014 - - - Dated:- 13-8-2018 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI O. P. KANT, ACCOUNTANT MEMBER For The Appellant : Shri P.C. Yadav, Adv. For The Respondent : Smt. Deepali Chandra, CIT-DR ORDER PER AMIT SHUKLA, J.M.: The aforesaid appeal has been filed by the assessee against the impugned order dated 30.03.2014 passed by Ld. Commissioner of Income Tax, Ghaziabad u/s.263 for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under these heads has only been passed through book entries which were not verifiable. Accordingly, assessment was completed at an income of ₹ 3,94,650/-. 3. Later on, ld. CIT in his revisionary jurisdiction u/s.263 after examining the assessment records observed that assessee had debited sum of ₹ 12,31,580/- on account of commission payment on which he has not deducted TDS u/s.194H, and therefore, prima facie the assessment order is erroneous and prejudicial to the interest of revenue. In response to the show cause notice, the assessee submitted that he was having more than 200 dealers/retailers at various places, who do not represent the assessee for rendering any services, and therefore, they are not entitled to any comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the service providers, the assessee and the ultimate consumer, and therefore, assessee becomes an agent of the telecom entity and there is a principal-agent relationship between telecom entity and the assessee. In similar manner, the assessee becomes the principal and the dealer and sub-dealers becomes an agent. Even if it is presumed that the transaction between the assessee and the dealers/subdealers contain the essential element of sale, to view such transaction without considering the commitment of the distributor and in turn, the service provider to provide the services for ultimate consumers to commit payment, either in advance or subsequent to the utilization of services, and therefore, in lieu of such entitlement, it would amount t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned counsel for the assessee submitted that the issue of commission/incentive has already been examined by the Assessing Officer who has made disallowance on this score and therefore, to make further disallowance u/s. 40(a)(ia) amounts to take a different view and also it cannot be held that Assessing Officer has not carried out any inquiry or applied his mind. Thus, on such change of view revisionary jurisdiction u/s.263 is not permissible. 6. On the other hand, ld. CIT-DR submitted that the ld. CIT is empowered u/s.263 to revise/review any assessment order where the Assessing Officer has passed the order without making inquiry or verification which should have been made or has been passed allowing any relief without inquiring into the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular Ltd. (supra). First of all, it is noted that the assessee is a wholesale dealer who is having distribution agreement with various telecom entities. Ld. CIT has inferred that it is a relationship between the service providers, i.e., the telecom entities and the assesseecompany and there exists principal-agent relationship between the assessee and the telecom entities. Since there is a principal-agent relationship between the assessee and the telecom entity, therefore, there is a similar agency relationship between the assessee who is a wholesale dealer with dealers/sub-dealers. A cellular operator provides prepaid connection through recharge vouchers or prepaid SIM cards to the subscribers through distributors. A discount is offered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his sub-dealers. The reason being the SIM cards, vouchers belonged to the cellular operators/cellular entities and these cellular operators/telecom entities ensure that payment is received in respect of those prepaid vouchers and SIM cards which are sold to the subscribers and unsold SIM cards are returned back to them and even if such SIM cards are returned, then these cellular/telecom entities are required to be made payment against them and the SIM card stocked with the distributors are the property of service provider, i.e., the telecom/cellular entities. The permissive right to use the SIM cards to get access to the phone network of the telecom companies is given only to the ultimate customers who have activated the connections. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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