9911796707
TMI BlogPrincipal-Agent Relationship in Telecom Sector and TDS u/s 194H: A Supreme Court VerdictX X X X Extracts X X X X X X X X Extracts X X X X ..... s to deduct tax at source u/s 194-H of the Income Tax Act, 1961 , on amounts perceived as commissions paid to franchisees/distributors. The appellants, comprising various cellular service providers, challenged conflicting High Court rulings on this matter. The judgment extensively analyzes the nature of the relationship between service providers and their franchisees/distributors, determining whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges on interpreting Section 194-H and the nature of the relationship between the appellants and their franchisees/distributors. Key points include: Definition and Scope of Section 194-H : Section 194-H mandates tax deduction on income by way of commission or brokerage. Explanation (i) to Section 194-H clarifies that commission or brokerage includes payments received or receivable, directly or indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants. Revenue's Argument and Legal Precedents: The Revenue's reliance on the Singapore Airlines Limited case was differentiated, emphasizing that the latter involved a clear principal-agent relationship under IATA regulations. The Court noted that the appellants do not credit or pay income to franchisees/distributors as commissions, nor do they control the sale price to end-users. Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Courts of Delhi and Calcutta were set aside, while the appeals by the Revenue were dismissed. Comprehensive Summary The Supreme Court, in its judgment, clarified that cellular mobile telephone service providers are not liable to deduct tax at source u/s 194-H on the discounts offered to their franchisees/distributors. The Court determined that the relationship between the service providers and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
