The Delhi High Court addressed a case involving TDS u/s 194H for ...

Court Rules No TDS Deduction Needed for SIM Card Sales; Principal-Principal Relationship Affirmed.

May 23, 2024

Case Laws     Income Tax     HC

The Delhi High Court addressed a case involving TDS u/s 194H for non-deduction of TDS on transactions between the Appellant and distributors regarding the sale of SIM cards/Recharge Vouchers. The key issue was determining whether the relationship between the Appellant and distributors was that of principal and agent or principal and principal. The court referred to the Supreme Court decision in Bharti Cellular Limited, emphasizing that the term "agent" involves a specific legal relationship where one party has the power to affect the legal position of the principal through contracts or property disposition. The court held that the Appellant was not obligated to deduct tax at source on certain payments received by distributors, and Section 194-H was deemed inapplicable to the case. Consequently, the appeals by the cellular mobile service providers were allowed, overturning the judgments of the High Courts of Delhi and Calcutta. The appellant was not considered an assessee in default.

View Source