The Tax Publishers2020 TaxPub(DT) 0702 (Bom-HC)

INCOME TAX ACT, 1961

Section 194H

Discount allowed to distributors by assessee was on account of principal-to-principal relationship and not that of principal-to-agent. Tribunal followed the decision of High Court in the case of Bharti Airtel Ltd. vs. DCIT [(2014) 372 ITR 33 (Karn) : 2014 TaxPub(DT) 4369 (Karn-HC)] and held that sale of SIM cards/recharge coupons at discounted rate to the distributors was not commission, therefore not liable to deduct the TDS under section 194H.

Tax deduction at source - Under section 194H - Discount given by assessee to its distributors on prepaid SIM Cards -

Issue arose under consideration as to whether Tribunal erred in holding the discount given by assessee to its distributors on prepaid SIM Cards did not require deduction of tax under section 194H. Held: Tribunal noted the observations of AO that the discount allowed to the distributors by assessee was on account of principa-to-principal relationship and not that of principal-to-agent. Tribunal followed the decision of High Court in the case of Bharati Airtel Ltd. vs. DCIT [(2014) 372 ITR 33 (Karn) : 2014 TaxPub(DT) 4369 (Karn-HC)] and held that sale of SIM cards/recharge coupons at discounted rate to the distributors was not commission and therefore, not liable to deduct the TDS under section 194H.

REFERRED : CIT(TDS) v. Idea Cellular Ltd. [Income Tax Appeal No. 1129 of 2017, dt. 13-1-2020] Pr. CIT v. Reliance Communications Infrastructure Ltd. [ITA No. 702 of 2017 decided on 22-7-2019] : 2019 TaxPub(DT) 5799 (Bom-HC) and Bharti Airtel Ltd. & Ors. v. Dy. CIT & Anr. (2015) 372 ITR 0033 (Karn) : 2014 TaxPub(DT) 4369 (Karn-HC)

FAVOUR : In assessee's favour

A.Y. :

IN THE BOMBAY HIGH COURT

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