Bharat Sanchar Nigam Ltd., Uttar Pradesh v. ITO, Meerut

ITA 1705/DEL/2011 | misc
Pronouncement Date: 23-09-2011 | Result: Allowed

Appeal Details

RSA Number 170520114 RSA 2011
Assessee PAN AABCB5576G
Bench Delhi
Appeal Number ITA 1705/DEL/2011
Duration Of Justice 5 month(s) 15 day(s)
Appellant Bharat Sanchar Nigam Ltd., Uttar Pradesh
Respondent ITO, Meerut
Appeal Type Income Tax Appeal
Pronouncement Date 23-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 23-09-2011
Date Of Final Hearing 23-09-2011
Next Hearing Date 23-09-2011
Assessment Year misc
Appeal Filed On 08-04-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI B.K. HALDAR ACCOUNTANT MEMBER ITA NOS.1706 & 1705/DEL/2011 ASSESSMENT YEARS : 2009-10 & 2010-11 BHARAT SANCHAR NIGAM LTD. C/O RISHI & ASSOCIATES ADVOCATES 60-VIVESHWAR PURI BEHIND SADAR THANA MEERUT CANTT. UTTAR PRADESH. PAN : AABCB5576G VS. ITO TDS MEERUT. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANURAG RISHI ADVOCATE REVENUE BY : MRS. ANUSHA KHURANA SR. DR ORDER PER I.P. BANSAL JUDICIAL MEMBER THESE ARE THE APPEALS FILED BY THE ASSESSEE. THEY ARE D IRECTED AGAINST THE CONSOLIDATED ORDER PASSED BY THE CIT (A) DA TED 25 TH JANUARY 2001 IN RESPECT OF ASSESSMENT YEARS 2009-10 AND 2010-11. THE GROUNDS OF APPEAL FOR BOTH THE YEARS ARE IDENTICA L AND READ AS UNDER:- 1. THAT THE IMPUGNED ORDER PASSED BY THE LEARNED CIT (A) IS CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE THERE BY RENDERING THE SAID ORDER AS BAD IN LAW AND LIABLE TO BE SET ASIDE. 2. THAT THE APPEAL FILED IS IN TIME. 3. THAT THE IMPUGNED ORDER IS IN CONTRAVENTION OF THE PR INCIPLES OF NATURAL JUSTICE AND LIABLE TO BE SET ASIDE. ITA NOS.1706 & 1705/DEL/2011 2 4. THAT THE LD. ASSESSING AUTHORITY HAS ERRED IN IMPOSI NG TAX ON TRADE DISCOUNT OFFERED TO CUSTOMERS AND FRANCHISEES ON MOBILE HANDSETS AND PREPAID RECHARGE VOUCHERS WHEREAS NO L IABILITY TO DEDUCT TDS ON SUCH TRADE DISCOUNT IS PROVIDED IN THE IN COME TAX ACT 1961. 5. THAT THE APPELLANTS HAVE DULY DEDUCTED AND DEPOSITED TDS ON COMMISSION PAID TO FRANCHISEES BUT AS NO TDS IS A PPLICABLE ON TRADE DISCOUNT ON THE SAME. 6. THAT THE HONBLE HIGH COURT OF GUJARAT HAS HELD IN TH E CASE OF AHMEDABAD STAMP VENDORS ASSOCIATION VS. UOI (2002) 17 8 CTR (GUJ) 193 THAT DISCOUNT ALLOWED TO VENDORS AND CUSTOMERS DOES NOT FALL UNDER THE MEANING OF COMMISSION OR BROKER AGE UNDER THE PROVISIONS OF SECTION 194-H OF THE INCOME TAX ACT AND NO TDS LIABILITY CAN BE CONSTRUED ON THE SAME. 7. THAT THE ABOVE VIEW FINDS SUPPORT IN THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF BHOPAL SUGAR IND USTRIES LTD. VS. STO 1977 CTR (SC) 284 AND BOMBAY HIGH COURT IN THE CASE OF HARIHAR COTTON PRESSING FACTORY VS. CIT (1980) 39 ITR 594. 8. THAT THE SAME VIEW HAS BEEN REITERATED IN THE CASE OF ACIT VS. SAMAJ (2001) 77 ITD 358 (CUTTAK) THAT TRADE DISCOUNT CANNOT BE EQUATED WITH COMMISSION SO AS TO APPLY THE PROVISION S OF SECTION 194-H IBID. 2. THE ASSESSEE WAS SADDLED WITH THE LIABILITY FOR NON-DE DUCTION OF TAX AND INTEREST THEREON FOR DEFAULT UNDER THE PROVI SIONS OF SECTION 194H. THE FACTS AS STATED IN THE IMPUGNED ORDERS DAT ED 4 TH DECEMBER 2009 PASSED U/S 201(1) OF THE IT ACT 1961 A RE THAT THE ASSESSEE IS PROVIDER OF TELECOM SERVICES IN WESTERN UP AND BHAGHPAT DISTRICT. THE SERVICES INCLUDE THE SALE OF MOBILES AND PRE-PAID RECHARGE VOUCHERS TO THE FRANCHISEES AND ALSO THROUGH C OUNTER SALE. DURING THE COURSE OF SURVEY/VERIFICATION IT WAS FOUND THAT THE ASSESSEE COMPANY HAD SOLD RECHARGE PRE-PAID COUPONS TO FRANCHI SEES AND ALSO SOLD THEM THROUGH COUNTERS BUT TDS WAS NOT DEDUCTED F ROM TRADE DISCOUNT/COMMISSION GIVEN TO THE FRANCHISEES AND ALSO TO THE CUSTOMERS WHO PURCHASE THE VOUCHERS AND IT WAS HELD BY T HE ASSESSING OFFICER THAT SUCH PAYMENTS WERE LIABLE FOR DEDU CTION OF TAX ITA NOS.1706 & 1705/DEL/2011 3 U/S 194H @ 10% PLUS SURCHARGE AND EDUCATION CESS. THE A SSESSING OFFICER REFERRED TO THE DECISION OF THE TRIBUNAL IN THE CASE OF VODAFONE ESSAR CELLULAR LTD. VS. ACIT DATED 23 RD APRIL 2009 IN ITA NO.106 TO 113/COCH/2009 AND IN THIS MANNER THE ASSESSING OFFICER HAS CREATED DEMANDS OF ` 18 89 804/- AND ` 6 12 458/- IN RESPECT OF ASSESSMENT YEARS 2009-10 AND 2010-11 RESPECTIVELY. THE APPEALS FOR BOTH THE YEARS WERE DECIDED BY THE LEARNED CIT (A) VIDE THE I MPUGNED ORDER DATED 25 TH JANUARY 2011 IN WHICH AFTER MENTIONING THAT THE ASSESSEE HAS RAISED SEVEN GROUNDS OF APPEAL OBJECTING TO TAX AND INTEREST PAYABLE AND ON TWO OCCASIONS THE ASSESSEE SOUGHT ADJOURNME NTS WHICH WERE GRANTED. IT IS ALSO MENTIONED IN PARA 4 TH AT THE LAST HEARING WAS FIXED FOR 25 TH JANUARY 2011 ON WHICH SHRI ANURAG RISHI AR ATTENDED AND HAVE RELIED UPON THE GROUNDS OF APPEAL. HOWEVER ON THE ORDER AFTER DESCRIBING THE DATE OF HEARING I.E. 25 TH JANUARY 2011 IT HAS BEEN WRITTEN: PRESENT FOR APPELLANT : NONE PRESENT FOR DEPARTMENT: NONE. THE OBSERVATIONS OF LEARNED CIT ( A) VIDE WHICH THE ORDER OF THE ASSESSING OFFICER HAS BEEN UPHELD READ AS UNDER:- 5. I HAVE GONE THROUGH THE GROUNDS OF APPEAL. NO WORTHWHILE FACTS ARE MENTIONED THEREIN WHICH WOULD LEAD ME TO UNDERSTAND THE GRIEVANCES ARISING THEREFROM. REFERENC ES HAVE BEEN MADE TO CERTAIN CASE-LAWS IN THE GROUNDS OF APPEA L. HOWEVER IN THE ABSENCE OF ANY MATERIAL/DOCUMENTARY EVIDENCES TO SHOW THE NATURE OF TRANSACTIONS AND TO PROVE THAT THE TRANSACTIONS WITH THE DISTRIBUTORS IN RESPECT OF HANDSE TS AND PREPAID RECHARGE VOUCHERS WERE ONES OF SALE OF GOO DS ON PRINCIPAL TO PRINCIPAL BASIS AND THERE WAS NO PRINCIP AL-AGENT RELATIONSHIP THE A.OS ORDER IS AFFIRMED. 3. IT MAY FURTHER BE MENTIONED THAT THE ASSESSEE HAD TA KEN THE FOLLOWING GROUNDS OF APPEAL BEFORE THE CIT (A):- 1. THAT THE APPEAL FILED WITHIN TIME. 2. THAT THE IMPUGNED ORDER IS PASSED EX PARTE IN TOTAL D ISREGARD TO THE PRINCIPLES OF NATURAL JUSTICE IN AS MUCH AS NO REASONABLE OPPORTUNITY FOR PERSONAL HEARING WAS GRANTED TO THE APPE LLANTS ITA NOS.1706 & 1705/DEL/2011 4 THEREBY RENDERING THE IMPUGNED ORDER AS BAD IN LAW AN D LIABLE TO BE SET ASIDE. 3. THAT THE LD. ASSESSING AUTHORITY HAS ERRED IN IMPOSI NG TAX ON TRADE DISCOUNT OFFERED TO CUSTOMERS AND FRANCHISEES ON MOBILE HANDSETS AND PREPAID RECHARGE VOUCHERS WHEREAS NO L IABILITY TO DEDUCT TDS ON SUCH TRADE DISCOUNT IS PROVIDED IN THE IN COME TAX ACT 1961. 4. THAT THE APPELLANTS HAVE DULY DEDUCTED AND DEPOSITED TDS ON COMMISSION PAID TO FRANCHISEES BUT AS NO TDS IS A PPLICABLE ON TRADE DISCOUNT TO CUSTOMERS AND THUS TDS HAS NOT BEEN DEDUCTED ON THE SAME. 5. THAT THE HONBLE HIGH COURT OF GUJARAT HAS HELD IN TH E CASE OF AHMEDABAD STAMP VENDORS ASSOCIATION VS. UOI (2002) 17 8 CTR (GUJ) 193 THAT DISCOUNT ALLOWED TO VENDORS AND CUSTOMERS DOES NOT FALL UNDER THE MEANING OF COMMISSION OR BROKER AGE UNDER THE PROVISIONS OF SECTION 194-H OF THE INCOME TAX ACT AND NO TDS LIABILITY CAN BE CONSTRUED ON THE SAME. 6. THAT THE ABOVE VIEW FINDS SUPPORT IN THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF BHOPAL SUGAR IND USTRIES LTD. VS. STO 1977 CTR (SC) 284 AND BOMBAY HIGH COURT IN THE CASE OF HARIHAR COTTON PRESSING FACTORY VS. CIT (1980) 39 ITR 594. 7. THAT THE SAME VIEW HAS BEEN REITERATED IN THE CASE OF ACIT VS. SAMAJ (2001) 77 ITD 358 (CUTTAK) THAT TRADE DISCOUNT CANNOT BE EQUATED WITH COMMISSION SO AS TO APPLY THE PROVISION S OF SECTION 194-H IBID. 4. THE PERUSAL OF ABOVE GROUNDS WILL SHOW THAT THE ASSESSE E HAD CHALLENGED THE VALIDITY OF ASSESSMENT ORDER ON THE BASIS OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AS ALSO THE DEMAND WAS CHA LLENGED ON MERITS. IT CAN BE SEEN FROM THE ABOVE OBSERVATIONS OF LEARNED CIT (A) THAT HE HAS NOT GIVEN ANY INDEPENDENT FINDINGS UPON E ACH OF THE GROUNDS. THE ORDER PASSED BY THE CIT (A) IS U/S 250 (6) OF THE IT ACT 1961 WHICH READ AS UNDER:- (6) THE ORDER OF THE COMMISSIONER (APPEALS) DISPOSI NG OF THE APPEAL SHALL BE IN WRITING AND SHALL STATE THE POINTS FO R DETERMINATION THE DECISION THEREON AND THE REASON FOR TH E DECISION. ITA NOS.1706 & 1705/DEL/2011 5 5. AS PER THE AFOREMENTIONED SUB-SECTION THE LEGAL RE QUIREMENT IS THAT THE ORDER OF CIT (A) DISPOSING OF THE APPEAL SHA LL BE IN WRITING AND SHALL STATE THE POINTS FOR DETERMINATION THE DECISION THEREON AND THE REASON FOR THE DECISION. IT CAN BE SEEN THAT THE ORDE R PASSED BY THE CIT (A) DOES NOT FULFILL THE CRITERIA LAID DOWN IN S ECTION 250 (6). THEREFORE AFTER HEARING BOTH THE PARTIES WE ARE OF THE CONFIRMED OPINION THAT THESE APPEALS ARE REQUIRED TO BE RESTORED TO THE FILE OF THE CIT (A) WITH A DIRECTION TO PASS A PROPER ORDER STATIN G ALL THE ISSUES RAISED BY THE ASSESSEE AND HIS DECISION ON THOSE ISSUES AND AL SO PROVIDING THE REASONS FOR ARRIVING THE CONCLUSION. NE EDLESS TO OBSERVE THAT BEFORE PASSING SUCH ORDER LEARNED CIT (A) SHALL GI VE THE ASSESSEE A REASONABLE AND SUFFICIENT OPPORTUNITY OF HEARING SO THAT ALL THE FACTS ARE GIVEN ON RECORD WHICH ARE NECESSARY TO DECIDE THE ISSUE. IT MAY BE MENTIONED HERE THAT THE ASSESSEE DID NOT GET THE OPPORT UNITY OF HEARING EVEN BEFORE THE ASSESSING OFFICER AS IT HAS BEEN STATED IN GROUND NO.2. THEREFORE ALSO IT IS NECESSARY TO RESTORE THESE APPEALS TO THE FILE OF CIT (A) FOR DENOVO CONSIDERATION AS PE R DIRECTIONS GIVEN IN AFOREMENTIONED PART OF THIS ORDER. AS WE ARE RESTORIN G THE APPEAL TO THE FILE OF CIT (A) WE DO NOT EXPRESS ANY OPINION AB OUT ALL THE GROUNDS TAKEN BEFORE US AS THE APPEAL WILL BE DECIDED AFRESH B Y THE LEARNED CIT (A) AS PER THE DIRECTIONS GIVE HEREIN. 6. IN THE RESULT FOR STATISTICAL PURPOSES THE APPEALS FI LED BY THE ASSESSEE ARE CONSIDERED TO BE ALLOWED IN THE MANNER AFOR ESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 23.09.20 11. SD/- SD/- [B.K. HALDAR] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 23.09.2011. DK ITA NOS.1706 & 1705/DEL/2011 6 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES