IDEA CELLULAR LTD. VS ASSISTANT COMMISSIONER OF INCOME TAX-(ITAT)

These two appeals are at the instance of the assessee company and they are directed against the separate but identical orders passed by the CIT(A)-8, Hyderabad.

2. In respect of the A.Y. 2014-2015, the A.O. noticed that that the assessee is engaged in the business of providing Cellular Mobile Telephone Services to its customers in State of Andhra Pradesh and Telangana through a network of distributors and paid commission to its distributors on pre-paid connections but did not deduct tax at source on such commission payments. The assessee is also not deducting tax at source on the commission paid to agents on pre-paid sim-cards and recharge coupons, sold through agents. According to the A.O, TDS is payable under section 201(1) and interest under section 201(1A) of the Act on account of non- deduction of tax at source under section 194H of the Act and accordingly, issued a show cause notice to the assessee.

3. The case of the assessee was that the agreement with the distributors is on ‘principle-to- principle’ basis and the distributors paid discounted price in advance and nothing was paid by the assessee to distributors so as to attract the provisions of section 194H of the Act.

4. The A.O. rejected the contention of the assessee. He observed that the assessee is not deducting any tax in respect of transactions arising out of providing pre-paid Cellular services to the customers. He further observed that there is a ‘principal-to-agent’ relationship between the assessee company and the distributors in which event, the assessee is liable to deduct tax at source under section 194H of the Act. On account of non- compliance with the provisions, the assessee was treated as an assessee-in-default as per the provisions of section 201(1) of the Act and consequently, levied interest under section 201(1A) of the Act. The facts for the A.Y. 2015-16 are also identical wherein the A.O. observed that the TDS payable is Rs.8,16,75,422 and interest thereon under section 201(1A) works out to Rs.56,77,894.

5. On an appeal filed by the assessee, the Ld. CIT(A) confirmed the order of the A.O. in the light of decision of the A.P. High Court in assessee’s own case (ITTA.No.291 of 2013 dated 17.07.2013). In the light of the decision of the Hon’ble jurisdictional High Court and also bearing in mind the judicial discipline to be followed, he concluded that the assessee deserves to be treated as an assessee-in-default and liable to pay TDS under section 201(1) and also interest under section 201(1A) of the Act.

6. Aggrieved, the assessee preferred appeals before us. When appeals were filed, the Registry issued an acknowledgment –cum- notice wherein it was stated that the appeals are fixed on 28.03.2016. On that date none appeared for the assessee. According to the Ld. D.R. the issue stands squarely covered by the decision of the jurisdictional High Court and therefore, the appeals were again posted for hearing on the next day. Even on that day, none appeared for the assessee. Under these circumstances, we proceed to dispose of the appeals ex- parte, qua the assessee, on merits. Ld. D.R. submitted that the issue is squarely covered by the decision of Hon’ble A.P. High Court (cited supra) and facts being identical the Tribunal is bound to follow the decision of the jurisdictional High Court in assessee’s own case for the earlier year.

7. It may be noticed that the assessee has raised several pleas in its ground of appeal. Vide Ground No.1 assessee company urges that the CIT(A) erred in treating the appellant as an “assessee-in-default” under section 201 read with section 194H of the Act without ascertaining as to whether the recipient had paid tax on the alleged income. Without prejudice, the discount offered by the assessee to the distributors as commission is not liable to TDS under section 194H as the relationship between the assessee and its distributors is on ‘principal-to-principal’ basis. Similarly several grounds, without prejudice to each other, were raised before us. The central contention is that it is the duty of the tax authorities to verify as to whether the recipient had paid the tax and whether the payment is on ‘principal-to-principal’ basis or not.

7.1. As per the procedure, the assessee is entitled to file a paper book either along with the appeal papers or atleast one day before the date of hearing of the appeal. Till date the assessee has not filed any paper book to support its contention. On the other hand, under identical facts and circumstances, the Hon’ble High Court of A.P. had already upheld the plea of the Revenue by observing that section 194H is applicable in this case. If the assessee is of the opinion that the recipient paid the tax, it is for him to place the material before the Tribunal. But in these appeals, the assessee did not place any material in that regard. Having regard to the circumstances of the case and consistent with the view taken by the Hon’ble A.P. High Court, we are of the view that the orders passed by the Ld. CIT(A) do not call for any interference. We, therefore, uphold the orders of the Ld. CIT(A) and dismiss the appeals filed by the assessee company.

Order pronounced in the open Court on 29.03.2016.

Sd/- Sd/-

(S. RIFAUR RAHMAN) (D. MANMOHAN)

ACCOUNTANT MEMBER VICE PRESIDENT

Hyderabad Dated 29th March, 2016

VBP/-