The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) has quashed the reassessment order against the Bharat Sanchar Nigam Ltd ( BSNL ).
The Asssessee Bharat Sanchar Nigam Ltd, has filed appeal against confirming the validity of the reassessment proceedings under section 147 read with section 143(3) of the Income Tax Act initiated by the learned Assistant Commissioner of Income-tax.
Tarandeep Singh, on behalf of the assessee submitted that the Commissioner of Income Tax Appeal (CIT(A)) had erred in not observing that the present reassessment proceedings were bad in law in the absence of any omission and failure on part of the Appellant to disclose fully and truly all the material facts leading to escapement of income chargeable to tax, without appreciating the fact that the additions made and confirmed in the reassessment order were specifically dealt with and analysed in depth during the course of the original assessment proceedings.
Similar case with the same facts in assessee’s own case was decided in favour of the assessee for Assessment Year 2009-10 which set aside the additions. That is,
“Profits and loss account appellant has shown income from prepaid services at a net figure after reducing a discount given by it to the distributors / franchisees of its prepaid Sim Card and Recharge Vouchers. During the course of reassessment Ld. AO directed the appellant to submit as to why said discount should not be treated as a commission paid to distributors / franchisees on which tax was deductible as per provisions of section 194H of the Income Tax Act.
In reply it was submitted by the appellant that the distributor margin is in nature of “discount” and not “commission” which would trigger applicability of section 194H. It was further submitted that the relationship between BSNL and Distributors / Franchisees was on principal-to-principal basis and hence TDS was not deductible.”
TarandeepSingh, appeared on behalf of the assessee and Sukesh Kumar Jain appeared on behalf of the revenue.
The Division Bench of N. K Billaiya, (Accountant Member) and Anubhav Sharma, (Judicial Member) observed that in the earlier case disallowance made u/s 40(a)(ia) was held to be not sustainable and quashed the reassessment order.
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