The Income Tax Appellate Tribunal (ITAT), Amritsar Bench has held that no tax deduction at source (TDS) on discount given to distributors on sale of prepaid sim card under section 194H.
The appellant, M/s. Dickson Electronics is a franchise of Bharat Sanchar Nigam Limited (BSNL), which sells SIM-Card on behalf of BSNL. The BSNL sold the goods at a discount of 5.5% and a deducted TDS. The sim card was sold to the party at a 4% discount. The Assessing Officer had treated this discount as Commission. In violation of section, 194H read with section 40(a)(ia) of the Act, the AO added back the amount of Rs.8,60,955 as taxable income with the total income of the appellant. The CIT(A) upheld the assessment order; hence the appellant filed an appeal before the ITAT.
The counsel for the appellant submitted that BSNL sold the goods at a discount of 5.5% and a deducted TDS. The sim card was sold to the party at a 4% discount. The same amount was already deducted as TDS by the BSNL. By relying on the decision of the Coordinate Bench in the case of Bharat Sanchar Nigam Limited Vs. Income Tax Officer the appellant’s counsel further submitted that no need to deduction of TDS a second time on the same amount. The doubled taxation in the same amount is a nullity.
The Coordinate Bench in the case of Bharat Sanchar Nigam Limited Vs. Income Tax Officer has held that “no tax was liable on the discount allowed by BSNL to its distributors on sale of prepaid sim card and that that being so, no question of levy of any interest under section 201(1A) of the Act arises”.
The Coram of Dr. M. L. Meena, Accountant Member, and Mr. Anikesh Banerjee, Judicial Member by relying on the decision of the Coordinate Bench in the case of Bharat Sanchar Nigam Limited Vs. Income Tax Officer has held that“the assessee had not violated the provisions of section 194H of the Act, so addition amounting to Rs.8,60,955/- is deleted”.
Mr. P. N. Arora and Mr. Manpreet Singh Duggal appeared on behalf of the appellant and respondent respectively.
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