Tata Teleservices not required to deduct TDS for Sale of Recharge Coupons and Starter Kits to Channel Partners: ITAT [Read Order]

Tata Teleservices - TDS - sale of recharge voucher coupons - ITAT - Taxscan

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that Tata Teleservices is not required to deduct TDS for the sale of recharge voucher coupons and starter kits to its channel partners.

The assessee company is engaged in the business of providing telecommunication services across the country. In the course of the telecommunication services business, the assessee sells Recharge Coupon Vouchers (RCV) and starter kits to its channel partners for onward sale to the retailer and, thereafter, to the final customers. While concluding the assessment proceedings against the assessee, the Assessing Officer held that these payments are in the nature of commission for which, TDS under section 194H shall be deducted. Accordingly, the Assessing Officer proceeded to raise a demand on account of non-deduction of tax at source and also levied consequential interest U/s 201(1A) of the Act.

The Tribunal bench comprising Accountant Member N K Billaiya and Judicial Member Sudhansu Srivastava relied on the orders in the case of DCIT vs. Idea Cellular the Co-ordinate Bench decided the issue of applicability of the provisions of section 194H of the Act in favour of the assessee.

“We would also like to refer to the observations of the Co-ordinate Bench of this Tribunal, Jaipur Bench in the case of Teta TeleServices Ltd. vs. ITO, Jaipur (supra) wherein view favourable to the assessee was taken,” the bench said.

Concluding the order in favour of the assessee, the Tribunal held that “therefore, in light of the discussion in the above paras and respectfully following the judicial precedents referred to above, we hold that the sale of recharge voucher coupons and starter kits and the discount offered to the distributors would not attract TDS provisions u/s 194H of the Act and as such, no default U/s 201(1) of the Act can be attributed to the assessee. Accordingly, the order of the Ld. CIT(A), allowing relief to the assessee, is upheld and the grounds raised by the Department are dismissed.”

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