The Bombay High Court held that TDS provisions under section 194H of the Income Tax Act, 1961 are not attracted on discounts given by the assessee to the distributors of prepaid SIM cards
The High court bench comprising of Justices Ujjal Bhuyan, & Milind N. Jadhav pronounced the judgment based on an application filed by M/s. Vodafone Cellular Ltd.
Section 194H of the Act deals with commission or brokerage. It says that any person, not being an individual or a Hindu undivided family, who is responsible for paying, on or after the 1st day of June 2001, to a resident, any income by way of commission(not being insurance commission referred to in section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of five.
In the light of the judgment in Commissioner of Income Tax-8, Mumbai v/s. M/s.Reliance Communications Infrastructure Ltd. – Income Tax Appeal No. 702 of 2017 decided on 22.07.2019, Court held that when the transaction is between two persons on principal to principal basis, deduction of tax at source as per Section 194H of the Act would not be made since the payment was not for a commission or for brokerage.
The court held that the transaction was between two persons on principal to principal basis, deduction of tax at source as per section 194H of the Act, would not be made since the prepaid SIM Cards payment was not for commission or brokerage.
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