February 2019

Section 194H –Where assessee, engaged in business of providing DTH services, sold set top Box (STB) and recharge coupon vouchers to distributors at a discounted rate, discount so offered could not be considered as commission and, hence, not liable for deduction of tax at source under provisions of section 194H.

Jagdish T. Punjabi | Devendra Jain | Tejaswini Ghag
Chartered Accountants

30.  [2019] 197 TTJ 75 (Mumbai – Trib.) Tata Sky Ltd. vs. ACIT ITA No.: 6923 to 6926/Mum/2012 A.Y: 2009-10 to 2012-13 Dated: 12th October, 2018

           

Section 194H –Where assessee, engaged in business of providing DTH services, sold set top Box (STB) and recharge coupon vouchers to distributors at a discounted rate, discount so offered could not be considered as commission and, hence, not liable for deduction of tax at source under provisions of section 194H.

 

FACTS


The assessee-company was engaged in business of providing Direct to Home (DTH) services in the brand name of Tata Sky. The provision of this service required installation of set top box and dish antenna at the customer's premises. The assessee had entered into agreement with distributors for sale/distribution of settop boxes, prepaid vouchers, recharge vouchers (RCVs) etc. As per the agreements, STBs and RCVs were sold to distributors at a discounted price. The distributors/dealers sold these items to customers/subscribers of the assessee-company at a price not exceeding the MRP mentioned for the product.

 

The Assessing Officer held that the assessee was liable to deduct tax at source in respect of payments made to the distributors as discount for sale of STBs and recharge coupons as same was 'commission and brokerage' and the same was income in the hands of distributions for service relevant of assessee. He therefore, treated the assessee to be in default as per the provisions of section 201(1).

 

Aggrieved by the assessment order, the assessee preferred an appeal to the CIT(A). T

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