Are primary and secondary discounts subject to provisions of TDS Section 194H of the Income Tax Act?

This case examines whether primary and secondary discounts, including those on set-top boxes and recharge vouchers, are subject to Tax Deducted at Source (TDS) under Section 194H of the Income Tax Act. The Income Tax Appellate Tribunal considered the disallowance of these discounts and related expenses by the Assessing Officer for non-deduction of TDS. The appeals also cover issues such as bonus credits to subscribers and sale promotion expenses.

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI

BEFORE SRI MAHAVIR SINGH, VP AND SRI G MANJUNATHA, AM

ITA No. 3214/Mum/2014
Assessment Year 2009-10)
ITA No. 3215/Mum/2014
Assessment Year 2010-11)

Tata Sky Limited
Unit 301, to 305, 3rd Floor, Windsor, Off C.S.T. Road, Kalina, Santacruz (East), Mumbai-400 098
Appellant

Vs.

The Asst. Commissioner of Income Tax, Circle 7(3), [now Assistant Commissioner of Income –tax, Range 16(1)] Mumbai
Respondent)
PAN No. AAGCS9294M

ITA No. 3971/Mum/2014
Assessment Year 2009-10)
ITA No. 3972/Mum/2014
Assessment Year 2010-11)

The Dy. Commissioner of Income Tax 7(3)
Room No. 615, 6th Floor, Aayakar Bhavan, M.K. Road, Mumbai-400 020
Appellant

Vs.

M/s Tata Sky Ltd.
34d Floor, C-1, Wadia International Centre, (Bombay Dyeing), Pandurang Budhkar Marg, Worli, Mumbi-400 025
Respondent

Appellant by : Shri J D Mistry, Senior Advocate
Respondent by: Shri R Manjunatha Swamy, CIT-DR

Date of hearing:29-07-2020
Date of pronouncement : 10-09-2020

 O R D E R

PER MAHAVIR SINGH, VP:

These cross appeals, by the assessee and by revenue, are arising out of the orders of Commissioner of Income Tax (Appeals)-13, Mumbai [in short CIT(A)], in appeal Nos. CIT(A)-13/Rg.7(3)/AP-269/11-12 and 127/12-13 dated 03.03.2014. The Assessments were framed by the Asst. Commissioner of Income Tax & Dy. Commissioner of Income Tax, Circle-7(3), Mumbai (in short ‘ACIT/DCIT/ AO) for the AY 2009-10 and 2010-11 vide different orders dated 31.12.2011 and 06.02.2013 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).

2. The first common issue in these two appeals of assessee for AYs 2009-10 and 2010-11 in ITA Nos. 3214 & 3215/Mum/2014 is as regards to the order of CIT(A) confirming the action of the AO in making disallowance of discount and various other expenses like discount on sale of set-top box and hardware, discount on sale of recharge coupon vouchers, disallowance of bonus or credit provided by the assessee to subscribers, disallowance of sale promotion expenses and disallowance of channel support expenses for non-deduction of TDS by invoking the provision of section 40(a)(ia) of the Act.

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