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2012 (8) TMI 576 - ITAT MUMBAITDS u/s 194H - payment of commission - Diversion by overriding title - tri-party agreement - held that:- The relationship between the assessee and franchisee/commission agent is of principal and agent. - Where an amount of fees received by an agent, he receives it for and on behalf of his principal. The terminology used by the assessee that it will be a charge for payment of commission to the franchisee/commission, in our view, is against the principles of law of agency and hence the same is immaterial. The payment of commission amounts to discharge an obligation after such income reaches to the assessee. There is no quarrel with the principles enunciated in the aforesaid decisions but keeping in view the law laid down by the Hon'ble Apex Court in the case of Sitaldas Tirathdas (1960 (11) TMI 17 - SUPREME COURT) that the case is one of application of a portion of the income to discharge an obligation, we are of the view that the assessee's case falls outside the rule laid down in Raja Bejoy Singh Dudhuria's case. The payment of commission though mentioned in receipt issued by the franchisee/commission agent does not amount to discharge an obligation by an overriding title rather the said payment amounts to discharge an obligation after such income reaches to the assessee. Since the assessee is liable to deduct TDS on the payment of commission under the provisions of section 194H of the Act and has failed to deduct the same, therefore, the Assessing Officer was justified in disallowing the payment of commission of Rs. 56,30,173 under the provisions of section 40(a)( ia) of the Act
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