TMI Blog2023 (11) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... URT] and clearly held that it is a case of sale and not works contract and section 194C will not be applicable. Respectfully following the above decision, Ground No. 1 raised by the Revenue is devoid of merits and the same is hereby dismissed. Discounts given by the assessee is to be treated in the nature of commission u/s 194H - HELD THAT:- Plain reading of the definition of section 194H makes it clear that the said section applies only if the nature of the payment is for acting on behalf of another person or for rendering of services. However, in the case of the assessee, the discounts were allowed to assessee's own buyers/parties to whom goods are sold. None of the parties were assessee's agents and none of them had rendered any services to the assessee. For buying goods from the assessee, they paid sales consideration. They had also not sold the goods supplied to them on behalf of assessee, but they had sold the same in their own rights as independent parties. Thus, all the 12 parties were not the agents and had not rendered any services to the assessee, therefore section 194H does not apply in the present case. As seen that all the credit notes are by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ault for non-TDS an amount of Rs. 46,68,151/-. Further the A.O. noticed that the assessee company provides various types of discounts such as trade discount/quantity discount expiry discount, scheme discount etc to its dealers amounting to Rs. 39,36,687/- to twelve parties. These discounts were offered by way of credit notes and not a direct discount on sale price, but the same is being given for enhancing sale in a particular area or achieving targets for sale. However the A.O. treated the above discount as that of a commission and assessee failed to make TDS u/s. 194H of the Act and made addition of Rs. 3,93,669/-. Similarly, the Assessing Officer levied interest u/s. 201(1) and 201(1A) of Rs. 18,22,225/-. 3. Aggrieved against the same, the assessee filed appeal before Ld. Commissioner of Income Tax (Appeals). The Ld. CIT(A) following Jurisdictional High Court judgment in the case of CIT Vs. Girnar Food deleted the additions made u/s. 201(1) by observing as follows: 6.3 On perusal, I find that the Jurisdictional High Court of Gujarat in the case of CIT vs. Girnar Food 306 ITR 23 (2008) has held that where there is a contract for supply of materials with design/logo/brand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties, wherefrom the aforesaid fact can be verified that the invoices contain description of goods and there was no payment of labour job charges by appellant. It clearly shows that what was purchased, are the entire flexible laminated packaging material. It is also held by Hon'ble courts that the particulars printed on the said flexible packaging as per specifications or containing appellant's name or particulars of the products thereon does not signify that a jobwork was ordered. Thus, section 194C is not applicable on the purchase made by the appellant. 6.3.2 Further, the Girnar case (supra) decision has also taken into account of all Board Circulars including Circular no. 715 relied by the AO and has laid down that no TDS was deductible despite the said Circular. 6.4 1 further find that the Jurisdictional High Court of Gujarat in the case of Hindustan Lever Ltd. 306 ITR 25 has dismissed the appeal of the Revenue, relying on the basis of own decision in the case of CIT vs. Girnar Food 306 ITR 23 (2008) and held that where contract is for supply of materials, viz., sale of materials, it cannot be termed to be a contract for work and labour and is not amenabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and the dealer, there is no service provided by the dealer to the assessee in the course of buying or selling goods, inasmuch as, the assessee directly sells goods to the dealer and the dealer makes the payment after collecting it from the consumers and, therefore, it is a transaction on principal to principal basis and, therefore, the payment made by the dealer is not liable for any deduction of tax by the assessee company Therefore, in the facts of the case, the provisions of section 40(a)(ia) of the Act cannot be applied as the dealer cannot be said to be a commission agent of the assessee company 7.3.1 I also find that the facts narrated in above decision are similar with the facts of appellant's case because the discounts was allowed by appellant to its own buyers/parties to whom sold goods (who purchased goods from the appellant). Further, none of the parties were appellant's agents and none of them had rendered any services to appellant. For buying goods from the appellant, they had paid sales consideration. They had also not sold the goods supplied to them on behalf of appellant but they had sold the same in their own rights as independent parties. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the assessee and suppliers of goods as being in the nature of job work. Thus it is not a works contract, but it is an outright purchase which is not hit by Section 194C of the Act. The entire material of flexi packaging were purchased by the suppliers on their own and paid Excise Duty and VAT. The assessee submitted sample bills from each of the suppliers, wherein the above facts are proved which is not disputed by the Assessing Officer. Further the above issue was considered by Jurisdictional High Court in the case of Girnar Food (cited supra) and clearly held that it is a case of sale and not works contract and section 194C will not be applicable. Respectfully following the above decision, Ground No. 1 raised by the Revenue is devoid of merits and the same is hereby dismissed. 7. Regarding Ground No. 2 namely various discounts given by the assessee is to be treated in the nature of commission, Section 194H applicable. The word 'commission or brokerage' is defined in section 194H so as to include any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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