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2009 (7) TMI 827 - AT - Income TaxTDS - The relevant facts as stated are that the assessee is a limited company registered under s. 25 of the Companies Act, and formed under the co-operative movement - Department was of the view that the assessee was not deducting tax at source (TDS) on the payments made to the distributors though required under s. 194H as it was a payment made on account of commission - The assessee was therefore, given a show cause towards the alleged failure to deduct the tax at source and to show why assessee be not treated as assessee in default and also why interest under s. 201(1) should not be charged from the assessee The assessee through w/s dt. 16th Dec., 2007 mainly contended that the relations between the assessee dairy and the distributor were not of principal-agent but it was a pure case of sale of goods at discounted rates – Commissioner (A) confirmed that the assessee was liable for the payment of TDS under s. 194H and the levy of the impugned interest - A careful perusal of the provision of 194H shows that it requires any person, who is responsible for paying any income by way of commission or brokerage, at the time of credit or payment thereof, whichever is earlier, to deduct income-tax thereon @ 10 per cent To determine the rights and obligations of the parties through a contract, it is always the intention which should prevail i.e., the substance must prevail over the form - In the case of Hindustan Coca Cola Beverages (P) Ltd. vs. ITO (2005) 98 TTJ (Jp) 1, wherein, the facts were that commission on sale of goods by the distributors, who were allowed to make sales only in the area precisely specified by the assessee company and they had no independence whatsoever of fixing the sale price by reducing their margins - . Thus, we are convinced that s. 194H, is not applicable on the facts and circumstances of the present case and therefore, it is held that the demand raised by the ITO, is without jurisdiction and hence quashed Interest - The learned Authorised Representative submitted that this is consequential to the earlier grounds - Held that the assessee was not liable to make any deduction under s. 194H hence there cannot be any charging of interest under s. 201 (1A) – Appeal is allowed
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