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2013 (4) TMI 291 - HC - Income TaxAssessee in default - TDS u/s 194-H - commission or discount - legality and validity of the order passed by the Income Tax Officer (TDS), Agra passed under section 221(1)/221(1A) whereby the Chief Treasury Officer has been held as assessee in default questioned - allegations of the dept. that the petitioner sells general stamp papers, court fee stamps, copy stamps and other stamps either to the public directly or through licensed stamp vendors at a price less than 1% of the value of such stamps which amounts to 'commission' within the meaning of section 19H - Held that:- The central theme of the impugned order dated 16.12.2003 is that as the stamp papers etc. have been sold at a discounted price, it is nothing but payment of commission to stamp vendors by the petitioner. The impugned order proceeds on the ignorance of the scheme of U.P. Stamp Rules as also the difference in between the commission and discount. Similar kind of controversy was up for consideration before this Court in the case of Jagran Prakashan Limited (2012 (5) TMI 488 - ALLAHABAD HIGH COURT) where it was a case of publisher of newspaper engaged in the business of printing and publishing newspapers 'Dainik Jagran' and 'Eye Next' from different places across the country. It was giving trade discount to the advertisers who used to bring advertisements for the newspapers. The newspaper publisher used to charge less advertisement charges from a category of persons who are the members of Indian Newspapers Society. The Income Tax Department treated the newspaper Dainik Jagran as assessee in default as it failed to deduct the tax at source on the differential amount which according to the department was commission paid to such advertisers. This Court on the consideration of various judgements of the Apex Court has held that such type of discount is trade discount and it is not commission. By applying the ratio of the aforesaid decision and keeping in mind that the nature of transaction discount under Rule 161 is not payment of commission directly or indirectly but it is a discount. Therefore the impugned order has been passed without taking into consideration the relevant facts and is illegal. Also in similar set of facts CIT (A)-II, Kanpur has held that the provisions of 194-H are not attracted in the case of stamp vendors on the sale of stamp papers etc. to licensed vendors as per the U.P. Stamp Rules, 1942 deserves for acceptance and this decision should have been followed in absence of any material otherwise by the respondent no.2 who is below the rank of CIT (A). In the result, the writ petition succeeds and is allowed. The impugned orders declaring assessee in default are quashed - in favour of assessee.
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