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2014 (4) TMI 353 - HC - Income TaxDeletion of disallowance u/s 40(a)(ia) r.w section 194H of the Act Explanation to section 194H not properly interpreted The Assessee had undertaken sales promotional scheme viz. Product discount scheme and Product campaign under which the Assessee had offered an incentive on case to case basis to its stockists /dealers/agents - Held that:- The relationship between the Assessee and the distributor / stockists was that of principal to principal and in fact the distributors were the customers of the assessee to whom the sales were effected either directly or through the consignment agent - the distributor / stockists were the persons to whom the product was sold, no services were offered by the assessee and what was offered by the distributor was a discount under the product distribution scheme or product campaign scheme to buy the assessee's product. The distributors / stockists were not acting on behalf of the assessee and that most of the credit was by way of goods on meeting of sales target - it could not be said to be a commission payment within the meaning of explanation (i) to Section 194H of the Income Tax Act, 1961 - the application of the provision is required to be considered to the relevant facts of every case - as regards sales promotional expenditure, the provisions of Explanation (i) below Section 194H of the Act are rightly held to be not applicable as the benefit which is availed of by the dealers / stockists of the Assessee is appropriately held to be not a payment of any commission thus, no substantial question of law arises for consideration Decided against Revenue.
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