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2016 (8) TMI 223 - AT - Income TaxTDS u/s 194G - Disallowance under section 40(a)(ia) - payment of disbursed prize monies - whether the assessee was liable to deduct tax at source from the amount in question disbursed as prize monies on lottery tickets under section 194G - revision u/s 263 - Held that:- As rightly contended by the ld. counsel for the assessee, the amount in question can be considered as in the nature of commission for the purpose of section 40(a)(ia) read with section 194G only if the same represents payment received or receivable, directly or indirectly, by a person acting on behalf of another person for any services rendered, inter alia, in the course of buying or selling of goods. As per the terms and conditions of the agreements entered into between the assessee and its stockists (copy of Stockist Agreement placed), the assessee-firm and the stockists were acting on principal to principal basis, inasmuch as, the stockists were free to act in their capacity and once the lottery tickets were sold to them, such lottery tickets stood transferred to the stockists. The stockists were mainly concerned with their shares on sale of lottery tickets and they were not entitled to receive any commission on sale of lottery tickets from the assessee. They were free to sale the lottery tickets to any sub-stockists or retailers at the self determined prices as per their free will and the contract between the assessee and the stockists was that of purchase and sale of lottery tickets and not that of rendering services on commission. In the matter of lottery business as governed by the relevant agreements, the stockists were to act on their own and not for or on behalf of the assessee. The relationship between the assessee and the stockists thus was that of principal to principal and there being no principal – agent relationship between them as held by the Hon'ble High Court of Sikkim in the case of Future Gaming and Hotel Services Pvt. Limited (supra), we agree with the contention of the ld. counsel for the assessee that the amount in question was not in the nature of commission as defined in clause (i) of Explanation to Section 194H so as to attract the provision of section 40(a)(ia) read with section 194G. In our opinion, the amount in question representing the disbursal of prize monies on lottery tickets thus was not liable to be disallowed under section 40(a)(ia) in the facts and circumstances of the case and there was no error in the order of the Assessing Officer not making such disallowance as alleged by the ld. CIT justifying revision under section 263. - Decided in favour of assessee
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