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2018 (3) TMI 736 - AT - Income TaxRevision u/s 263 - TDS u/s 194H on incentives passed on to the retailer - TDS liability - Held that:- It is evident that passing on incentives by the wholesale distributor to the retail dealer, there is no principal and agent relationship and cannot be held to be commission or brokerage paid to the recipient. Provisions of tax deduction at source u/s 194H of the Act would not attract the tax and accordingly disallowance u/s 40(a)(ia) of the Act is applicable, thus the assessment made u/s 143(3) cannot be held to be erroneous since the incentives passed on by credit note to the retail dealers is neither commission nor brokerage as discussed above, the section 194H of the Act has no application in this case. In the instant case as observed from the Ld. Principal CIT’s order, the A.O. has called for the details of the ledger accounts of the incentives and the details of salaries paid to its employees. In respect of salaries paid to employees, the A.O. did not make any addition in the consequential order passed u/s 143(3) r.w.s. 263 of the Act dated 29.12.2017. In respect of the incentives passed on to the retailers, the A.O. has obtained the details of ledger accounts and examined the same. Therefore, it is established beyond doubt that the A.O. has examined the issue and taken one of the possible views. Not examining the entire transaction and sales by the assessee company to its retail dealers and sales by its dealers till to the end users and verification of principal agent relationship etc. at best can be treated as inadequate enquiry but not lack of enquiry. Once the A.O. has conducted the enquiry and completed the assessment and the enquiry conducted was inadequate, there is no case for revision u/s 263 for inadequate enquiry. Lack of enquiry is a reason for taking up the case for revision u/s 263 of the Act but the inadequate enquiry cannot be a reason for taking up the case for revision u/s 263 of the Act. - Decided in favour of assessee.
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