TMI Blog2006 (1) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... ned ITO regarding discount as a commission for deducting the income-tax as per provisions of section 194(H) of Income-tax Act. 2.That the CIT was in error not to consider the terms agreement between the appellant and his concessionaires which clearly shows that the title of goods passed immediately to concessionaires and it becomes property of the concessionaires as soon as he got delivery and there is no relation of master and employee between the appellant and concessionaires. 3.As per agreement, the concessionaires are authorized dealer and they are acted independently. 4.That the Explanation to the section 194H has explained the terms "Commission or brokerage" which clearly says that any amount received for any act done on behalf or principal in our case there is no master and there is no employee. 3. M/s. Delhi Milk Scheme ( DMS in short) is a Public Sector Undertaking. It is engaged in the business of manufacturing and selling of milk and milk products. A survey operation under section 133A was carried out on 12-6-2002 on the basis of information that the DMS has not been deducting tax at source on the amount of commission paid to its agents who sell milk on beha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion. So according to the Assessing Officer the DMS ought to have deducted TDS on amount of commission paid to its agents as prescribed in section 194H of the Act. Rejecting the arguments of the assessee in support of non-deduction of TDS, he came to the conclusion that by non-deducting TDS, the assessee has clearly attracted provisions of section 201/201(1A) and so he treated the assessee in default within the meaning of section 201(1) of Income-tax Act and thereafter worked out the deduction of tax and interest under section 201(1A) in financial year 2001-02 at Rs. 33,02,940 and for financial year 2002-03 (up to 31-7-2002) at Rs. 9,24,464 and issued a demand notice against the assessee. 5. Aggrieved with the order of the Assessing Officer, the assessee filed an appeal before the CIT(A) and contended before him that the concessionaires were not the agents or employees of the assessee. They were not selling milk or milk products for or on behalf of DMS. The payments made to the concessionaires were in the nature of discount and not in the nature of commission. The agreements with them were in the nature of commercial agreement. They also furnished copy of draft of the agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised before the tax authorities below and raised for the first time before us in the absence of any evidence proved on record by the assessee to substantiate its claim is devoid of any merit and accordingly the same is rejected as such. Another contention of learned AR for the assessee that as per the orders of tax authorities below for the home delivery supplies 70 paise per litre were to be paid to the agents out of which 50 paise per litre was to be given to home delivery agent by the agents/concessionaires appointed by DMS has not been taken into consideration separately we find that this agreement of learned AR for the assessee also has no force because under section 194H, commission paid to the agents is to be taken into consideration for the purpose of TDS and not the fact what commission is further paid by the agents/concessionaires to the sub-agents and secondly, learned AR for the assessee has also not led any evidence to show that this fact has even not been taken into consideration by the Assessing Officer at the time of calculating the commission paid to agents/concessionaires. In these facts even this argument first time raised before us also has no merit and accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The unsold milk from the agents would be taken back by DMS. The agents were barred from selling any other product of any other brand. The sale collections were collected by cash clerk of DMS from these booth operators. As per para 4.1(2) of the agreement the concessionaires shall have no right, title or interest over the said milk booth and other items provided/to be provided in the said milk booth from time to time and shall not claim any right whatsoever in respect of the said milk booth or any part thereof. Further, in sub-para 3 of para 4.1 of the agreement it is mentioned that the possession and control of the said milk booths as also other property movable/immovable of the said milk booths shall be with DMS and DMS shall always have the right to enter the said milk booths and take over the charge thereof at any time without any reason and without any intimation to the concessionaire. In addition thereto Shri Ram Swaroop, Manager (Distribution) in a sworn statement in reply to the question of the Assessing Officer specifically indicated that the sale collections were collected by cash clerk of DMS subsequently from the booth operators indicating that milk and milk products wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty and any loss on account of the curding or any other reason, whatsoever, shall be borne by the concessionaires whereas, on the contrary in the earlier agreement, certified copy of which was given to the department during survey, in para 4.1 (II) it was mentioned that the concessionaires shall not have any right, title or interest over the said milk booth and other items provided/to be provided in the said milk booths from time to time and shall not claim any right, whatsoever, in respect of the said milk booths or any part thereof. In sub-para 3 of para 4.1 of that agreement it was further mentioned that the possession and control of the said milk booths as also other property movable/immovable of the said milk booths shall be with DMS and DMS shall always have the right to enter the said milk booths and takeover charge thereof at any time without assigning any reason and without any intimation to the concessionaires. Either before us or before the CIT(A), it has not been denied by DMS that the agreements/ appointment letters, certified by DMS, relied upon by the Assessing Officer were not provided to department at the time of survey. They have also not explained as to where ..... X X X X Extracts X X X X X X X X Extracts X X X X
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