TMI Blog2013 (1) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... ime travel agents on behalf of their respective customers, would partake the character of “Discount” only & such discount payments will not be attracted by the provisions of sec. 194H. CIT(A) agreed with the contentions of the assessee and accordingly held that the decision rendered in the case of Vodafone Essar Cellular Ltd [2010 (8) TMI 691 - KERALA HIGH COURT] shall not apply to the payments made by the assessee to the small time agents as small time agents have not been appointed by the Airline companies. These small time agents have also not been appointed by the assessee herein also - in favour of assessee. - ITA Nos.373-376/Coch/2011 & ITA Nos.377-380/Coch/2011 - - - Dated:- 14-12-2012 - N.R.S. Ganesan and B.R. Baskaran, JJ. Appellant Rep by: Smt Susan George Varghese, Sr.DR Respondent Rep by: Shri C.B.M Warrier, FCA ORDER Per: B.R. Baskaran: These cross appeals are directed against the orders passed by Ld CIT(A)-III. Kochi and they relate to the financial years relevant to the assessment years 2006-07 to 2009-10. Since identical issues are urged in these appeals, they were heard together and are being disposed of by this common order, for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . By placing reliance on the following decisions, the Ld CIT(A) held that the discounts given to the retail customers and group persons cannot be considered as Commission payments. (a) Kerala Stamp Vendors Association Vs. Office of Accountant general and ors. (282 ITR 7)(Ker) (b) Ahmedabad Stamp Vendors Association Vs. Union of India (257 ITR 202)(Guj) The Ld CIT(A) held that the discounts/commission paid to the small time agents (Non- IATA agents) are liable for TDS u/s 194H of the Act. Accordingly, the Ld CIT(A) directed the TDS officer to re-work the liability u/s 201(1) and interest u/s 201(1A) of the Act. Accordingly, the appeals filed by the assessee were partly allowed. Hence both the parties are in appeal before us. 5. In all the years, the revenue has urged that the Ld CIT(A) has violated Rule 46A(1) of the Income tax Rules by accepting new evidences during the course of appellate proceedings. However, on a careful perusal of the orders passed by Ld CIT(A), we notice that the Ld CIT(A) (a) has categorised the commission payments into three categories, as stated earlier, on the basis of information available in the books of accounts maintained by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in all the assessment years such discount given to the customers are termed as COMMISSION and assessed in the order. It is fact that the expression or the terminology of COMMISSION is mistakenly used in several places but in substance the deduction given in the sale bill is only a discount and not commission as treated in the assessment order. In the statement of accounts and elsewhere this TRADE DISCOUNT is termed as COMMISSION by mistake which may be condoned since Substance is important than the form and expression . 7. There is no dispute with regard to the fact that the assessee herein is a IATA agent and it is authorised to sell air tickets at a price range that are usually fixed by the airline companies. It is also a fact that the competition between different airline companies has increased due to presence of a number of airline companies and the same has resulted in fixation of ticket rates at different levels at different points of time. Accordingly, it appears that the IATA agents are given option to fix the ticket rates within the maximum and minimum range that are fixed by the airline companies. Similarly, there is competition among various IATA agents and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 194H of the Act. The contentions made by the assessee before Ld CIT(A) with regard to this category of payment are extracted below:- 4. SUB-AGENT In the business of travel agency there are 2 categories of travel agents. The first is the travel agent who is having the agency agreement with the Air Lines under IATA Rules. Those travel agents are provided with blank tickets with the freedom for the travel agents to sell the air tickets at the rates at their discretion within the minimum and maximum rates prescribed by the airlines. They represent the Air Lines in issuing tickets and they are responsible for their acts as agents under various rules and regulation and provisions of various statutes. The appellant is doing business as a travel agent in this category. There are several small time-business may be proprietary, partnership or limited company doing the business of travel agency. These self-styled travel agents who are up country dealers of air tickets, train tickets and bus tickets are buying tickets and giving to the travelling public with the charge for their services. The appellant has not appointed any person as SUB-AGENT to act on its behalf and del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... billed at its gross price and thereafter trade discount is debited there from and the balance is shown as net price and sales tax is collected on that net amount and goods are delivered. In this case it was held that such trade discounts allowed does not amount to commission payment and there is no requirement for deduction of tax under sec. 194H. 8. COMMISSIONER OF INCOME TAX Vs. SINGAPORE AIRLINES LTD. ORS. HIGH COURT OF DELHI (2009) 224 CTR (Del) 168. The concessional air tickets sold by the travel agents to other persons are on a principal to principal basis does not involve payment of commission u/s. 194H, 201(1) and 201(1A) of the Act Page-172. 9. (a) KERALA STAMP VENDORS ASSOCIATION Vs. OFFICE OF THE ACCOUNTANT GENERAL AND ORS., 285 ITR 7 (Ker.) (b) AHMEDABAD STAMP VENDORS ASSOCIATION Vs. UNION OF INDIA (2002) 176 CTR (Guj.) 193. (2002) 257 ITR 202 (Guj.). It is held that licensed stamp vendors are required to purchase the stamp papers from Government on payment of price les discount on principal to principal basis and there being no contract of agency at any point of time, discount allowed to such licensed stamp vendors under Gujarat Stamps ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from any of the IATA agents. The Ld A.R submitted that the modus operandi of these small time agents is that they, on being approached by a customer for a ticket, will make enquiries about the rate of flight tickets with various IATA agents. On ascertaining the flight rates offered by the IATA agents, they would identify the lowest rates and accordingly place orders. Accordingly, the Ld A.R contended that the relationship between the assessee and the small time agents is on Principal to Principal basis only and in reality, they act as the agent of their respective customers only. Hence, the discount offered by the assessee to such small time agents cannot be treated as commission payments. 12. On the other hand, the Ld D.R, by placing reliance on the decision of jurisdictional Kerala High Court in the case of Vodafone Essar Cellular Ltd Vs. DCIT (2010), contended that the discounts given to the small time agents would partake the character of Commission and hence the provisions of sec. 194H shall apply to such payments. 13. On a careful consideration of rival submissions and also the definition of Commission or brokerage given in section 194H of the Act, we find force in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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