TMI Blog2015 (11) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... oncur with the view of the CIT(A) and dismiss these appeals by the revenue. - Decided in favour of assessee. - ITA Nos. 852 & 853/Kol/2013 - - - Dated:- 20-10-2015 - P. M. Jagtap AM And N. V. Vasudevan, JM For the Petitioner : None For the Respondent : Shri M K Biswas, JCIT Sr. DR ORDER Per N V Vasudevan, JM These are appeals by the Revenue against two orders both dated 3.1.2013 of CIT(A)-I, Kolkata, passed u/s.201(1) 201(1A) of the Income Tax Act, 1961(Act) pertaining to AY 2003-04 2004-05. 2. Notice sent to the Assessee has been returned un-served with the 'LEFT . Since the issue arising for consideration in this appeal have been considered and decided in several cases of manufacturers of dairy products by higher judicial forums under identical facts and circumstances, we proceed to decide these appeals, after considering the arguments of the learned DR. 3. The issue involved in both these appeals are identical and arise out of same facts and circumstances. We deem it appropriate to pass a common consolidated order. 4. The Assessee is a company engaged in the business of production and sale of milk, icecream and other Dairy products. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is section, - (i) Commission or brokerage includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing; (ii) Professional services means services rendered by a person in the course of carrying on a legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or such other profession as is notified by the Board for the purposes of section 44AA; (iii) Where any income is credited to any account, whether called Suspense account or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. 4. It is clear from the aforesaid provision that taxes have to be deducted at source by a person responsible for paying any income by way of commission or brokerage. The express ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee reserved a right to change the selling price of milk to the consumers from time to time and the same will not have any connection with the margin allowable to the franchisee. f) Clause 22 whereby the franchisee was obliged to display signboard and price list as specified by the Essential commodities Act or the Assessee. g) Claus 24 of the agreement which provides that the franchisee shall not under any circumstances whatsoever sell any other type of milk other than the milk supplied to them by the Assessee either directly or through any other party from the said selling premises and that such sale shall be only against cash payment on first cum first served basis. 7. Before CIT(A), the Assessee submitted that key clauses of the agreement between the Assessee and franchisee would show that the arrangement for sale of dairy products of the Assessee to the public through franchisees was on the basis of principal to principal there being an outright sale of products by the Assessee to the franchisee and not in the capacity of commission agent. The Assessee pointed out that para 2 of the Franchisee Agreement provided that the Assessee will sell milk and the franch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the Assessee. The CIT(A) therefore concluded that the payment by the Assessee to the franchisee was not in the nature of 'commission' within the meaning of Sec.194-H of the Act and therefore there was no obligation on the payment of the Assessee to deduct tax at source on such payment. 11. Aggrieved by the orders of the CIT(A), the revenue is in appeal before the Tribunal. 12. We have heard the submission of the learned DR who relied on the order of the AO. We have considered the order of the AO and that of the CIT(A) in the light of the various judicial pronouncements referred to therein in the light of the agreement between the Assessee and its franchisee. 13. The Hon'ble Delhi High Court in its judgment dated 19.12.2011 in the case of CIT Vs. Mother dairy India Ltd. ITA No.1925/2010 and ITA 313/d011 held in para-12 to para 15 of it's judgment as follows: 12...........The principal question that falls for consideration is whether the agreements between the assessee and the concessionaires gave rise to a relationship of principal to principal or relationship of principal to agent. On a fair reading of all the clauses of the agreement as have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed to the concessionaire. In the cases before us, the concessionaire becomes the owner of the milk and the products on taking delivery of the same from the Dairy. He thus purchased the milk and the products from the Dairy and sold them at the MRP. The difference between the MRP and the price which he pays to the Dairy is his income from business. It cannot be categorized as commission. The loss and gain is of the concessionaire. The Dairy may have fixed the MRP and the price at which they sell the products to the concessionaire but the products are sold and ownership vests and is transferred to the concessionaires. The sale is subject to conditions, and stipulations. This by itself does not show and establish principal and agent relationship. The supervision and control required in case of agency is missing. 13. It is irrelevant that the concessionaires were operating from the booths owned by the Dairy and were also using the equipment and furniture provided by the Dairy. That fact is not determinative of the relationship between the Dairy and the concessionaires with regard to the sale of the milk and other products. They were licencees of the premises and were permitted the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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