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TMI Blog2016 (6) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act and the purported finding on that issue is wholly arbitrary, unwarranted and perverse. 2. FOR THAT on the facts and in the circumstances of the instant case, the Ld. Commissioner of Income Tax (Appeals) Jalpaiguri acted unlawfully in upholding the impugned addition in the sum of Rs. 52,63,871/- resorted to by the Ld. Income Tax Officer, Ward 1, Rainganj within the province of s. 40(a)(ia) of the Income Tax Act, 1961 by misreading the facts and circumstances of the instant case and such specious finding reached on that behalf in violation of the statutory prescription is completely unfounded, unjustified and untenable in law. 3. FOR THAT the Ld. Commissioner of Income tax (Appeals) Jalpaiguri was remiss in sustaining the purported addition to the tune of Rs. 2,11,770/- under the implied application of s. 68 of the Act resorted to by the Ld. Income Tax Officer, Ward 1, Rainganj by misreading the facts and circumstances of the instant case and the adverse conclusion reached on that behalf is totally invalid, illogical and unsustainable in law. 4. FOR THAT the specious approach of the Ld. Commissioner of Income Tax (Appeals) Jalpaiguri of misreading evidence, considering i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been paid in terms of cash without deducting from the sale price. Therefore, incentive, in the present case is exactly similar to commission within the meaning of section 194H of the Act. The Assessing Officer further observed that the company, DWL has paid said commission to the assessee after deducting TDS and therefore, assessee was also liable to deduct TDS from such payment of incentive paid to retailers. Accordingly, AO disallowed an amount of Rs. 52,63,871/- u/s 40(a)(ia) of the Act and added to the total income of assessee. 3. Aggrieved, assessee preferred an appeal before Ld. CIT(A), where it was submitted that the assessee is getting the commission at fixed rate from the DWL on the distribution cash card. The assessee used to pass on a part of the commission to the retailers in the form of trade discount. The DWL never paid the commission by way of cash but it was always adjusted against the purchase consideration. Similarly the assessee never paid the commission in cash to the retailers but it was always paid in the form of discount so the provision of Sec. 194H on the commission paid to the retailers was not attracted. However, Ld. CIT(A) disregarded the claim of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e without adjusting the same with the trade discount given to the retailers. Accordingly the trade discount was shown as an independent expenditure in the profit and loss account under the head of Incentive paid to retailers but factually no such incentive expenses was required to be incurred. The assessee in the instant case has just shown the incentive paid as an expense without adjusting the same from the sales account. We further find that in none of the case, incentive has been paid to the retailers in cash which was just the method of accounting and presentation that assessee has shown incentives paid to the retailers as an expense in its profit and loss account. We have also found the ledger of the incentive paid to retailers which is placed on pages 49 to 51 of the paper book and find that the incentive is nothing but a trade discount. Now the question before us arises as to whether the trade discount given by assessee to the retailers amount to commission and therefore liable to TDS as contemplated u/s 194H of the Act. In this connection, we find on the similar facts and circumstances the Co- ordinate Bench of Cuttack Bench has decided this issue in favour of assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate that there is violation of Rule 46A of IT Rules. Even otherwise we find that there is no specific ground raise by the Revenue with regard to violation of Rule 46A in their grounds of appeal. With regard to the merits of the case, we are in total agreement with the finding given by the Learned CIT(A) that the subject mentioned payments made by the assessee are only discount paid to the purchasers of recharge coupons through wrongly categorized as commission on sales in the books of account. We also agree that the nomenclature in books of account would not be the determinative factor for understanding the real nature of the transactions and it is well settled that substance would always prevail over its form. We hold that in these facts and circumstances, the payments made by the assessee is in the category of principal to principal and the provisions of section 194H of the Act would come into play only when the payment is from principal to agent. Hence we find no infirmity in the order of the Learned CIT(A) in this regard. Accordingly, the ground no 2 raised by the revenue is dismissed." Taking a consistent view of the co-ordinate Benches of Cuttack and this Tribunal in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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