TMI Blog2016 (11) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... only to promote their sales. The Tribunal rightly held that in the absence of relationship of a principal and agent, and as there was no direct relationship between the respondent-assessee and the retailer, the discount offered by the respondent-assessee to the retailers could only be treated as sales promotion expenses, and not as commission, as no services were rendered by the retailers to the respondent-assessee. - I. T. T. A. Nos. 633, 647 and 666 of 2015 - - - Dated:- 16-6-2016 - Ramesh Ranganathan And M. Satyanarayana Murthy, JJ. For the Appellant : K. Raji Reddy, Standing Counsel for the Income-tax Department For the Respondent : None appeared JUDGMENT Ramesh Ranganathan, J. 1. These appeals, under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal preferred thereagainst, the Commissioner of Income-tax (Appeals) held that the relationship of principal and agent was not mandatory ; payments were made by the assessee to their del-credere agents, and they would be the payees and not the retail dealers ; the relationship of principal and agent was established ; the del-credere agents had rendered the service of promoting the brands/products manufactured by the assessee, inducing the retail dealers to place orders with APBCL for which the subject payments were made ; and the conditions prescribed in section 194H of the Act were satisfied requiring deduction of tax at source. Aggrieved thereby, the respondent-assessee carried the matter in appeal to the Tribunal. 4. In the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d del-credere agents ; there was no dispute that payment made to del-credere agents, for the services provided by them to the assessee, was treated as commission by the assessee ; TDS had been deducted under section 194H of the Act, from them ; the incentives payable under the trade discount scheme was disbursed by the assessee to the retail dealers through del-credere agents who had opened separate bank accounts for the said purpose ; and the del-credere agents had only acted as a conduit for transferring incentives to the retail dealers. 5. Placing reliance on the judgment of the Supreme Court in Bhopal Sugar Industries Ltd. v. STO, [1977] 40 STC 42 (SC) ; AIR 1977 SC 1275, the Tribunal held that the essence of a Contract of Agency w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held not to be commission as the relationship between the assessee therein and its distributor was on a principal to principal basis. The Tribunal held that, since the assessee had sold the goods to the APBCL and the retail dealers had purchased the goods from the APBCL, the sale between the assessee and the APBCL, and the sale between the APBCL and retail dealers, was on a principal to principal basis ; the retail dealers had not provided any services to the assessee, since there was no direct connection between the assessee and retail dealers ; the trade discount scheme was announced by the assessee in order to promote its sales ; under the said scheme, the assessee had disbursed the eligible amount of incentive or rebate or discount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailers as trade discount, was only to promote their sales. The Tribunal rightly held that in the absence of relationship of a principal and agent, and as there was no direct relationship between the respondent-assessee and the retailer, the discount offered by the respondent-assessee to the retailers could only be treated as sales promotion expenses, and not as commission, as no services were rendered by the retailers to the respondent-assessee. 10. An appeal under section 260A of the Act would lie only on a substantial question of law. Save perversity, or a finding based on no evidence, the findings of fact recorded by the Tribunal would not give rise to a substantial question of law. The findings of the fact recorded by the Tribunal ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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