TMI Blog2013 (12) TMI 1604X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, which reads as under:- '194H. Commission or brockerage.- Any person, not being in individual or an Hindu Undivided Family, who is responsible for paying, on or after the 1st day of June, 2001, to a resident, any income by way of commission (not being insurance commission referred to in Section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent. Provided that no deduction shall be made under this section in a case where the amount of such income or, as the case may be, the aggregate of the amounts of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r profession as is notified by the Board for the purposes of section 44AA; (iii) the expression securities shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); (iv) 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.' 2. The challenge in the present writ petition by the members of the petitioner/association is the communication dated 17.02.2011 of Treasury Department, Haridwar, Uttarakhand by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educted. 5. The Division Bench of the Gujarat High Court (supra) has examined this matter at great length. The question which the Gujarat High Court had placed before itself, in order to determine the controversy was whether the stamp vendors are agent of the State Government, who are paid Commission or Brokerage or whether the stamp vendors purchased stamp papers from the Government and the transaction between the two involves contract of sale . If they are agents then tax has to be deducted as per the provision of law. However, in case what transpires between the Government and the stamp vendors is a contract for sale then the tax is not liable to be deducted under the above provision. The Division Bench of the Gujarat High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he society, which has made a departure from the doctrine of laissez faire by including a transaction within the fold of a sale even though the seller may by virtue of an agreement impose a number of restrictions on the buyer, e.g., fixation of price, submission of accounts, selling in a particular area or territory and so on. These restrictions per se would not convert a contract of sale into one of agency, because in spite of these restrictions the transaction would still be a sale and subject to all the incidents of a sale. A contract of agency, however, differs essentially from a contract of sale inasmuch as an agent after taking delivery of the property does not sell it as his own property but sells the same as the property of the princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hopal Sugar Industries Ltd. v. STO [1977] 40 STC 42, 47, the concept of a sale has, however, undergone a revolutionary change, having regard to the complexities of the modern times and the expanding needs of the society, which has made a departure from the doctrine of laissez faire by including a transaction within the fold of a sale even though the seller may by virtue of an agreement impose a number of restrictions on the buyer, e.g., fixation of price, submission of accounts, selling in a particular area or territory and so on. These restrictions per se would not convert a contract of sale into one of agency, because in spite of these restrictions the transaction would still be a sale and subject to all the incidents of a sale. Hence w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Gujarat High Court has been followed by the Kerala High Court in Kerala State Stamp Vendors Association v. Office of the Accountant General [(2006) 200CTR (Ker) 658 decided on 20.06.2005. 11. This Court is clearly of the view that in the present case, the determination of the Division Bench of the Gujarat High Court gives the correct position of law on the subject and, therefore, it is to be followed by this Court as well. 12. Consequently writ petition succeeds. The communication dated 17.02.2011 is hereby quashed. As far as the refund of the TDS amount is concerned, since the deduction of TDS is wrong, the respective stamp vendors are at liberty to approach Income Tax Department for refund of the said amount as per the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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