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Thyrocare Technologies Limited, Mumbai Versus The Income Tax Officer (TDS) 3 (4) , Mumbai And Thyrocare Technologies Limited Versus The Assistant Registrar representing the Income Tax Appellate Tribunal & Others

2017 (9) TMI 1037 - BOMBAY HIGH COURT

TDS liability - payment to the parties who brought the samples for testing and reports at the assessee's door steps - arrangement as a principal to agent relationship - Tribunal assumes by terming the whole arrangement as a principal to agent relationship, that it is the appellant/assessee who is paying the money and therefore, for such services for which money is paid, the assessee is obliged to deduct tax at source - Held that:- The appellant/assessee says that it is a sample testing labo .....

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or testing to any other laboratories. Therefore, this is a principal to principal relationship. The decision of the coordinate Bench of the Tribunal at Delhi in the case of SRL Ranbaxy Ltd. (2011 (12) TMI 84 - ITAT DELHI ) would therefore, bind the authorities. - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by this single paragraph conclusion. There is absolutely no discussion of the law and why the coor .....

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statements, referred to such of the materials on record which would disclose that the assessee has entered into such arrangements so as to avoid the obligation to deduct the tax at source. If the arrangements are sham, bogus or dubious, then such a finding should have been rendered. Therefore, we are most unhappy with the manner in which the Tribunal has decided these Appeals. We have no alternative but to set aside such order and when the last fact finding authority misdirects itself totally i .....

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Mr. Suresh Kumar a/w Ms. Samiksha Kanani, Mr. Prakash C. Chhotaray for the Respondent ORDER P. C. 1. The assessee has filed these Appeals aggrieved and dissatisfied with the order of the Income Tax Appellate Tribunal, Bench at Mumbai, dated 31st March, 2015. 2. The Income Tax Appellate Tribunal decided two Appeals of the Revenue bearing ITA Nos. 5389 & 5390/Mum/2013 for the assessment years 2009-2010 and 2010-2011. 3. These Appeals were directed against the order of the First Appellate Autho .....

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er in this case was of the view that the assessee was obliged to deduct tax at source while making payment to the parties who brought the samples for testing and reports at the assessee's door steps. In fact, when such samples are tested by the assessee, it is the assessee who renders services to those sample collectors and who are distinct third parties. They are not obliged to hand over all their samples for testing to the assessee alone. These sample collectors can approach any of the lab .....

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t this understanding of the Tribunal is entirely faulty. Apart from that, in the entire order of the Commissioner which is upholding the stand of the assessee, there is reference to the very documents which the Assessing Officer looked into. It is based on these very documents that the Commissioner/First Appellate Authority held that there was a principal to principal relationship and not a principal to agent relationship. The Tribunal, without adverting to these findings and conclusions of the .....

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view of the First Appellate Authority is based on a decision of the Tribunal's Bench at Delhi. It is urged that there is a view taken and specifically on the point. That view was taken by considering an identical arrangement/agreement. That view of the Tribunal was taken by its Delhi Bench in the case of SRL Ranbaxy Ltd. vs. Assistant Commissioner of Income Tax, reported in (2012) 143 TTJ 265. The Tribunal has made no reference to this decision and made no attempt to distinguish it. 8. On t .....

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projection is that the patients do not directly go to the assessee/appellant before us, but that is incorrect. That is how the Tribunal directed the Assessing Officer to examine the records again so as to determine the relationship between the parties. However, according to Mr. Chhotaray, in doing so and in directing the Assessing Officer to act on these lines, the Tribunal has discussed the case of both sides and perused carefully the materials on record. Hence, the impugned order does not rais .....

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discharged the burden is perverse, contrary to the facts on record and such that no reasonable person properly instructed as to the facts and law could come to in the light of the fact that (a) there was no such grievance raised by the Respondent, (b) the Appellant had filed voluminous evidence in support of its contentions and the Tribunal never indicated during the hearing that it was not satisfied with the evidence, (c) the Tribunal appears to have totally lost sight of the said evidence and .....

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143 TTJ 265 which is similar on facts and also the other judgments cited by the Appellant? 10. We have carefully perused the order of the Tribunal impugned in these Appeals. The Tribunal seems to be unaware of the fact that the entire order of the Assessing Officer reproduced by it in the impugned order had been set aside by the Commissioner of Income Tax (Appeals). The Tribunal completely overlooked the fact that there is a version of the assessee which was accepted by this First Appellate Auth .....

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samples exclusively for the appellant and they are free to send the samples collected by them for testing to any other laboratories. Therefore, this is a principal to principal relationship. The decision of the coordinate Bench of the Tribunal at Delhi in the case of SRL Ranbaxy Ltd. (supra) would therefore, bind the authorities. 11. On the other hand, the version of the Assessing Officer was that this is nothing but a eyewash. It is the appellant/assessee who is representing to the world that i .....

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y rely on paragraphs 2.1 and 2.4 to 2.6 of the Tribunal's order to submit that the Tribunal has applied its mind to what it terms as a question going to the root of the case, however, it did not decide it itself, but directed that it should be redecided by the Assessing Officer and there is no error in the said approach of the Tribunal. The manner of deciding the Appeal, is therefore, not unsatisfactory. 13. We are not in agreement with Mr. Chhotaray for more than one reason. 14. The Tribuna .....

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ee company and TSPs. II. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in not correctly appreciating the nature of the payment made to TSPs as the same is in the nature of commission or brokerage which is evident from the affidavit cum undertaking executed by the TSPs and their application forms for appointment as TSPs. III. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax ( .....

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g the hearing of the Appeals, refers to the crux of the argument on behalf of the Revenue and that is in support of the assessment order. The Revenue argued that the First Appellate Authority did not correctly appreciate the nature of payments made to the service providers and that there is a principal to agent relationship between the assessee company and these service providers. The Revenue argued that the payment is in the nature of commission or brokerage and in that process, the Revenue rel .....

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sions of the First Appellate Authority. The Tribunal holds that the assessee did not satisfactorily explain the queries raised by the Bench. The Assessing Officer, nor the Commissioner of Income Tax has examined the aforesaid points which go to the root of the matter. 18. Then, from paragraph 2.1 to paragraph 2.4, all that is reproduced are the statements or the extracts thereof. We do not see how relying on these statements, which may or may not be referred by the Assessing Officer or the First .....

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First Appellate Authority. Pertinently, it lost sight of the fact that the Assessing Officer's order was not upheld but set aside by the First Appellate Authority, and the Revenue was in Appeal against the same. The Tribunal terms certain facts as undisputed, whereas, those are very much disputed. The assessee is not admitting that the service providers are its agents. It is not admitting that the service providers are allowed to collect necessary charges from the assessee's clients for .....

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en, in paragraph 2.6 (at running pages 65 to 67) the Tribunal holds as under: 2.6. During the course of hearing, the Ld A.R. vehemently contended that the relationship between the assessee and TSPs/collectors/aggregators are that of Principal to Principal basis, yet no document was produced before us to substantiate those contentions. Further, we notice that the test results given by the assessee directly benefit the patients and in that case the TSPs/collectors/aggregators appear to act as mere .....

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he retailer and then from the retailer to the ultimate consumers, i.e., each of the parties mentioned above become owners of the goods in their independent capacities and they are entitled to deal with the goods in any manner as he likes. However, in the case of lab results, the TSPs/collectors/aggregators are not going to be benefited by the test results and it is the patient who is going to be benefited by the lab results. Hence, we are of the view that the traders of the goods cannot be compa .....

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ine them and decide the issue in accordance with law. We are of the view that the assessee has certainly not discharged the burden and the ld. Commissioner of Income Tax (Appeals) granted relief to the assessee ignoring the true facts and observation made in the assessment order, therefore, the impugned orders are set aside. The Assessing Officer is directed to examine the case afresh with different angles including the observations made by us. The assessee be given opportunity of being heard, s .....

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contrary to law. There are no infirmities, much less serious errors of fact and law noted by the Tribunal in the order of the Commissioner, which the Tribunal is obliged to and which order is therefore interfered by the Tribunal. Why the Tribunal feels it is its duty and obligation to interfere with the order of the First Appellate Authority, therefore, should be indicated with clarity. We have also not seen a reference to any communication or to any document which would indicate that the six q .....

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