TMI Blog2018 (6) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... in refiling the appeal is condoned. The application stands allowed. 2. The appellant-revenue has filed the instant appeal under Section 260A of the Income Tax Act, 1961 (in short, the Act ) against the order dated 12.6.2012, Annexure A.3, passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (in short, the Tribunal ) in ITA No.418(ASR)/2011 for the assessment year 2008-09, claiming following substantial question of law:- Whether the Hon ble ITAT was right in confirming the order of CIT(A) in reversing the order of the Assessing Officer invoking the provisions of Section 194H of the Income Tax Act, 1961 on the payment of turnover discount of ₹ 4,57,52,494/-? 3. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. During inspection on 20.1.2009 of the office records of the respondent-assessee i.e. M/s OCM India Limited, GT Road, Chheharta, Amritsar, a company engaged in manufacturing and sale of woolen articles, it was noticed that the assessee debited an amount of ₹ 4,57,52,494/- to the account of Trade turnover discounts which had been netted out from the gross turnover and did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ... On plain reading of Section 194H of the Act, it is clear that tax at source is to be deducted by a person responsible for paying any income by way of Commission or brokerage . The expression Commission or brokerage referred to in this section derives its meaning from the Explanation appended thereto. According to it, Commission or brokerage includes any payment received or receivable directly or indirectly by a person acting on behalf of another person (i) for services rendered (not being professional services); or (ii) for any services in the course of buying or selling of good, or (iii) in relation to any transaction relating to any asset valuable article or thing, not being securities. In order to examine whether Explanation (i) to Section 194H of the Act is attracted, necessarily, it is to be seen whether the assessee has made any payment and, in case it is so, whether it is for service rendered by the payee to the assesseee. 6. Having crystallized the legal position, we proceed to examine various pronouncements relied upon by learned counsel for the parties. Learned Counsel for the revenue, on the strength of judgments in Commissioner of Income Tax Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission for the services rendered by the agents for services provided by the assessee to the subscriber. In the present case, the assessee had been deducting the trade discount allowed to the dealers under the heading turnover incentive and the same had been reduced from the sale which is distinct from the facts of the case before the Delhi High Court. 9. Similar issue arose before the Kerala High Court in Vodafone Essar Cellular Limited s case (supra). The issue was adjudicated in favour of the revenue relying upon decision of the Delhi High Court in Idea Cellular Limited s case (supra). The Calcutta High Court in Bharti Cellular Limited s case (supra) also expressed in favour of the revenue in view of judgments of the Delhi and Kerala High Courts. 10. Learned Counsel for the Assessee had cited judgments in The Bhopal Sugar Industries Limited Vs. Sales Tax Officer Bhopal , AIR 1977 SC 1275, Ahemdabad Stamp Vendors Association Vs. Union of India , (2002) 257 ITR 202 (Guj.), Commissioner of Income Tax Vs. Qatar Airways , (2011) 322 ITR 253 (Bomb.) and M.S. Hameed and others Vs. Director of State Lotteries and others , (2001) 249 ITR 186 (Kerla). 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturer when the dealings between the company and the dealer in the matter of sale of cars are on principal to principal basis. This is just an illustration to clarify that a service in the course of buying or selling of goods. When the licensed stamp vendors take delivery of stamp papers on payment of full price less discount and they sell such stamp papers to retail customers, neither of the two activities (buying from the Government and selling to the customers) can be termed as service in the course of buying or selling of good. In view of the above discussion, we uphold the contention urged on behalf of the petitioner s association that the discount made available to the licensed stamp vendors under the provisions of the Gujarat Stamps Supply and Sales Rules, 1987, does not fall within the expression commission or brokerage under section 194H of the Income-tax Act, 1961. The impugned communication dated March 14, 2002, from the Incometax Officer, TDS 4, Ahmedabad, to the Senior Treasury Officer, Ahmedabad, is, therefore, quashed and set aside, and so also the consequential instructions dated March 19, 2002 (annexure D to the petition) issued by the Senior Tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The appellantcompany has all along been arguing that this a part and parcel for his consistent trade practice being followed year after year to allow trade discount to the trade dealers so as to boost its turnover and this has been credited to the respective accounts of the trade dealers during the closing of the account books and on the other hand, it has been debiting commission amounting to ₹ 1.84 crore paid to its commission agents appointed territorywise which are acting and procuring orders/effecting sales of appellant s products for and on behalf of the appellant-principal and getting commission varying from place to place and quality of the product to product. Further, the A.O. has failed to established and bought on record any living instance on the basis of which it can be safely inferred that trade discount is only a sham arrangement and the payment has not been actually made to the trade dealers, Neither, the A.O. has bought on record any solid information coming to his possession which could led that the trade discount is virtually a commission paid to the intermediaries. On the contrary, it has been all along the appellant s contention that after the deal in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord before the AO that such discount offer is a commission within the meaning of Section 194-H of the Act. No iota of evidence or document has been placed on record by the assessing authority that the assessee has paid or debited the commission in its account. The AO has relied upon the decision in the case of Hindustan Coco Cola Beverages Pvt. Ltd. Vs. ITO ITAT (JP) (2005) 98 TTJ (JP) 1 along with other decisions of various courts of law. The AO has not established how the present case is identical to the facts in the case of Hindustan Coco Cola Beverages Pvt. Ltd. Vs. ITO (supra). Since in the case of Hindustan Coco Cola Beverages Pvt. Ltd. Vs. ITO (supra), the brief facts are that the assessee is a company engaged in manufacture and distribution of nonalcoholic packed glass bottle and plastic crates. The said company has been filing TDS return in respect of TDS of salary, contract/sub-contract and interest but no TDS return in respect of commission payment has been filed. A survey u/s 133 A of the Act was conducted on 20th Dec., 2002 on business premises for the purpose of verification regarding TDS being made by the assessee. During the course of survey, a trial balance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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