TMI Blog2018 (10) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... in the list at page No.25 containing the names of oil companies, schemes entitled, quantity & cost of gift, total value scheme and their respective contributions. The said form shows total value of scheme is ₹ 1,05,000/- and half of it i.e. 50% is ₹ 52,500/- was born by the assessee and its contribution of ₹ 52,500/- was credited to ledger account of C & F agent under the sales promotion vide credit note. Therefore, we find force in the arguments of ld.AR that it is not a commission and there is no principal and agent relationship. It is a sales promotion to grow simultaneously. It is a benefit to the distributor and assessee has no relationship with the distributor. We find from page No.88 of Paper Book that the assessee incurred foreign trip expenses to an extent of ₹ 11,18,000/- and the credit notes. As discussed above regarding the sample we note that a trip to Thailand offered to one person on achieving sale of 75 boxes or 2700 pieces and in our opinion, it is not a commission and is additional benefit given to the C&F agents. Case of COMMISSIONER OF INCOME-TAX (TDS) VERSUS UNITED BREWERIES LTD. (SUCCESSOR TO UNITED MILLENIUM BREWERIES) [2016 (11) TM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its business directly through the distributors. In the instant year, the assessee had debited ₹ 6,13,30,638/- as selling and distribution expenses to the P L a/c. The A.O. added the expenses amounting to ₹ 70,63,956/- on account of nondeduction of TDS treating the same as commission paid to the C F agent instead of sales promotion as contended by the assessee. The A.O. in the assessment order had stated that the same C F agents were allowed both commission fixed on sale and the credit notes in garb of sales promotion for the similar amount of sale. That the C F agents are separately paid commission and the TDS on such payment is duly deducted by the assessee. Copy of a statement showing the total commission paid during the year alongwith the TDS deducted on the same is placed at page 18 of Paper Book. It is further submitted that the assessee pays additional amounts to the C F agents which are in nature of reimbursement i.e. 50% of the expenses incurred by the C F agents and reiterated the submissions made before CIT(A) that it does not attract the provisions of sec 194H of the Act. 7. It is further submitted that the assessee had made a total payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... floated by the assessee and thus, there is principle to principle relationship between the assessee and the C F agents and thus the reimbursement by the assessee to the C F agents towards the scheme under no circumstances can be termed as commission. ( b) Trip: The C F agents were given additional scheme benefit as an incentive. The assessee used to give credit note to the C F agents towards the Scheme Benefit. The amount of payment was predetermined. For e.g the amount for a trip to Thailand was ₹ 44,000/- and that of Malaysia or Dubai was ₹ 60,000/- and for Mauritius it was ₹ 1,10,000/-. The amount was paid irrespective of the expenses incurred by the distributors. Total expenditure incurred under this head was ₹ 11,18,000/-. Sample Copies of the credit note towards the trips is annexed herewith and marked as Annexure: 'H'. ( c) Showroom: The assessee had incurred a total amount of ₹ 11,41,600/- towards the payment made to the show room staffs of end customers/LPG Distributors. The assessee awarded ₹ 10/- per pc to the showroom staff in Punjab and Haryana market for the boost in the sales. This payment was directly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;. ( i) Gift: The assessee during the year had incurred an expenditure of ₹ 2,04,373/- for the gift given to certain C F agents. The C F agents provided a copy of the bill and claimed the reimbursement of the same from the assessee. The assessee has basically reimbursed the dues, in the nature of gifts, to the C F agents. 9. It is argued by Ld.AR that the above-mentioned expenses incurred by the assessee were basically reimbursement of the expenses claimed by C F agents. The reimbursement was made by the assessee to the C F agents to the distributors only on achieving a target or under a scheme and was in nature of sale promotion. That as per provision of sec. 194C of the Income Tax Act, 1961, no TDS is liable to be deducted for the payment made on account of reimbursement of expenses and argued that there is no question of applicability of provision of sec. 40(a)(ia) in the instant case. 10. It is further submitted that the expenditure incurred by the agents on behalf of the assessee cannot form part of income in their hands and no tax will be deductible at source therefrom, under the provisions of Chapter XVII-B of the Act and no tax will be de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s credited to ledger account of C F agent under the sales promotion vide credit note. Therefore, we find force in the arguments of ld.AR that it is not a commission and there is no principal and agent relationship. It is a sales promotion to grow simultaneously. It is a benefit to the distributor and assessee has no relationship with the distributor. 13. We find from page No.88 of Paper Book that the assessee incurred foreign trip expenses to an extent of ₹ 11,18,000/- and the credit notes were placed at pages 89 to 96 of Paper Book. As discussed above regarding the sample copies at pages 22 to 24, we note that a trip to Thailand offered to one person on achieving sale of 75 boxes or 2700 pieces and in our opinion, it is not a commission and is additional benefit given to the C F agents. The CIT(A) examined the list of payments made to individual staff and having finding no adverse comment from AO in the remand proceedings upheld the contention of assessee that it was paid to showroom staff directly to boost the sale at an average of ₹ 3,600/-. The contention of Ld.AR was that no deduction of TDS is required on the reimbursement of expenses on sales promotion. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- and disallowed the claim of incentive for non deduction of TDS u/s 194H of the Act by invoking the provisions of section 40(a)(ia) of the Act. Aggrieved assessee preferred appeal before CIT(A), who confirmed the action of AO by observing in para 4 as under :- 4. I have considered the finding of the AO and submission made by the A.R. during appellate proceeding. The first and second ground of appeal are regarding addition by disallowance of commission paid u/s 40(a)(ia). The facts of the case is the assessee made payment on account of commission and incentive to various agents to the tune of ₹ 76,48,727/- out of this amount, the assessee deducted TDS u/s 194H on payments of ₹ 28,37,898/- but assessee did not deduct any TDS on the amount of ₹ 48,37,898/-. The AO disallowed the amount of ₹ 48,37,898/- u/s 40(a)(ia). During appellate proceeding the A.R. submitted that the payment was made to various collecting agents as incentives and no payment in any individual case was more than ₹ 50,000/-. I have considered the submission of the A.R. and finding of the AO I agree with the A.O. that as per Sec. 194H any payment over and above ₹ 2,500/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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