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TMI Blog2021 (11) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... oner Income Tax (JCIT) (OSD) TDS Circle Panchkula issued notice u/s. 201(1)/201(a) of the Act, to the assessee directing to explain as to why TDS has not been deducted/short deducted on various payments made during the previous year. In response thereof, the assessee filed written reply and also made an application u/s. 144A of the Act for issuing directions. The contention of the assessee company before the Ld. JCIT was that since the payments were made towards incentives to various parties, question of deducting tax at source u/s. 194H of the Act does not arise. So far as the deduction of tax u/s. 194J of the Act is concerned, the contention of the assessee was that since there was no professional/technical services involved in on line advertisement to promote company's sale, no tax was required to be deducted u/s. 194J of the Act. However, rejecting the contention of the assessee the Ld. JCIT held the assessee liable to pay interest u/s. 201(1A) of the Act for non-deduction of tax at source u/s. 194H and 194J of the Act. In the first appeal, the Ld. CIT(A) set aside the findings of the Ld. JCIT and deleted the addition made on account of non-deduction of tax at source u/s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delay may be allowed and the delay of 37 days in filing the present appeal may be condoned and the revenue may be allowed to argue its appeal on merits. 5. The Ld. counsel for the assessee did not oppose the application filed by the Revenue. Since the revenue has explained the delay which prevented it from filing the present appeal within limitation period, we allowed the application and condoned the delay and permitted the Ld. DR to argue the appeal on merits. 6. Accordingly, the Ld. departmental representative submitted that the Ld. CIT(A) has erred in holding that the assessee was not required to deduct tax at source in respect of incentive paid to various dealers as incentives. The Ld. DR further submitted that the assessee during the previous year paid an amount of Rs. 12,18,71,396/- on account of incentive to its dealers. The payment was made for services rendered for selling goods. The Ld. DR further contended that the distributors were appointed by the assessee on fulfilling certain conditions, therefore the relationship between the assessee and the distributors was not based on the principle of equity but of principal and the agent. The Ld. DR placing reliance on the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sect on 194H, the Assessing Officer (A.O.) treated the benefits allowed to franchise showrooms and franchise distributors as per relationship of one person acting on behalf of other for buying and selling of goods. The concept and perception of commission and brokerage was thus envisaged by JCIT while imparting directions under section 144A to A.O. The Counsel for the appellant, vehemently, argued that provisions of section 194H are specific and be read between the lines and also alongside to be looked into the definition and judgments pronounced on the Principal and Agent relationship etc. The A.O. while applying section 194H in the appellant's case except for his own observations, has neither referred nor relied on any case law at all - ITAT, High Court or Hon'ble Apex Court, as stated by the counsel in the course of appellate proceedings before me. I find this to be a fact as per the text of A.O's Order. The counsel for the appellant stated that the A.O., while passing the order under Section 201 (1)(1A), simply proceeded on the TDS survey party's observations as also post survey details and the replies made by appellant. He also framed his order while comply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 (Jaipur Trib.) iv) Pr. Commissioner of Income Tax-8 vs Reliance Communications... on 22 July, 2019 (Bombay High Court). These citations have also been perused and considered and are in favour of the appellant. The A.O. or JCIT didn't refer to any judgment in support of their observations that provisions of Section 194H read with Explanation 1 bring the case as one of services rendered in buying and selling. I don't find any merit: in the findings of A.O. read with the directions of JCIT and hold that no TDS deduction was required, keeping in mind the facts and circumstances in the appellant's case in respect, of incentives paid/payable to their franchise showrooms and distributors. This ground of appeal is decided in the appellant's favour and the addition of non-deduction of TDS under section 194H amounting to Rs. 71,09,165/- on amount paid/credited Rs. 12,18,71,196/- is deleted." 9. As pointed out by the Ld. counsel, the Ld. CIT(A) has allowed this ground of appeal of the assessee by following the ratio laid down in the cases referred above. Since the Ld. CIT(A) has decided the issue in favour of the assessee by following the judgments of the Hon'ble Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ductor to be assessee-in-default for shortfall in its amount of tax deducted at source. The Ld. CIT(A) has decided this issue in favour of the assessee holding as under:- "The grounds of appeal pertain to the application of provisions of section 194J instead of 194C, in respect of online managerial services and holding the appellant in default for lesser deduction of 2% rate under section 194C. The A.O. proceeded to calculate at 10% rate while working out the short deduction at Rs. 7,93,455/- on amount paid/credited of Rs. 99,18,191/-, The payments pertained to three parties and the counsel for the appellant, vehemently, argued and stated in written submissions, as well, that in the facts of his case, he had rightly and legally deducted TDS at 2% rate. In addition to that he pleaded that the status between him and the payee was such in which provisions of section 194J are not applicable. The appellant stated that the amendments brought in by the Legislature in view of uncalled for litigations, are continuing, I have perused the same and find that such amended provision can be considered as of clarificatory nature although not retrospective, I am inclined to agree in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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